That's a cutscene of Danny's past, an argument with his wife when he told her he was volunteering for the experement......(injecting Leo into his mind)........Back 6 years before.
Leo, at first, was the killer when activated. Danny would have no memory of the killing Leo did while Leo was in control of his body......But Danny became aware of Leo, and then Leo couldn't gain full control. So, he had to teach Danny how to kill in order to escape the asylum.
At first Danny is sickened by the killing he has to do at Leo's command. but Leo keeps urging him on, saying the "Project" will kill them both if they don't escape. Danny has no rememberence of the experement, so he thinks Leo is just another person. He sees and hears Leo, but nobody else does.
