Updated to include a response from InVivo.
In a lengthy, nearly 2,700-word press release issued today, PixarBio and Reynolds cited the -41.7% slide in the price of NVIV shares since January 2016 in making their case for the merger with PixarBio. Their proposal would create a new entity called Reynolds Therapeutic Corp. to pursue PixarBio’s NeuroRelease non-opioid pain treatment and InVivo’s scaffold technology for spinal cord injury repair. The deal is expected to close during the 1st quarter, according to the release.
Borrowing from the campaign slogan of president-elect Donald Trump, Reynolds alleged mismanagement by current InVivo CEO Mark Perrin as the company’s share price hovers at $4.20, near its debut split-adjusted price of $4.
“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. “PixarBio’s 2017 Deal making is NOT done. The industry needs consolidation, so let’s get busy and make US Pharma great again [sic].”
Reynolds said the $77 million offer, which represents a -42% discount on InVivo’s market capitalization of nearly $133 million, is discounted “because NVIV has failed to develop my patents, science and know-how. NVIV appears to have lost the historically significant [spinal cord injury] primate research data, and they are now back to my 2010 IPO share price, for the second time in 3.5 years but its 2017 [sic]. It is time I take back the technology I invented to bring my neurological R&D portfolio to market by acquiring NVIV and saving the NVIV shareholder from more years of down-rounds,” said Reynolds, who also serves as PixarBio’s CFO and chief science officer.
InVivo released a response to the offer, stating that the PixarBio press release “contained a number of unfounded statements that do not warrant a response.”
“InVivo Therapeutics Corporation was not privy to the announcement made today and has not had any discussions with PixarBio Corporation nor any other party regarding this matter. Given that the nature of the offer is not credible, InVivo disclaims any obligation to make any additional public statements regarding this or similar proposed transactions from PixarBio,” InVivo wrote in a press release.
The company shot down claims to its intellectual property as well, saying that it has an exclusive license to all patents and patent applications covering its Neuro-Spinal Scaffold and that Reynolds “is not an inventor on any of these patents or patent applications.”
InVivo, co-founded by Reynolds in 2005 based on technology out of MIT professor Robert Langer’s lab, parted ways with Reynolds in August 2013; the company sued him in November of that year, alleging that he ran up $500,000 worth of “personal and/or exorbitant expenses.” Reynolds counter-sued in December 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 pending in a Massachusetts state court.
Reynold filed his own lawsuit against InVivo last July in a New Hampshire state court, alleging defamation, conspiracy and tortious interference, according to regulatory filings. The case was removed to the U.S. District Court for New Hampshire, which dismissed it without prejudice Nov. 30 for failing to state a claim and lack of jurisdiction, according to court documents.
The PixarBio press release issued today does not mention either lawsuit, or a shareholders suit that’s on appeal before the U.S. Court of Appeals for the 1st Circuit.
Back in 2009 and 2010, Reynolds told MassDevice.com and Inc. magazine that he’d suffered spinal cord injury of his own in a 1992 car accident that left him partially paralyzed. The executive later retracted the story, saying instead that he injured his back loading a snack truck and suffered spinal problems after a 1992 surgery to treat the injury.