Prosecutors have claimed that collapsed Silicon Valley blood testing start-up Theranos was burning through $2m per week while presenting investors with a rosy view of its financial health, reports Matthew Field.
The former chief executive of Theranos, Elizabeth Holmes, is on trial for fraud in California over allegedly misleading investors and fooling patients over the effectiveness of her company’s blood testing machines.
At one stage, Theranos was valued at $9bn, had a deal to take blood samples from customers at Walgreens with investors including media mogul Rupert Murdoch.
Late on Tuesday night, Danise Yam, a former financial controller at Theranos, told a US court the company was hemorrhaging millions of dollars while claiming to investors it was on the brink of revenues of close to $1bn.
She told the US government lawyers that she had not prepared the inflated projections that had been shown to investors, but said the company had no revenues in 2012 and 2013. Prosecutors pointed to documents that said investors were told to expect revenues of $140m in 2014 and $990m in 2015.
Later, Erika Cheung, another government witness and former Theranos lab assistant, said she had been “star struck” by Ms Holmes, Theranos’ founder who was at one stage compared to Steve Jobs, but quit her job after seven months to become a whistleblower.
She told the court Theranos’s Edison machines, which were supposed to run up to 90 types of blood tests with just a pinprick of blood, could only run twelve types with the rest performed on third party devices.
“The Edison analyser could only run one type of test for one patient at a given time,” she said.
“I was uncomfortable processing patient samples,” Ms Cheung told the court, according to the New York Times. “I did not think the technology we were using was adequate enough to be engaging in that behaviour.”
In 2015, Ms Cheung sent a letter to US regulators outlining her concerns about Theranos’s lab, leading to a surprise inspection and the closure of its facility.
Ms Holmes is facing twelve counts of wire fraud and conspiracy to commit wire fraud. She has pleaded not guilty. The trial continues.