Theranos hired its president’s dermatologist as lab director in 2014, testimony shows

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  • Dermatologist Sunil Dhawan, who became Theranos’ laboratory director in 2014, took the stand on Thursday in Elizabeth Holmes’ criminal trial.
  • Dhawan said Ramesh “Sunny” Balwani, who was the company’s chairman at the time, insisted that the job required a “minimal” commitment.

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San Jose, Calif. — As Theranos’ troubles loomed in 2014, the blood-testing start-up hired a dermatologist without board certification in laboratory science or pathology to become the lab director.

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Sunil Dhawan was brought in in a temporary role by the company’s chairman Ramesh “Sunny” Balwani, according to court testimony on Thursday in the criminal trial of Theranos founder Elizabeth Holmes.

Dhawan was a Dermatologist in Balwani for a long time. He was called as a witness by prosecutors, who are trying to prove that Holmes made millions of dollars from investors by deliberately misleading patients and doctors about the company’s blood-testing technology. Holmes, who faces 12 counts of wire fraud and conspiracy, has pleaded not guilty.

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Dhawan testified that Balwani, who was in a romantic relationship with Holmes at the time, told him, “The time commitment is too low.” In a November 2014 email, Balwani also told him that “this will mostly be an on-call consulting role,” said Dhawan, who met federal and state requirements to become a laboratory director.

In a San Jose courtroom, Jeff Schenk, an assistant US attorney, asked Dhawan, “Did he tell you what Theranos did?”

In response, Dhawan said he searched Google to learn about Theranos’ technology, adding that he “had a short conversation about it” with Balwani.

Dhawan testified that between November 2014 and the summer of 2015, he went to the lab only twice and worked a total of five to 10 hours. He told the jurors that he had never met any staff, doctors or patients.

Dhawan was appointed to replace Adam Rosendorff, who stepped down in 2014 amid growing frustrations about blood test inaccuracies and false results. Unlike Dhawan, Rosendorff was a board-certified pathologist who spent every day inside the lab.

Schenk continued, “One time you didn’t talk to an employee of Theranos who worked in the lab?”

“I don’t remember any conversation in all that time,” Dhawan said.

Dhawan said that he did not meet Holmes until September 2015. He told jurors that he became more involved in the company that month as regulators planned to audit the lab.

In his cross-examination, defense lawyer Lance Wade, representing Holmes, asked Dhawan about the importance of Balwani in the company.

“You understand that he was one of the top two executives in the company?” Wade asked.

“My impression was that he was a top executive,” Dhawan said.

“He was running the lab from an operational standpoint, wasn’t he?” Wade asked.

Dhawan replied, “I can’t comment on that as I was never told that he was running the lab, but it was my impression that he was yes.”

Balwani was charged with the same crimes as Holmes. He also pleaded not guilty and will be tried separately next year. Dhawan’s testimony continues on Friday as well.

‘real magic’

Earlier on Thursday, Nimesh Jhaveri, a former senior executive at Walgreens, took the stand.

Jhaveri said Walgreens’ goal in partnership with Theranos was to allow customers to get their lab results with just a few drops of blood. It would be “extraordinary” to provide a more efficient and less painful procedure than conventional laboratories, Jhaveri said.

“It was changing the lab environment,” Jhaveri said. “Require Less Blood was the real magic, it was so interesting for us at Walgreens.”

Walgreens Invested $140 million Failed company. Clinics with blood testing technology were started in 40 drugstores in Arizona and one clinic in California. In August 2014, a year into the partnership, Walgreens reduced the rollout target of 500 Theranos Wellness Centers to 200.

“Cost was a constraint, training our team members was a constraint, hiring a phlebotomist was a constraint,” Jhaveri said. “The overall operating model was not perfect so we decided to reduce the number.”

Jhaveri said he told Balwani that if they plan to expand they need a detailed plan to improve the patient experience. Under cross-examination, Jhaveri told the jurors that he had minimal contact with Holmes, meeting him only two or three times.

Zaveri said Walgreens took “a step back” when former Wall Street Journal reporter John Carrero first broke the story that Theranos was misleading customers and investors about its testing accuracy. In 2016, Walgreens began pulling the plug on Theranos services inside its drugstores.

Watch: Former staff and patients testify at Elizabeth Holmes trial

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