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We did ‘at least 100 hours’ of diligence on Theranos

Elizabeth Holmes, founding father of Theranos Inc., left, arrives at federal court docket in San Jose, California, on Tuesday, Oct. 12, 2021.

David Paul Morris | Bloomberg | Getty Photos

SAN JOSE, CALIF. — Former Safeway CEO Steve Burd mentioned on Tuesday that his firm knew it was taking a threat by partnering with blood-testing start-up Theranos, and he acknowledged {that a} deal would have been good for the grocery chain’s inventory value.

On his second day testifying within the felony fraud trial of Theranos founder Elizabeth Holmes, Burd informed jurors that Safeway ran a radical impartial investigation into the corporate’s claims about its know-how earlier than signing an settlement in 2010.

The deal, valued at practically $400 million, resulted in 969 Safeway shops being reworked in preparation for the blood-testing machines. Safeway dissolved its partnership with Theranos in 2015, two years after Burd retired.

Whereas Burd was referred to as as a witness by the prosecution, protection lawyer Kevin Downey, who’s representing Holmes, took the ex-CEO to job for what he knew about Theranos when he struck the deal.

“You knew on the time she was a really younger entrepreneur?” Downey mentioned, referring to Holmes, who was then in her 20s. “Appropriate,” Burd replied.

Downey continued, “Is it truthful to say within the technique of doing a deal, Safeway did lots of of hours of due diligence?”

“Not less than 100,” Burd mentioned, including that he held himself “personally accountable” for executing the settlement.

Holmes rocketed to fame in Silicon Valley by growing know-how that promised to run lots of of diagnostic assessments with only a finger prick of blood. However Theranos by no means realized these aspirations, and Holmes is now charged with 12 counts of wire fraud and conspiracy in reference to deceptive buyers and sufferers. She has pleaded not responsible.

Throughout opening statements, protection lawyer Lance Wade informed jurors that regardless of making some errors, main a failed start-up would not make her a felony. Holmes faces as much as 20 years in jail if convicted.

With Burd on the stand, the protection tried to indicate that Safeway, an enormous nationwide chain, wasn’t duped in its negotiations.

“You’d have communicated with Theranos nearly day by day for multiple 12 months,” Downey mentioned to Burd. The witness responded, “We had been on a parallel path to do the deal and to do due diligence.”

Theranos had by no means deployed its units right into a bodily retailer. It later introduced a partnership with Walgreens, which additionally flopped.

An individual enters a Walgreens retailer in San Francisco, California, U.S., on Tuesday, April 13, 2021.

David Paul Morris | Bloomberg | Getty Photos

“So that you understood that Safeway or Walgreens or one of many different firms they had been speaking to, this may be their first client based mostly deployment of know-how, right?” Downey requested. “You understood in consequence that they had by no means scaled this know-how on a broad foundation, right?”

“I knew they did not have lots of clients,” Burd mentioned.

Downey additionally pointed to Safeway’s personal challenges. The corporate’s inventory value had slumped from $19 in January 2012 to $14 in July of that 12 months, as Safeway and Theranos had been working to get the units up and working.

“Did you talk with Ms. Holmes by textual content or in any other case and inform her that you simply thought the inventory value of Safeway would enhance when you may announce a launch of a Theranos product in Safeway shops?” Downey requested. Burd testified that he did not recall saying that, however agreed that Safeway’s inventory would have gone up if the launch had taken place.

A few of Burd’s emails from that interval in 2012 had been learn in court docket, and revealed his rising frustration with Theranos.

In one among his emails to Holmes, Burd wrote within the topic line, “Changing into Discouraged.” He testified, “I am probably the most constructive individuals you may ever meet, I do not get discouraged.”

Burd additionally informed jurors that Safeway was working trial assessments on workers who labored on the company campus. Nevertheless, the assessments had been coming again inaccurate.

“I believe everytime you begin one thing new you are going to have some tough spots, however we continued to have tough spots,” Burd mentioned. “We had samples that had been misplaced, we had outcomes that did not make any sense.”

Wade Miquelon, the previous finance chief of Walgreens, took the stand late Tuesday. He testified a couple of sequence of conferences he had with Holmes and her prime government, Ramesh “Sunny” Balwani, in 2010.

“This was probably the most thrilling firms we had seen, not simply within the lab however basically,” Miquelon mentioned, including that “we had been very enthusiastic about forming the partnership.”

Walgreens at one level had over 40 Theranos blood-testing facilities inside its shops. Miquelon’s testimony continues Wednesday.

WATCH: More details emerge in Theranos trial

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