Tag Archives: Healthcare/Life Sciences

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Illumina Wins Case Against FTC on Grail Acquisition

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Illumina said the judge rejected the FTC’s position that the deal would hurt competition in the market for multicancer early-detection tests.

“As we’ve stated from the outset, this transaction is procompetitive, will advance innovation, lower healthcare costs and save lives,” said Charles Dadswell, general counsel of Illumina.

The decision, which the FTC staff can appeal, suggests the agency could face hurdles as it tries to push into newer theories of harm that can result from unchecked merger activity. The FTC alleged Illumina’s purchase of Grail could diminish innovation—a concern that goes beyond antitrust’s traditional focus on price levels and output.

In a statement, FTC Bureau of Competition Director Holly Vedova said the agency’s staff is disappointed with the decision and believes it mounted a strong case. “We are reviewing the opinion and evaluating our options,” Ms. Vedova said.

San Diego-based Illumina, which makes genetic-sequencing products, agreed in 2020 to acquire Grail, which is developing blood tests for early cancer detection. Illumina founded Grail and had spun it off in 2017, retaining a minority ownership stake. The 2020 deal was to acquire the part of Grail that it didn’t already own.

But in 2021, the FTC moved to block the deal, claiming that it would harm competition in an emerging field of tests for early-stage detection of multiple types of cancers.

The FTC said Grail and other developers of early-stage cancer tests all rely on Illumina’s DNA-sequencing platform. “If the acquisition is consummated, Illumina will gain the incentive to foreclose or disadvantage firms that pose a significant competitive threat to Grail,” the FTC wrote in its complaint last year. Illumina countered that it has made an open offer to provide continued access to its DNA sequencing to any Grail competitors.

Illumina closed its acquisition of Grail in 2021, despite the pending legal challenges.

The case isn’t the first time that Chief Administrative Law Judge D.

Michael Chappell

has ruled against the FTC on one of its lawsuits. Earlier this year, he rejected the FTC’s challenge of

Altria Group Inc.’s

purchase of a large stake in e-cigarette maker Juul Labs Inc. The FTC’s staff appealed that decision. The case is now pending before the commissioners.

Judge Chappell also ruled against the FTC in a data-security case in 2015.

The FTC under Chair Lina Khan has investigated more proposed mergers and vowed to take a stronger position against deals that could threaten competition. Ms. Khan has said antitrust enforcers need to be more forward-looking, prioritizing concerns such as preserving incentives for innovation, protecting workers and buttressing small businesses.

Illumina’s deal was an example of vertical merger, a type of transaction that integrates complementary instead of competing companies, allowing the combined firm to expand into new or related businesses or lower its input costs. Vertical deals have often been viewed with far less skepticism, but the FTC last year withdrew guidelines for reviewing them, indicating enforcers planned to apply tougher scrutiny to them.

“This case was always something of a stretch,” said

Stephen Calkins,

a law professor at Wayne State University. “It was a vertical case, which is a challenging area of law, and the law judge conspicuously noted during the oral arguments that there were very high stakes in terms of healthcare innovation.”

Illumina’s legal challenges aren’t over, as the FTC’s staff could appeal Judge Chappell’s decision to the agency’s commission. The commission authorized the legal challenge to the deal in March 2021 on a bipartisan vote. If the commission overruled Judge Chappell, the companies could take their case to a federal appeals court.

The FTC had initially sought a federal court injunction that would have blocked the closing of the acquisition, but it backed off because Illumina and Grail were facing antitrust scrutiny in Europe.

Instead, the FTC proceeded with an administrative complaint over the deal, resulting in a trial before an administrative law judge in August and September of 2021. The new ruling arises from that trial and post-trial briefs filed by Illumina and the FTC.

In July, a European Union court ruled that the EU’s competition regulator has jurisdiction to review the Illumina-Grail deal under European merger regulations. Illumina said it intends to appeal that decision. The European Commission said in July that Illumina’s decision to complete the Grail deal breached European regulations.

Illumina is keeping the Grail business separate from the rest of its business while these legal challenges play out.

For Illumina, full control of Grail would give it a solid position in what analysts estimate could be a $50 billion market for tests that can detect multiple cancers early.

Last year, Grail introduced Galleri, a test designed to detect more than 50 types of cancer. The test is intended for people with elevated risk of cancer, such as adults 50 and older, and as a complement to standard single-cancer screening tests. Galleri costs about $950 per test and generally isn’t covered by insurers.

But Galleri sales to date have been lower than expected, as some health systems have taken a measured approach toward using the test.

“We believe it’s a fantastic test,” Illumina Chief Executive Francis deSouza said in an interview. “We believe that in Illumina’s hands, we can make this test available to more people, more affordably and more quickly than in Grail’s hands.” He added that it could save many lives and healthcare costs.

Illumina shares declined 0.5% to $200.62 Thursday. SVB Securities analysts said in a research note that despite the win, there continues to be regulatory uncertainty around the deal, delaying Illumina’s full integration of Grail and its benefits.

Write to Peter Loftus at peter.loftus@wsj.com and Dave Michaels at dave.michaels@wsj.com

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Health

Latest Covid Boosters Are Set to Roll Out Before Human Testing Is Completed

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The Food and Drug Administration is expected to authorize new Covid-19 booster shots this week without a staple of its normal decision-making process: data from a study showing whether the shots were safe and worked in humans.

Instead, the agency plans to assess the shots using data from other sources such as research in mice, the profiles of the original vaccines and the performance of earlier iterations of boosters targeting older forms of Omicron.

“Real world evidence from the current mRNA Covid-19 vaccines, which have been administered to millions of individuals, show us that the vaccines are safe,” FDA Commissioner

Robert Califf

said in a recent tweet. The FDA pointed to Dr. Califf’s tweets when asked for comment.

Clearance of the doses, without data from human testing known as clinical trials, is similar to the approach the FDA takes with flu shots, which are updated annually to keep up with mutating flu viruses.

Some vaccine experts have urged the agency to wait before clearing the new Covid-19 booster doses.



Photo:

EMILY ELCONIN/REUTERS

The approach has raised concerns, however, among some vaccine experts who have urged the agency to wait.

“I’m uncomfortable that we would move forward—that we would give millions or tens of millions of doses to people—based on mouse data,” said

Paul Offit,

an FDA adviser and director of the Vaccine Education Center at Children’s Hospital of Philadelphia.

The comparison with flu vaccines isn’t sound, Dr. Offit said, because flu viruses mutate so rapidly that shots from one year don’t offer protection for the next, while currently available Covid-19 shots continue to keep people out of the hospital.

In addition to evaluating the boosters without clinical-trial data, the FDA won’t convene another element from its earlier Covid-19 vaccine reviews: a meeting of advisers who make recommendations whether the agency should authorize a shot.

Retooled Covid-19 boosters are similar to the original shots, including Moderna’s Covid-19 vaccines, seen last year, but have been customized to fight the latest variants.



Photo:

andrew caballero-reynolds/Agence France-Presse/Getty Images

The FDA scrapped the meeting, Dr. Califf said in his tweets on the subject, because the committee discussed the matter in June, and the agency doesn’t have new questions warranting its input.

The Covid-19 vaccines available in the U.S., which were first authorized for use in December 2020, haven’t been modified until now, though the virus they were designed to target has evolved.

The shots held up well against earlier strains, researchers found, but weren’t as effective against the newest Omicron subvariants like BA.5.

In planning for a fall booster campaign, federal health authorities in late June directed

Pfizer Inc.

and its partner

BioNTech SE,

and

Moderna Inc.

to update their shots to target BA.5, an Omicron subvariant called BA.4 and the original strain of the virus.

“We’ve validated the process several times over and continue to produce safe and effective vaccines against Covid-19,” a Pfizer spokeswoman said. Moderna said all current data indicates its shots are safe and effective.

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Human trials for Moderna’s vaccine targeting the subvariants have started, and for the Pfizer-BioNTech vaccine are expected to start this month, the companies have said. Results won’t be available, however, before the U.S. government’s planned fall booster campaign.

“If we waited for clinical-trial results, thank you very much, we’d get them in the spring. It takes time to do clinical trials,” said

William Schaffner,

professor of medicine at Vanderbilt University Medical Center and a nonvoting liaison to the Centers for Disease Control and Prevention committee that will decide whether to recommend the shots, should the FDA sign off. “This is just an updating of the previous vaccine that we used.”

The retooled shots are similar to the original shots, but customized to fight the latest variants, much like keys that are nearly identical but have slightly different ridges and valleys, said

John Grabenstein,

director of scientific communications for Immunize.org, a nonprofit that seeks to boost immunization rates.

With each mutation, the Covid-19 virus is becoming more transmissible. WSJ’s Daniela Hernandez breaks down the science of how Covid variants are getting better at infecting and spreading. Illustration: Rami Abukalam

The similarities make it very reasonable for regulators to weigh the overwhelmingly safe track record of the original series when considering the new shots, he said.

The FDA has reviewed test results from a shot that Moderna modified to target an early version of Omicron as well as the ancestral strain of the coronavirus. The study found the shot generated a significant amount of antibodies in humans compared with the company’s currently available booster shot. That shot is now approved in the U.K.

The agency also looked at human data from Pfizer and BioNTech finding that their experimental shots, updated to target an earlier form of Omicron, also boosted antibody levels significantly. The companies have submitted one of those shots to the U.K., EU and Canada for authorization, Pfizer has said.

Such findings give the FDA confidence that the newest modified shots will also work well, said a person familiar with the agency’s deliberations.

“As we know from prior experience, strain changes can be made without affecting safety,” Dr. Califf said in a tweet.

Dr. Offit, however, said he would like to wait for clinical-trial data showing the shots are effective before asking people to take them.

“If you have some evidence that this is likely to be of value, sure,” he said. “But if you don’t have evidence, and you know that the current vaccine does offer protection against severe disease, I don’t think it’s fair to ask people to take risks.”

—Jared S. Hopkins contributed to this article.

Write to Liz Essley Whyte at liz.whyte@wsj.com

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Health

Health Authorities Issue New Advice for Avoiding Monkeypox

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The Centers for Disease Control and Prevention released data finding the monkeypox outbreak is concentrated among men who have had sex with several men, and issued more detailed recommendations on how to avoid exposure to the disease.

Among 291 men surveyed, 40% reported that they had two to four partners and 14% reported five to nine partners in the three weeks before developing monkeypox, according to the report. About 19% reported 10 or more partners during that period, the CDC said Friday.

And among 86 men who reported information, 28% said they had had group sex, which is defined as sex with more than two people, at a festival, group sex event or sex party, based on the report. The research was conducted from May 17 through July 22.

After releasing the data, the CDC also issued more specific warnings and recommendations for reducing the risk of monkeypox than its earlier guidelines. The CDC also extended its recommendations to anyone sexually active, not just those who suspect they are infected.

In addition to advising people to limit their number of sex partners, the CDC recommended wearing latex, polyurethane or nitrile gloves, and changing or cleaning clothes, bedding, towels and sex toys after sex.

The new developments come after cases increased to more than known 7,000 in the U.S., prompting the federal government to declare a public-health emergency.

Monkeypox is a viral disease that can spread to anyone through close, personal contact that is often skin-to-skin as well as contact with respiratory secretions, direct contact with rash or scabs, and touching objects used by someone with the virus, the CDC said.

U.S. health officials have declared monkeypox a public-health emergency, after the World Health Organization declared it a global health emergency in late July. WSJ explains what you should look out for and what scientists know about how the virus is spreading. Illustration: Adele Morgan

Direct contact can happen during sex or touching of genitals, as well as kissing, hugging, massage, and touching fabrics and objects used during sex such as fetish gear, according to the agency.

Scientists are still researching if monkeypox can be spread through semen or vaginal fluids. Monkeypox DNA was present in semen in one study of Italian men conducted in May, but health experts have said they don’t know for sure if that means the virus can transmit sexually.

While anyone can get monkeypox, the CDC said in June that the outbreak may be concentrated among gay and bisexual men because the virus is taking advantage of social and sexual networks in that group.

Yet health authorities had held off on some direct warnings out of fear of stigmatizing the population, according to people familiar with the discussions.

The release of the data and guidelines suggests a new phase in the response, however, with the Biden administration speaking more directly about who is at risk and how they can reduce it.

Government officials expressed hope that the new recommendations could help slow the spread of the virus by getting through to people most at risk. Shortages of tests, vaccines and drugs have hurt the effort and drawn criticism from some doctors and health experts.

“Given the current limited supply of vaccine, CDC recommends temporarily changing some behaviors that may increase a person’s risk of being exposed,” an agency spokeswoman said. “These temporary changes will help slow the spread of monkeypox until vaccine supply is adequate.”

Even people who feel well, the CDC said, should consider such steps as limiting the number sex partners, having sex with clothes on and covering areas where a rash is present. Aside from recommending gloves to reduce exposure, the CDC also described the benefits of wearing leather or latex gear.

U.S. health authorities have struggled with how to communicate about the virus that is hitting communities already subject to historical discrimination.

Federal officials had been careful to avoid warnings that they think would lead to stigma of certain sexual activities, but such caution has led to criticism that government leaders are being unclear and that messages aren’t getting through to people most at risk for the virus.

“They are harming the very group they’re trying so hard not to stigmatize,” said Dr. Greg Poland, head of the Mayo Clinic’s Vaccine Research Group.

Absent detailed recommendations from the federal government, LGBT activists had written their own guidelines for safe sex. One guide advised against group sex in public places and recommended creating pods of small groups men who would only have sex with each other.

“I think the CDC should be saying the truth,” said David Kilmnick, president and founder of the New York LGBT Network, who praised the new recommendations. “We have to be direct and real and not sugarcoat anything.”

The head of the World Health Organization warned in late July that men who have sex with men should limit their number of sexual partners, think twice about sex with new people and exchange contact information when they do have sex.

The Biden administration had initially adopted a strategy known as ring vaccination that has often worked in instances of household transmission. The approach focuses on vaccinating contacts of confirmed patients and people who had close contacts with those people.

This monkeypox outbreak has instead been centered in sexual networks, according to one federal official. An effort was made to do contact tracing, the person said, but the number of contacts was “significantly greater and often anonymous.”

Because of the challenge, the official said, the administration abandoned the initial ring vaccination strategy and moved instead to encouraging people who may have been exposed or had multiple partners in areas of high monkeypox transmission to get vaccinated.

The administration sought to conduct outreach during the recent Pride month. The CDC on June 2 began conversations with Interpride, a group that organizes Pride events throughout the country, to share information about monkeypox with event organizers and attendees. It also joined with sites such as Grindr to spread warnings about monkeypox.

The CDC in June also worked with social-media influencers such as

Shea Coulee,

a drag queen, musician and podcaster and social-media platforms to get messages on monkeypox out to followers and users.

Monkeypox can cause symptoms such as fever, chills, exhaustion, headache, sore throat and a rash. Some cases of monkeypox are mild, but others come with excruciating rectal pain or swelling. The symptoms usually appear within three weeks of exposure. The illness typically lasts two to four weeks. CDC recommends the infected isolate for the duration of their illness.

Write to Liz Essley Whyte at liz.whyte@wsj.com and Stephanie Armour at stephanie.armour@wsj.com

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Health

Monkeypox Patients Report Excruciating Pain and Lack of Guidance as U.S. Cases Mount

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Taber Feltner, a research associate in Iowa City, Iowa, said he noticed some worrying symptoms in mid-July, a few days after returning home from a trip to Chicago.

A rash developed in his groin, which he initially brushed off as ingrown hairs. But within a few days, he developed a fever of over 103 degrees Fahrenheit and the rash transformed into painful, pus-filled lesions.

“I’ve never been that sick in my life,“ said Mr. Feltner.

More than two months after monkeypox was detected in the U.S. as part of a global outbreak mostly among men who have sex with men, transmission shows no sign of slowing. The U.S. has surpassed Spain as the country with the most known cases. Federal officials are considering whether to declare monkeypox a public-health emergency.

The continuing spread of monkeypox has prompted the World Health Organization to declare a global health emergency. WSJ’s Denise Roland explains what you need to know about the outbreak. Photo: Kena Betancur/AFP/Getty Images

Patients said they are navigating the outbreak without sufficient guidance from physicians and public-health officials on how to treat the disease and prevent its spread. Mr. Feltner said he wasn’t able to get vaccinated before travel because Iowa gave priority to people who had been exposed to monkeypox. He said he was mocked by healthcare providers when he attempted to seek care and struggled to find adequate expert information about the disease. He said he has relied on social media and the anecdotal accounts of other patients to fill the gaps.

“Trying to get questions answered was impossible,” said Mr. Feltner.

Public-health experts and community advocates said the Biden administration and the Centers for Disease Control and Prevention were too slow at responding to the outbreak when it first emerged and continue to take insufficient action to stem the spread of the virus.

“We’re not getting streamlined communication to communities. People are making things up as they go. That’s not the best public-health strategy,” said Jason Rosenberg, a member of ACT UP NY, an HIV/AIDS advocacy organization.

Taber Feltner, a research associate in Iowa City, Iowa, said it took several days to get access to testing and treatment for monkeypox.



Photo:

Taber Feltner

The CDC said it was wrong to suggest that it hadn’t taken early and adequate action to mitigate the outbreak and to educate communities about monkeypox.

“All summer, [the] CDC has been working with partners to help put information in the hands of people who may be at highest risk for contracting monkeypox,” an agency spokesperson said, adding that the CDC continues to work with community health organizations to raise awareness about the virus.

The Department of Health and Human Services didn’t immediately respond to requests for comment.

To date, there have been more than 5,800 confirmed or suspected cases in the U.S., mostly among men who have sex with men, federal health officials said. Epidemiologists said the virus is exploiting close-knit social and sexual networks, but knowledge of how the virus is spreading in this current outbreak remains incomplete.

“We have to be very humble about what we know and what we don’t,” said Anne Rimoin, an epidemiologist at the University of California, Los Angeles, who spent two decades studying monkeypox in Africa, where the disease has long been endemic. “What we know is based on studies done in very different epidemiological and ecological contexts. We need to know much more about transmissibility.”

The World Health Organization, which declared monkeypox a global health emergency, says monkeypox is most commonly spread through close contact with an infected person’s rash, lesions and bodily fluids. The virus can also spread via fabrics and other materials, and through prolonged exposure to an infected person’s saliva or mucus.

Aerosol, also known as airborne, transmission of the virus hasn’t been considered to be of significant concern by public-health experts, but some early research suggests it could be possible in certain conditions. Airborne transmission is defined as the dissemination of a virus through very small droplets that remain suspended in the air over long distances and time.

Public-health experts recommended that people at risk for infection get vaccinated when possible, not share bedding or towels, wash hands often, and avoid intimate physical contact with someone with rashes or sores, or limit sexual partners altogether.

People waiting in line for the monkeypox vaccine in Los Angeles last week.



Photo:

robyn beck/Agence France-Presse/Getty Images

A person can spread monkeypox until all their lesions have scabbed and the scabs have fallen off, infectious-disease experts said. Public-health officials have advised potentially infectious people to remain quarantined for the duration of their illness. Monkeypox symptoms typically last two to four weeks, the CDC said.

Most monkeypox cases in the U.S. have been mild, though moderate and severe cases have been reported. A recent study in the New England Journal of Medicine of more than 500 monkeypox patients in 16 countries found that 13% were hospitalized, mostly for pain.

It is hard to predict who will experience a severe case, said Peter Chin-Hong, a professor of medicine at the University of California, San Francisco, noting that patients in his care haven’t been immunocompromised or very old. “The people who are hospitalized are very, very sick,” he said.

Josh Watson of Chicago said he developed lesions on different parts of his body, including some in his throat that made it difficult to eat and drink. He was hospitalized and treated with the antiviral drug tecovirimat in mid-July. The drug, sold by New York-based

Siga Technologies Inc.

under the brand name TPOXX, has been approved by the Food and Drug Administration for the treatment of smallpox, a disease closely related to monkeypox.

Amid the outbreak, the FDA and CDC have approved expanded access of TPOXX to monkeypox patients, but healthcare providers said obtaining the drug has been burdensome. Until recently, it took providers several hours to complete extensive FDA and CDC paperwork and other requirements to get the drug to patients, said Cathy Creticos, medical director of infectious disease at Howard Brown Health, a nonprofit LGBTQ healthcare and social services provider in Chicago. The CDC simplified the protocol to obtain TPOXX late last month.

Twenty days after his first monkeypox symptoms appeared, Mr. Watson said he remained quarantined with a lesion on his foot and lingering fatigue.

“The risks of monkeypox have been severely downplayed,” Mr. Watson said. “People need to know that the risk is greater, the symptoms are greater. What I’d heard is that you get a rash for a couple of weeks and then it’ll go away, you won’t die. But no one was talking about the pain, the difficulty urinating or having bowel movements.”

Tecovirimat, also known as TPOXX, a treatment for smallpox, has been prescribed for monkeypox patients amid the outbreak.



Photo:

yuki iwamura/Agence France-Presse/Getty Images

Some patients with moderate to severe symptoms said their symptoms improved significantly after taking TPOXX. Healthcare providers said most monkeypox cases in the U.S. have resolved without medical intervention.

Mr. Feltner said it took many days before he was able to get access to testing and treatment for monkeypox.

He said a nursing assistant at an urgent-care clinic in Iowa City laughed at him when he suggested he had monkeypox. A doctor at the clinic diagnosed him with herpes and refused to test him for monkeypox, Mr. Feltner said. The doctor sent him home with Valtrex, an antiviral drug used to treat herpes.

The medication didn’t work. “Things just got worse,” said Mr. Feltner, who was eventually hospitalized and given TPOXX.

“Our healthcare system here is definitely not ready for this disease,” Mr. Feltner said.

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Health

Two HIV Patients Appear to Have Beaten Virus, Offering Hope for Cure

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A 66-year-old man in Southern California and a woman in her 70s in Spain are the latest in a small group of people who appear to have beaten their HIV infections, providing researchers new clues to a possible cure at a time when Covid-19 and other crises are slowing progress against the spreading virus.

Doctors caring for the man said they have not found any human immunodeficiency virus that can replicate in his body since he stopped antiretroviral drug therapy in March 2021 after a transplant of stem cells containing a rare genetic mutation that blocks HIV infection. He was given the transplant for leukemia, for which people with HIV are at increased risk. Details of his case were made public Wednesday and will be presented at a large international AIDS conference in Montreal, which opens Friday.

He is the oldest of five patients thus far who appear to have rid their bodies of HIV after the risky procedure and had been infected the longest, since 1988, offering hope for a growing cohort of aging HIV patients, said Jana Dickter, an infectious disease doctor who cares for the man at City of Hope, a cancer research and treatment center in Duarte, Calif., in the Los Angeles area.

“He saw many of his friends and loved ones become ill and ultimately succumb to the disease and had experienced some stigma associated with having HIV,” she said. His success “opens up the opportunity potentially for older patients to undergo this procedure and go into remission from both their blood cancer and HIV.”

The woman in Spain still has HIV lying dormant in some cells in her body. But the amount is declining, and the virus isn’t replicating even though she stopped antiretroviral therapy more than 15 years ago, said Juan Ambrosioni, one of the doctors caring for her at the Hospital Clinic of the August Pi i Sunyer Biomedical Research Institute in Barcelona.

She was diagnosed with HIV at age 59 shortly after becoming infected, and entered a clinical trial in which she received antiretroviral drugs as well as therapies to boost her immune system. After nine months, the antiretrovirals were stopped, Dr. Ambrosioni said.

Researchers and doctors at the Hospital Clinic of the August Pi i Sunyer Biomedical Research Institute in Barcelona who have cared for a woman in her 70s who appears to have beaten her HIV infection.



Photo:

Daniel Arbos

Years of research finally revealed how she keeps her HIV naturally under control, he said: she has high levels of two types of immune cells that the virus normally suppresses and that probably help control viral replication, he said. Details of her case will be presented at the same conference. Both patients declined to be identified publicly.

The two cases “provide continued hope for people living with HIV and inspiration for the scientific community,” said Sharon Lewin, director of the Peter Doherty Institute for Infection and Immunity and a leader in HIV cure research who wasn’t involved in the studies.

Finding a cure for HIV is a major scientific challenge because even when reduced to low levels with medication, the virus can hide from the body’s immune system, going latent in certain cells. It can then roar back to life and start replicating.

So difficult is HIV to get rid of that researchers are often reluctant to declare patients cured even when they can’t find any sign of the virus. Some patients have relapsed. “We don’t use the term ‘cure’ lightly in the world of HIV,” said Dr. Dickter, who says her patient is in remission but that to call him “cured” will take “more time and data.”

Doctors caring for the woman in Spain consider her to have achieved a “functional cure,” meaning that the virus hasn’t been completely eliminated but is under control without medication.

Other research released Wednesday identified a series of steps by which HIV becomes latent in a rare type of immune cell, an important finding that could help guide scientists searching for ways to flush those viruses out of the body, HIV researchers said. It shows that drugs tried so far attack only part of that latency process, said Eli Boritz, an HIV cure research scientist who led the work at the Vaccine Research Center of the National Institute of Allergy and Infectious Diseases, part of the National Institutes of Health.

Jana Dickter is an infectious disease doctor at City of Hope in Duarte, Calif.



Photo:

City of Hope

Transplants such as the one the Los Angeles area patient received cannot be a cure for the 37.7 million people living with HIV globally, Dr. Lewin said. They are risky, expensive, and only for people who need them for a life-threatening disease such as cancer, she and other researchers say. But they say scientists who are searching for a cure are learning from them.

“There are fancy new gene editing methods emerging that might one day be able to achieve a similar outcome with a shot in the arm,” said Steven Deeks, a professor at the University of California, San Francisco who leads research for an HIV cure and wasn’t involved in the studies of the two patients.

Dr. Ambrosioni said findings from the woman in Barcelona could be used to develop a treatment that could be given more widely than transplants.

He said he and his colleagues hope to determine whether her control of her HIV is the result of genetic factors, the immune-boosting treatment she received in the trial, or both. If a treatment for others results from the findings, “that could be something you could scale up for many, many people,” he said.

Write to Betsy McKay at betsy.mckay@wsj.com

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Business

Amazon to Buy One Medical for $3.9 Billion in Healthcare Deal

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Amazon on Thursday said it is paying $18 a share in cash for San Francisco-based 1Life Healthcare. Based on a recently disclosed share count, the deal would be worth about $3.5 billion excluding debt.

One Medical is a membership-based primary-care practice with offices in 12 major U.S. markets, according to its website. It offers healthcare service in person and provides access to virtual care as well. It works with more than 8,000 companies to provide One Medical health benefits to their employees.

The deal price marks a roughly 77% premium, based on where shares of 1Life Healthcare closed on Wednesday.

Shares of 1Life Healthcare rose 68% to $17.10 on Thursday. Amazon shares fell slightly to $122.37.

Amazon has significant ambitions in healthcare, and CEO

Andy Jassy

has made expansion in the space a priority.

“We think healthcare is high on the list of experiences that need reinvention,” said

Neil Lindsay,

senior vice president of Amazon Health Services.

Once the deal closes, One Medical’s chief executive officer,

Amir Dan Rubin,

will remain as CEO of the business.

Launched in 2019, Amazon Care expanded from a service offered to employees in Washington state to a health service with telemedicine components that the company is seeking to provide throughout the U.S. Amazon has said it has signed several agreements with companies to offer the service to their employees, in addition to its own workers.

Amazon’s goal is to be capable of providing a service that can begin with a chat in an app, continue with a virtual visit with a healthcare professional and even include a home visit within an hour after a user connects with the service. It could end with the delivery of prescription medication to a patient’s home, Amazon executives have said.

Amazon has also launched its own pharmacy business after buying online pharmacy PillPack Inc. about two years ago.

The most expansive version of Amazon Care isn’t yet available over all the U.S. The company said the telehealth component would be available nationwide last summer, and in-person care would be available in cities such as Washington, D.C., and Baltimore.

One Medical, a tech-based primary-care company, has sought to position itself as a convenient and flexible option for patients and for employers who offer healthcare benefits to workers.

Its concierge-like model offers members virtual medical visits, wellness coaching apps and in-person visits. One Medical ended last year with 182 medical offices in 25 U.S. markets and plans to expand its geographic reach this year, according to its Securities and Exchange Commission filings.

The company faced a Congressional investigation last year into its handling of Covid-19 vaccine distribution. The investigation concluded the company used “its access to scarce coronavirus vaccines to promote the company’s business interests and push vaccine seekers toward paying for One Medical memberships,” and that One Medical employees prioritized immunization for relatives and friends.

As part of the deal, the private-equity firm

Carlyle Group Inc.,

which made a minority investment of up to $350 million in One Medical in 2018, would exit its position in the company, according to a person familiar with the investment. The investment was made before 1Life Healthcare’s 2020 initial public offering.

—Melanie Evans contributed to this article.

Write to Will Feuer at will.feuer@wsj.com

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World

Biden Invokes Emergency Power in Bid to Resolve Solar Import Dispute

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President Biden used emergency authority Monday in a bid to resolve a supply logjam that threatened the solar power industry, but the action drew complaints from U.S. manufacturers who say it will impede their efforts to build domestic production.

The four Southeast Asian countries account for roughly 80% of U.S. solar panel imports. The Commerce investigation had led importers to halt shipments, putting in jeopardy more than half of the 27 gigawatts of new solar-power capacity developers had been expected to install this year, according to the energy consulting firm Rystad Energy.

The White House acted as part of a larger package intended to resolve a conflict pitting solar power developers and utilities that rely on cheap imported components against manufacturers who want to reshore solar parts manufacturing to the U.S.

Mr. Biden invoked the Defense Production Act among other measures to help U.S. suppliers compete with Asian rivals and spur more U.S. manufacturing long-term.

The developers and utilities who import solar panels cheered the decision as a way to avoid a slowdown in new installations. But advocates for U.S. manufacturers said it undermines efforts to help U.S. companies catch up to Chinese rivals that dominate the industry.

“President Biden is significantly interfering in Commerce’s quasi-judicial process,” said Mamun Rashid, chief executive of California-based Auxin Solar Inc., a small maker of solar panels whose complaint triggered the Commerce investigation.

“By taking this unprecedented—and potentially illegal—action, he has opened the door wide for Chinese-funded special interests to defeat the fair application of U.S. trade law,” Mr. Rashid said in a  statement.

A solar panel in production at the San Jose, Calif., factory of Auxin Solar.



Photo:

Ian Bates for Wall Street Journal

Some trade lawyers and analysts question whether Mr. Biden has overstepped authority meant for use in wartime.

“It is highly problematic that the Administration is apparently declaring a war or similar national emergency as the basis for negating a continuing trade law investigation on solar,” said

Timothy Brightbill,

a trade lawyer at Wiley Rein LLP. “This emergency authority is used extremely rarely and it’s a dangerous precedent to use it to negate a continuing trade investigation.”

Mr. Biden cited disruptions in global energy markets caused by Russia’s invasion of Ukraine—along with extreme weather events exacerbated by climate change—as justification for his emergency declaration.

When asked about challenges to the decision’s legality, a senior administration official said the president is acting under his emergency authority under the Tariff Act of 1930 to waive import duties. The changes will not interfere in the Commerce investigation, the official said.

Administration officials said the plan creates a bridge period to keep developers supplied for now while U.S. panel-makers build up their limited capacity.

“The Federal Government is working with the private sector to promote the expansion of domestic solar manufacturing capacity, including our capacity to manufacture modules and other inputs in the solar supply chain, but building that capacity will take time,” Mr. Biden said in his declaration.

Solar developers and installers, who vastly outnumber manufacturers in the U.S. and have lobbied for protection, said the decisions could jump-start projects that have been delayed.

Executives at SOLV Energy LLC, the biggest installer of large-scale solar farms in the U.S., are now reconsidering decisions on nearly a dozen projects that were halted or delayed by fallout from the Commerce probe and would have eliminated or postponed thousands of new jobs, said George Hershman, the company’s chief executive.

“We’re starting to work with our customers and determine which projects we can restart and how quickly we can restart them,” he said.

Companies that build or support solar projects such as

Sunrun Inc.,

SunPower Corp.

and

Enphase Energy Inc.

all posted gains Monday, with

Sunnova Energy International Inc.

NOVA 6.45%

leading the group, up nearly 6.5%.

Shares of

NextEra Energy Inc.,

a utility and one of the world’s largest renewables companies, added almost 2%. Monday’s advance pares some of the sector’s recent losses.

“A big part of the tariff uncertainty and a lot of the other supply chain disruption just creates uncertainty,” said

Rebecca Kujawa,

president and CEO of NextEra Energy Resources, the company’s competitive power business. “To remove this as a point of concern, at least for a period of time, is going to be hugely helpful.”

Money is a sticking point in climate-change negotiations around the world. As economists warn that limiting global warming to 1.5 degrees Celsius will cost many more trillions than anticipated, WSJ looks at how the funds could be spent, and who would pay. Illustration: Preston Jessee/WSJ

But

First Solar Inc.,

a U.S. manufacturer based in Tempe, Az. said the administration’s actions “only benefits China’s state-subsidized solar industry.”

“The use of the Defense Production Act to boost solar manufacturing is an ineffective use of taxpayer dollars and falls well short of a durable solar industrial policy,” the company said in a statement. “Quite simply, the administration cannot stick a Band-Aid on the issue and hope that it goes away.”

First Solar manufactures solar panels using a different technology that is not affected by industry tariffs.

Washington has been central in the solar dispute in part because Mr. Biden has promised that addressing climate change with support for clean energy would grow working-class jobs in solar, wind, battery and other manufacturing businesses. In recent months a fight over tariffs has illustrated how those goals can clash rather than complement one another.

The White House has tried to help build up a U.S. supply chain by maintaining Trump-era solar tariffs on China and Taiwan. Utilities and developers—fearful the reach of those tariffs was expanding to other Asian partners—warned that threat was causing what could become a drastic slowdown in solar growth.

In Monday’s declaration, Mr. Biden accepted those industry claims that a slowdown was caused in part by import bottlenecks, and that ultimately it was threatening the reliability of the country’s electricity supply.

“The United States has been unable to import solar modules in sufficient quantities to ensure solar capacity additions necessary to achieve our climate and clean energy goals, ensure electricity grid resource adequacy, and help combat rising energy prices,” Mr. Biden said in the declaration.

Abigail Ross Hopper,

president and chief executive officer of the Solar Energy Industries Association, applauded the decision.

“While the Department of Commerce investigation will continue as required by statute, and we remain confident that a review of the facts will result in a negative determination, the president’s action is a much-needed reprieve from this industry-crushing probe,” she said in a statement.

—Anthony DeBarros and Katherine Blunt contributed to this article.

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Business

Bausch + Lomb Prices IPO at $18 a Share, Below Expectations

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Bausch + Lomb Corp. priced its IPO at $18 a share Thursday, falling short of expectations as it became the first big company in months to try going public into a turbulent stock market.

Bausch Health

BHC -7.40%

Cos., the parent company, raised $630 million in the offering. It had been aiming to raise as much as $840 million and sell the stock at $21 to $24 a share, according to a regulatory filing. The Wall Street Journal had previously reported the deal was likely to price at the low end or below the range.

The debut of the eye-care company, a spinoff of Bausch Health Cos., is being watched closely as a bellwether for the IPO market, which has been virtually shut down since stocks started falling earlier this year. It is the first big initial public offering since private-equity firm

TPG Inc.

went public in mid-January. After a record year in 2021, traditional IPOs have raised less than $3.3 billion in 2022, the slowest start since 2016, according to Dealogic.

Bausch is a fitting test case for the IPO market, which provides a crucial spigot of cash and visibility to startups and Wall Street alike. The company is profitable and a well-established name in its industry.

“It’s a real critical week for the IPO market,” said

Jeff Zell,

senior research analyst at IPO Boutique. With so few IPOs so far this year, “It’s extremely important that this one not only gets out on the right foot but trades steady in the aftermarket,” he said.

Among those who will be watching closely are others on the IPO runway. Fund managers say they have met this year with executives at companies including

Intel Corp.’s

$50 billion-or-more self-driving car unit Mobileye and Steinway Musical Instruments Holdings Inc., which have said they are pursuing IPOs. Other companies considering listings later this year include ServiceTitan Inc. and Quick Quack Car Wash Holdings LLC, according to people familiar with the matter.

It doesn’t help that markets have whipsawed lately, with the technology-stock-heavy Nasdaq Composite up more than 3% Wednesday and down 5% Thursday. The index has moved at least 1% in either direction in 11 of the past 13 trading sessions.

Traditionally, volatility has been considered the most crucial indicator for the IPO market. When a company launches its IPO, the management team and its advisers spend several days on a so-called roadshow, meeting with fund managers to entice them to buy the stock. A volatile market, with little visibility into the next day let alone week, makes that tricky.

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Do you think the IPO market is making a comeback? Why, or why not? Join the conversation below.

There has been another, less well-appreciated factor gumming up the gears of the new-issue market, bankers say. Correlation between individual stocks in the S&P 500 has risen dramatically in recent months as fears that rising interest rates could spark a recession lead to across-the-board selling. That makes it harder for stock pickers, and makes IPOs less attractive, some analysts say. Fund managers expect outperformance from IPOs, and if stocks are nearly all moving in unison, the odds of achieving that become longer.

Over the three months before technology stocks started falling in December on inflation and interest rate fears, the average stock moved in the same direction as the S&P 500 39% of the time, according to Ned Davis Research. Since then, that has jumped to 61%.

Some fund managers welcome the air coming out of the IPO market.

Jonathan Coleman

at Janus Henderson Investors, who oversees more than $14 billion across two funds, said last year the IPO market got so heated, it became hard to receive meaningful allocations in offerings. In the past, Mr. Coleman said he thought the market was frothy when there were orders for 10 times the number of shares available in an average offering. In late 2020 through late 2021, order books were routinely 30- to 40-times oversubscribed, he said.

“My experience is, if we’re lamenting the lack of IPOs now, we’ll be lamenting the flood when the windows open back up,” he said.

Write to Corrie Driebusch at corrie.driebusch@wsj.com

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Business

Why is the stock market falling? Dow drops nearly 900 points as investors weigh Fed’s policy path, earnings

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U.S. stocks fell sharply Friday, as investors continued to weigh hawkish comments on interest rates by Federal Reserve Chairman Jerome Powell a day earlier, as well as a fresh batch of corporate earnings that largely disappointed.

How are stocks trading?
  • The Dow Jones Industrial Average
    DJIA,
    -2.18%
    was down 879 points, or 2.5%, at 33,914.
  • The S&P 500
    SPX,
    -2.18%
    fell 107 points, or 2.4%, to 4,286, and was on track for a third straight weekly fall.
  • The Nasdaq Composite
    COMP,
    -2.03%
    shed 298 points, or 2.3%, to trade at 12,875.

On Thursday, the Dow shed 368.03 points, or 1.1%, reversing a gain of as much as 331.43 points in intraday trading. The more-than 700-point intraday swing was its biggest since March 8, according to Dow Jones Market Data. The S&P 500 fell 1.5%, while the Nasdaq Composite slumped 2.1%.

What’s driving the market?

Stock-market weakness picked up Friday where Thursday’s selloff left off, when equities tumbled into the afternoon after Powell added his support for moving faster on raising interest rates to cool inflation, measures that would include a possible 50 basis point interest rate hike in May.

“It would seem investors have been too complacent about the upcoming [Fed] meeting, which will need to change,” said Michael Kramer, founder of Mott Capital, in a note.

The Cboe Volatility Index
VIX,
+20.55%,
an options-based measure of expected volatility over the next 30 days, had been too low heading into the May 3-4 Federal Open Market Committee, or FOMC, meeting, Kramer said. It rose Thursday and was up another 19.5% at 27.1- on Friday, moving above its long-term average just below 20.

Powell’s remarks appeared to make a half percentage point rate hike the base case, with the central bank also likely to announce the beginning of the unwinding of its balance sheet, Kramer said.

Meanwhile, traders of fed funds futures have priced in a 94% chance that the Federal Reserve will deliver a 75 basis point rate hike in June, up from 70% on Thursday and 28% a week ago, according to the CME FedWatch Tool. 

The benchmark 10-year Treasury yield 
TMUBMUSD10Y,
2.895%,
meanwhile, pulled back slightly to around 2.89% after climbing about 8.1 basis points to 2.917% on Thursday, the highest since Dec. 4, 2018.

Read: How to invest as inflation, higher interest rates and war roil markets

And some are warning that the Nasdaq is looking particularly vulnerable. The week has delivered some big earnings news for the technology sector, with investors cheering Thursday’s results from Tesla
TSLA,
-0.12%,
on the heels of deeply disappointing Netflix
NFLX,
-0.91%
results.

The Fed’s hawkish shift and the relentless rise in Treasury yields may be sapping the previous appeal of equities, which had previously been seen as the only viable avenue for many return-seeking investors.

“Investors appear to be moving away from the TINA (There is no Alternative) narrative as of late when it comes to equities,” said Brian Price, head of investment management at Commonwealth Financial Network, in a note. “This is the second straight week of significant outflows from equity mutual funds and days like today are unlikely to change the sentiment moving forward. The one positive takeaway may be that sentiment has become too bearish and we could see a countertrend rally at some point in the coming weeks.”

In One Chart: Investors just pulled a massive $17.5 billion out of global equities. They’re just getting started, says Bank of America.

All 11 major S&P 500 sectors fell Friday, with healthcare stocks dropping the most after a downbeat profit forecast from HCA Healthcare Inc.
HCA,
-20.47%
sent its shares tumbling. Other hospital operators, including Tenet Healthcare Corp.
THC,
-13.49%,
Community Health Systems Inc.
CYH,
-17.36%
and Universal Health Services
UHS,
-12.70%
also fell between 10.4% and 13.2%.

However, of the 99 companies in the S&P 500 that have reported earnings for the first quarter, 77.8% of them have beat market expectations. Typically, 66% of companies beat estimates, according to Refinitiv data.

Next week will mark another big week for earnings, with 558 companies reporting, Saxo noted. “It is the big test of companies’ ability to pass on costs to their customers,” they said.

Investors may also be skittish ahead of the final round of France’s presidential election on Sunday. An upset victory by far-right candidate Marine Le Pen over incumbent Francois Macron would likely spark market volatility, analysts said.

See: Here’s how markets are positioned for Sunday’s presidential election in France between Macron and Le Pen

What companies are in focus?
  • HCA shares were down 19.6%, on pace for their largest percentage decrease since March 16, 2020, when they fell 19.02%, according to Dow Jones Market Data.
  • Gap Inc.
    GPS,
    -18.51%
    stock tumbled nearly 19%, following a bigger-than-expected drop in sales and as the retailer announced the depature of Old Navy CEO Nancy Green.
  • Shares of Qualtrics International Inc.
    XM,
    -9.41%
    fell 9.5% after the experience-management software company reported fiscal first-quarter forecast-beating revenue.
  • Snap Inc.
    SNAP,
    -0.27%
    shares lost 0.7% after the social media group reported quarterly revenue that fell short of Wall Street’s expectations.
  • Shares of American Express Co.
    AXP,
    -1.87%
    fell 1.4% after topping earnings expectations Friday amid a continued rebound in travel and strong spending trends among younger consumers.
  • Verizon Communications Inc.
    VZ,
    -5.30%
    fell after its earnings report showed a net loss of postpaid phone subscribers in its latest quarter, calling out “competitive dynamics within the industry,” though it said it had its best quarter of broadband net additions in more than a decade.
How are other assets trading?
  • The ICE U.S. Dollar Index 
    DXY,
    +0.56%
     rose 0.7% to trade at its highest since March 2020.
  • Bitcoin 
    BTCUSD,
    -2.51%
    fell 2.4% to trade near $39,500.
  • The U.S. oil benchmark
    CL.1,
    -1.90%
     fell $1.72, or 1.7%, to settle at $102.07 a barrel on the New York Mercantile Exchange, falling 4.1% for the week.
  • Gold
    GC00,
    -0.60%
    fell $13.90, or 0.7%, to settle at $1,934.30 an ounce, leaving a 2.1% weekly fall.
  • The Stoxx Europe 600
    SXXP,
    -1.79%
    dropped 1.5% while London’s FTSE 100 
    UKX,
    -1.39%
    fell 1.4%.
  • The Shanghai Composite 
    SHCOMP,
    +0.23%
     rose 0.2%, while the Hang Seng Index 
    HSI,
    -0.21%
    slipped 0.2% in Hong Kong and Japan’s Nikkei 225 
    NIK,
    -1.63%
    fell 1%.

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Business

Former Theranos President Ramesh ‘Sunny’ Balwani Begins His Defense

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SAN JOSE, Calif.—Ramesh “Sunny” Balwani wasn’t in charge at Theranos Inc., and the blood-testing company was neither his idea nor his creation, his attorney told a jury Tuesday as the second criminal-fraud trial involving the defunct Silicon Valley startup got under way.

The responsibility for the rise and fall of Theranos rests on founder and Chief Executive

Elizabeth Holmes,

attorney Stephen Cazares said in opening statements as he outlined the main points of Mr. Balwani’s defense.

“Sunny Balwani did not start Theranos, he did not control Theranos,” said Mr. Cazares. “Elizabeth Holmes, not Sunny, founded Theranos and built Theranos.”

By the time Mr. Balwani joined Theranos in 2009 as president and chief operating officer, Ms. Holmes had spent six years building “a small but sophisticated company,” said Mr. Cazares. His knowledge of the company was largely based on what Ms. Holmes, who was also his girlfriend, and Theranos scientists told him, Mr. Cazares said.

Elizabeth Holmes’s former top deputy at Theranos, Ramesh ‘Sunny’ Balwani, faces charges of defrauding investors and patients about the startup’s blood-testing capabilities, which he denies. Photo: Getty Images

Mr. Balwani, 56 years old, faces a dozen counts of wire fraud and conspiracy to commit fraud for allegedly lying to investors and patients about the blood-testing startup’s technology. Mr. Balwani helped run the company from 2009 to 2016 alongside Ms. Holmes, and helped finance it by underwriting a $13 million loan and buying $5 million in stock. The two had a romantic relationship that spanned more than a decade and was intertwined with their co-leadership of the company, according to evidence in the case.

Ms. Holmes was found guilty of wire fraud and conspiracy in January in a separate criminal trial.

Ms. Holmes and Mr. Balwani were indicted together in June 2018, but U.S. District Judge

Edward Davila

agreed in March 2020 to Mr. Balwani’s request to sever the trials so they would have separate court appearances. Judge Davila presided over Ms. Holmes’s trial and is also overseeing Mr. Balwani’s proceedings; the same assistant U.S. attorneys who brought Ms. Holmes’s case are also prosecuting Mr. Balwani’s case.

Mr. Balwani’s trial had faced delays due to a prolonged jury selection and the Covid-19 pandemic, and because Ms. Holmes gave birth to a baby boy last year, which postponed her own trial.

The government has accused Mr. Balwani, like Ms. Holmes, of misleading investors, business partners and patients about the capabilities of Theranos’s technology and its finances. Theranos claimed it could test for more than 200 health conditions using just a few drops of blood from a finger prick. Prosecutors have alleged and witnesses in Ms. Holmes’s trial testified that the company used its proprietary device for just 12 types of patient tests, and those tests could be inaccurate. Theranos relied on commercial blood analyzers for the majority of its tests, lawyers for both sides have said.

Mr. Cazares said that Theranos used investor money as it promised—to build the company. When Mr. Balwani left in May 2016, Theranos had hundreds of millions of dollars in the bank, patents and hundreds of blood tests developed by Theranos scientists, Mr. Cazares said.

“The money was there, the business was there,” said Mr. Cazares. And Mr. Balwani, whose stake in Theranos was worth as much as $500 million on paper, walked away from Theranos without selling any stock.

By the time Mr. Balwani left in 2016, Theranos was struggling with unreliable and inaccurate blood tests, deteriorating retail partnerships, unhappy investors and regulatory scrutiny, The Wall Street Journal has reported. Regulators had uncovered major deficiencies in the lab he oversaw. The company dissolved in 2018 following civil lawsuits, a settlement with the Securities and Exchange Commission over fraud charges in which Theranos didn’t admit or deny wrongdoing but paid a penalty, and the federal indictment.

The government’s indictment alleges fraud spanning from 2010 to 2016, during which Mr. Balwani was at the company. In Ms. Holmes’s trial, she described Mr. Balwani as her closest business mentor who had influence over how she ran the business—though he wasn’t the ultimate decision maker.

The government’s opening statements gave a preview of a case that echoed the one against Ms. Holmes.

“This is a case about fraud. About lying and cheating to obtain money and property,” said Assistant U.S. Attorney

Robert Leach.

Mr. Balwani “did this to get money from investors, and he did this to get money and business from paying patients who were counting on Theranos to deliver accurate and reliable blood tests so that they could make important medical decisions.”

Mr. Leach said Mr. Balwani was responsible for what he described as false financial projections that were given to investors. Mr. Leach said Mr. Balwani told investors to expect Theranos would have $990 million in revenue in 2015, when in fact the company had less than $2 million in sales, among other projections Mr. Leach said were misleading.

Mr. Cazares countered that allegation, saying Mr. Balwani accurately portrayed the company’s expected revenue growth based on an agreement from

Walgreens Boots Alliance Inc.

to put Theranos blood-testing devices in thousands of retail pharmacies.

Mr. Balwani is an entrepreneur and immigrant from a family of farmers, who became wealthy from his own success in tech startups before going to work at Theranos, Mr. Cazares said. Mr. Balwani had worked as a software engineer and had a business degree when he went to the blood-testing company, where he was put in charge of the lab despite having no medical or laboratory experience.

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What do you think will be the outcome of the Balwani trial, and why? Join the conversation below.

Mr. Cazares took issue with the government for charging Mr. Balwani without reviewing a database that contained all of Theranos’s lab testing data, including 9 million patient test results.

The database is a thorny issue. The government subpoenaed a copy of Theranos’s proprietary lab-result database, but in August 2018, just days after the government received a copy on an external hard drive, Theranos officials destroyed the entire database, the Journal has reported. The government later learned that a passcode needed to make use of their hard drives was missing.

Before Mr. Balwani’s lawyers outlined the broad strokes of his defense, prosecutors on Tuesday described Mr. Balwani as one-half of a business duo that lied to cheat investors and patients out of money. “They were partners in everything, including their crimes,” said Mr. Leach.

Mr. Balwani was a full participant in the lies Theranos spread, Mr. Leach said, driven by its dwindling cash reserves and unreliable technology. The company went years without revenue and its cash had diminished to $6.9 million by 2013, he said.

For a time, said Mr. Leach, their fraud scheme was enormously successful: They raised hundreds of millions of dollars from investors, and it “brought them fame and adoration.”

Mr. Leach told the jury that they would soon see text message exchanges Mr. Balwani and Ms. Holmes shared during their yearslong personal relationship, which was largely hidden from Theranos investors, employees and board directors. Prosecutors also introduced hundreds of these messages during Ms. Holmes’s trial, showing the two worked in tandem as the top officers of a multibillion-dollar company and as romantic partners.

“They candidly explained to each other how bad things were inside Theranos at the time they were touting Theranos as a revolution in healthcare,” said Mr. Leach.

Theranos and the ‘Sunny’ Balwani Trial

Write to Heather Somerville at Heather.Somerville@wsj.com

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