The rise and fall of Nuclea Biotechnologies
Despite that profile, the end came quickly for Nuclea.
Nine months after co-founder Patrick J. Muraca was replaced as CEO by Nuclea's board of directors, the company filed for Chapter 7 bankruptcy protection, listing debts of $9.6 million, against assets of only $235,144, according to documents filed in federal bankruptcy court in Delaware.
Muraca, who co-founded Nuclea in 2005, left the company in December 2015 following eight years as CEO when the board replaced him with biotech industry veteran Donald J. Pogorzelski of Cambridge, who served in that position for only a month, according to court documents. The board made Muraca president and CEO of another biotech venture that it was involved in, Nano DX., in Albany, N.Y.
According to the website Genomeweb.com, NanoDX closed shortly after it was formed because Nuclea failed to raise the necessary funding to get it off the ground. There is no connection between Muraca's new company, NanoMolecular DX, NanoDX, and Nuclea, Muraca told the website.
When he left Nuclea, Muraca termed the move a "mutual decision" between him and the board because Pogorzelski was considered to be better suited to move the company from the research and development stage to commercialization. Muraca was listed as one of Nuclea's largest shareholders when he left the company, and said he owned about 4 percent of Nuclea, a stake worth some $4 million, he said, when the firm went under.
He said he doesn't know what happened to the company after he left.
"That's a good question," Muraca said. "When I walked out the door, Nuclea was poised for commercialization. They brought in a fantastic CEO and he was poised and ready to go. I can't speak to the specific reasons because I was out of the company at that time."
Nuclea's 197 creditors include several local entities including the Pittsfield Economic Development Authority, the city of Pittsfield, Berkshire Medical Center, the former North Adams Regional Hospital, Berkshire Gas Co., the owner of Nuclea's former facility on Elm Street, several private businesses and local residents and three Berkshire County law firms, court documents indicate.
The company's largest creditor is the German company, Wilex AG, which is owed $2.7 million in acquisition and debt/interest costs, which includes the responsibility for a $2.5 million loan between Wilex AG and its U.S. subsidiary, Wilex Inc. of Cambridge.
Nuclea assumed responsibility for the payment of that loan when it purchased Wilex Inc. from Wilex AG for $5 million in 2013, and obtained all of its assets, including the HER2/neu assay, a blood-based test for monitoring women with metastatic breast cancer that overexpress the HER2/new protein. This assay is considered to be the most prominent of the former Nuclea assets that Muraca acquired, according to Genomeweb.com, and is something that his new company, Nano Molecular DX, intends to commercialize.
In October, Wilex AG filed a motion with the court to move its case against Nuclea from U.S. bankruptcy court in Delaware to Massachusetts, claiming "factors relevant to the venue favor Massachusetts" including Nuclea's principal place of business being in the Bay State, and "most key witnesses, former employees and officers of the debtor necessary to resolve disputes of the debtor's estates are likely located in Massachusetts not Delaware."
In court documents, Wilex states, "there have been allegations of, at a minimum, negligence and or possible improprieties, and fraudulent transfer of assets, by or to the former CEOs and other officers of the debtor" that may require 2004 examinations in the case, and are "almost certain" to be beyond the Delaware court's "subpoena power."
The court granted the motion, but Wilex's legal representatives did not return a telephone call seeking comment. Nuclea is not currently listed as a debtor in any bankruptcy filings in Massachusetts, said a clerk at Massachusetts Bankruptcy Court in Worcester.
Wilex is listed in Nuclea's bankruptcy filing as a creditor with a nonpriority, unsecured claim, meaning that none of its debts are secured by collateral. In a Chapter 7 bankruptcy filing, creditors with secured claims, those backed by collateral, are paid in order of priority depending on the amount of funds that the court-appointed trustee is able to raise by the sale of any company assets. Once those funds are exhausted, any remaining creditors receive no financial compensation.
The vast majority of Nuclea's debts, $9.04 million, are listed as unsecured claims without priority, according to court documents. The firm lists $578,981 in priority unsecured claims, and just $23,499 in claims that are secured by priority.
PEDA, the quasi-public agency charged with the development of the William Stanley Business Park of the Berkshires, is also listed as a creditor with a nonpriority secured claim. Nuclea rented space in PEDA's administration building on Kellogg Street.
According to court documents, Nuclea owes PEDA $4,580 in unpaid rent and utilities between January and April 2016, but PEDA Executive Director Corydon Thurston said the quasi-public agency has put in a claim that spans the amount that Nuclea owes for the entire lease, which expired in November. That brings the total close to $10,000, he said.
Thurston isn't sure that PEDA will ever receive any of the funds that it is owed.
"Like anyone else we'll exhaust all our possibilities, but am I expecting anything? No," Thurston said. "There are many more creditors in front of us."
The city of Pittsfield is listed as a creditor with a priority unsecured claim, meaning that it would be paid before PEDA if any funding is available.
Court documents list the city's claim for back property tax revenue from Nuclea as $1,773, but according to the tax collector's office, Nuclea currently owes the city $2,493 in property tax revenue.
Reach Business Editor Tony Dobrowolski at 413 496-6224.
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