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Traversa Bankruptcy Trustee Sues Former CSO; Cites Relationship with Startup Solstice


NEW YORK (GenomeWeb) – The trustee overseeing the bankruptcy proceedings of now-defunct RNAi drug developer Traversa Therapeutics this week sued an ex-Traversa executive for breaching his responsibilities to the company by allegedly orchestrating the transfer of certain of its assets to a startup — Solstice Biologics — where he is now a shareholder and CSO.

The litigation, which names former Traversa CSO Curt Bradshaw as defendant, is the newest wrinkle in the tumultuous history of the firm. Less than a year ago, its one-time CEO Hans Petersen shot Co-founder and University of California, San Diego researcher Steven Dowdy because of a grudge he held over his termination as CEO and the demise of the company.

Traversa was founded in 2006 to develop and commercialize siRNA-delivery technologies developed in Dowdy's lab at UCSD. The firm largely focused on a technology known as PTD-DRBD, but also had a less-advanced delivery approach called ribonucleic neutrals (RNNs) in the works.

By mid-2012, Traversa was forced to shut its doors, filing for bankruptcy after failing to secure the necessary funding to keep up operations. Several months later, Solstice publicly announced its formation by Dowdy and Bradshaw with an $18 million Series A investment from venture capital firms VenBio and Aeris Capital.

Notably, as Traversa wound down its operations, it returned the rights to RNNs to UCSD, which promptly licensed them to Solstice. The technology is now the centerpiece of Solstice's research and development efforts. Bradshaw also acquired some of Traversa's laboratory equipment, which is being used at Solstice.

These transactions caught the attention of the trustee overseeing the Traversa bankruptcy, and he has now filed a lawsuit charging Bradshaw with failing to meet his obligations to the company to "refrain from doing anything that would injure the corporation" of which he was an officer.

"Bradshaw breached this duty by encouraging Traversa to cancel its RNN license with UCSD [and] beginning a venture [in Solstice] that would compete with Traversa and/or deprive it of the opportunities offered to the new venture," the lawsuit charges.

Further, the suit alleges that he improperly failed to inform Traversa’s board of directors and shareholders of the financing opportunities he was seeking for Solstice and not presenting them to Traversa.

According to the suit, Traversa's board voted to end the company's license to the RNN technology in November 2011 — a move that Dowdy and Bradshaw pushed for. Less than four months later, Bradshaw was at a "naming party," thrown by Dowdy, for the company that was to become Solstice.

The suit states that just days later, while still an employee of Traversa, Bradshaw disclosed in an email to an associate that he was planning to meet with investors, including VenBio Managing Director Corey Goodman. He and Dowdy did so around the end of March 2012, shortly after Traversa ended its operations, and eventually secured the Series A funding, according to the lawsuit.

Goodman is now executive chairman of Solstice.

"At no time did Bradshaw inform Traversa's CEO or its board of directors of the funding opportunities and venture capital connections that Bradshaw and Dowdy were pursuing for themselves," the lawsuit claims. "Instead … Bradshaw sought to take advantage of Traversa's demise by proposing a buyout of Traversa's lease and equipment."

Although that buyout never happened, Traversa did end up liquidating its assets, some of which Bradshaw purchased for himself. Included in the deal was a MerMade RNA synthesis unit, which was sold to Bradshaw for $1,000, "despite the fact that a competing buyer was willing to purchase it for $8,000," the suit states.

That unit is now being used at Solstice — a company in which Bradshaw holds a 15 percent stake, it adds.

For allegedly failing to act in the best interests of Traversa while he was an agent of the company, as well as for receiving payment for consulting services he allegedly did not provide the firm, the Traversa bankruptcy trustee is seeking $191,216, as well as additional costs and interest.