Former Safeway CEO said he had done more than 100 hours of due diligence on the deal with Theranos, as it would ultimately cost the grocery chain more than $ 360 million before the deal was signed.
Still, even after that investigation, when Safeway tried the Theranos diagnostic device at headquarters for almost a year, then CEO Steven Burd said the startup was confused, lost patient tests, and returned strange results. Said it became clear.
“Whenever I start something new, I think there are some rough spots, but we kept going,” he said. “There was a lost sample. I got meaningless results.”
Bird’s exposure was revealed during an interrogation by Elizabeth Holmes’ defense lawyer, Kevin Downey. Holmes is on trial for a conspiracy attempting 10 wire frauds and 2 wire frauds.
The court also heard more from Bird about the “tests” Holmes did when pitching Safeway board members. Board director Michael Shannon stabbed his finger and evaluated the blood for a prostate-specific antigen, a screening test for prostate cancer. Theranos device “produced a lot of noise” Burd Said, But does not provide any results. “I said something that made me think I’d get it later,” Holmes added. They didn’t.
Due diligence is questioned
During the cross-examination, Downey sought to impose a finer detail on the Safeway-Theranos deal on Bird, claiming that experienced executives knew what he was doing. He has been the CEO of the grocery chain for nearly 20 years. I met Holmes, 26 years old.
“Did you know when she was a very young entrepreneur?” Downey Asked he.
“It’s the correct answer,” Bird replied.
“Isn’t it an exaggeration to say that Safeway has done hundreds of hours of due diligence in the process of making a deal?” Downey asked.
“At least 100 people,” Bird said.
The transaction required Safeway to pay Theranos $ 85 million and refurbish the store to accommodate a small lab for blood testing equipment. According to biotechnology executives Ars spoke, more than 100 hours are spent on due diligence on transactions of that size. The numbers Burd mentioned in court were so high that executives wondered if Burd was counting the diligence made by other investors against Safeway’s total.
Bird as part of a hard-working process Said He spoke with Johns Hopkins and a doctor and laboratory director at the University of California, San Francisco. However, Johns Hopkins experts said they haven’t spent enough time verifying Theranos devices.
Holmes promised Safeway executives that her company’s diagnostic equipment could return results to patients in 20-30 minutes. Still, when Safeway was testing the machine, it took Theranos 3-5 days to send the results back to the patient.
The deal did not include a specific timeline, but Safeway’s board made a presentation in 2010, rolled out a pilot program in the first quarter of 2011, and a grocery store in mid-2011. Officially launched in. Safeway was expecting. Expand testing to over 900 stores in 22 states.
Safeway had several ways to cancel a transaction. If you don’t like how the pilot program goes, or if the FDA takes regulatory action against your startup, you can cancel it with 30 days’ notice. Ultimately, Theranos has never been successful. By the time the deal was finally terminated in 2015, Safeway had spent more than $ 300 million preparing the store.
https://arstechnica.com/?p=1803770 The Theranos device “made a lot of noise” but did nothing else in the Safeway demo