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Elizabeth Holmes Trial: Retailers Validate Theranos Without Test Equipment

San Jose, CA — In 2010, Theranos Inc. courted two major retailers in hopes of introducing its lab technology to busy pharmacies across the country.

Safeway Inc is a blood test startup. Win,

Walgreens Boots Alliance Ltd

WBA -0.34%

According to court testimony in the criminal trial of Theranos founder Elizabeth Holmes, real-time, cheap lab testing is promised, expanding affordable healthcare for consumers and bringing even more revenue to retail giants.

The testimony explains how executives of both chains were persuaded to believe Theranos’ claims after years of due diligence, pilot projects, consultations with lawyers and medical professionals, and negotiations with startups that would eventually collapse. is showing.

According to court testimony over the last two days, the lack of diligence was that both companies spent a considerable amount of time investigating the Theranos device itself and testing its reliability or accuracy.

“Our common understanding was that the technology worked as we were told,” former Walgreens Chief Financial Officer Wade Miquelon said in a court testimony Wednesday.

Elizabeth Holmes, CEO of Theranos, celebrated her partnership with Walgreens with scissors at the 2013 ceremony. On the right is former Walgreens CEO Gregory Wasson and former CFO Wade Michelon.


Photo:

Walgreens

According to Theranos, a unique technology allows you to test over 200 health conditions using a few drops of blood from a finger puncture wound. According to 2015 and 2016 reports from The Wall Street Journal, Theranos blood testing equipment is unreliable and inaccurate, the company can only run part of the test on its own machine, and the rest are commercially available. It relied on the analyzer.

Holmes’ lawyer said running a failed company was not a crime and tried to blame her best lieutenant and former boyfriend Ramesh “Sunny” Balwani for the technology and operations of Theranos. bottom.

Barwani faces the same dozens and another trial is scheduled for early next year. He pleaded not guilty.

Micron Island, who helped with the early directors of Walgreens’ ultimate turbulent relationship Together with Theranos, the company testified Wednesday that it had its own due diligence on Theranos, some relying on staff medical professionals. Walgreens also hired a lab company to provide ratings, and of the approximately 200 diagnostic companies Walgreens was considering collaborating with, Theranos told Walgreens that it was “farthest,” Miquelon testified.

Walgreens turned to Johns Hopkins University experts and asked his doctor to meet Holmes and Balwani. According to documents presented in court, doctors did so and determined that the technique was sound and would be useful in setting up a retail clinic. But they never got a Theranos device to “play,” Michelon said.

Former Safeway CEO Steven Burd testified Tuesday that he had consulted with Johns Hopkins Institute Director and the University of California, San Francisco about Theranos’ claims. He invited one of the doctors to dinner with him and Mr. Holmes to discuss Theranos’ business. Burd added that Johns Hopkins contacts had received a Theranos test device, but the company regained it before researchers could verify its functionality.

An email from Burd in court indicated that Safeway had completed hundreds of hours. Due diligence I’ve been in contact with Holmes almost every day at Theranos for over a year.

Mr. Bird testified that Safeway’s director had a blood test with a finger stab, although the machine broke down and did not produce results. Mr. Micron said he had two blood tests for a finger puncture wound and after a while he got results from a doctor.

Safeway and Walgreens each signed a deal with Theranos in 2010. Safeway has run a pilot program to test employee blood on a corporate campus. However, Theranos devices never ended At Safeway stores, even though grocery stores have spent more than $ 350 million building store clinics for that purpose.

The Walgreens project has gone through a stage where companies have come up with details, from the 2011 “Project Beta” to the 2012 “Project Normandy.” Mr Michelon said Walgreens and Theranos each sought the advice of outside experts on regulatory questions, such as whether Walgreens stores or Theranos headquarters are considered regulatory laboratories.

“This technology has new qualities in the world, so it took some work to understand,” Michelon said in court testimony.

Both Safeway and Walgreens contracts with Theranos allowed retailers to terminate their relationship.

Mr Michelon said Walgreens had agreed to pay Theranos a $ 100 million “innovation fee” and a $ 40 million convertible bond.

Walgreens and Theranos launched an in-store blood test in 2013, starting with friends and family and opening it to the public. According to court records, the relationship between Theranos and Walgreens began to deteriorate in 2014 after startups missed a major deadline.

Theranos then nullified tens of thousands of results from patients tested at Walgreens and, under pressure from federal regulators, stopped blood sampling with its characteristic finger stab. Walgreens sued Theranos for $ 140 million in 2016, a year later They have reached a secret settlement As a result, Theranos had to pay Walgreens more than $ 25 million, the Wall Street Journal reported at the time.

Theranos and Elizabeth Holmes Trial

Write to Heather Summer Building Heather.Somerville@wsj.com

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Elizabeth Holmes Trial: Retailers Validate Theranos Without Test Equipment

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