Elizabeth Holmes trial: New trouble for Holmes with second apparently pilfered logo

SAN JOSE — Theranos founder Elizabeth Holmes was hit with more damaging testimony Tuesday, as jurors learned she distributed a report bearing an apparently unauthorized logo from a second pharmaceutical company, adding to claims that she had knowingly misled potential investors and corporate customers.

The email that jurors in Holmes’ criminal fraud trial saw Tuesday, sent from Holmes to Walgreens, had a Theranos company report attached bearing the logo of major pharmaceutical firm Schering-Plough. The drug giant has since merged with Merck. Walgreens at the time was considering partnering with Theranos to put the company’s blood-testing machines inside drugstores.

A Schering-Plough scientist testifying for the prosecution in U.S. District Court told the jury that before the dual-logo report was issued, she and a handful of colleagues had visited Theranos headquarters in Palo Alto while considering working with Holmes’ company.

Scientist Constance Cullen testified that Holmes “almost exclusively” answered their questions, at times interrupting when Cullen, frustrated with Holmes’ indirect responses, tried to ask questions of other Theranos representatives. “There were what I describe as cagey responses or attempts to redirect to other topics of discussion,” Cullen said of Holmes’ answers.

The report with the Theranos and Schering-Plough logos concerned preliminary work Theranos did for Schering-Plough on development of blood tests, citing Theranos’ “accurate and precise results.”

Cullen testified that the report and conclusion about accuracy and precision were the work of Theranos, not Schering-Plough. Cullen said neither she nor anyone else she knew of at Schering-Plough had agreed with the conclusions.

The jury had earlier heard that Holmes sent executives for the drugstore chain a Theranos report with the logo of pharmaceutical giant Pfizer. The report touted the “superior performance” and “excellent” accuracy of Theranos machines, but a former Pfizer scientist testified that he had dismissed Theranos’ technology and was not aware of anyone at Pfizer authorizing Theranos to use the logo.

On Tuesday, an investment advisor for former U.S. Secretary of State Henry Kissinger testified that he, too, had believed the Pfizer logo meant the laudatory Theranos report was written by Pfizer and showed the pharmaceutical firm had approved Theranos’ technology.

Daniel L. Mosely, who personally invested $6 million in Theranos after meeting with Holmes and receiving materials from her company, testified that the report had the Pfizer logo on every page, and was important to his decision to invest.

“Pfizer is a very large pharmaceutical company that is highly sophisticated and has a large scientific staff, and I believed that if they had reached the conclusion stated in this report, that was a very good validation of the company,” Mosely testified.

In a memo to Kissinger, who had asked him to look into Theranos and ultimately invested $3 million in the company and took a seat on its board, Mosely cited the Pfizer-emblazoned Theranos report as “the most extensive evidence supplied regarding the reliability of the Theranos technology and its applications.”

Holmes lawyer Lance Wade, cross-examining Mosely, advanced the defense’s strategy of highlighting the sophistication of Theranos’ investors. Wade noted Mosely’s work for billionaires, including the Walton family of Walmart fame and the Cox family of telecommunications giant Cox Cable, both of which invested heavily in Theranos.

Mosely’s statements followed earlier testimony by an investment manager for the family of former U.S. Education Secretary Betsy DeVos, that Theranos sent her the Pfizer dual-logo report as the the family was considering what became a $100 million investment in Holmes’ startup in 2014.

Holmes is charged with a dozen felony fraud counts related to her failed startup. She is accused of bilking investors out of hundreds of millions of dollars and defrauding patients with false claims that Theranos’ machines could conduct a full range of tests using only a few drops of blood from a finger-stick. She has denied the allegations.

Earlier Tuesday, a lawyer for Holmes sought to dampen the impact of the report bearing the logos of Theranos and Pfizer. DeVos family investment manager Lisa Peterson had testified last week that she believed Pfizer’s logo on the report — which also said “Pfizer, Inc.” directly below the title — meant Pfizer had prepared it.

With Peterson under cross-examination Tuesday, Holmes lawyer Lance Wade showed the jury that Theranos’ former Palo Alto address appeared on a page of the report, and Wade asked Peterson if she knew that each page bore the address.

“I would imagine, yes,” she replied. “It was a long time ago.”

Prosecutor Robert Leach then asked Peterson if the Theranos address on the report changed her view that the document purported to represent the conclusions of Pfizer and Theranos.

“No, not when Pfizer’s logo’s on the page,” Peterson answered.

Wade also questioned Peterson about the investment contract the DeVos family signed with Theranos, noting cautionary language including that “an investment in the company is highly speculative and involves substantial risks,” and that Theranos’ financial projections were “necessarily speculative.”

Peterson, often clearly irritated by Wade’s questioning, called Theranos’ statements about its financial position “wildly different” from reality.

Prosecutor Leach asked Peterson about future-revenue estimates provided to the DeVos family by Theranos in late 2014 that projected income of $140 million that year and $990 million in 2015. Leach asked Peterson, “Did you in any way dream?” that revenue for 2014 would be zero and that it would be less than $500,000 in 2015.