Battle Over Stem Cells Rages in Texas

RICHMOND, Texas (CN) - A stem cell therapy provider claims in court a lab operator is wrongly refusing to release its customers' stem cells unless it pays $1 million.

Celltex Therapeutics Corporation fka Biolife Stem Cell Corp. sued RNL Bio Co. and Human Biostar, in Fort Bend County Court.

Human Biostar sued Celltex last week in Harris County Court, Houston, demanding $1 million in stem cell processing and storage fees.

"Celltex is a Texas corporation engaged in the field of regenerative medicine," Celltex says in its countersuit. "Specifically, Celltex is in the business of separating, multiplying and banking stem cells for use in stem cell therapy.

"Defendant RNL is a South Korean company doing business in Texas and has developed and patented certain human stem cell technology that relates to methods for the use of adult stem cells in stem cell therapy.

"Defendant HBI is a Texas corporation and, until recently, was believed to be a subsidiary of defendant RNL.

"However, HBI now claims have no legal affiliation with RNL, even though RNL transferred possession of those stem cells (wrongfully) to HBI and HBI is currently in possession of those stem cells." (Parentheses in complaint.)

Celltex claims it signed a Technology Licensing and Purchase Agreement, referred to as the TLPA, with RNL in March 2011 giving it the right to use, sell and sublicense RNL's patented stem cell technology in Canada, the United States and Mexico.

The purchase price for the technology was $30 million up front, Celltex says, and "milestone payments equal to twenty percent (20%) of the fees received by Celltex from the sale and license of the technology within the territory until those milestone payments total three hundred million dollars."

RNL also bought Celltex shares, and set up a lab to process adult stem cells for Celltex's customers while training Celltex employees how to use the technology.

"Celltex has marketed the technology and developed a customer base of approximately two hundred and thirty (230) customers," the complaint states. "Many of these customers are battling degenerative diseases, such as Parkinson 's disease, and hope stem cell therapy will work to reverse, at least in part, their conditions.

"Most patients who bank their stem cells do so because there is an incurable, chronic condition they are fighting."

Celltex says that under its customers' agreements, it is the custodian of their stem cells until they request that the cells be transported to their doctor, or they give Celltex written orders to destroy the cells.

For a year, Celltex says, RNL and Human Biostar have operated a lab in Sugar Land, Texas where they provide the stem cell processing and banking services for Celltex.

The cells were stored there at -400 degrees Fahrenheit in liquid nitrogen-filled tanks, Celltex says.

Celltex says that though the lab is registered in its name with the U.S. Food and Drug Administration, RNL and Human Biostar are now denying it access.

"When Celltex last saw the tank holding its customers' stem cells, it was located in Suite 800," the complaint states. "RNL and HBI have wrongfully denied, and continue to wrongfully deny Celltex's personnel entry to Suite 800.

"RNL and HBI refuse to permit any Celltex personnel to observe or participate in any lab operations in Suite 800."

Celltex says RNL and HBI recently moved the lab to another building in the same office park.

"RNL and HBI did not have the authority to move the records or the stem cells because neither RNL nor HBI are the party registered with the FDA," the complaint states. "Only Celltex has the authority to move the stem cells and corresponding records from their current location to another location of Celltex's choosing."

Celltex says its agents were denied access to both Suite 800, and the new lab, on Nov. 20.

The next day, Celltex says, "RNL and HBI announced via PR Newswire that they completed FDA revisions of the laboratory and that HBI was engaged in contract services for stem cell banking and production for Celltex," the complaint states. "These statements are false as Celltex has not been able to confirm the validity of the changes to the laboratory nor entered into a contractual agreement with HBI."

Celltex says it learned from RNL's lawyer on Nov. 1 that "despite the clear record of corporate succession contained in the Texas Secretary of State's records ... HBI claims it is not a subsidiary of RNL but is simply a 'cooperative company.'

"On November 27, 2012, Celltex learned that HBI claims no affiliation with RNL and claims it has no obligation to Celltex under the TLPA.

"Celltex also learned HBI is the party in possession of the stem cells of Celltex's customers and is asserting Celltex owes it more than one million dollars ($1,000,000) for alleged costs associated with services HBI purported to have performed for Celltex, and an additional six thousand ($6,000) per day for alleged storage fees to begin on December 1, 2012.

"However, Celltex has no contractual relationship with HBI and HBI has disclaimed all responsibility for the laboratory obligations of RNL under the TLPA.

"In fact, HBI now claims the laboratory, which RNL was contractually obligated to establish under the TLPA, belongs to HBI and that it (HBI) has no obligation to turn over the laboratory to Celltex.

"There is no basis, in law or fact, for HBI's position."

Celltex says HBI is refusing to release its customers' stem cells until it signs a contract with HBI, which would replace RNL's lab obligations under the licensing deal.

"In addition, RNL and HBI have demanded, as an additional condition to releasing the stem cells, that Celltex fire and assist in the deportation of Hyeonggeum Park, a former RNL employee who came to work for Celltex on November 19, 2012," the complaint states.

It adds: "RNL and HBI's conduct amounts to extortion."

Celltex says its "customers are battling degenerative diseases and are desperate to obtain their stem cells for therapy."

Celltex seeks an injunction ordering RNL and HBI to release its customers' stem cells with their accompanying records.

It also seeks damages for conversion.

Celltex is represented by Richard Tate with Tate Moerer & King in Richmond.

A call to Tate seeking comment was not returned by press time.

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