Trovagene Inc. has fired and sued two of its top executives — CEO Antonius Schuh and CFO Stephen Zaniboni -- alleging breach of fiduciary duty.
The actions caught both seasoned biotech executives by surprise.
Schuh said he intends to file a wrongful termination suit against Trovagene, and expects that Zaniboni will join him in the lawsuit. He also challenged the validity of Trovagene’s claims.
“We believe there are no merits to the actions the company has taken against us,” Schuh said in an interview Tuesday, the day after he was fired. “It’s a very bizarre situation, and I am shocked and saddened by it.”
The dispute appears to hinge on how Trovagene defines itself: as a diagnostic or a therapeutic endeavor.
According to a Trovagene statement released Monday night, Schuh and Zaniboni allegedly failed to present a lucrative corporate opportunity to Trovagene, and instead took advantage of the opportunity for their own personal benefit.
Schuh and Zaniboni are managing partners of an investment firm called Global Source Ventures.
“Our engagement with the investment firm has been well known to Trovagene from day one,” Schuh said. “They agreed to it. It was in our employment agreements and known to the public on our LinkedIn profiles. We’ve been doing this for four years.”
Global Source Ventures was approached by a therapeutics company developing a very early-stage cancer drug, Schuh said. The investment firm became engaged with the drugmaker as advisors and angel investors.
Trovagene, which currently makes liquid biopsy tests to screen for cancer mutations, announced March 28 that it had filed a complaint against the two executives in San Diego Superior Court. The complaint asks that Schuh and Zaniboni be required to turn over their interests in the cancer drug opportunity to Trovagene.
“The acquisition of new therapeutics in the field of precision medicine presents an exciting opportunity for Trovagene and we intend to bring that opportunity to Trovagene where it rightfully belongs for the good of our shareholders,” Trovagene Chairman Thomas Adams said in a statement.
In a follow-up conference call with analysts, Adam was asked how long the board knew about Schuh and Zaniboni’s side activities. Adams said the issue came to the board’s attention in the past few weeks.
“Like Hillary, it was an email,” Adams said.
Diagnostics or Therapeutics?
Adams, now acting as interim CEO, said that Trovagene, a diagnostics firm founded in 1999, had long-held intentions of expanding into therapeutics, and that experts in the field had advised Trovagene that a drug/diagnostic combination would be a very powerful line of business for the company.