By Julia Karow
Life Technologies last week denied all allegations in a lawsuit that former Visigen Biotechnologies CEO and co-founder Susan Hardin filed in October 2009 against Life Tech, its Invitrogen unit, and Visigen, alleging breach of contract, fraud, negligent representation, and breach of fiduciary duty regarding Invitrogen's 2008 acquisition of Visigen.
According to court documents, Hardin and several unnamed Visigen stakeholders for whom she is serving as representative are seeking a jury trial and are asking for at least $55 million in actual damages and at least $250 million in exemplary damages, as well as suit costs and attorneys fees.
Invitrogen purchased Visigen, which was developing a real-time single-molecule sequencing technology based on fluorescence energy resonance transfer, in August 2008 for approximately $21 million in cash (see In Sequence 10/28/2008).
At the time, Invitrogen was independently working on demonstrating FRET-based sequencing (see In Sequence 3/24/2009).
Later that year, Invitrogen and Applied Biosystems merged to become Life Technologies, and Hardin joined Life Tech as research director for Visigen, which retained its Houston location. She resigned from that post in October 2009, according to court documents.
In a petition filed with the District Court of Harris County, Texas, in October 2009, Hardin, on behalf of the other Visigen stakeholders, claims that Life Technologies has failed to honor certain "material promises" it made as part of the merger agreement. The document does not provide details about the nature of these promises.
According to the petition, "Life knew that the promises made to Dr. Hardin were of extreme importance to Dr. Hardin and the Visigen stakeholders" and that they "did rely on these material statements made by Invitrogen (Life) in deciding to sell Visigen to Life."
Hardin further claims that Life "was aware at the time the agreement was signed [that] it did not have the ability to comply with its promises" but "continued to consistently assure Dr. Hardin and her fellow scientists it was keeping its promises" throughout the last year. Life's statements, according to the petition, "were knowingly false when made or made with reckless indifference as to their truthfulness."
Citing a 10Q document that Invitrogen filed with the Securities and Exchange Commission for the third quarter of 2008, Hardin claims that Life Tech "executed a strategy from inception where Life would only pay the down payment (for the acquisition of the technology owned by Dr. Hardin and the Visigen stakeholders); and never comply with certain other obligations." Without these obligations, they "would not have sold their company" to Invitrogen."
That SEC document states that on Aug. 29, 2008, Invitrogen "completed a cash for stock acquisition of Visigen Biotechnologies Inc. (Visigen) for a total cash consideration of $21 million" and that the transaction "has been accounted for as asset purchase" due to the development-stage nature of Visigen's operations. The company added in the filing that it treated the purchase as a "taxable stock acquisition."
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Hardin says the filing "reflects the true intent of all defendants versus what they promised," but does not spell out what the promises were. She further claims that the defendants "have used this same pattern of non compliance in previous company acquisitions" but cites no examples.
In its response to the petition, filed on Jan. 11, 2010, Life Technologies denies all allegations.
In addition, the firm asked the court to dismiss Hardin's claims, and to order her to amend the petition to state a maximum amount of damages sought.
According to Life Tech's response, Hardin lacks standing to sue on behalf of the Visigen stakeholders because she ceased to be their representative when she resigned from Visigen and Life Tech last fall. She also waived her right to sue the company individually relating to the merger agreement, according to Life Tech.
A Life Technologies spokesperson declined to comment further this week, citing that the company does not comment on pending litigation.