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Nuclea's Former CEO Attempting to Buy Company's Assets in Bankruptcy

NEW YORK (GenomeWeb) – Nuclea Biotechnologies Founder and former CEO Patrick Muraca is attempting to buy the bankrupt company's assets for $330,000 after they failed to sell at auction in January.

Don Beskrone, Nuclea's Chapter 7 trustee, filed a motion in US Bankruptcy Court for the District of Delaware on March 6 requesting that the court approve the sale of Nuclea's assets to NanoMolecularDx (NMDX), the company Muraca founded as a spinoff from Nuclea in 2015 upon being replaced as Nuclea's President and CEO by Donald Pogorzelski, a former president of Genzyme Diagnostics.

Cambridge, Massachusetts-based Nuclea filed a voluntary Chapter 7 petition in US Bankruptcy Court for the District of Delaware on Aug. 30, 2016. According to filings, the company had at that time $235,144 in assets and debts of $9.6 million.

It was determined by the court that the company's assets, including Nuclea's intellectual property and its HER-2/neu assay, a blood-based test for monitoring women with metastatic breast cancer that overexpressed the HER2/neu protein, were to be put up for auction, with Heritage Global Partners managing the sale.

However, as Beskrone noted in his motion, there were no purchasers for Nuclea's assets. Given the failure of the assets to sell at auction, Beskrone, according to the motion, "continued to solicit bids and offers from potential purchasers," and "these efforts culminated in the offer" from Muraca and NMDX.

NMDX is affiliated with the State University of New York Polytechnic Institute in Albany and is part of the Start-Up New York program, under which businesses operate tax-free for 10 years when they expand or relocate to certain New York colleges. According to a release from the office of New York Governor Andrew Cuomo, the company has committed to creating 15 new jobs and investing $265,000. In its bankruptcy filings, the Research Foundation of SUNY is listed as one of Nuclea's creditors, with the company owing the organization $279,300 for sponsored research.

According to NanoDX's website, it is using biochip technology to develop assays for detection of various diseases. In 2013, Nuclea announced a $1 million research partnership with SUNY's College of Nanoscale Science & Engineering, where NanoDX is housed, to develop a nanochip platform for analysis of cancer biomarkers.

Muraca founded Nuclea in 2005 and over the course of its 12-year history the company raised more than $40 million, but produced little in the way of commercial products. At auction its assets included only four commercially ready tests, two of which, the HER2/neu and CAIX tests, it acquired from Wilex AG in its 2013 purchase of that company's Wilex Inc. subsidiary.

The HER2/neu test is the company's most valuable asset and, according to the March 6 motion, the main factor necessitating a rapid sale. The motion asserts that Nuclea's assets include "unsold diagnostic kits related to HER2 Neu" that must be kept in cold storage and that Nuclea cannot currently cover the cost of this storage, putting the kits at risk of becoming valueless.

According to the motion, acquisition of the HER2/neu test will require NMDX to pay a fee of $41,800 to Siemens as a cure covering costs associated with assuming the license to the test. Wilex AG originally obtained rights to the test when it acquired Oncogene Science from Siemens Healthcare Diagnostics in 2010.

The motion also proposes that the sale of the assets be used to pay auctioneer Heritage Global Partners; Devonshire Holdings, which consulted on efforts to sell Nuclea's assets; and Masy BioServices, which has provided cold storage for Nuclea kits including the HER2/neu test.

Wilex AG is Nuclea's largest creditor, owed $2.7 million, and in October filed a motion seeking transfer of Nuclea's bankruptcy case to Massachusetts Bankruptcy Court, noting that a number of involved parties, including Wilex AG's US counsel and potential witnesses familiar with Nuclea's business are located in that state.

The court has not ruled on this motion, but in the filing Wilex AG indicated it might pursue additional actions, including investigation of members Nuclea's former management team and attempting to obtain payment from NMDX.

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