PixarBio (OTC:PXRB) faces its own legal problems: a possible lawsuit by the SEC, legal action by a disgruntled employee who is demanding unpaid wages and former landlords looking for $1.8 million in unpaid rent.
But the 7-person biotech is also looking to launch some litigation of its own, according to a recent document it filed with the SEC – PixarBio plans to sue InVivo Therapeutics (NSDQ:NVIV) for libel and for the patent rights to the company’s scaffold device.
The feud between InVivo and PixarBio dates back to August 2013, when InVivo parted ways with co-founder (and now-PixarBio CEO) Frank Reynolds. In January last year, Reynolds launched a $100 million takeover attempt of InVivo, which he later discounted to $77 million. Reynolds has long laid claim to InVivo’s IP, alleging that he invented the company’s Neuro-Spinal Scaffold.
In a rambling, 2,700-word press release, Reynolds pointed towards a -41.7% slide in the price of NVIV shares since January last year in making his case for the merger.
“We all know that NVIV current CEO Mark Perin’s [sic] took his company before NVIV as CEO into bankruptcy, and Perin [sic] has had 3 years (maybe 2 years too long) that’s enough time to succeed with a Frank Reynolds’ Neuroscaffold technology so it’s time for change. The CEO of NVIV needs to be replaced to have a shot at commercializing NVIVs true value, the NeuroScaffold for treating acute spinal cord injury invented by Frank Reynolds,” Reynolds said in prepared remarks, timed to capitalize on the recent election of Donald Trump. “PixarBio’s 2017 Deal making is NOT done. The industry needs consolidation, so let’s get busy and make US Pharma great again [sic].”
InVivo Therapeutics repeatedly denied that it ever engaged in talks with Reynolds and asserted its exclusive license to the patents covering its neuro-spinal scaffold.
The two companies have been embroiled in an ongoing legal battle since Reynolds’ ouster in 2013. InVivo sued him in Nov. 2013, alleging that he ran up $500,000 worth of “personal and/or exorbitant expenses.” Reynolds counter-sued in Dec. 2013, alleging breach of contract, breach of the covenant of good faith and fair-dealing, and tortious interference with a contract. That case is still alive in a Massachusetts state court.
Reynolds filed a different lawsuit against InVivo in July 2016 in a New Hampshire state court, alleging defamation, conspiracy and tortious interference. The case was later dismissed.
Not long after the company’s takeover attempt failed, the SEC halted trading of PixarBio shares due to possible “manipulative or deceptive activities.”
Now the company is facing renewed scrutiny by the SEC, which could result in a lawsuit. SEC investigators recommended that the securities watchdog sue the company. In a comment to the Boston Business Journal, PixarBio denied any wrongdoing.
“Nothing from the Boston U.S. SEC can stop our success in 2018 and 2019,” Reynolds told the news outlet. “PixarBio will charge forward regardless of any SEC ruling.”
As of Dec. 31, PixarBio had just $113,000 on hand, according to documents.
Today, the company said it plans to file two new drug applications with the FDA for its 14-day, non-opiate pain reliever, NeuroRelease, by 2020.
