A Delaware chancery court judge has tossed nearly all of the claims brought by Neurvana Medical against a pair of senior executives of Balt International for reneging on a $16 million deal for Neurvana’s Titan neurovascular catheter.
The story of the lawsuit, filed in January 2019, begins with Balt’s September 2016 acquisition of Blockade Medical, including its Barricade coil and a facility in Irvine, Calif., which became the headquarters for Balt’s newly formed American subsidiary.
Neurvana was spun out to continue development of three devices that weren’t included in the Barricade purchase, with Blockade co-founder, president & CTO David Ferrera named both president & COO of Balt USA and chairman of Neurvana, according to the complaint. Balt International CEO Pascal Girin was also named CEO of the U.S. business.
Of the three pre-commercial products Neurvana inherited – dubbed Titan, Lumenate and Dimension – the Titan device was closest to winning regulatory approval in Europe and the U.S. While pursuing both CE Mark approval and 510(k) clearance, the company also sought to attract a buyer for Titan, “which promised to be marketable and commercially successful, in order to raise much-needed capital to develop its other two products,” according to the complaint.
After Balt USA and Johnson & Johnson (NYSE:JNJ) unit Cerenovus emerged as suitors in the spring of 2017, Neurvana ultimately inked a deal with Balt USA for the Titan device. Under the terms of the buyout, slated to kick off on winning CE Mark approval or 510(k) clearance and continue until March 31, 2020, Neurvana would have earned a series of commercial milestones worth a collective $16 million, according to the document.
But the relationship between Ferrera and Neurvana soon soured, Neurvana alleged, and in the fall of 2017 the company asked him to resign as chairman. Crucially, the terms of the deal also allegedly included a provision that shifted the onus of achieving CE Mark approval from Neurvana to Balt.
“Balt, under the direction of Ferrera and with the approval of Girin, then repeatedly breached the agreement by failing to use commercially reasonable efforts to obtain European regulatory approval for Titan, which would have allowed sales of Titan catheters in the lucrative European market. Instead, the Titan catheter languishes, and Neurvana faces the prospect of receiving almost no consideration for its sale,” the lawsuit alleged.
The suit also accused Ferrera of spiking a supply deal for a Balt delivery system that was crucial to the development of its product pipeline, according to the suit. “On information and belief, defendants intend to continue to allow the Titan catheters to languish in order to deprive Neurvana of sorely needed revenue until it is forced to shut down,” the complaint said.
In September, Judge Kathaleen McCormick dismissed Balt as a defendant in the case, which she described as containing “a boatload” of contractual and tort claims by Neurvana. This week, McCormick granted Girin’s motion to dismiss based on the court’s lack of personal jurisdiction but denied a similar motion by Ferrera.
She also dismissed 13 claims Neurvana brought against Ferrera for his conduct after resigning as chairman but kept intact the company’s claim alleging that Ferrera breached his fiduciary duty before his resignation.
“The complaint pleads facts making it reasonably conceivable that Ferrera, who could not be presumed disinterested or independent due to his dual roles as fiduciary of both Balt USA and Neurvana, breached his duty of loyalty to Neurvana when he negotiated the economic terms of the asset purchase agreement,” McCormick wrote.