University officials file suit against two local companies

Kamariea Forcier

The University is suing two Minnesota companies for breach of contract in connection with the research and development of an artificial liver.
The Board of Regents filed suit against Cellex Biosciences Inc. and Regenerex Inc. in Hennepin County District Court.
In response Cellex filed a counter suit July 3 against the University, claiming it was treated unfairly.
The University entered into a contract with Cellex, then known as Endotronics Inc., in 1991. The Coon Rapids-based company manufactures and sells medical devices and equipment to hospitals.
Cellex gave all its rights and obligations related to the University contract to Regenerex Inc. in 1993. Both companies are presided over by Richard E. Sakowicz.
A group of medical and chemical engineering professors at the University formed a research team in the late 1980s to develop the artificial liver to sustain patients until they could receive a liver transplant.
The team, known as The University Bioartificial Liver Study Group, was led by Frank Cerra, former professor of surgery and current provost for the Academic Health Center, and Wei-Shou Hu, a chemical engineering professor.
The group obtained a patent for the newly developed artificial liver in 1990, and then decided to turn the technology over to a private firm to be manufactured and marketed.
The researchers and the University entered into contract with Cellex in December 1991 with the agreement that Cellex would help the device receive Food and Drug Administration approval.
In order for the artificial liver to gain FDA approval, the device needed to go through several stages of research, including clinic trials on both animals and humans.
According to the civil complaint, Cellex failed to provide money for the continued research and now owes the University more than $357,000.
The University cancelled the research agreement in 1994 after Cellex and Regenerex failed to reimburse $200,000 owed to the University under the contract, according to the complaint. The University had spent the money on animal research for the device. In 1995, after failing to receive compensation for the research, the University cancelled its contract with the company.
According to the counter suit, Cellex states it invested a large amount of money in developing the device and was treated unfairly by the University. Cellex states the University used funding by the company to complete research and afterward cancelled the contract that would have given it the right to profit from sales of the device.