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Former Theranos Inc. patients will be allowed to testify at the criminal fraud trial of the defunct blood-testing startup’s founder, Elizabeth Holmes, a federal judge ruled Wednesday, the Wall Street Journal reported. The decision by U.S. District Judge Edward Davila blocked a last-ditch attempt by Ms. Holmes to keep jurors from hearing the stories of patients who say they received inaccurate results from Theranos tests. The ruling comes less than four weeks before the scheduled start of jury selection in the case. Ms. Holmes has pleaded not guilty to counts of wire fraud and conspiracy to commit wire fraud. The patient testimony could be a pivotal piece of the prosecution’s case that Ms. Holmes defrauded investors and patients in her attempt to create a revolutionary company that promised to test for a wide range of health conditions using only a few drops of blood from a finger prick. As the Wall Street Journal first reported in 2015, Theranos’s proprietary technology was unreliable and the company often ran tests on commercial analyzers, including some that it modified to be able to use smaller amounts of blood. Patients on a list of potential witnesses in the court record received Theranos test results that falsely signaled a miscarriage instead of a healthy pregnancy, flagged high levels of a prostate-specific antigen that indicated an aggressive cancer, and claimed patients were HIV positive who weren’t.

Shareholders in Mallinckrodt, the Dublin-based but U.S.-run drugmaker in the middle of a bankruptcy reorganization, are being urged by a leading corporate advisory firm to vote against some directors as a parting rebuke over its handling of the U.S. opioid crisis and executive pay, the Irish Times reported. Mallinckrodt filed for bankruptcy in Delaware last October as the company was overwhelmed by lawsuits accusing it of deceptively marketing opioids. The company is pursuing a U.S. court-supervised chapter 11 reorganization that would set up a $1.6 billion trust to resolve opioid-related claims with states, local governments and private individuals. The plan, supported by certain creditors and subject to broader votes by early September, would see unsecured bondholders take control of the company, some $1.3 billion of debt being eliminated and general unsecured creditors split $150 million in cash. Existing shareholders are set to be wiped out by the debt restructuring. Glass Lewis, an influential shareholder advisory firm on corporate governance, is calling on investors to vote against the re-election of board members Martin Carroll and Kneeland Youngblood at the group’s annual general meeting in Dublin next month. Both have been members of Mallinckrodt committees covering governance and compliance since the company floated in New York in 2013. Almost 500,000 people died from overdoses involving opioids, including prescription and illicit drugs, in the US in the 20 years to 2019, according to figures from the US Centres for Disease Control and Prevention. Mallinckrodt was the third opioid maker to seek chapter 11 bankruptcy protection.

After three back-to-back miscarriages, Brittany Gould said she turned to Theranos Inc. to know if her latest pregnancy was on track. Then, one of the company’s trademark finger-prick tests indicated she was losing another baby, Ms. Gould said. The Mesa, Ariz., medical assistant recalled dreading the moment when she would have to tell her 7-year-old daughter, who was waiting for a sibling. “Mommy is not having a baby,” Ms. Gould said she told her. Like those of other patients slated as potential witnesses in the criminal trial of Theranos founder Elizabeth Holmes, Ms. Gould’s test was wrong. Prosecutors have accused Ms. Holmes of defrauding patients and investors by falsely claiming her invention could accurately perform lab tests on just a few drops of blood, the Wall Street Journal reported. The repeatedly delayed trial — postponed once because Holmes was due to have a baby herself — is expected to be one of the most widely watched corporate-fraud cases in years. Scheduled to begin with jury selection on Aug. 31 in San Jose, Calif., the trial features a star-studded list of potential witnesses, including ex-Theranos directors Henry Kissinger and Jim Mattis; ex-Theranos lawyer David Boies; and high-profile investors, including Riley Bechtel, the former chairman of Bechtel Corp., and Rupert Murdoch, chairman of Fox Corp. and executive chairman of News Corp.
The lineup also could include a handful of previously unknown patients — if the court allows them to take the stand. Ms. Holmes’s lawyers have argued the patient witnesses should be excluded, and they have already had success in limiting the scope of their testimony. A ruling by the judge to eliminate the patients would be considered a big win for Ms. Holmes, and could significantly change the nature of the trial.

The judge overseeing Purdue Pharma’s chapter 11 case has tentatively approved $16.1 million in retention payments for 506 of the company's employees but conditioned his ruling on the OxyContin maker’s successful reorganization, Reuters reported. During a virtual hearing, U.S. Bankruptcy Judge Robert Drain in White Plains, New York, said that he would sign off on the payments — which he said are not the same as bonuses because they are part of the employees’ annual compensation — as long as Purdue doesn’t wind up liquidating in bankruptcy, which at this point in the case is a long shot. Meanwhile Purdue postponed a hearing on up to $5.4 million in proposed incentive bonuses for five top executives until Aug. 19. The company, which filed for chapter 11 protection in September 2019 to address thousands of lawsuits accusing it of fueling the opioid crisis through deceptive marketing, is expected to begin a multi-day hearing to secure Judge Drain’s approval of its restructuring plan and settlement with individuals, states, municipalities, hospitals and others on Aug. 9.

Bayer AG sees expenses from lawsuits accusing its Roundup weedkiller of causing cancer potentially rising by $4.5 billion — significantly more than it had previously planned for, the Wall Street Journal reported. The company will set aside the additional funds to cover Roundup claims in its next quarterly financial report, Bayer executives said yesterday. The new provisions would raise Bayer’s funds earmarked for the claims to more than $16 billion from the $11.6 billion the company had previously said it would pay to resolve the cases. The German chemicals and pharmaceuticals company has faced a tangle of litigation over glyphosate, the active ingredient in Roundup, since it inherited the weedkiller as part of its $63 billion acquisition of Monsanto in 2018. Three U.S. juries have found in favor of plaintiffs who said that glyphosate in Roundup caused their non-Hodgkin lymphoma. Bayer says that the chemical is safe and continues to sell Roundup with glyphosate. Chief Executive Werner Baumann said yesterday that Bayer would soon appeal one of those jury verdicts to the U.S. Supreme Court. A finding in Bayer’s favor from the high court could significantly limit the company’s future payouts over Roundup, Mr. Baumann said. On the other hand, the court could also decline to hear the case or find against Bayer. The company is setting aside the additional $4.5 billion with those scenarios in mind, Mr. Baumann said. (Subscription required.)

People alleging that Johnson & Johnson’s talc-based baby powder caused their cancer are seeking to restrain the company from taking steps toward a possible bankruptcy filing covering liabilities from thousands of personal-injury claims, WSJ Pro Bankruptcy reported. A committee representing talc-injury claimants said in court papers filed Tuesday that it needed a federal court order forbidding J&J from any “corporate machinations” that would isolate talc liabilities from the rest of the business. J&J has told personal-injury lawyers it is considering placing a corporate subsidiary with talc liabilities in bankruptcy as a way to resolve thousands of personal-injury lawsuits. Placing a corporate affiliate in bankruptcy would give J&J powerful legal tools to drive settlements of thousands of lawsuits linking Johnson’s baby powder to ovarian cancer and the asbestos cancer mesothelioma. The injury claimants disclosed the request for a restraining order in the bankruptcy proceedings of a separate company, Imerys Talc America Inc., which supplied talc to J&J and is named as a co-defendant in pending talc lawsuits. Overwhelmed by the litigation, Imerys filed for bankruptcy in 2019 and has proposed a settlement with injury claimants that isn’t supported by J&J. Read more. 

In related news, A U.S. congressional panel has asked Johnson & Johnson (JNJ.N) to provide it all documents related to the company's plans to put its talc liabilities into bankruptcy, according to a letter sent on Wednesday and seen by Reuters. Democrat Raja Krishnamoorthi, chairman of the U.S. House of Representatives Committee on Oversight and Reform's subcommittee on economic and consumer policy, wrote that the panel is trying to learn how J&J's plans may affect people who have said they were harmed by the company's baby powder. Krishnamoorthi also asked J&J to turn over documents showing how much funding it would provide to the new entity. The level of funding could determine payouts for victims. The healthcare company faces legal actions from tens of thousands of plaintiffs, including women suffering from ovarian cancer and others with mesothelioma, alleging that its baby powder and other talc products contained asbestos and caused cancer. Read more. 

The Nassau County (N.Y.) Industrial Development Agency (NCIDA) approved a resolution for The Amsterdam at Harborside, a senior living retirement community located in Port Washington, N.Y., which was seeking financial assistance from the NCIDA, the Port Washington News reported. The Amsterdam is requesting that the IDA consider several actions regarding financial assistance including issuing $41 million in taxable bonds, restructuring their existing debt of $140 million with new tax-exempt bonds and an exemption or partial exemption from real property tax and mortgage recording taxes. These requests come after the upscale retirement community filed for chapter 11 protection from their creditors last month. During the pandemic, The Amsterdam stopped making payments on their 2014 bond obligations and payments of resident entrance fees, causing them to fall out of compliance with state law, documents filed in the U.S. Bankruptcy Court in Central Islip stated. Thirty-three families are owed entrance-fee refunds in the amount of $20.3 million, the documents stated. James Davis, CEO of The Amsterdam stated in the filing that “the inability to attract new residents and the burden of statutory requirements regarding the repayment of refunds caused a severe liquidity crisis for the debtor even before the impact of the COVID-19 pandemic. The pandemic exacerbated these problems.” The nonprofit initially filed for bankruptcy protection in July 2014. A January 20, 2015 article from The Port Washington News stated that The Amsterdam exited bankruptcy court after restructuring their debt, which included tax-exempt bonds issued by the NCIDA.

Sen. Richard Blumenthal (D-Conn.) and Connecticut Attorney General William Tong said Monday that they are backing federal legislation that would block the Sackler family from using bankruptcy law to protect a fortune earned from Purdue Pharma’s manufacture of deadly opioids, the Hartford Courant reported. Blumenthal and Tong said that a bill before Congress would close a loophole in the U.S. Bankruptcy Code which they say the Sackler family has used to evade liability in government lawsuits. Connecticut and other states are still pursuing litigation against Purdue Pharma, which is owned by the Sackler family. The bill, dubbed the SACKLER (“Stop Shielding Assets from Corporate Known Liability by Eliminating Non-Debtor Releases”) Act, would amend bankruptcy law to prevent non-bankrupt individuals from receiving legal protections through a company’s bankruptcy. Speaking at the State Capitol Monday, Blumenthal argued that the Sackler family, which owns Purdue Pharma, has used the company’s bankruptcy proceedings to gain release from liability. Purdue Pharma filed for chapter 11 protection in 2019 in an attempt to settle about 3,000 lawsuits it faced from state and local governments and other entities. The plaintiffs had claimed that the company’s marketing of its painkiller drove a crisis that has resulted in nearly 500,000 deaths across America in the last two decades.