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Theranos Lab Director Revealed as Key Source for WSJ Expose (3)

Sept. 28, 2021, 11:17 PM

A former lab director at Theranos Inc. who is testifying against Elizabeth Holmes at her criminal fraud trial revealed that he was a source for the Wall Street Journal reporter whose stories led to the collapse of the blood-testing startup.

Adam Rosendorff has said he resigned from the company in late 2014 because he found Holmes unwilling to address quality-control problems with Theranos machines. He testified Tuesday that he later received a phone call from Journal reporter John Carreyrou and agreed to speak with the journalist off the record.

“I felt obligated to alert the public,” Rosendorff told jurors. “I didn’t quite know how I should do that. But when this opportunity presented itself I took advantage of it.”

Carreyrou published stories in the Journal in 2015 that triggered the company’s unraveling and followed up with the release in 2018 of “Bad Blood: Secrets and Lies in a Silicon Valley Startup.” He confirmed Tuesday that Rosendorff was the lab director identified in the book by the pseudonym Alan Beam.

“Adam Rosendorff was my first and most important source,” Carreyrou said. “I couldn’t have broken the Theranos story without him. Hats off to his integrity and his courage. He’s one of the heroes of this story.”

Rosendorff acknowledged under questioning from a lawyer for Holmes that for years leading up to Tuesday’s testimony he’s been talking to prosecutors and officials at various federal agencies, including the Food and Drug Administration, U.S. Postal Service and Federal Bureau of Investigation.

Rosendorff tried to elaborate on his answers and questioned Holmes’s lawyer, Lance Wade, requiring the attorney to repeatedly ask the judge to order jurors to disregard the unwanted responses.

Rosendorff is the latest in a steady march of former Theranos employees who are testifying at the trial in San Jose, California. On Friday, Rosendorff told jurors that when he was hired by Theranos from the University of Pittsburgh in 2013 he “really bought into the idea” of company running hundreds of blood tests with just a pinprick of blood.

He recalled that he was impressed by the “earnestness and dedication” Holmes and others exhibited. “I thought it was going to be the next Apple,” he said, referring to the iPhone-maker.

Read More: The Spectacular Rise and Fall of Elizabeth Holmes and Theranos

But just months into his job Rosendorff sent an email to Holmes with the subject line “Concerns about the launch,” a reference to the rollout of Theranos machines in Walgreens stores the following month. “I have some medical and operational concerns about our readiness for 9/9,” the email read.

“I was raising the alarm bells,” Rosendorff told jurors. “I felt it was important for Elizabeth to be aware of these issues as the chief executive of the company.” Rosendorff described often copying Holmes on responses to emails to Theranos President Ramesh “Sunny” Balwani because she had “more power within the company to make corrections.”

In a one-on-one meeting with Holmes to discuss failures of Theranos blood-tests just days before the launch, Rosendorff said, Holmes was noticeably shaken, responded nervously and wasn’t her normally composed self. Rosendorff said Holmes told him that tests proving problematic for Theranos machines could be done on conventional machines requiring larger venous draws of blood.

Holmes and Balwani are charged with lying about the accuracy of Theranos machines as well as failing to disclose the company’s reliance for many results on standard devices manufactured by other companies. Balwani, who faces a separate trial next year, has pleaded not guilty.

Rosendorff said he quit Theranos because of an unwillingness by Holmes and Balwani to perform machine proficiency testing “as required by law.”

Theranos “cared more about PR and fundraising than patient care,” he said.

(Updates with Carreyrou comment. A previous version of the story corrected the day of the week of the testimony.)

To contact the reporter on this story:
Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editors responsible for this story:
Peter Blumberg at pblumberg1@bloomberg.net;
Katia Porzecanski at kporzecansk1@bloomberg.net

© 2021 Bloomberg L.P. All rights reserved. Used with permission.

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