And on the basis of the favorable arbitration outcome, they're going after Pro's product, and actually pretty much looking to litigate Pro out of business. Wowsers! Should be interesting day tomorrow.
>>BOSTON--(BUSINESS WIRE)--Nov. 11, 2004--GlycoGenesys, Inc., (Nasdaq: GLGS - News), a biotechnology company developing carbohydrate-based drugs, announced earlier today that it was awarded a favorable ruling in the arbitration proceedings brought by the Company against David Platt, its former CEO. With this favorable decision in hand, GlycoGenesys is taking the opportunity to describe the separate litigation with Platt and Pro-Pharmaceuticals, Inc. (AMEX:PRW - News), the company Platt now heads, and its business implications. This separate litigation, regardless of outcome, does not affect our rights to pursue commercialization of GCS-100.
Bradley J Carver, President and CEO of GlycoGenesys, Inc., said, "With the issuance of the favorable arbitration decision, the outstanding litigation risk and uncertainty relating to GlycoGenesys' intellectual property is clearly resolved. As we move forward, we believe the focus on litigation risks and uncertainties relating to intellectual property will shift to Platt and Pro- Pharmaceuticals, because we are seeking ownership of Davanat®."
Mr. Carver continued, "As previously disclosed, Platt initiated a separate litigation against GlycoGenesys largely in connection with his termination agreement. As part of this litigation, we have filed several counterclaims against Platt and Pro-Pharmaceuticals targeting their core intellectual property including Pro-Pharmaceuticals' lead product, Davanat. We are seeking the assignment of Davanat to GlycoGenesys and to prevent Platt and Pro- Pharmaceuticals from developing and selling polysaccharides to treat cancer. Much as GlycoGenesys has done through the arbitration process, we will pursue this legal action in a manner that minimizes management's time and is results driven."
"Platt's claims in the litigation, in which he seeks monetary damages, in our opinion are without merit. Moreover, we believe they represent limited financial exposure to us based on the amount of severance in dispute and the price and volume of our stock following the expiration of his lock-up and his realized proceeds," concluded Mr. Carver.
Litigation
Background:
In May 2000, David Platt signed a termination agreement and agreed not to compete with GlycoGenesys.
In July 2000, Platt incorporated Pro-Pharmaceuticals, Inc., a biotech company to develop carbohydrate-based drugs and drug-delivery products in the field of oncology.
In early 2001, the Company stopped severance payments under the termination agreement because of Platt's competitive activities with Pro-Pharmaceuticals, as well as other breaches of the termination agreement.
In the fall 2002 through summer 2003, Platt sold shares of GlycoGenesys subject to Rule 144 limitations.
In January 2004, the U.S. Patent and Trademark Office issued to GlycoGenesys U.S. Patent No. 6,680,306 "Method for Enhancing the Effectiveness of Cancer Therapies" covering the use of GCS-100® and other carbohydrates that bind to galectins prior to or in combination with chemotherapy or surgery for the treatment of cancer.
Pro-Pharmaceuticals' lead drug candidate, Davanat®, is a carbohydrate administered in combination with existing chemotherapies to potentially enhance their efficacy and reduce their toxicity. Pro-Pharmaceuticals publicly states that Davanat binds to galectins. Pro-Pharmaceuticals began developing Davanat shortly after David Platt signed a termination agreement with GlycoGenesys.
Lawsuit:
In late January 2004, Platt filed a lawsuit against the Company. In this suit, Platt seeks damages from the Company and certain of its directors for, among other claims:
alleged breach of the termination agreement between the Company and Platt for, among other things, failure to pay Platt severance (net payments of approximately $180,000);
alleged breach of fiduciary duty for failing to release transfer restrictions on his GlycoGenesys stock in an appropriate manner; and unfair trade practices.
In response to Platt's lawsuit, GlycoGenesys brought counterclaims against Platt and PRW asserting that:
Platt breached the non-competition provisions of his termination agreement within months of signing it by founding Pro-Pharmaceuticals and targeting carbohydrates to treat cancer;
Platt misappropriated GlycoGenesys' confidential information and used it to help develop Davanat and potentially other Pro-Pharmaceuticals technologies;
Platt and Pro-Pharmaceuticals engaged in business libel by making false statements in press releases and public statements about GlycoGenesys' intellectual property rights in GCS-100;
Platt breached the non-disparagement clause and other provisions set forth in the termination agreement;
and Platt and Pro-Pharmaceuticals both engaged in unfair trade practices.
The Company is seeking damages and permanent injunctive relief including:
an order to assign all rights in Davanat and other Pro-Pharmaceutical's inventions to GlycoGenesys;
a permanent injunction on Platt and Pro-Pharmaceuticals from developing, selling or using polysaccharide compounds to treat cancer;
a permanent injunction on Platt and Pro-Pharmaceuticals from using proprietary and confidential information of GlycoGenesys;
an injunction preventing Platt from participating in the business of Pro- Pharmaceuticals for 2 years;
and the recovery of all payments made to Platt under the termination agreement as well as associated costs and attorneys fees. <<
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Cheers, Tuck |
