TriReme Medical and a pair of related companies are appealing a $20 million loss to AngioScore after a federal judge ruled that founder Eitan Konstantino violated his duties to AngioScore when he started TriReme, Quattro Vascular and QT Vascular.
AngioScore, which Spectranetics (NSDQ:SPNC) acquired last year for $230 million, accused Konstantino of breaching his fiduciary duties to AngioScore by developing the TriReme’s Chocolate balloon catheter, which competed directly with AngioScore’s AngioSculpt balloon. The Chocolate device won 510(k) clearance from the FDA in June 2014. The lawsuit, filed in June 2012 in the U.S. District Court for Northern California, also accused TriReme, Quattro and QT Vascular (SGX:5I0) of abetting in Konstantino’s alleged breaches.
Judge Yvonne Gonzalez Rogers agreed July 1, ordering Konstantino to disgorge $250,000 received for licensing the Chocolate rights and a 2.85% royalty on sales of the device. Gonzalez Rogers also ordered Konstantino to cough up his roughly 15 million shares in QT Vascular, which were worth about $2 million at their July 2 closing price of ¢13.5 (0.182 SGD), and any profits gleaned from sales of the stock and any remuneration from consulting on the Chocolate device. The judge also awarded nearly $3.0 million in lost profits and another $17.1 million in future lost profits to AngioScore on future sales from 2014 through the 2nd quarter of 2019.
TriReme, QT Vascular and Quattro Vascular appealed to the U.S. Court of Appeals for the Federal Circuit as soon as the decision was finalized Oct. 14 and asked the appeals court to stay the verdict pending its appeal, saying they will likely go bankrupt if forced to pony up.
“If this court does not stay execution of the judgment and waive the bond requirement, the companies will likely need to seek protection of the bankruptcy laws of the United States and their equivalent under the laws of the Republic of Singapore. In other words, executing on the judgment or collateralizing a bond for the full amount of the judgment would likely put the companies out of business,” they argued, according to court documents. “In contrast, plaintiff AngioScore cannot demonstrate any injury if the stay is granted. Indeed, driving corporate defendants into bankruptcy would only complicate and further delay any satisfaction of the money judgment.”