SAN JOSE, Calif. — In 2014, Dan Mosley, a lawyer and power broker among wealthy families, asked the entrepreneur Elizabeth Holmes for audited financial statements of Theranos, her blood testing start-up. Theranos never produced any, but Mr. Mosley invested $6 million in the company anyway — and wrote Ms. Holmes a gushing thank-you email for the opportunity.
Bryan Tolbert, an investor at Hall Group, said his firm invested $5 million in Theranos in 2013, even though it did not have a detailed grasp of the start-up’s technologies or its work with pharmaceutical companies and the military.
And Lisa Peterson, who handles investments for Michigan’s wealthy DeVos family, said she did not visit any of Theranos’s testing centers in Walgreens stores, call any Walgreens executives or hire any outside experts in science, regulations or legal matters to verify the start-up’s claims. In 2014, the DeVos family invested $100 million into the company.
The humiliating details of bad investments like Theranos are rarely displayed so prominently to the public. But they have been laid bare in recent weeks at the trial of Ms. Holmes, 37, who faces a dozen counts of wire fraud and conspiracy to commit wire fraud; she has pleaded not guilty. She and Theranos fell from grace — with investor money evaporating and the company shutting down in 2018 — after claims about its blood-testing technology were shown to be false.
frenzied state of record-breaking fund-raising.
With so many new investors flocking to start-ups, due diligence is sometimes so minimal that it is used as a punchline, investors said. An overheated market “definitely creates an environment for people to make more inflated claims” and may even tempt them to lie, said Shirish Nadkarni, a longtime entrepreneur, investor and author.
During its lifetime, Theranos exemplified that dynamic. The company raised $945 million from famous venture capitalists including Tim Draper, Donald Lucas and Dixon Doll; wealthy heirs to the founders of Amway, Walmart and Cox Communications; and powerful tech and media moguls such as Larry Ellison and Rupert Murdoch.
Understand the Elizabeth Holmes Trial
Elizabeth Holmes, the founder of the blood testing start-up Theranos, is currently standing trial for two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.
And as investors have testified at Ms. Holmes’s trial, a central tension has emerged around due diligence. Could these investors have avoided disaster if they had simply done better research on Theranos? Or were they doomed because their research was based on lies?
added pharmaceutical company logos to validation reports indicating the pharmaceutical firms had endorsed its technology when they hadn’t, according to evidence and testimony. Theranos also claimed in late 2014 that it would bring in $140 million in revenue that year when it had none, according to evidence and testimony. The start-up also faked demos of its blood-testing machines to investors, witnesses have testified.
Wade Miquelon, the former chief financial officer of Walgreens, to admit that he didn’t know if his company had ever gotten one of Theranos’s devices in its offices for testing before entering into a partnership. The lawyers also got Mr. Mosley to concede he never directly asked Ms. Holmes whether a pharmaceutical company had written the validation report.
The strategy has sometimes veered into condescension. That was evident last week when Lance Wade, a lawyer for Ms. Holmes, asked Ms. Peterson, an investment professional, if she was familiar with the concept of due diligence.
“You understand that’s a typical thing to do in investing?” he said.
The investors have pushed back, explaining that they were acting on false information supplied by Ms. Holmes.
“You’re trying to measure our sophistication as an investor when we weren’t given complete information,” Ms. Peterson said. Mr. Wade asked the judge to strike the comment from the record.
Still, testimony from pharmaceutical company executives who interacted with Theranos showed it was possible to see through at least some of Ms. Holmes’s grandiose claims.
Constance Cullen, a former director at Schering Plough, said this week that she was responsible for evaluating Theranos’s technology in 2009. She said she came away “dissatisfied” with Ms. Holmes’s answers to her technical questions, calling them “cagey” and indirect. She said she stopped responding to emails from Ms. Holmes.
Shane Weber, a director at Pfizer, looked into Theranos in 2008 and concluded that the company’s responses to his technical questions were “oblique, deflective or evasive,” according to a memo used as evidence. He recommended Pfizer cease working with Theranos.
But investors were less probing, especially when Ms. Holmes appealed to their egos. Her persona as a visionary, bolstered by magazine cover stories and personal eccentricities, created a sense that backing Theranos was an exclusive and elite opportunity.
In testimony and evidence, Ms. Holmes was shown to have guarded information about the business, calling it a trade secret. She told investors she sought out wealthy families who would not want to see a return on their investment anytime soon, making those that she picked feel special with formal invitations. And she controlled the company tightly with “supervoting” shares worth 100 times the power of other shares.
“She has a firm grasp on the company, let there be no mistake,” Christopher Lucas, a Theranos investor, said on a call with other investors that was recorded and played in court. “She would have the right to cast out investors.”
Mr. Lucas’s firm, Black Diamond Ventures, invested around $7 million into Theranos, despite not getting access to its financial information or examining all of its corporate records. This was unusual, Mr. Lucas testified on Thursday, but Ms. Holmes told him the information was sensitive because a leak could “give competitors a chance to crush the company.”
That secrecy extended to due diligence. Ms. Peterson testified that she was scared Ms. Holmes would cut her firm out of the deal if they dug deeper into the details of Theranos’s business.
“We were very careful not to circumvent things and upset Elizabeth,” she said. “If we did too much, we wouldn’t be invited back to invest.”
Mr. Nadkarni, the longtime investor, said such behavior sounded familiar. He said he had observed a loosening of diligence in deals he’s been involved with over the last year.
It hasn’t led to many problems while times were good, he said, but “if something happens to the economy, then everyone is going to be toast.”
Millions of Americans are not getting the second doses of their Covid-19 vaccines, and their ranks are growing.
More than five million people, or nearly 8 percent of those who got a first shot of the Pfizer or Moderna vaccines, have missed their second doses, according to the most recent data from the Centers for Disease Control and Prevention. That is more than double the rate among people who got inoculated in the first several weeks of the nationwide vaccine campaign.
Even as the country wrestles with the problem of millions of people who are wary about getting vaccinated at all, local health authorities are confronting an emerging challenge of ensuring that those who do get inoculated are doing so fully.
The reasons vary for why people are missing their second shots. In interviews, some said they feared the side effects, which can include flulike symptoms. Others said they felt that they were sufficiently protected with a single shot.
Walgreens, one of the biggest vaccine providers, sent some people who got a first shot of the Pfizer or Moderna vaccine to get their second doses at pharmacies that only had the other vaccine on hand.
Several Walgreens customers said in interviews that they scrambled, in some cases with help from pharmacy staff, to find somewhere to get the correct second dose. Others, presumably, simply gave up.
voted to recommend lifting a pause on the Johnson & Johnson Covid vaccine and adding a label about an exceedingly uncommon but potentially dangerous blood clotting disorder.
Federal health officials are expected to formally recommend that states lift the pause.
Administration of the vaccine ground to a halt recently after reports emerged of a rare blood clotting disorder in six women who had received the vaccine.
The overall risk of developing the disorder is extremely low. Women between 30 and 39 appear to be at greatest risk, with 11.8 cases per million doses given. There have been seven cases per million doses among women between 18 and 49.
Nearly eight million doses of the vaccine have now been administered. Among men and women who are 50 or over, there has been less than one case per million doses.
Johnson & Johnson had also decided to delay the rollout of its vaccine in Europe amid similar concerns, but it later decided to resume its campaign after the European Union’s drug regulator said a warning label should be added. South Africa, devastated by a more contagious virus variant that emerged there, also suspended use of the vaccine but later moved forward with it.
In Arkansas and Illinois, health officials have directed teams to call, text or send letters to people to remind them to get their second shots. In Pennsylvania, officials are trying to ensure that college students can get their second shots after they leave campus for the summer. South Carolina has allocated several thousand doses specifically for people who are overdue for their second shot.
recommended restarting use of the vaccine, but the combination of the safety scare and ongoing production problems is likely to make that vaccine a viable option for fewer people.
The C.D.C.’s count of missed second doses is through April 9. It covers only people who got a first Moderna dose by March 7 or a first Pfizer dose by March 14.
Roughly three-quarters of adults come back for their second dose of the vaccine that protects against shingles.
In some cases, problems with shipments or scheduling may be playing a role in people missing their second doses. Some vaccine providers have had to cancel appointments because they did not receive expected vaccine deliveries. People have also reported having their second-dose appointments canceled or showing up only to find out that there were no doses available of the brand they needed.
Some people can be flexible about being rebooked. But that’s harder for people who lack access to reliable transportation or who have jobs with strictly scheduled hours, said Elena Cyrus, an infectious disease epidemiologist at the University of Central Florida.
Walgreens booked some customers for their second appointments at places that didn’t have the same vaccine that they had received for their initial doses. The company said it fixed the problem in late March.
come under fire for, until recently, scheduling second doses of the Pfizer vaccine four weeks after the first shot, rather than the three-week gap recommended by the C.D.C. Pharmacists have been besieged by customers complaining, including about their inability to book vaccine appointments online.
In other cases, though, access to vaccines is not the sole barrier; people’s attitudes contribute, too.
Basith Syed, a 24-year-old consultant in Chicago, nabbed a leftover Moderna vaccine at a Walgreens in mid-February. But when the time came for his second shot, he was busy at work and preparing for his wedding. After the first shot, he had spent two days feeling drained. He didn’t want to risk a repeat, and he felt confident that a single dose would protect him.
C.D.C. says there is limited data on the vaccine’s effectiveness when shots are separated by more than six weeks, although some countries, including Britain and Canada, are giving shots with a gap of up to three or four months.
Mr. Syed’s experience is part of a broader shift in Illinois. When vaccines were mostly being given to health care workers, residents of long-term care facilities and people over 65, almost everyone was getting their second shots. In recent weeks, though, the number dipped below 90 percent, though it has since rebounded slightly, according to the Illinois Department of Public Health.
In Arkansas, about 84,000 people have missed their second shots, representing 11 percent of those eligible for those shots, said Dr. Jennifer Dillaha, the state epidemiologist. Workers recently began calling people who are due or overdue for their second shots.
College students pose a particular challenge. Many recently became eligible to be vaccinated and are getting their first shots, but they will have left campus by the time they are due for their second doses.
In Pennsylvania, health officials have instructed vaccine providers to give second doses to college students even if they did not receive their first doses from that location.
Some vaccine providers have put on special clinics for people who need a second dose. In South Carolina, the health system Tidelands Health started a program specifically for people who received their first Pfizer doses more than 23 days earlier but hadn’t been able to find a second shot. The state health department sent the health system 2,340 doses for the effort.
Demand has been strong, and Tidelands only has a few hundred doses left. The majority of takers have been people who “were having difficulty navigating all the various scheduling systems and providers,” said Gayle Resetar, the health system’s chief operating officer.
In many cases, vaccine providers had canceled second-dose appointments because of bad winter weather. “It was up to the individual to reschedule themselves on a web portal or web platform, and that just became difficult for people,” Ms. Resetar said.
There are rare cases in which people are supposed to forgo the second shot, such as if they had an allergic reaction after their first shot.
Zvi Ish-Shalom, a religious studies professor from Boulder, Colo., had planned to get fully vaccinated. Then, an hour after his first shot of the Moderna vaccine, he developed a headache that hasn’t gone away more than a month later.
There is no way to know for sure whether the vaccine triggered the headache. But after weighing what he saw as the risks and benefits of a second dose, Dr. Ish-Shalom reached a decision about how to proceed.
“At this point in time, I feel very clear and very comfortable, given all the various elements of this equation, to forgo the second shot,” he said.
Walgreens’s system currently allows people to rebook their second-dose appointment, but they can do so only the day before the appointment.
“I’m not happy about it,” Ms. DeTurris Poust said. “It gives me one extra week of not being protected, so it means there’s one more week that I’m worried about catching it from someone, or giving it to someone.”
Some public health experts said they were not concerned that Walgreens has been scheduling doses with a four-week gap.
“It’s a week difference. Everybody’s going to need to put it in their contexts and their risk factors, but I think this is a very reasonable approach” from Walgreens, said Dr. Katherine Poehling, a pediatrician at Wake Forest School of Medicine who sits on the C.D.C. advisory panel that recommended that Pfizer doses be given roughly three weeks apart.
But other experts said they were troubled.
“It is not the role of a private, for-profit company to make public health decisions that should be determined by guidelines issued by a public health authority,” said Lawrence Gostin, a global health law professor at Georgetown University.
Dima Qato, a pharmacist and associate professor at the University of Southern California School of Pharmacy, said she was concerned about how the public perceives inconsistent messages about spacing doses of the same vaccine.
“As we’re trying to build trust in this pandemic, I think this may push us back,” Dr. Qato said.
Walgreens is not the only vaccine provider that has been giving second shots slightly later than recommended. Others around the country have been doing so for months, especially in the early days of the rollout when vaccine supply was constrained and sites had little clarity about which vaccines and how many doses they would be receiving in subsequent weeks, said Tinglong Dai, who studies health care operations at Johns Hopkins University.