Dr. Tarun Jolly
NEW ORLEANS — A marketing executive briefly employed by a New Orleans biotech company has filed suit against the firm, claiming she was enticed to work for it to help secure tens of millions in funding from an outside investor as part of ploy to create the appearance of a solid company.
Alison Diboll alleges UTC Laboratories, which does business as Renaissance RX, and key executives hired her as chief marketing officer as they attempted to secure the $55 million investment, but then quickly let her go once the deal was done.
Renaissance RX brought Diboll from San Francisco to New Orleans with the promise of a $400,000 salary and equity in the firm, the lawsuit filed in Orleans Parish Civil District Court states.
But 30 days after Diboll was hired, she was told the company no longer needed a chief marketing officer. This happened after the company secured a promise of $55 million in funding -- and a down payment of $5 million -- from the private investment firm, TPG, the lawsuit alleges.
The lawsuit states that Renaissance “fraudulently enticed Ms. Diboll into accepting their offer, breached their agreement with her, caused her to detrimentally rely on their promises and ultimately intentionally inflicted emotional distress on her.”
Renaissance RX, founded in 2012, offers DNA testing that it claims will enable doctors to use genetics to better decide what drugs patients are prescribed. It is part of the wider personalized medicine field.
The company’s main revenue source until late 2014 was a federally funded study on the potential benefits of using genetics to better inform doctors. The plan was to enroll 250,000 patients, with the company paid $600 under Medicare for every test.
Renaissance reported explosive growth through 2013 and 2014, with claimed revenue of $200 million.
It went from a five-person firm to employing 800 nationwide and was lauded by New Orleans’ civic leaders as a company that would jump start the growth of a biotech industry in the city. It received close to $1 million in grant funding from the city.
Then, in late 2014, federal funding was shut off pending a review of the program. This happened as negotiations were continuing with the investment firm, TPG.
The company and three senior executives -- Dr. Tarun Jolly, its founder and chief executive officer; Barry Griffith; and Patrick Ridgeway -- along with UTC are all named in the suit filed by Diboll.
Joe Peiffer, Diboll’s attorney, told the Louisiana Record that when his client came to him originally “it was a straight up employment case.”
“She was promised a job, and was told that she had a job, and was told she was going to be getting salary and equity and things that are commiserate with somebody of her experience,” Peiffer said.
Her termination by the company coincided with the closing of the deal with TPG, Peiffer said.
“And so we began to look into what was it that was going on at this company that caused this sort of situation,” Peiffer said. “We believe they wanted to see an executive team in place that looked like a real bona fide executive team.”
Peiffer claimed that when his client and a previous attorney went to senior management to negotiate a severance package deal, Diboll was told not only that she was getting no money, but also her reputation would be publicly attacked if she pursued the matter further. This “I found very disturbing,” Peiffer said.
The lawsuit also includes details on the history of a similar company that Ridgeway and Griffith operated previously in Washington state.
Natural Molecular, the complaint states, also received significant Medicare reimbursements exploiting the same loophole -- using federal money for a study of the benefits of DNA testing in the treatment of patients. That company ultimately went bankrupt and was required to repay Medicare $71 million, Peiffer said.
Renaissance has faced other allegations of wrongdoing. A Rhode Island physician, who signed on to enroll his patients in Renaissance’s registry, has alleged in a federal lawsuit that Renaissance committed “widespread potential legal and regulatory violations.”
The company appears still to be operating. Its website is still up and running, with the company promising to deliver the future of personalized medicine. A company spokesperson did not immediately return a call for comment.
“It is unfortunate that the Medicare review process has effectively crippled a burgeoning start-up," the company said in a statement to The New York Times last year regarding a federal review.
The statement continued: “While the principals of Renaissance RX have confidence about the eventual outcome of the review, this extended delay continues to create great challenges.”