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Expanding Suit, Nucleonics Co-Founders Say Chairman Sabotaged Their Employment Efforts

The co-founders of Nucleonics expanded their wrongful-termination lawsuit against the company and its CEO last week to include charges that the chairman of the expressed RNAi drug firm sabotaged their efforts to find new employment.
According to an amended complaint filed last week, Nucleonics’ co-founders Catherine Pachuk, who served as the company’s vice president of preclinical research, and C. Satishchandran, who was senior vice president of research and development, were led to believe by the management of biotech firm Callisto Pharmaceuticals that they would receive employment offers earlier this year.
The two had previously been fired from Nucleonics in late March amid charges of scientific misconduct.
But after discussing with Nucleonics Chairman James Barrett “intellectual property and the sale of Nucleonics,” Callisto’s Chairman Gabriele Cerrone dropped plans to hire Pachuk and Satishchandran, the amended complaint claims.
According to the complaint, Barrett told Cerrone that Pachuk and Satishchandran “had been involved in some form of fraudulent activity concerning data at Nucleonics, and also that … Satish had been operating and/or consulting for another company while he worked for Nucleonics,” it adds.
“The conduct of … Barrett was not based on anything other than personal animosity and malice, and the accusations … were without any credible factual basis whatsoever,” the complaint claims.
But in a telephone interview with RNAi News this week, Cerrone said that he first became aware of Nucleonics after Satishchandran approached a personal acquaintance employed by Callisto about an “opportunity” in RNAi. This employee then helped arrange a meeting between him and Satishchandran.
According to Cerrone, at their initial meeting at Callisto’s offices, Satishchandran allegedly made claims that he could provide Callisto with expressed RNAi intellectual property, including some that could bypass Nucleonics’ IP portfolio. He also produced an employment offer his co-founder colleague Pachuk received from Pfizer as a way to demonstrate the interest other companies had in them, Cerrone said.
He told RNAi News that after this meeting he became suspicious of Satishchandran’s claims because “it seemed too fishy to me that these co-founders could come and create a new company without infringing on the patents of the company that had just co-founded and worked for up until February.” At the same time, he said, he believed it was “unethical” for Satishchandran to use the Pfizer letter as “a marketing ploy.”

“The reason we didn’t move with Satish is he misrepresented facts … and he conducted himself in an unethical fashion by wanting to [reveal a] Pfizer offer letter in order to show his marketability. We said, ‘If he just meet us today and is doing something like that, what will he be doing if he is working for us?’”

Still, he noted, he was considering hiring Pachuk and Satishchandran to work on non-RNAi projects at Callisto.
Cerrone said that about a week after this initial encounter, he met with Satishchandran and Pachuk, who provided him with a copy of the Nucleonics countersuit accusing them with falsifying data contained within an investigational new drug application, and other scientific misconduct.
It was at this point, Cerrone told RNAi News, that he dropped any idea of entering employment negotiations with Satishchandran and Pachuk.
“The reason we didn’t move with [the Nucleonics’ co-founders] is because [Satishchandran] misrepresented facts … and he conducted himself in an unethical fashion by wanting to [reveal a] Pfizer offer letter in order to show his marketability,” Cerrone told RNAi News. “We said, ‘If he just meet us today and is doing something like that, what will he be doing if he is working for us?’”
At the same time, he said, the lawsuit’s allegations of misconduct made a professional relationship with either Satishchandran or Pachuk too big of a risk.
Cerrone insisted that he never made any promise to employ Pachuk or Satishchandran, and said his decision not to pursue a business arrangement with them “had nothing to do with what Jim Barrett told us.”
While Cerrone said that he did later speak with Barrett, with whom he sits on the board of biopharmaceutical firm Inhibitex, he stressed that Barrett never made any of the statements attributed to him in the amended lawsuit.
Furthermore, “I would never have walked away from an employment proposal based on hearsay from somebody who could have been a competitor,” i.e. Barrett through his involvement with Nucleonics, he noted. “We walked away because we saw public [court] filings … and because during the few interactions we had with [Satishchandran], he did some unethical things.”
As for claims that Callisto had been interested in possibly buying Nucleonics, Cerrone said that a meeting with the company was never scheduled and “I never even received a due-diligence package from them.”
Barrett declined to be interviewed about the situation. Satishchandran told RNAi News this week that “we have stated in the amended complaint what we wanted to say,” and declined to comment further. Pachuk was unavailable for comment.
‘Personal Animosity and Malice’
The legal row between Nucleonics and its co-founders began in May when they sued the company, as well as its President and CEO Robert Towarnicki, for alleged wrongful termination, defamation, and other charges.
In their suit, Pachuk and Satishchandran said that Towarnicki “purposefully, intentionally, wantonly, and maliciously acted in such a manner as to cause [their] termination” in late March, adding that their dismissal “was not based upon anything other than personal animosity and malice.”
The plaintiff’s suit claims that as early as January, Pachuk and Satishchandran became “increasingly concerned about … Towarnicki’s mishandling of the company’s efforts to obtain additional investment capital … [his] inappropriate and unanticipated efforts to insert himself into the company’s scientific research and development … [and his attempts] to undermine their authority and effectiveness with … [company] subordinates.”
Pachuk and Satishchandran added in their suit that they brought their concerns to Nucleonics’ board, which “further exacerbated … Towarnicki’s personal and professional animosity” and resulted in their being fired, although “Nucleonics would agree to characterize them as having been ‘laid off.’”
But according to a countersuit filed by Nucleonics in late June, Pachuk and Satishchandran left the company after allegations surfaced that they had mishandled or falsified data contained in an investigational new drug application Nucleonics filed in December 2006 for its hepatitis B therapy NucB 1000, and that Pachuk had included false data in a patent application (see RNAi News, 7/3/2008).
The co-founders, now defendants in the countersuit, also “knowingly submitted the false scientific data to” the National Institutes of Health and the US Food and Drug Administration in the IND filing and supporting papers, the countersuit added.
According to the countersuit, upon discovery of the alleged misconduct, a number of investment groups, including a venture capital arm of Johnson & Johnson, withdrew commitments to invest a combined $25 million in Nucleonics’ Series C round, which was set to close in early April. As a result, the company was forced to shut down and began looking to sell itself off, it stated.

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