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California Biotech Company, a Stanford University Startup, Sues UAB and Veteran Scientist Robert Kimberly for Fraud and Breach of Contract

Posted on the 15 August 2016 by Rogershuler @RogerShuler

California biotech company, a Stanford University startup, sues UAB and veteran scientist Robert Kimberly for fraud and breach of contractA California biotechnology-research company has filed a federal lawsuit against UAB and one of its veteran researchers, alleging a breach of contracts that caused $11 million in financing to fall through.
Pikamab Inc., of Menlo Park, California, alleges breach of contract, fraud, and negligence against UAB and Robert P. Kimberly, M.D. (See complaint at the end of this post.) Kimberly is director of UAB's Center for Clinical and Translational Science. He is a professor in the Division of Clinical Immunology and Rheumatology. Kimberly and UAB (technically, the defendant is the the University of Alabama Board of Trustees) claim they are protected from suit by sovereign immunity. They also claim the applicable statute of limitations precludes the Pikamab lawsuit. (See motion to dismiss at the end of this post.)
The lawsuit is before U.S. Judge Jefffey S. White, in the Northern District of California.
According to its complaint, Pikamab is a start-up company that grew from research conducted at Stanford University and the Hospital for Special Surgery (HSS) in New York. The company is attempting to commercialize cutting–edge treatments for cancer, inflammatory disorders, and autoimmune diseases, using an invention related to stratified medicine. The invention is based on a number of patents and patent applications owned by Pikamab CEO Vijay Ramakrishnan, Ph.D,; Stanford; and HSS.
Kimberly and Pikamab entered into an agreement in 2009, and Kimberly became a member of the company's scientific advisory board. The complaint alleges that Kimberly steered Pikamab to award UAB two research contracts, with Kimberly to be the lead investigator on both. From the complaint:
Kimberly convinced Pikamab that UAB had access to unique databases (each called a “Cohort”) that categorized the biological characteristics of medical patients for certain diseases, such as lupus and lupus nephritis. Indeed, in 2011 (prior to the contracts at issue being signed), Kimberly represented that UAB was the only institution that could perform the contract work and stated that he would perform the contract with an utmost level of diligence by stating to Ramakrishnan in a telephone call: “ I will do a great job on these studies” (the “Misrepresentation”).

Court documents indicate Kimberly did not do such a great job, at least in Pikamab's view. The first contract, for $128,000, involved development of a theragnostic product related to certain cancer therapies. The second contract, also for $128,000, involved development of a product for treating lupus and lupus nephritis.
Where did the dispute begin? From the complaint:
When a research institution like UAB undertakes formal research on behalf of a sponsor, it is an industry custom that the investigating institution provide a comprehensive report setting forth, among other things, raw data as well as information sufficient to verify the methodology, scope and accuracy of the research (the “Deliverables”).

Pikamab alleges that Kimberly delivered almost nothing in the way of deliverables, in both contracts:
Defendants utterly failed to provide any Deliverables . . ., even though each contract specifically provided that the Defendants were to provide progress reports and final reports on the research. . . . Notwithstanding his reporting obligations, Defendants delivered a purported final report in the form of a 10-line email on April 30, 2012 that was completely useless. Moreover, from that 10 line email, Pikamab discovered that Defendants lied, misled, and did not perform the relevant studies as per the contract requirements.

A company pays UAB $256,000 for research studies and detailed reports -- and for one of the contracts it gets a 10-line email in return? For the other contract, it gets an irrelevant set of garbled data that was not requested? That raises this question: What kind of research operation is UAB running? The discovery process and possible trial might yield an answer that is quite unflattering for one of Alabama's most important economic drivers.

California Biotech Company, Stanford University Startup, Sues Veteran Scientist Robert Kimberly Fraud Breach Contract

Robert Kimberly

Is that why UAB is seeking to have Pikamab's lawsuit dismissed, which would foreclose any possibility of discovery or a trial?   The Birmingham firm Maynard Cooper Gale is representing the university, and in documents we've seen so far, there is no effort to defend Kimberly's handling of the contracts. The defense arguments, so far, are legal and technical in nature.
There also is no effort to address Pikamab's damages, which are substantial, according to the complaint:
As a result of Defendants’ wrongful conduct above, Pikamab was unable to close on least $11 million dollars in financing. Such financing was contingent upon Pikamab being able to provide verifiable research results supporting the Invention. In addition, Pikamab was unable to close on strategic licensing deals with bio-pharma companies who were eager to be involved in the Invention, but who required proof-of-concept data. But Defendants’ breaches deprived Pikamab of the information needed to satisfy the requirements of investors and bio-pharma partners. Because of Defendants’ unlawful conduct, Pikamab ran out of money and was unable to finance new studies. Moreover, Pikamab wrote to other investigators of the lupus Cohort, but none were interested in investigating or resolving Pikamab’s complaints.

That is pretty damning stuff. It accuses UAB of cutting the legs out from under a company that holds the promise of helping to develop advanced treatment for cancers, lupus, lupus nephritis, and other diseases. What could possibly be the underlying motive behind this? Why would UAB do this in both contracts?
As we've reported numerous times in the past, UAB has a history of Medicare fraud, research fraud, and scientific misconduct. (See here, here, and here.) Such cases usually have been quietly settled or kept mostly from public view. It will be interesting to see if Pikamab gets an opportunity in a California federal court to pull back the mask on UAB's highly profitable, but ethically suspect, research enterprise.
Pikamab--Complaint vs. UAB by Roger Shuler on Scribd
Pikamab--UAB motion to dismiss by Roger Shuler on Scribd

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