Signal Genetics’ subsidiary increases bid for LungExpress DX test just weeks after filing fraud lawsuit against BioGene.

Signal Genetics’ Respira Health subsidiary is attempting to scupper Precision Therapeutics’ recently announced licensing deal for Med BioGene’s LungExpress DX™ non-small-cell lung cancer stratification test by offering what it claims amounts to $1.3 million more for the gene-expression assay.

Precision and Med BioGene reported their $1.6 million exclusive worldwide deal for LungExpress DX at the beginning of March. This agreement, which still has to be ratified by Med BioGene’s shareholders, would provide the firm with up to another $1 million in development and commercialization milestones, plus future sales milestones.

Respira’s new offer, however, includes a $2.3 million up-front payment and an additional $1.2 million in milestones, plus higher royalties than the Precision deal. The firm claims the terms are not only financially more attractive, but mean the initial fee would be paid up to 90 days earlier than the lesser up-front and research reimbursement payments offered by Precision.

Respira also maintains it could achieve commercialization of a CLIA-validated LungExpress Dx assay within 90 days of sealing a deal.  The firm says it already offers testing services using the CLIA-validated Affymetrix GeneChip platform, which is the format required for LungExpress DX, at Signal Genetics’ CLIA laboratory in Arkansas. Signal has, meanwhile, signed a letter of intent to market LungExpress DX through a large, national specialty laboratory that could sell directly to oncologists.

LungExpress DX uses a 15-gene signature to help identify early-stage NSCLC patients who will benefit most from chemotherapy after surgical removal of their tumor. “With this new, superior offer, and the announcement of our commercial partnership, we hope to succeed in licensing and quickly making LungExpress DX technology available to physicians and their lung cancer patients,” comments Joe Hernandez, president and CEO at Signal. “We encourage the board of directors and shareholders of Med BioGene to accept this overwhelmingly superior offer.”

The wrangle over a license to LungExpress DX  has been accompanied over recent weeks by an undertow of skullduggery claims, culminating in a lawsuit filed by Signal and Respira, which charges Med BioGene and Precision with fraud, and tortious interference, respectively.

The original complaint, filed in New York during mid-February, accused Med BioGene of breach of agreement, violation of a confidentiality agreement, and misuse of proprietary information. The lawsuit was amended a couple of weeks later, and includes additional new charges against Precision.

Essentially, the complaint  stems from Med BioGene reneging on its agreement to grant Signal a not less than 10-year exclusive, worldwide license to LungExpress DX, the latter claims. The firm also accuses Med BioGene of secretly negotiated with Precision, despite having promised  that Signal’s proposed transaction for the LungExpress DX technology was a “done deal”.

The suggestion is that Med BioGene used what Signal calls “the false promise of granting a license”, to induce the latter to provide confidential information about marketing, which Med BioGene then passed on to Precision. Signal claims that after Med BioGene had agreed to grant Signal an exclusive license and not to negotiate with any other party, it surreptitiously negotiated with Precision”, and told the firm which marketing company Signal was working with to commercialize the LungExpress DX technology. Precision is accused of then contacting Signal’s marketer partner directly to try and get the firm on board on Precision’s behalf.

Moreover, Signal claims, just a few days after its exclusivity period with Med BioGene had ended, and just a day after the latter assured Signal that their deal would be ratified, the firm announced that it had approved a transaction with another party, which turned out to be Precision.

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