The Rockville biotech firm CytImmune Sciences is suing a Swiss investment group, saying the group didn’t follow through on its promises to help CytImmune raise capital in Europe. The Zurich-based Fischer Investment Group fraudulently promised to generate about $20 million in investments for CytImmune, but the Swiss firm “did nothing but collect fees” that benefited the company and its executives, according to the lawsuit.
CytImmune is a medical technology company that was trying to raise money for cancer therapy clinical trials. The lawsuit, filed in federal court in Greenbelt, says Fischer executives told CytImmune they could raise capital if CytImmuned used the Swiss company to set up European corporate entities.
The companies agreed last June that Fischer would underwrite the 15 million euros — about $20 million — it promised to raise for CytImmune, meaning it would either generate the funds from other sources or provide the money itself, the suit says. In exchange, Fischer would get a 12 percent share of the European entities CytImmune would form.
Fischer said it could raise that money through private financing and an initial public offering.
But CytImmune alleges that Fischer did nothing and terminated the companies’ agreement without providing any money for CytImmune.
The suit accuses Fischer and two executives of civil conspiracy, fraudulent misrepresentation, breach of contract and other civil counts. CytImmune is seeking to recover the $20 million it says Fischer agreed to pay, as well as the more than $500,000 the biotech firm says it paid in fees to Fischer and others involved in the contract negotiations.
Fischer representatives couldn’t be reached for comment.
After the contract was signed, CytImmune transferred $75,000 to Fischer’s control to create the European entities Fischer said were necessary. CytImmune says it also spent $480,000 on accountants and attorneys to prepare for the public offering and to comply with Fischer’s other directions.
But two months later, the suit alleges, Fischer had “done virtually nothing to begin making contacts for raising capital or providing capital to CytImmune.”
When CytImmune e-mailed Fischer executives, the officials said they disagreed with CytImmune’s assertions and effectively ended the companies’ relationship, the suit says.
Fischer won’t return unspent funds that CytImmune paid to set up corporate entities in Europe, according to the suit.
When a foreign firm doesn’t honor a judgment against it in a U.S. court, assets the firm has in the United States can be seized, said lawyer Joseph Aronica, a partner at Duane Morris who is not affiliated with the CytImmune suit. If the company doesn’t have U.S. assets, foreign courts and treaties dictate whether the judgment can be enforced.
