PixarBio (OTC:PXRB) and CEO Frank Reynolds today upped the ante in their pursuit of InVivo Therapeutics (NSDQ:NVIV), the regenerative medicine company Reynolds co-founded and led until his 2013 ouster.
In a lengthy, nearly 2,700-word press release yesterday, PixarBio and Reynolds cited a -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, they said.
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. The $77 million offer, which represents a -42% discount on InVivo’s market capitalization of nearly $133 million, was discounted “because NVIV has failed to develop my patents, science and know-how,” he said in the release yesterday.
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 said yesterday.
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.”
Today Reynolds and PixarBio called for Perrin and directors Richard Roberts and Ken DiPietro to step aside and raised its offer to $100 million. Reynolds again laid claim to the intellectual property behind InVivo’s technology and wondered if the company lost “years of records.”
“The failure to conduct an exit interview [with me] resulted in lost IP to InVivo Therapeutics but that doesn’t change the facts of reality that’s recorded in 8 years of calendars, meetings minutes, and even an iPaq [sic],” Reynolds said in prepared remarks. “There are over 100 real people that know Frank Reynolds led the invention of the NeuroScaffold for Spinal cord injury so stop misleading with investors.
“WE ALL KNOW, and Frank Reynolds knows who was the inventor on every NeuroScaffold patent call, and it was Frank Reynolds [sic],” he said. “I own the trademark for Neuroscaffold, and when NVIV learned of the [U.S. Patent & Trademark Office] ruling, they realized I would not sign over the trademarks so InVivo created a new trademark ‘Neuro-Spinal Scaffold’ and that trademark was indeed created after I left InVivo so I didn’t invent anything under that moniker or the trademark ‘Neuro-Spinal Scaffold’ but I certainly invented the NeuroScaffold for spinal cord injury at InVivo Therapeutics 2005-20013 about a decade before InVivo even thought up the moniker or trademark ‘Neuro-Spinal Scaffold’. The new mgmt. team should have conducted an exit interview with me in 2013 [sic].”
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 releases issued yesterday and today do 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.