Chrome (col) posted this elsewhere.
Let’s hope Naughton can prove Histogen didn’t infringe on any patents, or this company’s cooked!!!
Withdrawal of investors, lawsuit hit Histogen hard
By Terri Somers
Union-Tribune Staff Writer
Histogen, a San Diego company that revealed promising trial with a hair regrowth product last week, is about $1 million in debt and is staying afloat on the credit cards and cash of Chief Executive Gail Naughton.
Jan. 29, the day before the company was to close a $2.4 million funding round, investors pulled out, Naughton said. As a result, Histogen was forced to lay off all of its 36 employees until it could secure new investors, she said.
Earlier that day, Histogen had been served with a patent-infringement suit filed by SkinMedica, a San Diego company that has regenerative skin care products on the market.
The suit alleges that Histogen’s ReGenica product, made from growth factors and other cells that promote the activation and growth of stem cells, violates patented scientific techniques that SkinMedica bought in 2003.
The science in question was created at the now-defunct Advanced Tissue Sciences, a company that was run by Naughton, who is also dean of the College of Business Administration at San Diego State University.
When Advanced Tissue Sciences broke up, its assets, including its science, were sold.
The SkinMedica lawsuit also claims that to manufacture the ingredients for Histogen’s products, employees are using trade secrets covered by patents that SkinMedica owns. In addition to the hair regrowth treatment, HistoGen has regenerative skin creams for use after microdermabrasion and laser skin therapy.
Naughton said the lawsuit was filed to stop the planned March 6 launch of the cosmetic products.
It won’t stop the launch, she said. But it did prompt investors to pull out of the funding round because they did not want their money used to defend a lawsuit, she said.
Now Histogen is hoping to find new investors based on the promising early-stage data from the hair regrowth product, Naughton said.
In the meantime, most of the laid-off employees are continuing to work without receiving pay, at least not right away.
“Basically we have 19 to 20 people working as if nothing happened because they believe in the product and the company. They don’t want to shut down the experiments they are running,” Naughton said yesterday. “Obviously they cannot do this a long time. It’s a short-term situation.”
Once investors are committed, the employees will be reimbursed as consultants for the work they are doing now, she said. And they will be rehired, Naughton said.
Naughton denied the patent-infringement claims in the lawsuit.
Histogen’s growth factors and other ingredients are grown through a method that is much different from the one outlined in SkinMedica’s patent, she said.
(the only good news)
“I’ve been going out of my way for the last four years to make sure there is absolutely no infringement of the patent in terms of manufacturing or composition of our products,” Naughton said.
“I think that since we don’t have any patents formally published yet, they (SkinMedica) don’t have the benefit of knowing exactly what we are doing, and they want to stop the launch of our skin products.”
The first court date for the patent case is March 16, 10 days after Naughton plans to launch the Histogen skin products.