Wade Miquelon — Direct
354 linesJUDGE DAVILA: THANK YOU. WE'RE BACK ON THE RECORD. ALL PARTIES PREVIOUSLY PRESENT ARE PRESENT AGAIN. OUR JURY AND ALTERNATES ARE PRESENT. THANK YOU FOR YOUR PATIENTS. IN THE SPIRIT OF FULL DISCLOSURE, WE WERE GETTING MY OFFICE READY AND THAT MEANT MOVING BOXES. I'LL LEAVE IT AT THAT. DOES THE GOVERNMENT HAVE ANOTHER WITNESS?
MR. SCHENK: YES, YOUR HONOR. THE GOVERNMENT CALLS WADE MIQUELON.
JUDGE DAVILA: IF YOU WOULD STAND AND FACE OUR COURTROOM DEPUTY WHILE YOU RAISE YOUR RIGHT HAND, SHE HAS A QUESTION FOR YOU.
(GOVERNMENT'S WITNESS, WADE MIQUELON, WAS SWORN.)
WADE MIQUELON: YES.
JUDGE DAVILA: THANK YOU. PLEASE HAVE A SEAT HERE, SIR, AND MAKE YOURSELF COMFORTABLE. FEEL FREE TO ADJUST THAT CHAIR AND MICROPHONE. I'LL ENCOURAGE YOU TO SPEAK DIRECTLY INTO THE MICROPHONE. THE LAWYER WILL HAVE A QUESTION FOR YOU ABOUT YOUR MASK IN JUST A MOMENT. BUT, FIRST OF ALL, IF YOU COULD PLEASE STATE YOUR NAME AND THEN SPELL IT, PLEASE.
WADE MIQUELON: YES, YOUR HONOR. MY NAME IS WADE MIQUELON. W-A-D-E, M-I-Q-U-E-L-O-N.
JUDGE DAVILA: THANK YOU. COUNSEL.
DIRECT EXAMINATION BY MR. SCHENK:
MR. SCHENK: GOOD AFTERNOON, MR. MIQUELON. I SEE YOU'VE TAKEN OFF YOUR MASK. WITH THE COURT'S PERMISSION AND IF YOU'RE FULLY VACCINATED, YOU CAN REMOVE YOUR MASK AND I'LL DO THE SAME.
WADE MIQUELON: THANK YOU.
JUDGE DAVILA: THANK YOU, COUNSEL.
MR. SCHENK: THANK YOU, YOUR HONOR.
MR. SCHENK: MR. MIQUELON, WERE YOU THE CFO AT WALGREENS?
WADE MIQUELON: YES, I WAS.
MR. SCHENK: AND WHEN WERE YOU THE CFO AT WALGREENS?
WADE MIQUELON: FROM JUNE 2016 TO AUGUST 3RD OR 4TH 2014.
MR. SCHENK: DO YOU MIND PULLING THE MICROPHONE A LITTLE BIT CLOSER TO YOUR MOUTH?
WADE MIQUELON: FROM JUNE -- JUNE 2008 -- I APOLOGIZE -- TO AUGUST 4TH, 2014.
MR. SCHENK: SO 2008 UNTIL 2014?
WADE MIQUELON: THAT'S CORRECT.
MR. SCHENK: AND WE'LL COME BACK TO THAT IN A MOMENT. LET'S START WITH YOUR EDUCATIONAL BACKGROUND. WHERE DID YOU GO TO UNDERGRAD, AND IF YOU HAVE GRADUATE DEGREES?
WADE MIQUELON: I WENT TO UNDERGRADUATE SCHOOL AT PURDUE UNIVERSITY AND I WAS AN ENGINEER, AND I WENT TO GRADUATE SCHOOL AT WASHINGTON UNIVERSITY AT ST. LOUIS FOR MY MBA.
MR. SCHENK: FOR YOUR?
WADE MIQUELON: MBA.
MR. SCHENK: THANK YOU. HOW ABOUT YOUR WORK HISTORY BEFORE YOU BECAME CFO AT WALGREENS?
WADE MIQUELON: AFTER GRADUATE SCHOOL, I SPENT 17 YEARS AT PROCTOR & GAMBLE, THE FIRST MORE OR LESS FIVE YEARS IN CINCINNATI, AND THE NEXT 12 YEARS I SPENT IN ASIA AND EUROPE. AND FROM THERE I WENT TO TYSON FOODS WHERE I BECAME THE CHIEF FINANCIAL OFFICER FOR TWO YEARS, AND AFTER TYSON FOODS I WENT TO WALGREENS WHERE I WAS THEIR CHIEF FINANCIAL OFFICER FOR MORE OR LESS SIX YEARS.
MR. SCHENK: AND AFTER WALGREENS, HAVE YOU REMAINED EMPLOYED SINCE YOU LEFT WALGREENS?
WADE MIQUELON: YES.
MR. SCHENK: AND WHAT HAVE YOU DONE SINCE THEN?
WADE MIQUELON: I WAS THE CHIEF FINANCIAL OFFICER FOR THE LARGE ARTS AND CRAFTS RETAILER, JOANN, AND I'M CURRENTLY THE CEO OF THE SAME COMPANY.
MR. SCHENK: YOU'RE CURRENTLY THE CHIEF EXECUTIVE OFFICER?
WADE MIQUELON: YES.
MR. SCHENK: OKAY. WHILE YOU WERE THE CFO AT WALGREENS, WOULD YOU DESCRIBE FOR THE JURY SOME OF YOUR RESPONSIBILITIES AS CFO?
WADE MIQUELON: GENERAL OVERSIGHT FOR ALL FINANCIAL AND ACCOUNTING MATTERS TYPICAL OF A TYPICAL CFO ROLE, FROM THE GOVERNMENT ASPECTS OF ACCOUNTING THROUGH FINANCIAL ANALYSIS ASPECTS OF THE BUSINESS, AS WELL AS I HAD OVERSIGHT FOR MERGERS AND ACQUISITION, WHAT WE CALL M & A, NEW BUSINESS DEVELOPMENT, AND FOR A PERIOD OF TIME I ALSO HAD OVERSIGHT FOR THE INTERNATIONAL EXPANSION OF THE COMPANY.
MR. SCHENK: WAS WALGREENS A PUBLICLY TRADED COMPANY WHILE YOU WERE CFO?
WADE MIQUELON: YES.
MR. SCHENK: AND DO YOU RECALL WHAT THE TICKER SIMPLE OR THE TRADING SYMBOL WAS?
WADE MIQUELON: IT WAS -- AT THE TIME WHEN I JOINED IT WAS W-A-G, BUT THE TICKER SYMBOL IS DIFFERENT NOW.
MR. SCHENK: OKAY. AND WHAT IS IT NOW, IF YOU KNOW?
WADE MIQUELON: W-P-A.
MR. SCHENK: OKAY. THANK YOU. HAVE YOU HEARD OF A COMPANY CALLED THERANOS?
WADE MIQUELON: YES.
MR. SCHENK: WHEN DID YOU BECOME FIRST FAMILIAR WITH THAT COMPANY?
WADE MIQUELON: I BELIEVE IT WAS IN THE EARLY SPRING OF 2010, AROUND MARCH.
MR. SCHENK: AROUND MARCH OF 2010?
WADE MIQUELON: CORRECT.
MR. SCHENK: AND DO YOU REMEMBER THE CIRCUMSTANCES? DID SOMEONE BRING THE COMPANY TO YOUR ATTENTION?
WADE MIQUELON: YES. WE WERE LOOKING AT A LOT OF DIFFERENT LAY OUT TECHNOLOGY COMPANIES AT WALGREENS TRYING TO SEE IF POTENTIAL COMPANIES COULD BE A GOOD PARTNER FOR WHAT WE WANTED TO DO IN TERMS OF EXPANDING CLINICAL OFFERINGS THROUGH LAB, AND I RECALL DR. JAY ROSAN HAD COME TO ME WHILE WE WERE SEARCHING VARIOUS COMPANIES AND HE WAS VERY EXCITED ABOUT THE COMPANY THAT HE HEARD ABOUT CALLED THERANOS.
MR. SCHENK: AND DR. ROSAN WAS ANOTHER EMPLOYEE AT WALGREENS?
WADE MIQUELON: YES. HE WAS MORE OR LESS THE MEDICAL EXPERT FOR THE NEW BUSINESS DEVELOPMENT DIVISION OF THE COMPANY.
MR. SCHENK: AND YOU DESCRIBED WALGREENS HAVING SOME INTEREST IN LABS. COULD YOU DESCRIBE THAT FOR US?
WADE MIQUELON: CORRECT. EVEN THOUGH WALGREENS HAS BEEN A TRADITIONAL PHARMACY, OVER TIME THEY'VE WORKED TO FIND OTHER HEALTH CARE OFFERINGS THAT CAN MORE OR LESS PUSH THE HEALTH CARE CLOSER AND CLOSER TO THE INDIVIDUAL IN THE COMMUNITY. ONE EXAMPLE WOULD BE VACCINATIONS WHERE THEY'RE A VERY LARGE PLAYER, AS WELL AS OTHER CLINICS AND THERE'S PRACTITIONER SERVICES. LAB WAS ANOTHER ADJACENCY THAT THAT WE WERE VERY EXCITED ABOUT.
MR. SCHENK: AND HOW DID THERANOS FIT INTO THIS INTEREST OF WALGREENS?
WADE MIQUELON: THERANOS AT THE TIME -- AND THERE WAS A LOT OF, A LOT OF COMPANIES THAT WERE LOOKING TO REALLY CHANGE THE WAY THAT TRADITIONAL LAB HAD BEEN DONE THROUGH VARIOUS PLATFORMS, AND THERE WAS A FAIR AMOUNT OF WORK TO TRY TO UNDERSTAND WHO THE LEADER IN THAT SPACE MIGHT BE. BUT AS WE GOT TO KNOW THERANOS, WE FELT THAT THEY WERE PERHAPS THE FARTHEST ALONG AND THE MOST RELEVANT FOR WHAT THE COMPANY WAS LOOKING TO ACHIEVE.
MR. SCHENK: AND WHEN, IN THE EARLY DAYS IN 2010, YOU BEGAN TO LEARN ABOUT THERANOS, WHAT KINDS OF THINGS DID YOU DO TO LEARN MORE ABOUT THERANOS?
WADE MIQUELON: AS A STARTING POINT I WAS ABLE TO GO OUT WITH DR. JAY ROSAN AND SPEND SOME TIME AT THERANOS JUST TO LEARN FROM ELIZABETH AND SUNNY WHAT THEY WERE DOING, WHAT THEY HAD BEEN DOING, AND THAT WAS PROBABLY THE STARTING POINT OF THE JOURNEY OF LEARNING.
MR. SCHENK: YOU SAID GO OUT TO THERANOS. WHAT DO YOU MEAN BY THAT? WHERE WERE YOU AND WHERE DID YOU GO TO?
WADE MIQUELON: I WAS BASED IN DEERFIELD, ILLINOIS, AND WE WENT TO THEIR HEADQUARTERS AT THE TIME IN PALO ALTO.
MR. SCHENK: IS THAT -- IS ILLINOIS WHERE WALGREENS IS HEADQUARTERED?
WADE MIQUELON: CORRECT.
MR. SCHENK: I THINK I PLACED A BINDER ON THE DESK IN FRONT OF YOU. IF YOU COULD OPEN IT UP TO TAB 278. AT EXHIBIT 278, DO YOU RECOGNIZE THE DOCUMENTS THERE?
WADE MIQUELON: YES.
MR. SCHENK: WHAT ARE THE FIRST TWO PAGES, JUST GENERALLY?
WADE MIQUELON: AN EMAIL MESSAGE.
MR. SCHENK: DOES IT BEGIN AN EMAIL MESSAGE FROM MS. HOLMES TO YOU AND DR. ROSAN, AN INDIVIDUAL YOU JUST REFERENCED?
WADE MIQUELON: THAT'S CORRECT.
MR. SCHENK: AND THEN IS THERE ANOTHER MESSAGE FROM YOU, AND THEN ANOTHER MESSAGE WITHIN WALGREENS?
WADE MIQUELON: THAT'S CORRECT.
MR. SCHENK: AND HOW ABOUT THE ATTACHMENT? DO YOU RECOGNIZE THE ATTACHMENT?
WADE MIQUELON: YES, I DO.
MR. SCHENK: AND WHAT IS THE ATTACHMENT GENERALLY?
WADE MIQUELON: IT WAS A PRESENTATION THAT HAD BEEN MADE TO US WHEN WE VISITED AND SUBSEQUENTLY FORWARDED TO ME VIA EMAIL AND WHICH I WAS SHARING WITH SOME EXECUTIVES IN THE COMPANY.
MR. SCHENK: AND A PRESENTATION MADE TO YOU BY WHOM?
WADE MIQUELON: BY THERANOS, BY MS. HOLMES AND MR. BALWANI.
MR. SCHENK: THANK YOU. YOUR HONOR, THE GOVERNMENT OFFERS 278.
MR. DOWNEY: NO OBJECTION.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 278 WAS RECEIVED IN EVIDENCE.)
MR. SCHENK: MS. HOLLIMAN, IF WE COULD START WITH THE EMAIL AT THE BOTTOM OF THE PAGE, PICK UP WITH THE FROM AND TO LINES.
MR. SCHENK: MR. MIQUELON, YOU CAN START ON YOUR SCREEN, WE SEE AN EMAIL FROM MS. HOLMES TO YOU IN MARCH OF 2010. DO YOU SEE THAT?
WADE MIQUELON: YES.
MR. SCHENK: AND IF WE COULD CARRY OVER TO THE NEXT PAGE, THE SECOND PAGE OF THIS EXHIBIT TO CAPTURE THE TEXT OF THE EMAIL, MS. HOLMES WRITES, "WADE. "IT WAS GREAT TO MEET YOU. "AS PROMISED, PLEASE FIND THE PRESENTATION WE PRESENTED TODAY." DO YOU SEE THAT?
WADE MIQUELON: YES.
MR. SCHENK: AND WAS THIS THE PRESENTATION THAT YOU TRAVELLED TO PALO ALTO TO ATTEND IN PERSON?
WADE MIQUELON: YES.
MR. SCHENK: AND NOW IF WE COULD LOOK ONE EMAIL UP BACK ON THE FIRST PAGE, THE EMAIL IN THE MIDDLE, THE EMAIL FROM YOU, IF WE COULD CAPTURE THAT EMAIL TO THE JURY. YOU WROTE THAT EMAIL TO AN INDIVIDUAL NAMED GREG WASSON. DO YOU SEE THAT?
WADE MIQUELON: YES.
MR. SCHENK: AND WHO WAS MR. WASSON?
WADE MIQUELON: MR. WASSON WAS THE CHIEF EXECUTIVE OFFICER OF WALGREENS AND HE WAS MY BOSS AT THE TIME.
MR. SCHENK: IN THE EMAIL YOU DESCRIBE TO HIM YOUR BEGINNING EFFORTS AT DUE DILIGENCE REGARDING THERANOS; IS THAT RIGHT?
WADE MIQUELON: YES, THAT'S CORRECT.
MR. SCHENK: AND WHAT WERE YOU TRYING TO COMMUNICATE TO THE CEO AT THIS TIME?
WADE MIQUELON: I THINK JUST THAT A LOT OF ENTHUSIASM ABOUT THE POSSIBILITY OF WORKING WITH THEM AND THE FACT THAT IT WAS VERY EXCITING AND IT SEEMED TO BE THEY WERE PRETTY MUCH OUT FRONT FOR WHAT WE WERE LOOKING FOR.
MR. SCHENK: I'D LIKE TO SHOW YOU SOME SLIDES FROM THE PRESENTATION, BUT BEFORE WE DO THAT, DESCRIBE THE SETTING. WHERE DID YOU GO WHEN YOU WERE IN PALO ALTO, AND I'M WONDERING WHO WAS PRESENT IN THE ROOM?
WADE MIQUELON: WE WENT TO THEIR HEADQUARTERS AND WE WERE IN A SMALL CONFERENCE ROOM RIGHT OFF OF THE RECEPTION AREA, WHICH WAS THE FOUR OF US.
MR. SCHENK: AND WHO WERE THE FOUR THAT WERE PRESENT?
WADE MIQUELON: MYSELF, DR. ROSAN, MS. HOLMES, AND MR. BALWANI.
MR. SCHENK: AND WHAT WAS IN THE ROOM IF YOU REMEMBER? WAS THERE A SCREEN OR A LAPTOP? WAS THERE A DEVICE?
WADE MIQUELON: I DON'T REMEMBER IF THE PRESENTATION WAS ON A LAPTOP OR IF THERE WERE HANDOUTS AS WELL.
MR. SCHENK: OKAY. HOW ABOUT A THERANOS DEVICE OR DEVICES? DID YOU SEE ANYTHING?
WADE MIQUELON: I SAW A THERANOS DEVICE LATER, BUT MY RECOLLECTION IS THAT IT WAS OUTSIDE OF THE ROOM AND SLIGHTLY AROUND THE CORNER.
MR. SCHENK: AND WHEN YOU SAY "LATER," DO YOU MEAN LATER THAT SAME DAY?
WADE MIQUELON: LATER THAT SAME DAY.
MR. SCHENK: OKAY. IF WE COULD NOW TURN TO THE FIRST PAGE OF THE PRESENTATION, THAT'S THE THIRD PAGE OF THE EXHIBIT. IS THIS THE PRESENTATION THAT MS. HOLMES AND MR. BALWANI PRESENTED TO YOU AND DR. ROSAN THAT DAY?
WADE MIQUELON: YES.
MR. SCHENK: AND IF YOU COULD TURN TO PAGE 5 OF THE EXHIBIT. THERE'S A SLIDE THAT BEGINS THERANOS INCORPORATED, AND I'D LIKE TO ASK YOU SOME QUESTIONS ABOUT A FEW OF THE BULLETS. IT BEGINS, "THERANOS IS A SILICON VALLEY-BASED HEALTH CARE TECHNOLOGY COMPANY FOUNDED IN 2003." DID MS. HOLMES SAY THAT TO YOU? DID SHE DESCRIBE TO YOU THAT THERANOS WAS A TECHNOLOGY COMPANY THAT WAS FOUNDED IN 2003?
WADE MIQUELON: I DON'T KNOW IF THOSE WERE THE EXACT WORDS, BUT MORE OR LESS SHE GAVE SOME PERSPECTIVE ON THE STARTUP AND THE COMPANY HAD BEEN AROUND FOR, YOU KNOW, EFFECTIVELY SEVEN YEARS.
MR. SCHENK: AND DID THAT SORT OF DESCRIBE THE WAY THE MEETING WENT? WERE SLIDES SHOWN AND EITHER MS. HOLMES OR MR. BALWANI TALKED ABOUT THE SLIDES WHILE THEY WERE BEING DISPLAYED?
WADE MIQUELON: THAT'S CORRECT.
MR. SCHENK: THE FIRST BULLET READS, "THERANOS'S PROPRIETARY, PATENTED TECHNOLOGY RUNS COMPREHENSIVE BLOOD TESTS FROM A FINGERSTICK IN REAL-TIME AT THE POINT OF CARE, OUTSIDE OF TRADITIONAL LAB SETTINGS." IS THAT CONSISTENT WITH THE WAY THAT MS. HOLMES DESCRIBED THE TECHNOLOGY TO YOU WHEN YOU WERE IN PALO ALTO?
WADE MIQUELON: YES.
MR. SCHENK: WHAT DID YOU UNDERSTAND "RUNS COMPREHENSIVE BLOOD TESTS," TO MEAN?
WADE MIQUELON: MY UNDERSTANDING WAS A PRETTY BROAD RANGE OF IMMUNOASSAY TESTS, YOU KNOW, BLOOD TESTS, THAT EXACTLY.
MR. SCHENK: OKAY. WHEN THIS CONCEPT WAS BEING DISCUSSED, DO YOU REMEMBER IF MS. HOLMES OR MR. BALWANI OR BOTH OF THEM WERE TALKING ABOUT IT? DO YOU HAVE A RECOLLECTION OF WHO DID THE SPEAKING?
WADE MIQUELON: I THINK IT WAS VERY INTERACTIVE, SO I WOULD SAY THAT IT WAS INTERACTIVE.
MR. SCHENK: WHAT DO YOU MEAN BY "INTERACTIVE"?
WADE MIQUELON: I MEAN WE WOULD TALK ABOUT DIFFERENT POINTS AND WE WOULD ASK QUESTIONS AND BOTH WOULD CHIME IN. BUT IT WOULD BE HARD TO SAY ANYONE SAID ONE SPECIFIC LINE OR ANY ONE LINE.
MR. SCHENK: OKAY. THE BULLET CONTINUES, "FROM A FINGERSTICK IN REAL-TIME AT THE POINT OF CARE." WHAT DID YOU UNDERSTAND THAT TO MEAN?
WADE MIQUELON: WELL, JUST PART OF THE VALUE PROPOSITION, WHICH OBVIOUSLY ONE DROP OF BLOOD WOULD HAVE BENEFITS, YOU KNOW, VERSUS AN ENTIRE VIAL. BUT BEING ABLE TO HAVE, AGAIN, THAT DECENTRALIZED LAB, I THINK, AKIN MOVING FROM A MAINFRAME TO A LAPTOP, BEING ABLE TO HAVE EFFECTIVELY A DEVICE THAT COULD AT THAT POINT OF CARE BE ABLE TO TAKE THE BLOOD AND GATHER THE RESULTS HAD A LOT OF ADDITIONAL BENEFITS AS WELL.
MR. SCHENK: AND THEN IT CONTINUES, "OUTSIDE OF TRADITIONAL LAB SETTINGS." WHAT DID YOU UNDERSTAND THAT TO MEAN?
WADE MIQUELON: YOU KNOW, A TRADITIONAL LAB SETTING WOULD HAVE LARGE MACHINES CAPABLE OF DOING SOME TESTS. TYPICALLY YOU'RE WITH LOOKING AT KIND OF VENA PUNCTURE, BEING ABLE TO DO THAT, THE PATIENT MAY HAVE TO GO TO INDUSTRIAL COURT TO GET THEIR BLOOD DRAWN, BUT THIS WOULD BE ABLE TO TAKE THE LAB TESTING AND MOVING IT INTO THE PHARMACY WHERE IT WAS VERY CLOSE TO LOTS AND LOTS OF PATIENTS.
MR. SCHENK: SO THIS FIRST BULLET THAT WE JUST TALKED ABOUT, WAS THIS ATTRACTIVE TO YOU AND TO WALGREENS?
WADE MIQUELON: CERTAINLY.
MR. SCHENK: WHY?
WADE MIQUELON: AGAIN, WHEN YOU THINK ABOUT -- I THINK THE DATA SAYS 70 TO 80 PERCENT OF HEALTH CARE DECISIONS BY THE DOCTOR REQUIRES SOME FORM OF LAB. YOU KNOW, LAB IN MANY WAYS IS A GATEWAY TO GOOD HEALTH. BEING ABLE TO TEST ACCURATELY, FREQUENTLY, MAKING IT ACCESSIBLE FOR PEOPLE, ALL OF THAT IS A WONDERFUL EXTENSION OF HEALTH CARE.
MR. SCHENK: THE THIRD BULLET ON THE SCREEN IN FRONT OF YOU READS, "OUR CURRENT AND PAST CLIENTS INCLUDE 10 OF THE TOP 15 MAJOR PHARMACEUTICAL COMPANIES, MID SIZED BIO-PHARMAS, PROMINENT RESEARCH INSTITUTIONS, AND U.S. AND FOREIGN GOVERNMENT HEALTH AND MILITARY ORGANIZATIONS." DID YOU HEAR MS. HOLMES OR MR. BALWANI DISCUSS THIS TOPIC WHEN YOU WERE IN PALO ALTO?
WADE MIQUELON: YES, WE DID.
MR. SCHENK: AND WHAT DO YOU RECALL ABOUT THAT?
WADE MIQUELON: WHAT I RECALL WAS REALLY 10 OF THE 15 PHARMACEUTICAL COMPANIES, AS WELL AS SOME DISCUSSION ON THE WORK WITH THE MILITARY.
MR. SCHENK: AND WHAT DID YOU UNDERSTAND THAT THE PHARMACEUTICAL COMPANIES DID FOR THERANOS?
WADE MIQUELON: MY UNDERSTANDING WAS SOMEWHAT LIMITED BECAUSE THEY SAID THAT THEY WERE UNDER NDA AND COULDN'T SHARE A LOT. WHAT THEY HAD SAID IS THAT THEY WERE DOING WORK FOR, AND IN VARIOUS DEGREES, SOME CLINICAL TRIAL WORK. EARLY ON WHEN THEY STARTED WORKING WITH THE PHARMA COMPANIES IT WAS -- YOU KNOW, A LOT OF THE REVENUE WAS DERIVED FROM CREATING ALGORITHMS FOR THEM. BUT THEY HAD BEEN MORPHING INTO BEING ABLE TO DO TESTING FOR CLINICAL WORK AND HOPED TO TAKE THAT FURTHER OVER TIME.
MR. SCHENK: DID THERE COME A TIME LATER ON IN YOUR INTERACTIONS WITH THERANOS WHEN YOU GAINED MORE INFORMATION ABOUT WHAT MS. HOLMES SAID THE THERANOS PHARMACEUTICAL WORK INVOLVED?
WADE MIQUELON: YES.
MR. SCHENK: AND WOULD YOU DESCRIBE THAT FOR US?
WADE MIQUELON: I BELIEVE THERE WERE THREE PAPERS THAT WERE PRODUCED FOR US TO SEE FROM THREE DIFFERENT PHARMA COMPANIES THAT HAD BASICALLY OUTLINED SOME OF THE WORK THAT THEY HAD DONE TOGETHER, AS WELL AS THE FINDINGS OF THE PHARMA COMPANIES.
MR. SCHENK: OKAY. THANK YOU. WE'LL COME BACK TO THAT IN A MOMENT. THE FINAL BULLET ON THE SCREEN READS, "THERANOS IS LAUNCHING THERANOS SYSTEMS TO CONSUMERS IN 2010."
WADE MIQUELON: CORRECT.
MR. SCHENK: AND WHAT DID YOU UNDERSTAND THAT TO MEAN?
WADE MIQUELON: I DON'T KNOW THAT WE TALKED ABOUT THAT IN DETAIL. I DO BELIEVE AT THAT TIME THERE WAS SOME DISCUSSION OF SOME WORK THAT THEY WERE DOING WITH ANOTHER LARGE RETAILER, AND I BELIEVE OVER THE NEXT FEW MONTHS THERE WAS A LITTLE BIT OF LIGHT SHED ON SOME OF THAT WORK AND SOME OF THE TESTING OF THOSE EMPLOYEES. BUT, AGAIN, I THINK THAT -- MY UNDERSTANDING WAS THAT THAT WAS ALLUDING TO THAT OTHER RETAILER.
MR. SCHENK: AND WHICH RETAILER WAS THAT? DO YOU REMEMBER?
WADE MIQUELON: TO MY BELIEF, IT'S SAFEWAY. I'M NOT SURE THAT THAT WAS EXPLICIT, BUT THAT IS WHAT I BELIEVED TO BE TRUE.
MR. SCHENK: THANK YOU. COULD WE TURN NOW TO PAGE 7. THIS SLIDE IS ENTITLED OVERVIEW: THERANOS SYSTEMS, AND UNDER THE THERANOS SYSTEMS THERE ARE THREE PICTURES. DO YOU SEE THOSE IMAGES?
WADE MIQUELON: YES.
MR. SCHENK: AND THE FIRST IMAGE IS LABELED DEVICES. DO YOU RECOGNIZE THAT IMAGE?
WADE MIQUELON: YES.
MR. SCHENK: AND WHAT IS THAT?
WADE MIQUELON: THAT WAS -- I DON'T KNOW AT THAT TIME WHAT IT WAS CALLED, BUT IT BECAME EFFECTIVELY KNOWN AS THE EDISON MACHINE.
MR. SCHENK: AND WHEN YOU WERE IN PALO ALTO, DID YOU SEE THE PHOTO OR DID YOU SEE AN ACTUAL MACHINE?
WADE MIQUELON: I SAW AN ACTUAL MACHINE.
MR. SCHENK: AND WHERE WAS THAT MACHINE LOCATED?
WADE MIQUELON: AGAIN, I BELIEVE THAT WAS RIGHT OUTSIDE OF THE CONFERENCE ROOM IN A SMALL, YOU KNOW, CONCLAVE OFF TO THE RIGHT.
MR. SCHENK: AND THE NEXT PHOTO IS LABELLED CARTRIDGES. DID MS. HOLMES OR MR. BALWANI EXPLAIN TO YOU HOW CARTRIDGES PLAYED A ROLE IN THE THERANOS SYSTEMS?
WADE MIQUELON: CORRECT.
MR. SCHENK: AND WHAT DID YOU LEARN?
WADE MIQUELON: SO IT WAS -- MY UNDERSTANDING WAS ALWAYS THAT WHAT THERANOS WAS ACTUALLY DOING WAS, AGAIN, KIND OF AKIN TO MAINFRAMES MOVING TO LAPTOP. IT WASN'T CHANGING HOW LAB HAD BEEN DONE FOR IMMUNOASSAY. IT WAS MAKING IT MUCH MORE EFFECTIVE. SO ESSENTIALLY YOU WOULD HAVE A CARTRIDGE WHICH HAD VARIOUS CHAMBERS, YOU KNOW, LET'S SAY 8 BY 8 OR 64 POTENTIAL CHAMBERS, AND EACH ONE CAN HOLD A SPECIFIC ANTIGEN, AND IF YOU HAD A DROP OF BLOOD THAT WAS THEN MOVED INTO THE CHAMBERS, YOU COULD HAVE A REACTION AND IT COULD BE READ THROUGH THE OPTICS SIMILAR TO WHAT WOULD HAPPEN ON A, YOU KNOW, VERY BIG EXPENSIVE, YOU KNOW, INDUSTRIAL MACHINE. BUT IT WOULD HAPPEN, YOU KNOW, MUCH MORE EFFICIENTLY AT THE POINT OF CARE THERE. SO THE ESSENTIAL KEY OVER TIME WOULD BE TO CREATE CARTRIDGES THAT WERE RELEVANT TO WHAT YOU WANTED TO TEST. SO IF YOU WERE DOING GENERAL CHEMISTRY, YOU WOULD HAVE TO HAVE A CARTRIDGE THAT HAS THE VARIOUS ANTIGENS OF THE VARIOUS CHEMISTRY THAT YOU'RE TRYING TO DO.
MR. SCHENK: AND DID YOU HAVE AN UNDERSTANDING OF THE RELATIONSHIP BETWEEN THE CARTRIDGE AND THE DEVICE?
WADE MIQUELON: CORRECT. I GUESS I ALWAYS THOUGHT OF IT REALLY AS A PLATFORM, THE WAY THIS TECHNOLOGY WAS DEVELOPED, AND WHAT WAS PRETTY EXCITING I THINK IS THAT THAT DEVICE IS REALLY A PLATFORM TO TEST EFFECTIVELY ALMOST ANYTHING AS LONG AS YOU HAVE THE PROPER CARTRIDGE FOR THE PROPER SPECIFIC TEST.
MR. SCHENK: AND DID YOU SEE THE CARTRIDGE BEING PLACED INTO THE DEVICE?
WADE MIQUELON: I DON'T KNOW IF I SAW IT ON THAT DAY. I DID LATER ON, BUT I'M NOT SURE ON THAT PARTICULAR DAY THAT I DID.
MR. SCHENK: YOU CAN'T RECALL IF IT WAS THAT DAY IN 2010, BUT AT SOME POINT?
WADE MIQUELON: AT SOME POINT I DID, YEAH.
MR. SCHENK: AND THE THIRD IMAGE ON THE TOP IS CALLED MOBILE APPLICATIONS. DID YOU GAIN AN UNDERSTANDING OF WHAT THAT MEANT DURING THE MEETING?
WADE MIQUELON: YEAH, I THINK ANOTHER EXCITING THING THAT THEY WERE DOING REALLY WAS THE I.T. AROUND THE ENTIRE VALUE PROPOSITION. SO TO THE EXTENT THAT YOU COULD TEST REALTIME AT THE POINT OF CARE WITH THE DEVICE AND THE CARTRIDGE, THE DATA, THE RESULTS, IF YOU WILL, WILL BE FED INTO THE CLOUD AND GO INTO THEIR CENTRAL LAB IN PALO ALTO FOR, YOU KNOW, PATHOLOGISTS TO REVIEW OR AN ALGORITHM TO REVIEW. BUT YOU WERE EFFECTIVELY PUTTING THIS INFORMATION ON THE WEB AND PUTTING IT OUT MORE OR LESS REALTIME.
MR. SCHENK: OKAY. AND WAS THAT ATTRACTIVE TO WALGREENS?
WADE MIQUELON: I THINK IT'S AN ATTRACTIVE PART OF THE PROPOSITION BECAUSE YOU DON'T HAVE TO HAVE, YOU KNOW, AN EXPERT OR A PATHOLOGIST OR A DOCTOR WHERE THE MACHINE IS. YOU ONLY HAVE TO HAVE IT IN A CENTRAL LOCATION WHERE THE DATA CAN BE ANALYZED PROPERLY.
MR. SCHENK: IF YOU WOULD NOW TURN TO PAGE 8. WE SEE ANOTHER PHOTO UNDER THERANOS SYSTEMS DEVICES. IS THIS PHOTO ALSO SIMILAR TO THE DEVICE THAT YOU SAW IN PALO ALTO?
WADE MIQUELON: VERY SIMILAR.
MR. SCHENK: DID MS. HOLMES OR MR. BALWANI EVER TELL YOU THAT THERANOS TESTED BLOOD ON NON-THERANOS DEVICES, ON SOME OTHER DEVICE?
WADE MIQUELON: NOT TO MY RECOLLECTION, EXCEPT TO THE EXTENT THAT I KNOW THAT THEY HAD DONE A LOT OF WORK TO CORRELATE THE THERANOS EDISON DEVICE WITH CONVENTIONAL TESTING. SO I GUESS MY UNDERSTANDING WAS THAT THEY MUST BE DOING, YOU KNOW, THAT TESTING ON CONVENTIONAL LAB EQUIPMENT, WHETHER IT BE IN HOUSE OR OUTSOURCED, BUT THAT THOSE CORRELATIONS WOULD HAVE TO BE, YOU KNOW, DONE SOMEHOW.
MR. SCHENK: SO DO I UNDERSTAND WHAT YOU'RE SAYING IS THAT THEY WOULD TEST ON THE EDISON DEVICE, AND ALSO ON CONVENTIONAL DEVICES, BUT FOR THE PURPOSES OF COMPARING THE RESULTS?
WADE MIQUELON: RIGHT. FOR PURPOSES OF DRAWING CORRELATIONS THAT WOULD, YOU KNOW, DEMONSTRATE IT TO BE AS GOOD AS.
MR. SCHENK: AND HOW ABOUT FOR THE WALGREENS BUSINESS PROPOSITION? IF WALGREENS WAS GOING TO PARTNER WITH THERANOS, DID YOU HAVE AN UNDERSTANDING THAT THERANOS WOULD TEST BLOOD ON CONVENTIONAL DEVICES?
WADE MIQUELON: YES.
MR. SCHENK: AND DESCRIBE THAT TO US.
WADE MIQUELON: THE VALUE PROPOSITION WAS TO HAVE, YOU KNOW, 90, 95 PERCENT OF ALL TESTS THAT COULD BE DONE IN A CONVENTIONAL LAB DONE ON A THERANOS DEVICE. THERE WERE SOME DISCUSSIONS AT SOME TIME THAT IF WE HAD A FULL LAB OFFERING AND THERE WERE OTHER, YOU KNOW, MORE OBSCURE TESTS OR TESTS THAT WEREN'T RELEVANT TECHNOLOGY, THAT THOSE MIGHT BE DONE THROUGH A LAB SETTING. BUT THAT WAS, YOU KNOW, IT WOULD BE A VERY SMALL MINORITY OF THE TOTAL.
MR. SCHENK: SO THE MAJORITY WERE ON THE THERANOS DEVICE, AND AS YOU SAID, SOME OBSCURE TESTS WOULD BE TESTED ON CONVENTIONAL DEVICES?
WADE MIQUELON: RIGHT.
MR. SCHENK: WOULD YOU TURN TO PAGE 9. THIS SLIDE IS ENTITLED VALIDATION OF THERANOS SYSTEMS. THE FIRST PARAGRAPH READS, "THERANOS SYSTEMS HAVE BEEN COMPREHENSIVELY VALIDATED OVER THE COURSE OF THE LAST SEVEN YEARS BY 10 OF THE 15 LARGEST PHARMACEUTICAL COMPANIES." DID MS. HOLMES OR MR. BALWANI EXPLAIN THAT TO YOU WHEN YOU WERE IN PALO ALTO?
WADE MIQUELON: AGAIN, IT WAS THE ATTESTATIONS THAT THEY HAD BEEN DOING WORK FOR 10 OF THE 15 PHARMACEUTICAL COMPANIES. WE GOT A LITTLE MORE INFORMATION ON THREE OF THOSE COMPANIES. BUT WE DISCUSSED THAT. AND THERE WAS A POINT IN WHICH, AGAIN, BECAUSE THEY WERE UNDER NDA, THE LEVEL OF INFORMATION WAS DIMINISHED.
MR. SCHENK: SO AT SOME POINT LATER YOU ACTUALLY RECEIVED SOME OF THESE REPORTS; IS THAT RIGHT?
WADE MIQUELON: I BELIEVE WE RECEIVED THREE DIFFERENT REPORTS.
MR. SCHENK: OKAY. COULD WE NOW TURN TO PAGE 17. THIS SLIDE IS TITLED THERANOS GENERAL CHEMISTRY TESTS. THE FIRST BULLET READS, "REAL-TIME, FINGER-STICK-BASED TESTS. " WHEN YOU WERE AT THE THERANOS HEADQUARTERS, DID MS. HOLMES OR MR. BALWANI EXPLAIN TO YOU THAT THERANOS TESTS WERE DONE BY DRAWING BLOOD FROM A FINGERSTICK?
WADE MIQUELON: THAT WAS MY UNDERSTANDING.
MR. SCHENK: AND WHERE DID THAT UNDERSTANDING COME FROM?
WADE MIQUELON: FROM THE DISCUSSIONS THAT I HAD WITH MR. BALWANI AND MS. HOLMES.
MR. SCHENK: OKAY. AND THEY USED THE WORD REAL-TIME. DID YOU HAVE AN UNDERSTANDING OF WHAT THAT MEANT?
WADE MIQUELON: AGAIN, IT'S JUST THE FACT THAT YOU COULD TAKE BLOOD AND ENTER IT INTO A DEVICE AND IDEALLY IN 15 MINUTES THE DEVICE WOULD HAVE DONE THE ANALYSIS, VERSUS IF YOU WERE IN A LAB SETTING, YOU MIGHT HAVE MULTIPLE HANDOFFS OF BLOOD VIALS ULTIMATELY GOING TO A LAB AND THEN WAITING TO BE PROCESSED.
MR. SCHENK: THE SECOND BULLET SAYS THAT "AT LESS THAN 70 PERCENT OF THE COST OF CURRENT LAB TESTS." WAS THERE SOME DISCUSSION ABOUT SOME COST ADVANTAGES TO THE THERANOS SYSTEM?
WADE MIQUELON: THERE WAS. WE FELT THIS COULD BE MUCH MORE COST EFFECTIVE THAN A TRADITIONAL LAB FOR A VARIETY OF REASONS.
MR. SCHENK: WAS THAT ATTRACTIVE TO WALGREENS, THE COST ASPECT?
WADE MIQUELON: I THINK ATTRACTIVE TO EVERYONE.
MR. SCHENK: WHY?
WADE MIQUELON: I THINK, YOU KNOW, THE THING THAT EXCITED ME FOR SURE SO MUCH WAS THAT THERANOS HELD THE PROMISE OF BEING ABLE TO DO LAB TESTING BETTER, FASTER, AND CHEAPER, ALL OF WHICH LEAD TO BETTER OUTCOMES FOR PATIENTS.
MR. SCHENK: IF YOU'LL NOW TURN PLEASE TO PAGE 27. THIS SLIDE IS TITLED REAL-TIME FINGER-STICK-BASED TESTS FOR LAUNCH AT WALGREENS IN 2010. THEN THERE'S A NUMBERS 1, 2, AND 3, GENERAL CHEMISTRY PANELS AND STANDARD BLOOD TESTS, THE SECOND IS INFLUENZA, THE THIRD IS FERTILITY, AND THE SLIDE TALKS ABOUT LAUNCH AT WALGREENS IN 2010. WAS THERE DISCUSSION ABOUT LAUNCHING WITH FINGERSTICK-BASED TESTS AT WALGREENS THAT YEAR IN 2010?
WADE MIQUELON: THERE WERE DISCUSSIONS. EVERYBODY WAS EXCITED ABOUT THE PROPOSITION AND WONDERING, YOU KNOW, HOW LONG IT WOULD TAKE TO BRING THIS TO REALITY, BUT THERE WERE SOME EARLIER DISCUSSIONS FOR SURE.
MR. SCHENK: AND WHEN YOU WERE HAVING THOSE DISCUSSIONS, DID MS. HOLMES DRAW A DISTINCTION BETWEEN THE TESTS, THE BLOOD TESTS THAT WERE READY IN 2010 VERSUS BLOOD TESTS THAT WOULD BE READY LATER OR SOMETIME IN THE FUTURE?
WADE MIQUELON: I DON'T BELIEVE SO.
MR. SCHENK: WHAT DO YOU MEAN?
WADE MIQUELON: THE -- YOU KNOW, AGAIN, EITHER ON THIS DAY OR IN THE NEXT FEW MONTHS, THERE WAS A LOT OF DISCUSSION THAT THE COMPANY WAS VERY ADEPT AT DOING KIND OF THE STANDARD TESTING. BUT WE BUCKETED OVER TIME, YOU KNOW, THREE DIFFERENT VERSIONS. I THINK MORE OR LESS WE HAD THE TESTS THAT ARE THE OVERWHELMING, YOU KNOW, STANDARD TESTS DONE; THERE WERE SPECIALTY TESTS WHICH WERE A BIT MORE DIFFICULT; AND THEN WE TALKED ABOUT SOMETHING CALLED V3, YOU KNOW, WHICH WERE TESTS ULTIMATELY WHICH WOULD BE PREDICTIVE AND NEW TO THE WORLD, BUT THAT DIDN'T REALLY EXIST YET.
MR. SCHENK: AND WHEN YOU SAY V3, DO YOU MEAN VERSION?
WADE MIQUELON: VERSION 3.
MR. SCHENK: DID YOU HAVE AN UNDERSTANDING FROM MS. HOLMES WHAT THE FIRST BUCKET, AS YOU DESCRIBED IT, WHAT WAS INVOLVED, OR WHAT TYPES OF TESTS WERE INVOLVED IN THAT FIRST BUCKET?
WADE MIQUELON: YOU KNOW, AGAIN, IT'S PRIMARY, YOU KNOW, BLOOD TESTS DONE THROUGH IMMUNOASSAY, THE, THE ANTIGEN TESTS, WHICH NUMBER IN THE HUNDREDS, BUT THOSE TESTS WERE EITHER READY TO GO OR WOULD BE SHORTLY.
MR. SCHENK: DID YOU LEAVE THE MEETING WITH AN UNDERSTANDING THAT THERE WERE A NUMBER OF TESTS THAT WERE AVAILABLE IN 2010?
WADE MIQUELON: YES, AND I DON'T KNOW HOW MANY SPECIFICALLY. AGAIN, I DON'T KNOW IF WE HAD A NUMBER. WE, WE FELT THAT THEY WERE DOING A FAIRLY BROAD RANGE OF TESTS WITH THE PHARMA COMPANIES, AS WELL AS OUR UNDERSTANDING WAS THAT THEY WERE ALREADY DOING SOME WORK WITH THE OTHER RETAILER IN THAT REGARD.
MR. SCHENK: OKAY. WOULD YOU NOW TURN TO PAGE 30. THIS IS TITLED REAL-TIME FINGER-STICK-BASED TESTS FOR LAUNCH AT WALGREENS IN 2011, AND IT INCLUDES WOMEN'S AND MEN'S HEALTH. DURING THE MEETING, DID MS. HOLMES MAKE A DISTINCTION BETWEEN THE TESTS THAT WOULD BE READY IN 2010 VERSUS THE TESTS IN 2011?
WADE MIQUELON: I RECALL SOME DIALOGUE. I DON'T KNOW IF IT WAS THAT MEETING OR NOT, WHETHER WE WOULD WANT TO TAKE A COUPLE OF SPECIFIC TESTS TO GET SOME PILOT LEARNINGS, THESE TYPES OF TESTS; OR WHETHER WE WOULD, YOU KNOW, WAIT AND DO KIND OF THE BROADER GENERAL CHEMISTRY. AGAIN, THIS WAS VERY EARLY DISCUSSIONS, BUT IT WAS JUST, AGAIN, A DIALOGUE ON WHAT MIGHT BE THE NEXT BEST STEP TO BE ABLE TO PILOT AND GET MORE INFORMATION.
MR. SCHENK: DURING THE MEETING, DID YOU GET AN IMPRESSION ABOUT MS. HOLMES'S ABILITY TO DESCRIBE TO YOU PRESENT CAPABILITIES AS OPPOSED TO FUTURE CAPABILITIES?
WADE MIQUELON: I DON'T KNOW IF I COULD SAY IN THAT VERY FIRST MEETING OR NOT. I THINK BOTH OF US WERE UNDER THE IMPRESSION, DR. ROSAN AND I, THAT CERTAINLY THIS TECHNOLOGY WOULD WORK FOR, YOU KNOW, A NUMBER OF TESTS AND THAT EXPANDING TESTS WAS JUST, AGAIN, A MATTER OF JUST PERFECTING THE REAGENTS AND OTHER THINGS. WE CERTAINLY HAD AN UNDERSTANDING IT WORKED FOR MANY TESTS. I CAN'T SPECIFY HOW MANY.
MR. SCHENK: YOU DIDN'T KNOW THE CURRENT NUMBER, BUT YOU UNDERSTOOD THAT IT WAS PRESENTLY CAPABLE OF WORKING FOR SOME?
WADE MIQUELON: RIGHT. AND I WAS TOLD THAT ANY BLOOD, ANY BLOOD, URINE, OTHER FLUID SAMPLE SHOULD BE ABLE TO BE WORKABLE UPON THAT TECHNOLOGY.
MR. SCHENK: I'M SORRY?
WADE MIQUELON: ANY BLOOD, SALIVA, OR URINE, ALMOST ANY TEST SHOULD BE ABLE TO WORK ON THAT PLATFORM.
MR. SCHENK: IF YOU'LL TURN ONE PAGE NOW TO PAGE 31. THIS SLIDE IS TITLED LAUNCH OF THERANOS SYSTEMS AT WALGREENS AND IT READS, "THERANOS WOULD LIKE TO CEMENT A PARTNERSHIP WITH WALGREENS BY END OF APRIL 2010 TO LAUNCH THE GENERAL CHEMISTRY, INFLUENZA, AND FERTILITY TESTS IN Q4 2010." DO YOU REMEMBER A DISCUSSION AROUND THIS TOPIC?
WADE MIQUELON: VAGUELY, BUT YES.
MR. SCHENK: AND THE MEETING WAS OCCURRING IN MARCH OF 2010; IS THAT RIGHT?
WADE MIQUELON: CORRECT.
MR. SCHENK: AND SO WAS THERANOS SUGGESTING THAT YOU COULD BEGIN THE PARTNERSHIP NEXT MONTH IN APRIL OF 2010?
WADE MIQUELON: I THINK ON A SMALL SCALE, YES, THAT'S WHAT THEY'RE SUGGESTING.
MR. SCHENK: AND YOU SAID ON A SMALL SCALE. IT DESCRIBES A LAUNCH WITH CERTAIN TESTS, GENERAL CHEMISTRY, INFLUENZA AND FERTILITY. DO YOU REMEMBER THOSE BEING DISCUSSED?
WADE MIQUELON: YES.
MR. SCHENK: AND WHAT DO YOU RECALL ABOUT THAT?
WADE MIQUELON: AGAIN, THAT THESE MIGHT BE SOME LOW HANGING FRUIT, SO TO SPEAK, IN ORDER TO BE ABLE TO GET IN THE MARKET AND START TO UNDERSTAND THINGS LIKE CONSUMER ACCEPTANCE OF LAB IN A DRUG STORE AND OTHER LEARNINGS.
MR. SCHENK: OKAY. WOULD YOU NOW TURN TO EXHIBIT 291 IN YOUR BINDER. THE FIRST PAGE HAS A COUPLE OF EMAILS ON IT, AND THEN THERE ARE SOME ATTACHMENTS. WOULD YOU JUST SPEND A MINUTE AND FLIP THROUGH THAT AND I'M GOING TO ASK YOU IF YOU RECOGNIZE THE ATTACHMENTS.
WADE MIQUELON: OKAY.
MR. SCHENK: DO YOU RECOGNIZE THE ATTACHMENTS?
WADE MIQUELON: I DO.
MR. SCHENK: AND WHAT ARE THE ATTACHMENTS?
WADE MIQUELON: THESE ARE EXCERPTS FROM THE THREE PHARMA COMPANIES, DOCUMENTS THAT WERE SHARED WITH US MORE OR LESS VALIDATING THE WORK THAT THEY HAD DONE WITH THEM.
MR. SCHENK: SO EARLIER WHEN YOU TALKED ABOUT SEEING SOME VALIDATION REPORTS FROM PHARMACEUTICAL COMPANIES, ARE THESE THOSE REPORTS?
WADE MIQUELON: YES.
MR. SCHENK: AND THEN THE EMAIL ON THE TOP OF THE FIRST PAGE FROM MS. HOLMES TO TWO EMPLOYEES, INCLUDING DR. ROSAN ON THIS EMAIL, YOU'RE NOT ON THIS EMAIL; IS THAT RIGHT?
WADE MIQUELON: I'M NOT.
MR. SCHENK: BUT YOU STILL SAW THESE ATTACHMENTS AT SOME POINT?
WADE MIQUELON: YEAH. I RECALL DR. ROSAN SHARING THOSE WITH ME.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS THE FIRST EMAIL ON THE FIRST PAGE, THE ONE FROM MS. HOLMES AND THE ATTACHMENTS.
MR. DOWNEY: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: THOSE ARE ADMITTED, AND THEY MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 291 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: LET'S START FIRST WITH AN EMAIL FROM MS. HOLMES ON APRIL 2010. DO YOU SEE THAT EMAIL?
WADE MIQUELON: YES.
MR. SCHENK: AND IT READS "DR. JAY, ALEX. "AS PER OUR DISCUSSION, PLEASE FIND THREE INDEPENDENT DUE DILIGENCE REPORTS ON THERANOS SYSTEMS ATTACHED TO THIS EMAIL. THESE REPORTS ARE FROM GLAXOSMITHKLINE, PFIZER, AND SCHERING-PLOUGH AFTER THEIR OWN TECHNICAL VALIDATION AND EXPERIENCE WITH THERANOS SYSTEMS IN THE FIELD. PLEASE NOTE THAT THESE DOCUMENTS ARE STRICTLY CONFIDENTIAL UNDER OUR CDA." IN THE EMAIL, SHE WRITES "INDEPENDENT DUE DILIGENCE REPORTS." IS THAT CONSISTENT WITH YOUR UNDERSTANDING OF WHAT THESE REPORTS WERE?
WADE MIQUELON: YES.
MR. SCHENK: AND SHE ALSO WRITES THAT GLAXO, PFIZER, AND SCHERING-PLOUGH DID THIS AFTER THEIR, QUOTE, "OWN TECHNICAL VALIDATION." DID YOU ALSO UNDERSTAND THAT THE PHARMA COMPANIES DID THEIR OWN TECHNICAL VALIDATIONS AND PREPARED THESE REPORTS?
WADE MIQUELON: YES.
MR. SCHENK: LET'S NOW TURN TO THE REPORTS. I'D LIKE TO FIRST SHOW YOU PAGE 2. THIS ONE IS FROM GSK. WHEN YOU WERE CFO AT WALGREENS, YOU SAID THAT DR. JAY SHARED THESE REPORTS WITH YOU. DO YOU RECALL THAT?
WADE MIQUELON: YES.
MR. SCHENK: AND DO YOU REMEMBER WHAT YOU MADE OF THEM WHEN YOU RECEIVED THE REPORTS?
WADE MIQUELON: I THOUGHT IT WAS AT LEAST A TERRIFIC PIECE OF INFORMATION ABOUT THE VALIDITY OF WHAT THEY WERE WORKING ON TO BE ABLE TO HAVE THREE PHARMA COMPANIES USE IT, AND MOST OF THESE COMPANIES HAVE VERY BIG LABS AND VERY BIG R&D BUDGETS FOR LABS, AND TO BE ABLE TO VALIDATE SOME COMPONENTS OF WHAT THEY WERE DOING.
MR. SCHENK: AND DID THAT PIECE OF VALIDATION MATTER TO YOU OR MATTER TO WALGREENS AS YOU'RE DECIDING WHETHER TO CREATE A PARTNERSHIP WITH THERANOS?
WADE MIQUELON: CERTAINLY AN IMPORTANT PIECE.
MR. SCHENK: WHY?
WADE MIQUELON: AGAIN, THE PHARMACY COMPANIES IN GENERAL ARE MUCH MORE ADEPT AT THE LAB WORK THAT THEY DO BOTH FOR THE CLINICAL WORK FOR THEIR DRUG DEVELOPMENT, AS WELL AS MANY CASES FOR THEIR LAB WORK OUTRIGHT. SO BEING ABLE TO HAVE, AGAIN, THEIR VALIDATION, THEIR ANALYSIS, JUST BEING ABLE TO KNOW THAT 10 OF THE TOP 15 WERE ACTIVELY WORKING AND THREE WOULD BE WORKING TO VALIDATE AND PUBLISH OR AT LEAST TO CREATE A PARTNER WE THOUGHT WAS VERY IMPORTANT.
MR. SCHENK: AND IF YOU WOULD NOW TURN TO PAGE 8 IN THE DOCUMENT. WE SEE THE VALIDATION REPORT FROM PFIZER. DO YOU SEE THAT?
WADE MIQUELON: I DO.
MR. SCHENK: AND DID YOU NOTICE THAT PFIZER'S LOGO WAS ON THE DOCUMENT WHEN YOU LOOKED AT THIS INITIALLY?
WADE MIQUELON: YES.
MR. SCHENK: AND WHAT DID YOU MAKE OF THAT FACT?
WADE MIQUELON: MY ASSUMPTION WAS JUST THAT THIS WAS EITHER WRITTEN BY PFIZER WITH THE APPROVAL OF THERANOS TO SHARE, OR IT WAS WRITTEN BY THERANOS WITH PFIZER'S APPROVAL THAT THEY AGREED TO WHAT WAS WRITTEN.
MR. SCHENK: I'D NOW LIKE TO DRAW YOUR ATTENTION TO PAGE 34 IN THE DOCUMENT. NOW WE'RE LOOKING AT THE VALIDATION REPORT FROM SCHERING CORPORATION, SCHERING-PLOUGH. DO YOU NOTICE THAT THE SCHERING-PLOUGH LOGO WAS ON THIS DOCUMENT ALSO?
WADE MIQUELON: YES.
MR. SCHENK: AND IN THE SECOND LINE, IS THE WORD "INSTITUTE" MISSPELLED?
WADE MIQUELON: YES.
MR. SCHENK: AND DID YOU NOTICE THAT AT THE TIME?
MR. SCHENK: COULD WE NOW TURN TO EXHIBIT 300 IN YOUR BINDER. AFTER YOU LEFT THE THERANOS HEADQUARTERS AND WENT BACK TO ILLINOIS, DID YOU CONTINUE TO HAVE FURTHER MEETINGS WITH THERANOS?
WADE MIQUELON: YES.
MR. SCHENK: FOR WHAT PURPOSE? WHAT WERE YOU -- WHAT WAS WALGREENS CONSIDERING?
WADE MIQUELON: LIKE I SAID BEFORE, I THINK WE THOUGHT THAT THIS WAS ONE OF THE MOST EXCITING COMPANIES THAT WE HAD SEEN, MAYBE NOT JUST IN LAB BUT IN GENERAL; THAT WHAT THEY WERE DOING WAS VERY DISRUPTIVE AND COULD BE BETTER, FASTER, CHEAPER THAN WHAT HAD BEEN DONE BEFORE; THAT IT COULD REALLY CHANGE THE GAME IN TERMS OF PROVIDING MORE ACCESSIBLE LAB AND BETTER OUTCOMES FOR PATIENTS, AND SO WE WERE VERY EXCITED ABOUT FORMING A PARTNERSHIP.
MR. SCHENK: AND WAS ONE OF THE NEXT STEPS YOU TOOK TO HAVE ANOTHER MEETING, THIS TIME IN ILLINOIS, WITH MS. HOLMES AND MR. BALWANI?
WADE MIQUELON: YES.
MR. SCHENK: AND IS EXHIBIT 300 AN EMAIL FROM YOU TO OTHER FOLKS AT WALGREENS IN ADVANCE OF THAT MEETING?
WADE MIQUELON: YES.
MR. SCHENK: YOUR HONOR, THE GOVERNMENT OFFERS EXHIBIT 300.
MR. DOWNEY: NO OBJECTION, YOUR HONOR.
JUDGE DAVILA: IT'S ADMITTED. IT MAY BE PUBLISHED.
(GOVERNMENT'S EXHIBIT 300 WAS RECEIVED IN EVIDENCE.)
BY MR. SCHENK:
MR. SCHENK: IF WE CAN START WITH YOUR EMAIL THAT BEGINS ON THE MIDDLE OF THE PAGE AND CAPTURE THE REST OF THE SCREEN ALL OF THE WAY DOWN. YOU WROTE THIS APRIL 26TH, 2010, SO ABOUT A MONTH AFTER YOUR TRIP TO THERANOS HEADQUARTERS; IS THAT RIGHT?
WADE MIQUELON: CORRECT.
MR. SCHENK: AND YOU WROTE TO SEVERAL INDIVIDUALS FROM WALGREENS. SORT OF GENERALLY, WHO WERE THESE INDIVIDUALS?
WADE MIQUELON: THIS WOULD BE A COMPILATION OF, YOU KNOW, EIGHT, NINE OF THE TOP OFFICERS IN THE COMPANY, AS WELL AS EXECUTIVES WHO OVERSAW NEW BUSINESS DEVELOPMENT, AS WELL AS EXECUTIVES WHO WERE FROM A HEALTH CARE BACKGROUND.
MR. SCHENK: AND THE FIRST NAME WE SEE IS GREG WASSON. WAS HE THE CEO AT THE TIME?
WADE MIQUELON: YES, HE WAS.
MR. SCHENK: IN THE EMAIL YOU WRITE, "AS YOU KNOW, PROVIDING DIAGNOSTIC SERVICES IN THE STORES, RETAIL CLINICS, WORK SITE HEALTH CENTERS, HOME CARE, ET CETERA, IS IN OUR STRATEGIC DOCUMENT AND HAS BEEN PART OF OUR BOARD DISCUSSIONS." WHAT DID YOU MEAN BY THAT, IN OUR STRATEGIC DOCUMENT AND HAS BEEN PART OF OUR BOARD DISCUSSIONS?
WADE MIQUELON: WELL, LIKE ANY COMPANY, WALGREENS HAS A STRATEGY OF BOTH OVERARCHING THEMES, AS WELL AS SPECIFIC INITIATIVES, AND WE WERE WORKING TO KEEP MOVING AGAIN INTO ADDITIONAL SPACES IN HEALTH CARE THAT WE THOUGHT MADE SENSE FOR THE COMPANY. AGAIN, ONE OF THE ONES MOST PEOPLE WOULD BE FAMILIAR WITH WOULD BE VACCINATIONS, BUT THAT MOVING INTO THE LAB SPACE AND PROVIDING MORE ACCESSIBLE LAB FOR PATIENTS WAS ANOTHER VERY INTERESTING OPPORTUNITY.
MR. SCHENK: A SENTENCE DOWN, OR TWO SENTENCES DOWN, YOU WRITE, "ON FRIDAY NEXT WEEK WE HAVE ASKED A COMPANY, THERANOS, WHO HAS A NEW TECHNOLOGY (AND WE BELIEVE TO POTENTIALLY BE THE LEADER IN THE SPACE) TO PRESENT TO OUR SENIOR TEAM." IS THAT TRUE, DID YOU ASK THERANOS TO COME AND PRESENT?
WADE MIQUELON: YES.
MR. SCHENK: AND THEN YOU WRITE, "THE REASONS WHY WE ARE SO ENCOURAGED ARE," AND THEN I'D LIKE TO GO THROUGH SOME OF THESE REASONS WITH YOU. BUT FIRST, WHERE DID YOU GET THE INFORMATION THAT YOU WROTE IN THIS LIST? WHERE DID THAT COME FROM?
WADE MIQUELON: THIS LIST WAS A MIX OF THE PRESENTATION THAT I SAW, AS WELL AS THE DISCUSSION, THE Q & A AND THE DIALOGUE THAT WE HAD AT THE PRIOR MEETING.
MR. SCHENK: SO THE PRESENTATION THAT WE LOOKED AT, THE POWERPOINT SLIDES?
WADE MIQUELON: CORRECT.
MR. SCHENK: AND THEN THE QUESTIONS AND ANSWERS THAT YOU RECEIVED WHEN YOU WERE AT HEADQUARTERS FOR THERANOS?
WADE MIQUELON: CORRECT, JUST MY PERSONAL NOTES THAT I WOULD HAVE TAKEN FROM THE MEETING.
MR. SCHENK: NUMBER 1 IS "50 TO 70 PERCENT CHEAPER THAN TESTS DONE AT NORMAL LABS WHILE ALLOWING US TO EARN A ROBUST GROSS/NET PROFIT. "A. DISRUPTIVE TECHNOLOGY THAT CUTS ENTIRE INFRASTRUCTURE OF A CLINICAL LAB, NO COURIERS, NO EXPENSIVE TESTING EQUIPMENT, NO TEAMS OF TRAINED LAB TECHS, NO BIG BUILDINGS, PHARM TECH LEVEL PERSON CAN RUN DEVICE?" SO HELP ME TO UNDERSTAND WHAT YOU MEANT WHEN YOU WROTE "DISRUPTIVE TECHNOLOGY THAT CUTS ENTIRE INFRASTRUCTURE OF A CLINICAL LAB."
WADE MIQUELON: I THINK THIS REALLY GOES TO PART OF THE VALUE PROPOSITION OF, YOU KNOW, 50 TO 70 PERCENT LESS EXPENSIVE. AGAIN, WHEN YOU THINK OF CONVENTIONAL LABS WHERE YOU HAVE VERY EXPENSIVE MACHINES, WHERE YOU HAVE, AGAIN, REAL ESTATE TO HOUSE THAT, WHERE YOU MIGHT HAVE RELATIONSHIPS WITH OFFICE SPACE AND INDUSTRIAL PARKS TO COLLECT SAMPLES, WHERE YOU HAVE COURIERS THAT HAVE TO, YOU KNOW, COURIER YOUR SAMPLES, YOU CAN ARGUE THERE'S A LOT OF ROOM FOR EFFICIENCY AND OPPORTUNITY, AND WE BELIEVED AT SCALE, AS I DO BELIEVE THAT SUNNY AND ELIZABETH DID, THAT THERE WAS AN TREMENDOUS OPPORTUNITY TO REDUCE THAT WASTE AND TO GIVE VALUE TO CUSTOMERS.
MR. SCHENK: YOU THEN WROTE, "NO COURIERS." DID YOU UNDERSTAND THAT BLOOD TESTING THROUGH THERANOS WOULD NOT REQUIRE COURIERS TO TRANSPORT BLOOD?
WADE MIQUELON: CORRECT. AND, AGAIN, I THINK TO THE EXTENT THAT YOU HAVE AN EDISON IN FRONT OF YOU, THAT'S CORRECT. AGAIN, TO THE EXTENT THAT YOU'RE GOING TO TAKE BLOOD SAMPLES AND THEN SEND THEM TO AN EDISON, YOU'D HAVE SOME COURIER PROCESS.
MR. SCHENK: SURE. AND THEN YOU WRITE "NO EXPENSIVE TESTING EQUIPMENT." WHAT DID YOU MEAN BY THAT?
WADE MIQUELON: AGAIN, IT MIGHT BE SOMEWHAT ILLUSTRATIVE, BUT MY UNDERSTANDING IS THAT CONVENTIONAL LAB WILL HAVE VERY EXPENSIVE MACHINES, VERY LARGE MACHINES THAT HAVEN'T CHANGED MUCH IN MANY YEARS, HUNDREDS OF THOUSANDS OF DOLLARS, IF NOT MILLIONS, AND THAT YOU NEED SEVERAL OF THOSE TO BE ABLE TO DO A BROAD MENU OF TESTS. SO BEING ABLE, AGAIN, TO MOVE IT FROM MORE OF THAT MAINFRAME TO A LAPTOP TO WHERE YOU'RE CREATING LOTS OF EDISONS THAT ARE MORE CLOSER TO THE CUSTOMER VERSUS, AGAIN, INVESTING IN THOSE VERY EXPENSIVE TRADITIONAL LAB TESTING MACHINES.
MR. SCHENK: SO IN YOUR MIND, WAS ONE OF THE BENEFITS TO THERANOS THAT THEY DID NOT USE THIS EXPENSIVE TRADITIONAL LAB TESTING EQUIPMENT?
WADE MIQUELON: CORRECT.
MR. SCHENK: AND IF, IN FACT, THERANOS DID USE THIS EXPENSIVE TRADITIONAL LAB TESTING EQUIPMENT, YOU WOULD LOSE THAT BENEFIT THAT YOU JUST DESCRIBED TO US?
WADE MIQUELON: CORRECT.
MR. SCHENK: YOU WROTE, "NO TEAMS OF TRAINED LAB TECHS, NO BIG BUILDINGS, AND THAT THE PHARM TECH LEVEL PERSON CAN RUN THE DEVICE." WHAT DID YOU MEAN BY THAT?
WADE MIQUELON: AGAIN, IT'S -- IF YOU LOOK AT HOW A LAB IS DONE TODAY, IT'S -- SOME OF THE LARGE LAB PLAYERS, THEY'RE NOT ONLY INVESTING IN INFRASTRUCTURE OF LAB MACHINES, THEY'RE ALSO INVESTING IN INFRASTRUCTURE OF COLLECTION POINTS. AGAIN, IT MIGHT BE AN OFFICE BUILDING, REAL ESTATE. IT MIGHT BE IN AN INDUSTRIAL PARK. AND, AGAIN, WITH THE SINGLE BLOOD DROP AND THE NANOTAINER BEING ABLE TO DO THAT AT THE POINT OF CARE, AND PERHAPS WITH SOMEBODY WHO IS NOT A PHLEBOTOMIST WAS ALSO A BENEFIT.
MR. SCHENK: AND DID YOU UNDERSTAND THAT WHEN USING THE EDISON DEVICE, YOU DID NOT NEED A PHLEBOTOMIST TO DRAW BLOOD?
WADE MIQUELON: CORRECT.
MR. SCHENK: AND WHAT WAS A PHARMA TECH LEVEL PERSON?
WADE MIQUELON: A PHARMA TECH WOULD BE SOMEBODY WHO IS NOT A PHARMACIST, BUT WHO HAS HAD A FAIR AMOUNT OF TRAINING IN PHARMACY AND TO BECOME A CERTIFIED TECHNICIAN.
MR. SCHENK: BUT NOT A PHLEBOTOMIST?
WADE MIQUELON: BUT NOT A PHLEBOTOMIST.
MR. SCHENK: SO IF, IN FACT, THERANOS DREW BLOOD THROUGH A VEIN THAT REQUIRED A PHLEBOTOMIST, YOU WOULD LOSE THAT ADVANTAGE; IS THAT RIGHT?
WADE MIQUELON: THAT WOULD BE TRUE.
MR. SCHENK: IN NUMBER 2 YOU WRITE, "96 PERCENT OF TESTS DONE AT BIG LABS ($52 BILLION MARKET) WILL BE ABLE TO BE DONE ON THESE DEVICES." WHAT DID YOU MEAN BY THAT?
WADE MIQUELON: AGAIN, THAT WAS MY UNDERSTANDING OF THE PERCENT OF TESTS THAT COULD BE DONE VIA WHETHER BLOOD, SALIVA, URINE, VIA THAT IMMUNOASSAY TECHNOLOGY OF HAVING AN ANTIGEN REACT AND HAVING A, YOU KNOW, A PROTEIN MARKER AND AN OPTIC READER BE ABLE TO DECIDE. SO IT WAS AN AMOUNT OF TESTING IN THEORY TO BE DONE ON AN EDISON PLATFORM.
MR. SCHENK: AND WHERE DID YOU GET THAT UNDERSTANDING?
WADE MIQUELON: THAT WAS WITH MY DISCUSSION WITH SUNNY AND ELIZABETH.
MR. SCHENK: NUMBER 3, YOU WRITE, "CONSUMER BENEFITS, A IS FINGERSTICK VERSUS BLOOD DRAW." WHAT DID YOU MEAN BY THAT?
WADE MIQUELON: WELL, THERE'S A LOT OF BENEFITS FOR ONE DROP OF BLOOD VERSUS PHLEBOTOMY FOR A LOT OF PEOPLE. SOME PEOPLE DON'T LIKE BLOOD, BUT THERE ARE PEOPLE WHO HAVE CHILDREN WITH SMALL VEINS AND THERE ARE PEOPLE WITH SMALL VEINS, AND THERE MIGHT BE PEOPLE WHO HAVE CANCER TREATMENT OR WHERE THEY HAVE HAD A LOT OF VENA PUNCTURE DONE. AND SO THERE'S A LOT OF LEGITIMATE REASONS FOR LESS BLOOD TO BE VIABLE OR BETTER.
MR. SCHENK: OKAY. AND FROM YOUR DISCUSSIONS WITH MS. HOLMES, DID YOU UNDERSTAND THAT THE THERANOS TECHNOLOGY TESTED BLOOD DRAWN FROM A FINGERSTICK?
WADE MIQUELON: YES.
MR. SCHENK: B IS "RESULTS IN 30 MINUTES INSTEAD OF TOMORROW." WHAT WERE YOU COMMUNICATING THERE?
WADE MIQUELON: MY UNDERSTANDING WAS THAT ONCE YOU DREW THE BLOOD AND PUT THE BLOOD IN THE MACHINE AND THE CARTRIDGE IN THE MACHINE, THAT IT WOULD TAKE ABOUT 15 OR 20 MINUTES FOR THE EDISON MACHINE TO BE ABLE TO INTERPRET THE RESULTS AND THEN THOSE RESULTS WOULD, AGAIN, GET FED INTO THE CLOUD SOMEWHERE FOR A PATHOLOGIST OR AN ALGORITHM OR WHATEVER TO BE ABLE TO DECIPHER THE FINAL OUTCOME.
MR. SCHENK: AND DID YOU UNDERSTAND THAT THAT WAS FASTER THAN TRADITIONAL TESTING? YOU WROTE "INSTEAD OF TOMORROW"?
WADE MIQUELON: YES. IF YOU HAVE GO INTO AN INDUSTRIAL PARK AND THEY TAKE A VIAL OF YOUR BLOOD, YOU'RE GOING TO HAVE TO, YOU KNOW, WAIT FOR THAT VIAL TO BE SHIPPED TO A CONVENTIONAL LAB AND WAIT FOR THAT TO BE RUN ON A TEST IN A CONVENTIONAL LAB, AND SO EFFECTIVELY YOU'RE CUTTING OUT A LOT OF THAT TIME.
MR. SCHENK: WAS THIS ASPECT OF SPEED IMPORTANT TO WALGREENS?
WADE MIQUELON: I THINK BEING ABLE TO GIVE DOCTORS AND THEIR PATIENTS THE DIAGNOSTIC RESULTS FASTER IS ALWAYS BETTER ON AN APPLES TO APPLES BASIS.
MR. SCHENK: AND IF IN FACT THERANOS WAS TESTING BLOOD ON CONVENTIONAL DEVICES THAT TOOK THE LONGER TURNAROUND TIME, WOULD YOU LOSE THE ADVANTAGE THAT YOU JUST DESCRIBED?
WADE MIQUELON: YOU WOULD LOSE THE ADVANTAGE.
MR. SCHENK: NUMBER 4 YOU WRITE, "7 YEARS IN DEVELOPMENT LED BY FUNDING OF SILICON VALLEY EXPERTS SUCH AS LARRY ELLISON WITH STRONG EXPERIENCED MANAGEMENT TEAM (VERY WELL FUNDED COMPANY)." WHAT DID YOU MEAN BY THAT?
WADE MIQUELON: JUST WHAT IT SAYS, WHICH IS OUR UNDERSTANDING IS THAT THEY HAD HAD MR. ELLISON AND PERHAPS SOME VERY OTHER INFLUENTIAL OTHER PEOPLE INVEST, AND I THINK THAT'S ALWAYS A GOOD SIGN WHEN YOU HAVE PEOPLE WHO ARE IN THIS COMMUNITY OF TECHNOLOGY AND WANT TO INVEST THEIR OWN MONEY, IT SPEAKS HIGHLY FOR THAT COMPANY.
MR. SCHENK: AND HOW ABOUT THAT THE COMPANY HAD BEEN AROUND FOR SEVEN YEARS AT THAT TIME, DID THAT MATTER TO YOU?
WADE MIQUELON: I DON'T KNOW IF THAT MATTERED. IT SEEMED LIKE THEY HAD ACCOMPLISHED A LOT IN THAT PERIOD, BUT I GUESS THE FACT THAT IT HADN'T JUST STARTED THE DAY BEFORE IS PROBABLY IMPORTANT TO GIVE SOME LEGITIMACY.
MR. SCHENK: YOU SAY IT SEEMED LIKE THEY HAD ACCOMPLISHED A LOT DURING THAT PERIOD OF TIME. WHERE DID YOU GET THAT IMPRESSION?
WADE MIQUELON: WELL, I MEAN, I WOULD SAY IF AFTER SEVEN YEARS YOU'RE DOING CLINICAL WORK WITH 10 OF THE TOP 15 PHARMA COMPANIES, THAT'S PRETTY IMPRESSIVE.
MR. SCHENK: AND DID MS. HOLMES TELL YOU THAT?
WADE MIQUELON: MS. HOLMES AND MR. BALWANI, YEAH.
MR. SCHENK: THE LAST ITEM ON THIS PAGE IS NUMBER 1 AND IT READS, "DOES NOT EVEN VALUE NEW TESTS SUCH AS BREAST CANCER AND PROSTATE CANCER TESTS THEY ARE DEVELOPING." WHAT DID YOU MEAN BY THAT?
WADE MIQUELON: THIS WAS MORE OF THE KIND OF FUTURISTIC THINGS THAT THEY WERE WORKING ON. I THINK WE CALLED IT, YOU KNOW, VERSION 3. SO IT WASN'T ANYTHING THAT THEY HAD -- SO THEY HAD ALREADY DONE. IT WAS MORE, AGAIN, WHEN YOU -- YOU KNOW, IF I JUST PARSE, YOU KNOW, IF YOU THINK ABOUT A PSA TEST, GETTING A PSA TEST FREQUENTLY AND HAVING IT VERY ACCURATE IS A BENEFIT. IF YOU HAVE A PSA TEST DONE INFREQUENTLY AND IT'S DONE ON TWO DIFFERENT MACHINES, THEY COULD BE CALIBRATED DIFFERENTLY AND THE RESULT MAY NOT BE MEANINGFUL. ON THE BREAST CANCER SIDE, THEY WERE LOOKING AT I THINK A FEW SPECIFIC CANCERS WHERE THERE HAD BEEN NO BIOMARKER THAT HAD BEEN EVER DISCOVERED, AND MAYBE THERE WON'T BE, BUT BY BEING ABLE TO TEST FREQUENTLY AND ACCURATELY ACROSS MANY DIFFERENT FACETS AND THEN RUNNING ALGORITHMS, YOU MIGHT SEE SEVERAL MARKERS CHANGE WHICH WOULD BE PERHAPS AN INDICATION OF PREDICTIVENESS OF FUTURE BREAST CANCER.
MR. SCHENK: AND YOU WROTE "DOES NOT EVEN VALUE NEW TESTS." WHAT DOES THAT MEAN? DID YOU UNDERSTAND THAT NEW TESTS WERE COMING IN THE FUTURE AS OPPOSED TO CURRENT CAPABILITIES?
WADE MIQUELON: RIGHT. THOSE FUTURE BASED TESTS, THOSE VERSION 3 I WOULD SAY, AGAIN, I THINK THOSE WERE ALWAYS PRESENTED AS A POSSIBILITY DOWN THE ROAD. SO THAT WASN'T THE BASIS FOR OUR PARTNERSHIP. THE OTHER COMPONENT OF THIS IS JUST WHEN YOU LOOK AT THE LAB SPACES, YOU KNOW, 50-, $60 BILLION OF LAB SALES AT THE TIME I BELIEVE WAS ABOUT A BILLION TESTS DONE AT ABOUT $60 ON AVERAGE, ALTHOUGH IT VARIES. THERE WAS A BELIEF THAT IF YOU COULD DO THIS TYPE OF TESTING WITH A DROP OF BLOOD ACCURATELY, YOU KNOW, CLOSER TO THE CUSTOMER, THAT YOU WOULD ACTUALLY SEE A LOT MORE TESTING INCUR.
MR. SCHENK: THANK YOU, YOUR HONOR. YOUR HONOR, I WAS GOING TO MOVE TO ANOTHER DOCUMENT. I'M CONSCIOUS OF THE TIME.
JUDGE DAVILA: THANK YOU. LET'S TAKE OUR EVENING BREAK NOW, SIR. WE'LL BEGIN TOMORROW AT 9:00 O'CLOCK. WE'LL BEGIN AT 9:00 O'CLOCK, PLEASE. LADIES AND GENTLEMEN, WE'LL TAKE OUR EVENING BREAK. I KNOW SOME OF YOU ARE GOING TO STAY AND SPEAK WITH ME, BUT LET ME TELL ALL OF YOU, PLEASE, AGAIN, I'D LIKE TO ADMONISH YOU THAT YOU DO NOT DO ANY INVESTIGATION ON YOUR OWN ABOUT ANYTHING ABOUT THIS CASE OR ANYONE INVOLVED IN IT. PLEASE AVOID ANY MEDIA, SOCIAL MEDIA, NEWS, NEWSPAPERS, PERIODICALS, OR ANY OTHER NEWS ABOUT THIS CASE. SHOULD YOU COME ACROSS THAT INADVERTENTLY, I'M GOING TO ASK YOU TO PLEASE TURN IT OFF, CLOSE THE BOOK, TURN DOWN THE VOLUME, AND I'LL ASK YOU TOMORROW MORNING AGAIN WHETHER OR NOT THIS HAS HAPPENED TO ANYONE. PLEASE HAVE A GOOD EVENING. TOMORROW WE'LL BEGIN AT 9:00 A.M. THOSE WHO ARE GOING TO REMAIN, MS. KRATZMANN WILL TAKE YOU BACK TO THE JURY ROOM AND I'LL CALL YOU IN ONE AT A TIME FOR OUR CONVERSATION. THANK YOU VERY MUCH. ANYTHING FURTHER BEFORE WE RECESS?
MR. SCHENK: NO. THANK YOU.
MR. DOWNEY: NOTHING FURTHER.
JUDGE DAVILA: ALL RIGHT. THANK YOU. THANK YOU, SIR. YOU MAY STAND DOWN. THANK YOU.
(JURY OUT AT 3:05 P.M.)
JUDGE DAVILA: PLEASE BE SEATED. THANK YOU. COUNSEL, YOU'LL IDENTIFY ONE OF YOU WHO WILL COME BACK TO CHAMBERS AND THEN JUST LET MS. KRATZMANN KNOW AND WE'LL LET YOU KNOW WHEN WE HAVE THINGS SET UP.
MR. SCHENK: THANK YOU.
(RECESS FROM 3:06 P.M. UNTIL 3:20 P.M.)
(SEALED PROCEEDINGS IN CHAMBERS.) /// ///