June 10, 2015
Patrick Fabian NxThera Chief Commerical Officer
Ally Bridge Group
Ally Bridge Group, founded and led by Frank Yu, is a global healthcare-focused investment platform with bases in Hong Kong and the United States. Ally Bridge Group and its affiliates manage over $700 million in assets in the United States, China and Europe, and have expertise in cementing strategic partnerships between emerging healthcare companies and industry leaders, and across different geographies, especially between the United States and China.
MarketWatch: Ally Bridge Group Expands Global Healthcare Investing With Six New Medtech Investments in China and the US.
NxThera, Inc. – a company that has developed an innovative, outpatient water vapor debulking procedure for BPH (benign prostate hyperplasia); the technology has been approved in Europe with a CE Mark and is now awaiting U.S. FDA approval.
One of those six new medtech investments happens to be NxThera where current CCO Patrick (Pat) Fabian was arrested on 18 counts of fraud on April 10, 2015. Guess investors like Frank Yu from Ally Bridge Group don’t seem to mind.
Approximately ninety-seven percent (97%) of federal Grand Juries result in indictments.* (Check)
Approximately ninety-seven percent (97%) of federal criminal trials result in conviction.*
Former Acclarent, Inc. Executives Charged with Securities Fraud and Crimes Related to Sale and Distribution of Medical Devices | USAO-MA | Department of Justice
BOSTON – The former Chief Executive Officer and Vice President of Sales of Acclarent, Inc., a medical device company, were charged in an indictment unsealed today with conspiracy, securities fraud, wire fraud and violations of the Food, Drug and Cosmetic Act.
William Facteau, 45, of Atherton, California, and Patrick Fabian, 48, of Lake Elmo, Minnesota, were indicted on one count of conspiracy, three counts of securities fraud, four counts of wire fraud and 10 counts of introducing adulterated or misbranded medical devices into interstate commerce.
The indictment alleges that Facteau and Fabian engaged in a scheme to fraudulently drive up Acclarent revenues and stock valuation by illegally marketing a medical device known as the Relieva Stratus Microflow Spacer (“Stratus”) for uses not cleared or approved by the United States Food and Drug Administration (“FDA”). Despite the fact that the company had told the FDA that the Stratus was a medical device intended to maintain an opening to a patient’s sinus, Facteau and Fabian launched the product intending it to be used as a steroid delivery device. The indictment alleges, however, that the FDA had specifically refused Acclarent’s request to clear the Stratus for marketing as a drug delivery device without further submissions to support that use.
Facteau and Fabian are alleged to have sought to quickly develop and market products to create a projected revenue stream that would make Acclarent an attractive target for either an initial public offering (“IPO”) or acquisition. The former health care executives allegedly concealed Acclarent’s illegal promotion and distribution of the Stratus as a steroid delivery device from potential purchasers of the company, including Ethicon, Inc., a subsidiary of Johnson & Johnson, (together, “Ethicon”). In early 2010, Ethicon purchased Acclarent for approximately $785 million. Facteau and Fabian received approximately $30 million and $4 million, respectively, for stock options and other compensation in connection with the merger of Acclarent into Ethicon.
The charging statutes provide for a maximum prison sentence of up to 20 years on each count of wire fraud and securities fraud, five years for the conspiracy count, and three years for each count for violations of the Food, Drug and Cosmetic Act, followed by a term of supervised release and a $250,000 fine or twice the gross loss or gain, whichever is greater. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
The details contained in the indictment are allegations. *The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The case is being prosecuted by Assistant U.S. Attorneys Sara Miron Bloom and Patrick Callahan of the District of Massachusetts with the assistance of Trial Attorney Ross Goldstein of the Civil Division’s Consumer Protection Branch in Washington, DC and Beth Weinman in the FDA’s Office of General Counsel. The case was investigated by the Federal Bureau of Investigation’s Boston Field Division; the FDA’s Office of Criminal Investigations; U.S. Department of Health and Human Services’ Office of the Inspector General; Department of Defense Office of Criminal Investigation; and the Department of Veterans Affairs’ Office of Inspector General.