Lawsuit alleges co-founder derailed IPO

The stock of Voyager Pharmaceuticals, a Raleigh company developing a new Alzheimer's drug, was supposed to be trading on Wall Street for five months by now.

Instead, the company's founders are fighting in court over a failed public stock offering that could have raised at least $65 million and made millionaires out of investors in the Triangle and elsewhere.

The initial public offering was canceled Dec. 13 without explanation.

The lawsuit, which was filed March 6 by Patrick Smith as the chief executive officer of Voyager, alleges that Dr. Richard Bowen, Voyager's former chief scientific officer, derailed the IPO by acting erratically and spreading false information. He and company scientist Craig Atwood met secretly with WR Hambrecht, a San Francisco brokerage that was the IPO underwriter, and lied about Voyager's experimental treatment for Alzheimer's disease, the lawsuit alleges.

The actions raised concern at Hambrecht that Voyager's founders were having a feud, which in turn forced the company to cancel the IPO, the lawsuit claims.

Bowen and Atwood also threatened to disclose confidential information they had gained from research related to the experimental drug, known as Memryte.

The company has asked the court to stop Bowen and Atwood from breaching confidentiality and to determine damages based on how much money the company lost by canceling the IPO.

"This is not the life and death of the company," said Gary Parsons, a lawyer with Troutman Sanders in Raleigh who represents Voyager. "These kinds of disagreements happen. Sometimes the only way you get a resolution is to take it to the courtroom."

Hans Huang, a lawyer with Maupin Taylor in Raleigh who represents Bowen, called the fight between the founders "an unfortunate event."

But numerous facts and issues have yet to be brought up, Huang said. He declined to give details.

"There are a lot of hot issues, timely issues," Huang said. "But I would be very hesitant to make a comment."

Bowen and others involved in the case could not be reached for comment. Their lawyers would not comment on the merit of the allegations.

Voyager was incorporated in February 2001 in Florida, where the company's three founders had met.

At the time, Bowen was a physician practicing in Naples, Fla., and the holder of a patent on leuprolide acetate as a possible treatment for Alzheimer's disease. Bowen and Smith became friends after getting to know each other through their children's school activities. Smith introduced Bowen to David Corcoran, now Voyager's chief financial officer, whom Smith knew from his former job as CEO of a New England health-care company.

In 2002, the founders moved Voyager to Raleigh. The company now employs about 30.

To pay for the research and development of Memryte, Voyager raised about $53.5 million from small investors nationwide. Nearly 500 of them own about 43 percent of the company, according to regulatory filings. These investors include health-care professionals, sales managers and university professors. Many learned of the company at presentations held around the country.

In its IPO, the company wanted to use an open-auction process, a relatively new and little-used method that favors small investors. But instead of starting to trade its shares on Nasdaq, Voyager postponed its IPO on Dec. 8 and four days later canceled it without giving a reason.

The lawsuit claims that Bowen had been acting erratically for several months.

At a Sept. 20 meeting with shareholders, he insisted that Voyager's mission be changed to include "the glorification of God," the lawsuit alleges. He and Atwood kept secret positive research results that would have been valuable for the IPO, according to the lawsuit.

On Dec. 7, Voyager executives and various shareholders gathered in New York in anticipation of the IPO's closing, the lawsuit claims. The following day, Bowen told shareholders that the IPO wasn't going to proceed, because "God had told him so," the lawsuit alleges.

His lawyer, Huang, declined to comment on the allegations.