PixarBio scraps bid for InVivo, citing management credibility

Frank Reynolds and Robert Langer were involved in the formation of both companies

PixarBio has pulled the plug on a bid to buy InVivo Therapeutics. The morphine replacement player put in a low-ball offer for inVivo earlier this month, only to terminate its offer “for reasons related to management credibility and competence, corporate governance and IP control.”

Cambridge, MA-based PixarBio revealed its $77 million bid to buy InVivo at the start of the year. The plan was to merge the companies to create Reynolds Therapeutics, a neurological treatment biotech taking its name from the cofounder of PixarBio and InVivo, Frank Reynolds. In a release to disclose its bid, PixarBio said Reynolds patented the NeuroScaffold technology used by InVivo and argued a merger is the only way for its acquisition target to own the commercial rights to it.

PixarBio’s statement prompted a dismissive response from InVivo. The response argued Reynolds “is not an inventor on any of these patents or patent applications,” and said the size of PixarBio’s bid, which valued InVivo at 50% below its market cap, was “not credible.” PixarBio subsequently upped its bid to $100 million and ramped up the argument about ownership of the patents.

Now, PixarBio has terminated its bid and published a four-page letter to shareholders to explain its decision. The letter attacks InVivo over the credibility of its management, corporate governance and intellectual property control in a tone unusual for communications from publicly-traded biotechs but in keeping with PixarBio’s communications over the past few weeks.

The letter includes multiple quotes from Reynolds, such as: “Due to InVivo Therapeutics propaganda since I left InVivo in August 2013, It’s not the first time, and it won’t be the last time people say Frank Reynolds did not invent the NeuroScaffold. Im [sic] putting a stop to that NOW.”

Given the ongoing dispute over the patent, the argument between the companies could continue even now PixarBio has terminated its takeover offer. Both companies are among the many Robert Langer helped to set up.