Elizabeth Holmes trial: Walgreens paid $100 million to Theranos, invested $40 million more: ‘I didn’t want to believe that the things I believed weren’t true’
Drugstore giant Walgreens paid Palo Alto blood-testing startup Theranos $100 million, and invested $40 million more in the failed company, a former Walgreens executive testified at Theranos founder Elizabeth Holmes’ criminal fraud trial Wednesday.
Former Walgreens chief financial officer Wade Miquelonleft Walgreens before the deal with Theranos fell apart, but he continued to believe in her and her startup’s technology, he told the jury, which had seen displayed copies of emails between the two.
“You are in my thoughts,” Miquelon wrote in an email to Holmes in late 2015, after a damning article in the Wall Street Journal started the unravelling of Theranos. “We live in a world where anyone can say anything about anyone whether true or not. Hang in there. The haters are everywhere, but your contributions to the world cannot be bottled up.” He advised her to fight back aggressively, and signed his email, “your friend.”
Eight months later, Miquelon wrote to Holmes, “Don’t stop working to help the world,” and she responded, “You know how much that means to me.”
Miquelon testified earlier Wednesday in U.S. District Court in San Jose that Walgreens agreed in 2012 to pay Theranos a $100 million “innovation fee” and invest the additional millions in a deal that was intended to put Theranos blood-testing services in Walgreens stores across the U.S.
Under the deal, Walgreens was to pay Theranos $25 million right away, then the same amount when a pilot project hit 10 patients per store per day, then the remaining $50 million upon widespread launch of testing services in stores, according to a copy of the agreement displayed in the courtroom.
Patient testing started in late 2013 in Palo Alto and Arizona, according to Miquelon, a balding man in a navy suit, light-gray dress shirt and striped blue tie. “The patient feedback we’re getting is very good,” Miquelon said during an annual Walgreens call with analysts the month after testing started, according to a transcript of the call displayed on courtroom screens.
By 2014, Holmes was asking Walgreens to hurry up with payment of remaining money, and suggesting that the national rollout in the chain’s stores could be completed that year, according to an email shown to jurors.
Holmes, a Stanford University dropout who founded Theranos in 2003, is accused of bilking investors out of hundreds of millions of dollars and misleading patients and doctors with false claims that Theranos’ machines could conduct a full range of tests using only a few drops of blood from a finger-stick. She is charged with a dozen felony fraud charges and has pleaded not guilty.
Holmes, who gave birth to a baby over the summer, is accompanied during court appearances by her mother Noel, and sometimes her partner Billy Evans, who sit in the front row of the gallery directly behind Holmes. She faces up to 20 years in prison if convicted.
Miquelon testified that when he started looking into working with Theranos, the now-defunct startup appeared to be leading the way among more than 150 companies in bringing fast, easy, affordable blood-testing to the public, and that its technology appeared “really exciting.” But in 2016, after Miquelon left Walgreens, the drugstore chain ended the Theranos partnership and sued Theranos, ultimately reaching a tentative settlement for less than $30 million, the Wall Street Journal reported in 2017.
Miquelon also testified that Holmes and her co-accused, former company president Sunny Balwani, as well as documents provided by Theranos, led him to believe the firm was doing nearly all of its testing using its own devices. Prosecutors allege that Theranos was using third-party machines for most types of test.
Miquelon said Holmes and Balwani “gave us attestations that the technology worked, and needed to be scaled.” During the pilot project, after Miquelon learned that nearly all Theranos tests were being done on needle-drawn venous blood, when he believed 90% were supposed to be done with the finger-stick Holmes had touted, she told him that one of the problems was “getting clinicians to do the finger massage to get the proper blood sample.” He testified that he did not recall Holmes ever attributing problems to limitations of Theranos machines.
Miquelon also told the jury that he “definitely cared about her very much and wanted her to be successful.”
Asked by federal prosecutor Jeff Schenk about the negative press coverage, Miquelon said, “I didn’t want to believe that the things I believed weren’t true.”