ImStem Biotechnology Inc., a Connecticut-based biotech company once hailed for pioneering stem cell therapies for multiple sclerosis, has filed for Chapter 11 bankruptcy protection, listing more than $2.7 million in liabilities—the bulk owed to two powerhouse law firms that represented it in a bitter patent battle with Japanese pharma giant Astellas.

The voluntary petition, lodged Thursday in Connecticut bankruptcy court, paints a stark picture: ImStem owes $1.5 million to Verrill Dana LLP and $619,000 to Quinn Emanuel Urquhart & Sullivan LLP. The biotech said both debts remain contingent, unliquidated and disputed.

The Farmington company reported holding between $100,001 and $500,000 in assets, far short of its liabilities. Other creditors include Philadelphia-based clinical trial tech firm eResearchTechnology Inc., Georgia’s Q Squared Solutions LLC, Compass Biomedical of Massachusetts, accounting firm CFGI of Boston, and American Express.

Bankruptcy Filing Shadows Six-Year Legal War

The bankruptcy follows years of litigation that pitted ImStem and its founders, Ren-He Xu and Xiaofang Wang, against the Astellas Institute for Regenerative Medicine. Astellas alleged Xu and Wang improperly used confidential data shared by its doctors Robert Lanza and Erin Kimbrel to file for U.S. Patent No. 9,745,551 on embryonic stem cell research.

ImStem countered by seeking inventorship rights on Astellas-held patents, but in 2020 and 2021 rulings, U.S. District Judge Allison D. Burroughs sided with Astellas—cutting Xu and Wang’s names from the ’551 patent and rejecting their claims on Astellas’s ’956 and ’321 patents.

Although Xu and Wang appealed, the battle ended in May 2023 with a settlement, requiring their names be formally removed from the ’551 patent and aligned across related filings in the U.S., China, Canada, and Hong Kong.

A Costly Chapter for Innovation

Founded with research roots at the University of Connecticut, ImStem launched clinical trials in Georgia in 2021, aiming to push stem cell therapies into mainstream medicine. But the legal brawl drained its resources, leaving behind the debts now driving its bankruptcy.

Despite the court losses, ImStem previously insisted the disputed patents were “not related to our current product and clinical development,” signaling that its Chapter 11 bid is as much about restructuring finances as salvaging its scientific future.

Legal Representation

ImStem is represented in the bankruptcy by Andrea M. O’Connor of Shatz Schwartz and Fentin PC.