Ex-Trader Takes Sloan-Kettering to Court Over Gene Therapy Deal

Patrick Girondi, a former commodities trader from Chicago, lives in Italy these days. But for the last couple of years, he’s been spending weeks at a time crashing at a friend’s apartment in Manhattan, waging a bare-knuckle and uphill legal battle against two well-regarded names in medical science:Bluebird Bio, a cutting edge gene-therapy company, andSloan Kettering Institute, the research arm of the famous cancer center.

Girondi’s company, Errant Gene Therapeutics, sued them in New York state court in 2017, alleging that Sloan Kettering Institute tricked it into turning over potentially groundbreaking treatment. Girondi helped develop the treatment to save his son, Rocco, from beta thalassemia, a relatively rare and potentially fatal blood disorder.

Then, Girondi claimed, Sloan Kettering mothballed his work to favor Bluebird, whose chief executive had a prior business relationship with the cancer center’s boss.

Girondi’s rage has been fueled by Bluebird’s trajectory since then: its thalassemia treatment was approved last year by the European Union and — at $1.8 million per patient—will be among the most expensive.

“In my neighborhood, they’d have gotten ball batted for similar behavior,’’ said Girondi, a self-described former street tough from the South Side of Chicago who’s been usingsuch talk to describe his adversaries for years.

Now, Girondi is finally getting his day in court. Having survived years of legal challenges, which have portrayed his case as absurd and Girondi himself as erratic and ill-tempered, his trial began on Thursday. Errant is seeking hundreds of millions of dollars in damages, according to court filings.

The trial promises a rare glimpse into the not uncommonly messy marriage of medical researchers and for-profit companies, and it will showcase a slew of revealing documents and emails that have emerged in the court file, including one that Girondi’s lawyers described in court as “the smoking gun.”

Written in June 2010 by Nick Leschly, then interim president of Genetix Pharmaceuticals, which wasrenamed Bluebird Bio a few months later, the email said: “Pat Girondi—need to shut him down.’’

The recipient of the email, another Genetix executive, responded by saying they need to “be nice, suck up, etc.” to Girondi, so they can review valuable data from a Sloan Kettering scientist with whom Errant was collaborating. 

Both Sloan Kettering and Bluebird deny Errant’s allegations.

Sloan Kettering is “vigorously defending itself in court,” said Jorge Lopez, executive vice president and general counsel for Memorial Sloan Kettering Cancer Center, in a statement. “We also disagree with EGT’s characterizations of the case and of the Court’s rulings.’’ He declined further comment.

In court filings, Sloan Kettering has argued that Girondi’s company, called EGT for short, wasn’t tricked but rather was short of money and repeatedly failed to meet obligations outlined in its deal.

“The evidence shows that EGT’s case is the fantasy of a defunct company and its founder that refuse to accept responsibility for their own failure,’’ an attorney for Sloan Kettering Institute wrote in a July 8, 2019 filing. 

Bluebird’s attorney, Jeffrey Eilender, said the court record has disproved Errant’s claim of a conspiracy between Sloan Kettering Institute, referred to as SKI in court filings, and Bluebird, as well as an allegation that Bluebird gleaned secrets from Girondi’s company.

“None of the evidence relied upon by EGT shows a material issue as to the ultimate fact: none suggests in any way that there was an agreement between Bluebird and SKI to defraud EGT,” Bluebird’s lawyers wrote in a July 8, 2019 court filing. “In fact, EGT does not even explain how or why the facts it cites are relevant here (they are not); it just throws everything at the wall to see if it sticks.” 

As for Leschly’s email saying that Girondi needed to be shut down, Eilender said it referred to Girondi, not the company. “Why? Because with all due respect to Mr. Girondi, he’s a nudnik,” Eilender told the court at January 2019 hearing, explaining Girondi had become a nuisance.

Leschly wasn’t available for an interview, but he has previously expressed his opinions about Girondi and his firm.

“Errant is ‘toothless’ and the guy behind it is completely insane, truly,’’ Leschly wrote in a 2012 email to an investment analyst.

Thalassemia is an inherited blood disorder in which the body doesn’t produce enough hemoglobin, the substance in red blood cells that carries oxygen. Moderate and severe, or beta, cases require frequent blood transfusions and can result in early death. 

In 1992, Rocco Girondi was diagnosed with a more severe form of the blood disorder. He was two years old. The next year, Girondi retired from what he describes as a lucrative trading career to devote himself to finding a cure.

Girondi, 62, isn’t your typical biotech entrepreneur. A high school dropout, he was listed as one of America’s most eligible bachelors in Playgirl magazine in 1988 and appeared on the Oprah Winfrey Show in an episode on male chauvinists. (A copy of the show wasn’t readily available; Girondi said he had defended both a man’s and a woman’s right to work, but believed one should stay home if they have children). A 1987 article about him in Chicago Magazine is entitled “Fonzie Gets Rich.” He left Chicago decades ago for Italy, wherehe occasionally performs in concert, playing blues and rock and the occasional Italian ballad. But he still speaks in the blunt, sometimes salty, manner of the Chicago neighborhood where he grew up.

He had some money at a time when few others showed interest in gene therapy. By 2000, Girondi began providing financial support to researchers at Sloan Kettering, including Dr. Michel Sadelain, who had brought thalassemia  under control in mice, according to Errant’s complaint.  Those researchers had developed a method to replace defective genes in thalassemia patients with a healthy copy. The plan used a modified virus – known as a vector – to deliver the genetic material into the cells.

At that time, gene therapy was relatively new and scarred by missteps, including apatient who had died after undergoing treatment. In 2005, Sloan Kettering granted a license to develop Sadelain’s potential gene therapy treatment to the only interested party, Errant Gene Therapeutics, according to the complaint.

Progress was slow and hampered by delays, according to Girondi and his lawyers. But by 2010, Errant had manufactured enough of the medicine to start clinical trials, his lawyers say in court papers.

Girondi said the relationship between his company and Sloan Kettering changed soon after Craig Thompson’s hiring as president and chief executive officer of Memorial Sloan Kettering Medical Center was announced in August 2010. By that fall, he said it was clear his company was on the outs.

“It ended very strangely,” Girondi said. “I think that’s the best way to say it.”

Sadelain didn’t respond to messages seeking comment.

Thompson, 67, had previously worked at the University of Pennsylvania, where he had been director of the Abramson Cancer Center. He also co-founded a company called Agios Pharmaceuticals in 2007 with the goal of unlocking “a new field of discovery in cellular metabolism.” 

Agios received an infusion of $33 million from several venture capital firms in 2008 including Third Rock Ventures, where Leschly – the future Bluebird CEO — was a partner. Leschly also served as Agios’s interim chief business officer, according to a2010 Bluebird press release. A few months later, when Thompson began his job at Sloan Kettering, he was listed as being on Agios’s scientific advisory board.

In September, 2010, Sloan Kettering asked Errant for physical possession of the vector to complete a study which it said was necessary to move forward with clinical trials, according to Errant’s lawyers. Errant delivered the vector and never got it back, the lawyers said.

Sloan Kettering said in court documents that by 2010, Errant had defaulted on its obligations, and that following arbitration and a new deal the following year, all rights granted to Errant in the 2005 deal reverted to Sloan Kettering. 

Thompson started his job at Sloan Kettering in November, 2010. That same month, Sloan Kettering met with Bluebird and gave them a technical demonstration on Errant’s vector, sharing confidential information that served as a prelude to a more formal agreement the next year, according to Errant’s lawyers.

In November 2010, Bluebird’s board of directors in 2010 weighed the pros and cons of collaborating with Sloan Kettering, according to Errant’s court filings. Among the positives? “Eliminates the most threatening competitor,” according to the presentation, which is part of the court record.

Andrew Maslow, a former Sloan Kettering executive, said in an interview that he made the decision to pursue a collaboration with Bluebird, not Thompson. One reason was the improving  landscape for gene therapy, and another was Bluebird’s capabilities, he said.

“These guys are the real thing. They are totally capable,’’ he said. “They were just the opposite of Pat.”

While Errant squabbled with Sloan Kettering, Bluebird continued to move toward commercialization of its treatment.

Bluebird’s treatment for transfusion-dependent thalassemia patients, Zynteglo, was approved by the European Union last year, and the company plans to apply for U.S. approval in 2021. But that’s just the beginning. The gene therapy is also intended for use as a treatment for sickle cell disease(SCD).  It could ultimately generate $1 billion a year in annual sales, according to Bloomberg Intelligence. 

“These therapies have the potential to transform the lives of patients with thalassemia and SCD,” said Marc Engelsgjerd, a biotech analyst at Bloomberg Intelligence, who called the treatments “groundbeaking.”

Leschly, for one, has already benefited. He has pocketed roughly $78 million from stock sales since the company went public in 2013, according to data compiled by Bloomberg. Girondi and Sadelain have been left to contemplate what might have been.

“We could have gotten an incredible product and a Nobel Prize,’’ Sadelain said, in a May 2015 phone call that Girondi  recorded, also part of the court file. “And right now, we have nothing.” 

— With assistance by Anders Melin

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