BioVeris Corp., a Gaithersburg biotechnology firm entangled in a controversy involving the son of the company's chief executive officer, is facing delisting of its stock for failing to file its annual report for last year.
The company announced yesterday that the Nasdaq stock exchange issued an official notice telling the company it had failed to comply with listing requirements by not filing with regulators its 10-K financial report for its fiscal year that ended March 31.
The failure was the only deficiency cited by Nasdaq, the company said. BioVeris said it would appeal the decision.
In the interim, BioVeris shares will trade under the amended ticker symbol BIOVE, instead of BIOV, the firm said.
BioVeris, formerly IGEN International Inc., declined comment on its announcement and Nasdaq officials did not return a telephone call yesterday.
BioVeris has previously said that its failure to file its annual report on time was due to problems stemming from its involvement in a joint venture called Meso Scale Diagnostics LLC (MSD), a firm that's headed by Jacob Wohlstadter, the son of BioVeris CEO Samuel J. Wohlstadter.
BioVeris said it owns MSD jointly with Meso Scale Technologies LLC (MST), a firm that's wholly owned by Jacob Wohlstadter.
Last week, BioVeris filed suit in Delaware Chancery Court, against MSD, MST and Jacob Wohlstadter, alleging breach of contract and fiduciary duty. The company is seeking a court-ordered dissolution of the MSD joint venture, and requested the appointment of a trustee to oversee that liquidation.
This was the second civil action filed by BioVeris against the same three defendants in this matter - with both suits stemming from an unauthorized spending spree by the son, the company alleges. This latest action alleges that the son spent $7 million from the MSD joint venture, purchasing 10 luxury automobiles - including two Ferraris and five BMWs - as well as a $4.2 million condominium in New York.
BioVeris discovered the alleged transactions in June, adding that "the transactions were entered into by MSD upon Jacob Wohlstadter's sole approval and without BioVeris' knowledge" - prompting the first lawsuit.
Ruling on that suit, the Chancery Court ordered that BioVeris keep its representative on the board of managers of the MSD joint venture until the case was resolved. BioVeris also said the court prohibited MSD from engaging in any transactions of more than $10,000 without the unanimous approval of the MSD joint venture's board of managers.
Jacob Wohlstadter subsequently reimbursed MSD for the auto and condo purchases, and assumed responsibility for another transaction that hadn't yet been settled, according to BioVeris. Jacob Wohlstadter could not be reached for comment yesterday.
On July 6, MSD, MST, Jacob Wohlstadter and BioVeris agreed to put the first suit on hold, BioVeris said. The reason: The younger Wohlstadter, through MST and MSD, had the option of buying out BioVeris' share of the joint venture, and the stay would grant time to both sides to negotiate an acceptable deal. Also, BioVeris needed information to finalize its 10-K.
But when a July 13 deadline passed, the stay agreement terminated, according to BioVeris.
The company eventually filed the second lawsuit.
BioVeris shares declined 15 cents each, or nearly 2 percent, to close at $7.60 yesterday.