Securities and Exchange Commission temporarily suspends trade of PixarBio stock

Intellectual property ownership of the Neuro-spinal scaffold is at the heart of the PixarBio/Invivo Therapeutics disagreement

PixarBio stock has been suspended from trade by the Securities and Exchange Commission, in line with the Securities Exchange Act of 1934. The Commission announced the suspension on 23 January 2017, issuing a statement that “the market for the security [stock] appears to reflect manipulative or deceptive activities…because of questions regarding the accuracy of assertions by PixarBio in press releases and its Form S-1.” PixarBio’s stocks are scheduled to resume trade at 23.59 on 3 February 2017.

Among the areas of concern for the Commission are “the company’s business combinations and current shareholders”, “the identity and qualifications of key shareholders and employees” and “the company’s current and prospective development efforts.” According to a statement from PixarBio, the company is currently “in the process of providing the Securities and Exchange Commission with documentation” relevant to the suspension.

PixarBio has issued a number of colourful press releases over the past few months, largely regarding a proposed takeover bid of Invivo Therapeutics. Invivo is currently trialling the Neuro-spinal scaffold treatment for severe spinal cord injury. The PixarBio releases have variously questioned the legitimacy of Invivo’s claims to patent rights for the device, as well as repeatedly accusing executives of leadership failure at the company.

The takeover bid was withdrawn on 23 January, “for reasons related to management credibility and competence” on the part of Invivo. An accompanying letter to shareholders claims that “PixarBio has already beat [sic] Invivo Therapeutics in court on spinal cord injury non-compete allegations in 2015.” The patent argument surrounds the ongoing claim by PixarBio that Frank Reynolds—its founder and chief scientific officer, and a former executive at Invivo—invented the Neuro-spinal scaffold, before leaving the company in 2013. PixarBio claims that Invivo has removed Reynolds’ name from patent applications, and changed the name of the device from “NeuroScaffold” in an attempt to prevent him from claiming ownership.

Invivo has only once responded to the repeated allegations. Calling PixarBio’s claims about patent misuse “unfounded,” Invivo stated that it “has an exclusive license in the field of spinal cord injury to all patents and patent applications in prosecution covering the Neuro-spinal scaffold.” Further, the company said that “Frank Reynolds is not an inventor on any of these patents or patent applications, so no assignment is required and none was requested.” With regards to the proposed takeover, Invivo said that the offer was “not credible”.

PixarBio, which is reportedly developing a non-addictive opioid alternative (NeuroRelease), responded to the suspension with another characteristic press release. Reynolds, who has previously likened himself to US President Donald Trump, claims in the release that “whatever third parties were responsible for the Securities and Exchange Commission’s actions shall not stop our future plans to replace addictive opiates in the market.”

Further, Reynolds continues to express faith in the success of NeuroRelease, “Our team is confident that we will achieve US Food and Drug Administration approval for our 14-day NeuroRelease pain treatment in late 2018. We can now add our three-day NeuroRelease to join our seven-day pain treatment for expected approval in 2019, instead of approval in 2020.” Ending the release, Reynolds states, “Onward and upward…we [sic] got this!!”