Elizabeth Holmes trial: Former Theranos lab employee details concerns over company’s ability to perform blood tests

In her testimony, Cheung detailed her growing concerns about the company’s devices failing quality control tests in the research lab, as well as what she said was manipulation of data to pass the test. the quality. This led her to question the capabilities of the startup’s proprietary testing machine, which she said was only used on a small number of tests at the time it was hailed as the breakthrough innovation of the company.

Sometimes, she said, Theranos employees deleted as many as two out of six data points as part of a test in order to pass quality control. She said there had been no standard protocol within Theranos for determining when outlier removal was appropriate, but noted that this was something that happened “frequently” within the company and said it would “normally be considered a selective choice”.

Cheung testified that she voiced her concerns to supervisors, including speaking with a senior Theranos executive who she said rejected her as not qualified to intervene. She said she was told she had little visibility on the company. Cheung resigned shortly thereafter, just six months after joining the blood testing startup in 2013 as a recent college graduate.

Cheung first spoke on Tuesday as the second government witness in the long-awaited trial of Holmes, which faces a dozen federal fraud and conspiracy charges over allegations she knowingly misled investors, patients and doctors on the capabilities of his company’s exclusive blood. test the technology. Holmes, who has pleaded not guilty, faces up to 20 years in prison.

Cheung previously recounted being eager to work for a founder promising patients the ability to test for diseases like cancer and diabetes with just a few drops of blood, only to become “really stressed and uncomfortable with what was going on.” , as she said. Wednesday.

Many details of Cheung’s experience have come to light over the years as she has become a prominent figure in the history of the disgraced startup. Cheung, who contacted the Centers for Medicare and Medicaid Services to investigate Theranos in 2015, was featured in “Bad Blood,” the definitive book on society by Wall Street Journal reporter John Carreyrou who first broke it. story, as well as in the HBO documentary “The Inventor”. She also gave a TED talk on her experience as a whistleblower.

She testified that she had “amassed a lot of evidence” suggesting that the company’s technology was not adequate and that she did not feel comfortable performing tests on patients. “I was trying to talk to as many people as possible but I didn’t seem to get it,” she said on Wednesday, noting that she eventually, as a “last resort”, spoke with a Wall Street Journal reporter, presumably Carreyrou although not directly named, who contacted her about an investigation into the company.

The prosecution presented a chart on Wednesday that included internal data from March 2014 showing that about 25% of tests on Theranos proprietary devices failed quality control. Cheung, who left the following month, said this differed significantly from the failure rate of third-party testing devices approved by the U.S. Food and Drug Administration. The latter rarely failed, she said.

During cross-examination, Holmes’ defense attorney Lance Wade attempted to point out Cheung’s lack of experience and qualifications as a young college graduate whose first job was with the startup by having him recount the names and qualifications of the superiors of his team, including those with doctorate, medical degrees.

Addressing his testimony about the omission of outlier data, Wade showed benchmarking charts indicating that Theranos disclosed when that data was removed to show it was being considered. He also presented jurors with the names of those who signed Theranos ‘validation documents for regulators, including the lab director – Holmes’ signature was not there. In the opening defense statement last week, Wade pointed out to jurors that it is ultimately the lab director – not the CEO – who decides the accuracy and reliability of the tests.

His cross-examination of Cheung will continue when the trial resumes on Friday.

There was little direct mention of Holmes during the early hours of Cheung’s testimony on Wednesday, but towards the end of her questioning, the prosecution asked if she had considered speaking to Holmes directly before resigning over her concerns . Cheung said she did not, citing a close relationship with a colleague, Tyler Shultz, who was also a Theranos whistleblower and whose grandfather – former Secretary of State George Shultz – sat in the board of directors of the company. Tyler Shultz, Cheung said, had emailed Holmes about some of the same concerns she had raised, including quality control. (Cheung said Tyler Shultz had a closer relationship with Holmes, so she didn’t do it herself.)

Cheung said she and Shultz also met with her grandfather, who has since passed away, to share their concerns with him. Tyler Shultz is also an expected witness.

According to a court document filed last week, Theranos spent more than $ 150,000 on a private investigator to spy on Cheung and Shultz.

Years after leaving the company, the two started a nonprofit called Ethics in Entrepreneurship.

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