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AGP Sues Correlogic; Claims Company Defaulted on Loan by Misrepresenting OvaCheck Test


By Adam Bonislawski

Korean drug company Ahn-Gook Pharmaceutical this week sued Correlogic Systems in US Bankruptcy Court in the District of Maryland, claiming that Correlogic had defaulted on a loan agreement between the two companies by making material misrepresentations regarding OvaCheck, its protein biomarker-based ovarian cancer diagnostic.

According to AGP's suit, the terms of the loan agreement call for Correlogic to grant AGP an exclusive license to "unconditionally use Correlogic's intellectual property, and any and all applications thereof, in Asia, including but not limited to Korea, Japan, China, Singapore, the Philippines, Thailand, Malaysia, Vietnam, Taiwan, and Indonesia," in the event of default.

The loan in question is a one-time loan for $750,000 AGP made to Correlogic at 12 percent interest. It matures on Mar. 30, 2011.

In its complaint, AGP accused Correlogic of making misrepresentations regarding: Its ownership of all the technology and rights necessary to develop OvaCheck; the accuracy of the OvaCheck test; the test's status with the US Food and Drug Administration; and Correlogic's agreements with Quest Diagnostics and Laboratory Corporation of America to market and distribute the test.

AGP also asserted in its complaint that unless Correlogic submits written opinions and pays registration fees to patent offices in Korea, China, and Japan, certain of the company's intellectual property rights in those countries will expire. As this would affect AGP's rights under the loan agreement, it requested that the court order Correlogic to perform these actions.

Correlogic CEO Peter Levine disputed AGP's charges, telling ProteoMonitor that they "are without foundation, baseless, and contrary to what AGP knows to be the truth. Their allegations that we misled them or that anything we did or said was fraudulent is a trade libel."

He also said that Correlogic has taken "all the necessary steps to preserve patent protection" in the countries AGP cited in its complaint, and that he that had asked Correlogic's counsel to look into filing a countersuit.

This July, Correlogic filed for Chapter 11 bankruptcy protection. As part of its reorganization plan it moved to reject its licensing agreements for the OvaCheck test with Quest and LabCorp. In October, the court granted this motion over Quest's and LabCorp's objections (PM 10/08/2010).

Correlogic filed a 510(k) application for OvaCheck with FDA in December of 2008 but withdrew it in April after being told that the patient population used in the clinical trial for the test was not satisfactory. Currently the company is undertaking the "second arm" of the trial, which involves patient populations being treated by non-specialists, and plans to file another 510(k) submission upon its completion.

Have topics you'd like to see covered in ProteoMonitor? Contact the editor at abonislawski [at] genomeweb [.] com.

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