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InVivo's reverse merger is underway...and CEO faces reversal in his long lawsuit against Ivy League school

Posted by Scott Kirsner  October 27, 2010 11:49 AM

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Just a quick update on Cambridge-based InVivo Therapeutics, which is developing implant technology it hopes will restore function in people who've suffered serious spinal cord injuries. I wrote about the company late last month, when CEO Frank Reynolds told me the company was hoping to begin clinical trials of its first product this year, and win FDA approval next year. Reynolds predicted that the company's first product would generate a billion or two in revenues for the start-up. Reynolds also told me InVivo planned to gain a public market listing through a reverse merger — a transaction that involves taking over the listing of a defunct company.

Earlier this month, InVivo began the process of merging with a Chapel Hill, North Carolina company called Design Source. (The company used to market and sell fabric and draperies to interior designers.) That'll get InVivo a listing on the OTC Bulletin Board, home of lightly-traded stocks sometimes called "penny stocks."

[Update: InVivo put out a press release this afternoon announcing that in conjunction with the reverse merger, it has raised $10.5 million, and plans to begin trading Thursday under the ticker symbol NVIV.]

This afternoon, Reynolds will be part of a board meeting held by the Massachusetts Life Sciences Center, to make "an important announcement about his company," according to a press alert I received yesterday. Last year, InVivo received a $500,000 loan from the publicly-funded agency. Spokesman Angus McQuilken wouldn't comment yesterday about the nature of Reynolds' announcement, but he did note that if InVivo has raised at least $5 million in funding, the terms of the loan compel the company to repay it.

In other InVivo news...on Monday, a federal judge tried to end Reynolds' five-year-long lawsuit against the University of Pennsylvania for breach of contract. Reynolds had claimed that he enrolled in a Master's program at the Ivy League school under the impression that the degree would allow him to claim alumni status — and related benefits — from Penn's prestigious Wharton School of Business, but that the school changed the terms of the program while he was there, awarding him a degree from Penn's engineering school, and de-emphasizing the program's connection to Wharton. In earlier stages of the case, juries had decided to award Reynolds as much as $435,000 in damages, but this week's ruling nixed that, and instead ordered Reynolds to pay the university $7,438 to cover legal costs. (In Reynolds' first week as part of the graduate program at Penn, in fact, Wharton's career services department helped him land a new job at Siemens Corp., where he earned more than $250,000 a year.)

Reynolds didn't return a call placed yesterday to comment on either issue. An InVivo spokesman today said Reynolds would likely take the Wharton case to an appellate court.

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Scott Kirsner was part of the team that launched Boston.com in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.

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