Neurvana Medical this month accused Balt International and a pair of its senior executives of reneging on a $16 million deal for its Titan neurovascular catheter in scheme to “sabotage and destroy” Neurvana.
The story of the lawsuit, filed Jan. 17 in the Delaware Chancery Court, begins with Balt’s September 2016 acquisition of Blockade Medical, including its Barricade coil and a facility in Irvine, Calif., that 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 Ferrara and Neurvana soon soured, Neurvana alleged, and in the fall of 2017 the company asked him to resign as chairman (although he still owns a stake, according to the lawsuit).
“Incensed by his ouster from Neurvana’s board, Ferrera has sought to sabotage Neurvana and starve it of funds, hoping to cause the young start-up to collapse so he and/or Balt can acquire its valuable assets for far less than they are worth,” Neurvana alleged in the complaint.
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 Ferrara of spiking a supply deal for a Balt delivery system that was crucial to the development of its product pipeline and of demanding the repayment of some $264,000 “for expenditures purportedly made by Balt USA on Neurvana’s behalf immediately after it was spun out,” 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 lawsuit seeks compensatory, consequential and other damages “in an amount to be determined at trial, but believed to be in excess of $115.75 million,” plus pre- and post-judgment interest and punitive damages. Neurvana also wants the Delaware Chancery Court to enforce the provisions of the Titan deal, to indemnify it for any of its own breaches of contract and to award legal costs.
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