Palleon Pharmaceuticals Alleges Former Consultants Misappropriated Trade Secrets

On Friday in the District of Massachusetts, Palleon Pharmaceuticals Inc. filed a complaint against Aviceda Therapeutics LLC and two individuals over allegations that the defendants misappropriated Palleon’s trade secrets and proprietary information.

Biotechnology company Palleon brought on defendants Genead and Tolentino, both ophthalmologists, to consult on projects related to glyco-immunology in exchange for non-qualified stock options, according to the complaint. Reportedly, Genead and Tolentino agreed, through their signing of Palleon’s consulting agreements on May 5, 2017, that they would maintain the confidentiality of proprietary information and that all intellectual property they developed while consulting would belong to Palleon. Palleon claimed it had plans to create a spinoff company — called Aviceda Therapeutics — that develops ophthalmic applications for its existing technologies, so the individual defendants’ work was supposed to assist these efforts.

Ultimately, however, Palleon terminated Genead and Tolentino from their consultant positions in 2018, effectively ending their efforts in the creation of the spinoff company because Palleon was “choosing to prioritize different matters” at the time, the complaint said.

Nevertheless, the plaintiff claimed that the defendants did not cease their efforts, as Genead allegedly filed to incorporate Aviceda on June 19, 2018, without Palleon’s knowledge or consent. Aviceda’s website listed Genead as co-founder, CEO, and chairman and Tolentino as co-founder and chief technology officer and stated that its mission is to develop glyco-immune technology to treat various diseases.

Not only did the plaintiff claim that the defendants incorporated Aviceda without authorization from Palleon, but it further alleged that the technologies and trade secrets the individual defendants are employing in their work at Aviceda were misappropriated from and belong to Palleon. Palleon sent a cease-and-desist letter to no compliance by the defendants; thus, Palleon sued.

Palleon’s causes of action are alleged violations of the Defend Trade Secrets Act and Massachusetts code, two counts of breach of contract, and unfair competition. The plaintiff is seeking a judgment in its favor, an enjoinment of the alleged conduct by the defendants, an order that the defendants must return any of Palleon’s intellectual property still in their possession, and monetary damages, among other relief.

Goodwin Procter LLP represents Palleon.