Lucas must have had access to private information about the company if he was able to build financial models. Holmes in 2007 that offered financial projections for the company, using different cash-flow scenarios. Downey also showed the court emails and spreadsheets prepared by Mr. Downey displayed a page from the Theranos investment agreement that said the investor-in this case Black Diamond Ventures-had an opportunity to ask questions of and receive answers from the officers of the company. Holmes, with whom he communicated directly and regularly. Lucas had deep knowledge about Theranos and a personal relationship with Ms. Holmes’s lawyers, aimed to show the jury that Mr. The Walgreens partnership began unraveling in 2014 after Theranos missed key deadlines, and officially ended in 2016.Īs the long-awaited trial of Theranos founder and former CEO Elizabeth Holmes gets underway, WSJ looks back at the scandal’s biggest milestones and speaks with legal reporter Sara Randazzo about what we can expect to see in the fraud trial. Lucas said that, as part of his 2013 investment, he assumed that Walgreens did “an extensive analysis” of Theranos’s technology before agreeing to invest in the startup and put its machines in drugstores. Her lawyers have said she invested 15 years trying to improve healthcare and running a failed startup isn’t a crime. Holmes faces a dozen counts of wire fraud and conspiracy to commit wire fraud. Theranos technology was used on real patients and returned erroneous results for tests for pregnancy, HIV, blood disorders, cancer risks and other serious conditions, according to the prosecution. The Walgreens partnership meant “revenue for the company, more value for the company, and we were in a real business.” “So one could have believed at that time that the company could get to cash flow positive,” Mr. Holmes’s timeline.īut by that time, Theranos had spent a decade working on its technology, launched a retail partnership withĪnd raised hundreds of millions of dollars from investors.Įlizabeth Holmes, arriving at federal court in San Jose, Calif., on Tuesday, faces a dozen counts of wire fraud and conspiracy to commit wire fraud. Lucas said his team ended up working around the clock through the holidays to meet Ms. Holmes’s “sense of urgency” to meet a year-end deadline for fundraising, Mr. That suggested a lot of value creation and he was willing to pay for access to more Theranos equity, Mr. In late 2013, Theranos shares were selling for $75 apiece. Lucas paid between less than $1 to around $3 per share in Theranos, according to court testimony. Hall Group in 2013 made a $4.9 million direct investment in Theranos alongside Black Diamond Ventures. Lucas said on the witness stand.īlack Diamond Ventures brought another investor, Texas-based Hall Group, into the 2006 funding round by setting up a separate investment vehicle for that firm. “There would have been more information that we would have potentially liked, but we didn’t have access to it and we made the decision to invest,” Mr.
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