Ex-employees say Soon-Shiong's Big Data venture is a fraud

NantHealth founder Patrick Soon-Shiong

NantHealth, an arm of billionaire physician and biotech entrepreneur Patrick Soon-Shiong's empire, promises to improve cancer diagnostics through a marriage of genomics and high-speed computing. But behind its sleek marketing campaign and Soon-Shiong's bravado, the company is misleading customers and putting patients at risk, according to a lawsuit filed by two former employees.

As first reported by Matthew Herper in Forbes, ex-NantHealth executives Stephanie Davidson and William Lynch claim the company has repeatedly violated federal regulations, endangered patient privacy and misled the public about what its technology can do.

NantHealth bills itself as a clinical operating system, pooling vital signs and patient data from a multitude of hospital devices into one place and providing a real-time feed of information that Soon-Shiong says will lead to faster diagnoses and better outcomes.

Davidson and Lynch came aboard in leadership positions last year to help the company prepare for an IPO, but, according to the lawsuit, they "soon discovered that (NantHealth execs) were engaged in a multitude of fraudulent activities, which would, if known to investment bankers, customers and the public, ... substantially devalue the company's stock and likely cause the end of the IPO."

According to the plaintiffs, NantHealth's technology hardly lives up to its marketing pitch, with a buggy system that lags behind rival offerings. Davidson alleges that 15 of the company's customers--including Memorial Sloan Kettering, Piedmont Healthcare and Duke University--are "incurring huge costs as a result of (NantHealth's) products not working properly," with many threatening to dump their contracts altogether. And the company persisted in misrepresenting what its technology can do despite repeated warnings from Lynch that it was violating FDA regulations, according to the suit.

After bringing these and other issues to management, the pair were eventually fired in retaliation, the lawsuit claims.

Steve Curd, NantHealth's COO, tells Forbes the suit is "baseless" and "filled with inaccuracies and false statements." According to Curd, the pair were fired for "improper behavior," and, after her dismissal, Davidson demanded $2 million and threatened to "launch a smear campaign filled with false and damaging information" if she didn't get it. "The facts are the allegations are false," Curd told Forbes.

In the lawsuit, Davidson and Lynch ask for unspecified back pay, front pay and damages.

Unveiled in 2012, NantHealth has attracted $125 million in investments from Celgene ($CELG), the Kuwait Investment Authority and BlackBerry ($BBRY). An offshoot of Soon-Shiong's NantWorks umbrella outfit, the company sits alongside the drug-developing NantBioScience and NantOmics, a molecular diagnostics venture with technology that uses genomic and proteomic analyses to profile tumors. The billionaire's overarching goal is to unite cloud computing, genomic analysis and targeted drug development to create an end-to-end oncology system that can eventually manage a patient's cancer much like the industry current handles chronic disease.

- read the Forbes story
- here's the lawsuit

Special Report: Fierce's 10 top biotech billionaires - Patrick Soon-Shiong

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