Holmes Faked Pharma Backing to Lure Walgreens Deal, U.S. Says
(Bloomberg) -- Studies by Pfizer Inc. and Schering-Plough Corp. touted by Theranos Inc. to pitch its blood-testing technology shared a common flaw: they weren’t real, according to U.S. prosecutors.
In a bid to get the Walgreens drug-store chain to use her cutting-edge machines, Elizabeth Holmes sent documents she described as “independent due diligence reports” on Theranos from some of the leading pharmaceutical companies.
Wade Miquelon, chief financial officer of Walgreen Co. in 2010, was one of the executives who received some of these reports, which Holmes said were confidential. Miquelon told jurors hearing evidence in Holmes’s fraud trial Tuesday that he was impressed by the research, and didn’t notice that one of them had a typo in the name of the “Schering Plough Research Institure.”
Miquelon’s testimony is part of the government’s effort to prove that Holmes played a direct role in fooling investors and patients about the technology, which couldn’t do all the things the company promised. The Walgreens chain, whose parent company was renamed Walgreens Boots Alliance Inc. in 2014, was the only commercial partnership Theranos launched on a significant scale before the startup collapsed in 2018.
Holmes faces as many as 20 years in prison if the federal jury in San Jose, California, convicts her of fraud charges.
Based on the presentations Miquelon saw, Theranos was “better, faster, cheaper” than its competitors, he testified, all of which would lead to better outcomes for patients. “We thought this was one of the most exciting companies we’d seen,” the former executive said. “We were very excited about forming a partnership.”
Prosecutors had already given the jury a spoiler: They said in their opening argument that a report with Pfizer letterhead that Holmes provided to Walgreen had been “secretly drafted” at Theranos to endorse its technology.
“Pfizer did not write this,” Assistant U.S. Attorney Bob Leach told jurors on Sept. 8. “Pfizer did not put its logo on this. Pfizer did not make the conclusions in this report. In fact, it came to the opposite conclusions.”
While Theranos promised that its revolutionary technology would allow it to run a battery of tests with just a few drops of blood, the government alleges the company hid from Walgreen executives that it was using third-party analyzers and traditional venous blood draws.
“The vast majority of tests, we understood,” Miquelon testified Wednesday, would be on Theranos machines.
On cross examination, Holmes’s attorney Kevin Downey pressed Miquelon on what due diligence Walgreen did before partnering with Theranos.
Walgreen hired a lab to review Theranos’s tests, Miquelon said. “They were interpreting data they were given as opposed to taking the machine apart, if you will,” he said.
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