Former lab director testified Theranos prioritized PR and funding over patient care

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By Sara Ashley O’Brien, CNN Business

On Tuesday, the testimony of a former Theranos lab director is set to continue in the criminal trial of the failed blood-testing startup’s founder and former CEO, Elizabeth Holmes. Attorneys for Holmes have previously argued that the accuracy and reliability of the company’s tests were not her responsibility, but rather fell to those running the lab.

The state of the lab and Theranos’ testing capabilities ahead of its major commercial launch with Walgreens has been central to the prosecution’s case so far, with the former director’s testimony going all day on Friday.

Adam Rosendorff, who joined Theranos in April 2013 after applying for a lab director job on LinkedIn, was questioned for roughly five hours by assistant US Attorney John Bostic in a San Jose federal courtroom where Holmes’ trial is underway.

Rosendorff said he left his lab director job at the University of Pittsburgh Children’s Hospital to work at Theranos, which he said he believed “was going to be the next Apple.” But he departed in November 2014, even as the company’s profile was rising, after growing uncomfortable with its apparent priorities.

“I felt pressured to vouch for tests that I did not have confidence in. I came to believe that the company believed more about PR and fundraising than about patient care,” he began his testimony. “The platform was not allowing me to function effectively as a lab director.”

Rosendorff testified that he became lab director in the middle of 2013 after applying for his California medical license, and that a co-lab director, Mark Pandori, was hired in early 2014. (Pandori is also listed among the government’s possible witnesses.) Rosendorff said he reported into Ramesh “Sunny” Balwani — Theranos’ then-chief operating officer who was also Holmes’ boyfriend. Rosendorff testified that Holmes was above Balwani in the executive ranks.

Balwani and Holmes are both facing a dozen counts of federal fraud and conspiracy charges over allegations they knowingly misled investors, patients, and doctors about the capabilities of Theranos’ proprietary blood testing technology. Balwani and Holmes have both pleaded not guilty and face up to 20 years in prison. They’re being tried separately, with Balwani’s trial set to begin early next year.

In his testimony, Rosendorff called the events leading up to the commercial launch of Theranos’ testing with Walgreens in September 2013 “extremely rushed and hurried.”

He said Holmes and Balwani set the schedule for validating tests ahead of the commercial rollout — not him. Just days before the launch, Rosendorff sent an email to Holmes and Theranos vice president Daniel Young, which Rosendorff testified was an attempt at “raising the alarm bells” about tests he didn’t feel were ready for launch, as well as said he was raising “concerns about staffing and training.” According to the email, he had asked for “a few more weeks” to sort through some of the concerns, which would mean delaying the launch.

Rosendorff said he addressed the email to Holmes and had a conversation with her in her office, where she had “papers stuck on to the window with a number on it, which indicated the number of days until launch.”

“I told her that the potassium was unreliable, the sodium was unreliable, the glucose was unreliable, [and] explained why,” Rosendorff testified. (Theranos promised patients the ability to test for conditions like cancer and diabetes with just a few drops of blood.)

“She was very nervous. She was not her usual composed self. She was trembling a bit, her knee was tapping, her voice was breaking up. She was clearly upset,” he continued. He said she responded that they could use conventional FDA-approved devices rather than Theranos’ devices as needed.

Nine days before the launch, none of Theranos’ tests that it had intended to launch had been validated for patient care, according to an email from a research and development scientist that was presented during Rosendorff’s testimony.

Rosendorff, despite being lab director, was also notably left off some emails that discussed concerning Theranos test results. He testified that he felt he “absolutely” should have been included on them; Holmes and Balwani, however, were looped in on the emails. Echoing testimonies from earlier former Theranos employees, Rosendorff also said he was troubled by the lack of protocol for deleting certain data points to pass quality control as well as the high rates of failure when it came to quality control of tests.

Rosendorff said that he directed the company to cease testing for hCG, the hormone commonly used to detect whether a woman is pregnant, on its proprietary blood testing machine due to inconsistent results and instead use a third-party device. (The first patient witness to take the stand was a woman who took this test; it indicated she may be miscarrying when her pregnancy was fine.) Rosendorff testified that the company didn’t follow his directive.

Like former Theranos scientist Surekha Gangakhedkar, who said she printed out documents pertaining to her work, Rosendorff testified that he began forwarding emails “with issues of concern” to his Gmail account. “I wasn’t confident that Theranos would preserve these emails in the event of a [Centers for Medicare & Medicaid Services] or government investigation. I wanted to protect myself.” (Like Gangakhedkar, Rosendorff had signed a non-disclosure agreement but felt the risk of violating that was outweighed by self-protection in the case of an investigation.)

Rosendorff’s questioning by the prosecution will continue Tuesday when the trial resumes. At the end of Friday, Bostic told Judge Edward Davila they’re “much closer to the end than the beginning” of Rosendorff’s examination. He’s expected to then be cross examined by an attorney representing Holmes.

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