Statement of Claim: Med-Life Discoveries LP v. Yolbolsum Canada Inc., Prodrome Sciences Inc., Prodrome Health Centers Inc., Dayan Goodenowe, et al.

This is a partial transcription of selected paragraphs from the Statement of Claim, covering the parties named, the core allegations regarding the diagnostic tests and therapeutics at issue, and the relief sought. Numbered paragraphs below correspond to the original pleading. The full fifteen-page pleading is available as the original PDF linked above.

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FORM 3-9 COURT FILE NUMBER: QB 839 of 2019 COURT OF QUEEN’S BENCH FOR SASKATCHEWAN JUDICIAL CENTRE: SASKATOON

PLAINTIFF: MED-LIFE DISCOVERIES LP, by its general partner MED-LIFE DISCOVERIES GP INC.

DEFENDANTS: YOLBOLSUM CANADA INC., PRODROME SCIENCES INC., PRODROME HEALTH CENTERS INC., DAYAN GOODENOWE (also known as DAYAN GOODNOUGH), MONTE GORCHINSKI, ERIKA SHKLANKA, VIJITHA SENANAYAKE (also known as GAMARALLAGE SENANAYAKE), YANQIU JIANG, AUDREY TRICE (also known as AUDREY REIDT), ELLEN LIANG (also known as JIAQI LIANG), IAN WRIGHT, JOHN RYAN, KEVIN PERROTT, JANA HORSNALL, and TANYA SCHELL

This Statement of Claim was issued at Saskatoon on the 7th day of June, 2019 by Ximena Pino, Deputy Local Registrar.

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The Parties

1. The plaintiff, Med-Life Discoveries LP, by its general partner Med-Life Discoveries GP Inc. (“Med-Life”), is a limited partnership formed under the laws of Saskatchewan and headquartered in Saskatoon, Saskatchewan. Med-Life carries on business as a human health research and development company.

2. The defendant Yolbolsum Canada Inc. (“YBCI”) is a business corporation incorporated pursuant to the laws of Saskatchewan and has its registered office in Saskatoon, Saskatchewan. YBCI’s current business is as a holding company.

3. The defendant Prodrome Sciences Inc. (“Prodrome”) is a Canada business corporation extraprovincially registered to carry on business in Saskatchewan. Prodrome purports to carry on business as a human health research and development company.

4. The defendant Prodrome Health Centers Inc. (“PHCI”) is a Canada business corporation extraprovincially registered to carry on business in Saskatchewan. PHCI purports to operate a “Health Centre” in Moose Jaw, Saskatchewan utilizing the technologies allegedly owned or developed by Prodrome.

5. The defendant Dayan Goodenowe (also known as Dayan Goodnough) (“Goodenowe”) is an individual residing in or near Saskatoon, Saskatchewan and is the President and Chief Executive Officer of Prodrome and the Chief Executive Officer of PHCI. He is also the sole director and officer, and is a shareholder, of YBCI.

Paragraphs 6 through 16 identify the remaining individual defendants: Monte Gorchinski (CFO of Prodrome and PHCI), Erika Shklanka (VP Operations), Vijitha Senanayake (VP Clinical Research and Development), Yanqiu Jiang (VP Software Development), Audrey Trice (Office Manager), Ellen Liang (Interlaboratory Manager), Ian Wright (advisor, Delaware), John Ryan (advisor, Massachusetts), Kevin Perrott (advisor, California), Jana Horsnall (VP Community Health of PHCI), and Tanya Schell (Manager, Events of PHCI).

17. YBCI, Prodrome, and Goodenowe are referred to collectively herein as the “Primary Defendants”. PHCI, Gorchinski, Shklanka, Senanayake, Jiang, Trice, Liang, Wright, Ryan, Perrott, Horsnall, and Schell are referred to collectively herein as the “Secondary Defendants”. The Primary Defendants and the Secondary Defendants are referred to collectively herein as the “Defendants”.

Phenomenome Discoveries Inc. and Relevant Contracts

Paragraphs 18 through 26 set out the contractual history between YBCI, Dr. Goodenowe, and Phenomenome Discoveries Inc. (“PDI”), including the incorporation of PDI in March 2001, the Management Services Contract of February 1, 2002, the License Agreement of December 15, 2001 granting PDI an exclusive licence to practise the “Non-Targeted Complex Sample Analysis” Invention, the Non-Competition and Intellectual Property Agreement of April 22, 2003 (amended April 18, 2011), and the employment agreements between PDI and individual employees. These paragraphs quote covenants concerning confidentiality, non-competition, non-solicitation, and intellectual property ownership.

Receivership and Med-Life Acquisition of PDI Business Assets

Paragraphs 27 through 39 describe the court-appointed receivership of PDI and Phenomenome Laboratory Services Inc. (“PLSI”), the appointment of FTI Consulting Canada Inc. as Receiver on December 3, 2015 and its confirmation on February 25, 2016, Dr. Goodenowe’s resignation from PDI on or about July 5, 2016, the incorporation of Prodrome Sciences Inc. on July 6, 2016, the August 22, 2016 Purchase and Sale Agreement between the Receiver and Med-Life, and the closing of the transaction on or about November 1, 2016. These paragraphs also reference Dr. Goodenowe’s August 28, 2016 affidavit opposing the Receiver’s sale application, and the Court’s subsequent Approval and Vesting Order in favour of Med-Life.

Prodrome Sciences Inc. and Prodrome Health Centers Inc.

40. In May 2016, while Goodenowe was still an officer of PDI, Goodenowe and YBCI founded the business of Prodrome, which carries on a business similar or identical to the Business.

41. Gorchinski, Shklanka, Senanayake, Jiang, Trice, and Liang are all former employees of PDI who now work for Prodrome and PHCI. Ryan is a former director of PDI who is now an advisor to Prodrome. Wright and Perrott are advisors to Prodrome. Horsnall and Schell are employees of PHCI.

42. PHCI purports to promote and/or utilize Prodrome’s diagnostic and drug assets at its Health Centre in Moose Jaw, Saskatchewan.

43. Prodrome offers diagnostic tests (the “Prodrome Analogue Diagnostics”) which are similar or identical to those developed by PDI (and now owned by Med-Life) (the “Med-Life Diagnostics”), as follows:

Med-Life Diagnostic	Prodrome Analogue Diagnostic
Cologic®, a blood test that identifies individuals with an elevated risk of colorectal cancer by measuring the levels of a particular metabolite in the blood.	Prodrome-CRC, a test to assesses colorectal cancer risk by measuring the levels of a particular “prodrome” in the blood.
PanaSee™, a blood test that identifies individuals with an elevated risk of pancreatic cancer by measuring the levels of a particular metabolite in the blood.	Prodrome-PAC, a blood test that identifies people with an elevated risk of pancreatic cancer by measuring the levels of a particular “prodrome” in the blood.
Alz-ID™, a blood test that identifies individuals with an elevated risk of Alzheimer’s disease by measuring the levels of certain plasmalogens in the blood.	Prodrome-Neuro, a blood test that identifies individuals with an increased risk of Alzheimer’s disease by measuring the levels of a particular “prodrome” in the blood.
OvAware, a blood test that identifies individuals with an elevated risk of ovarian cancer by measuring the levels of certain lipids in the blood.	Prodrome-OVC, a blood test that identifies individuals with an increased risk of ovarian cancer by measuring the levels of a particular “prodrome” in the blood.

44. Each of the Med-Life Diagnostics is the product of years, and in some cases decades, of research and development work on the part of PDI and Med-Life including original scientific research, experimentation, data gathering and analysis, computer software development, and testing. The fruits of this lengthy process are wholly owned by Med-Life and, in addition to their protection under more formal intellectual property regimes which are not the subject of this litigation (i.e. patents, copyright, and trademarks), comprise trade secrets and/or confidential information owned by Med-Life, a fact known to the Defendants.

45. Notwithstanding the Primary Defendants’ characterization of the Prodrome Analogue Diagnostics as measuring “prodromes” in the blood, the fact is that each of the Prodrome Analogue Diagnostics is identical, or substantially identical, to its corresponding Med-Life Diagnostic. The arbitrary characterization of the compounds being tested for as “prodromes” is nothing more than a deceptive attempt on the part of the Defendants to distance themselves from PDI and Med-Life. The Prodrome Analogue Diagnostics were either:

a. developed by YBCI and/or Goodenowe under contract with PDI (as the Med-Life Diagnostics), and while their rights and actions were governed by the terms of the Licence Agreement, the Goodenowe Services Agreement, and the NCIP Agreement; or, in the alternative,

b. developed by the Defendants using knowledge, expertise, confidential information, data, trade secrets, intellectual property, books and written records (physical or electronic), and/or other information which forms part of the PDI Purchased Assets (“Proprietary Information”).

46. Prodrome also claims to be designing and/or developing a number of drug therapies (the “Prodrome Analogue Therapies”) which are similar or identical to those developed by PDI (and now owned by Med-Life) (the “Med-Life Therapeutics”), as follows:

Med-Life Therapeutic	Prodrome Analogue Therapeutic
Plasmalogen restoration therapy to improve the health of individuals with Alzheimer’s disease.	Plasmalogen restoration therapy to improve the health of individuals with Alzheimer’s disease.
Plasmalogen restoration therapy to improve the health of individuals with multiple sclerosis.	Plasmalogen restoration therapy to improve the health of individuals with multiple sclerosis.
Plasmalogen restoration therapy to improve the health of individuals with Parkinson’s disease.	Plasmalogen restoration therapy to improve the health of individuals with Parkinson’s disease.
Plasmalogen restoration therapy to improve the health of individuals with Rhizomelic Chondrodysplasia Punctata (“RCDP”), a relatively rare (but very serious) childhood disorder.	Plasmalogen restoration therapy to improve the health of individuals with RCDP.

Paragraphs 47 through 49 further allege that the Prodrome Analogue Therapeutics comprise trade secrets and/or confidential information owned by Med-Life, and that Prodrome would not be in a position to offer either the Prodrome Analogue Diagnostics or the Prodrome Analogue Therapeutics without using Proprietary Information.

Breach of Contract, Trespass to Chattels, Conversion, Conspiracy, and Unjust Enrichment

Paragraphs 50 through 53 allege that the Defendants’ actions constitute breaches of the NCIP Agreement, that the Approval and Vesting Order extinguished any right of the Defendants to use the Proprietary Information, and that Prodrome has been unjustly enriched through its use of the Prodrome Analogue Diagnostics and Prodrome Analogue Therapeutics.

Unlawful Means Tort

Paragraphs 54 through 61 allege unlawful conduct against PDI and PLSI by YBCI, Dr. Goodenowe, and what the pleading calls the “PDI Secondary Defendants” (Gorchinski, Shklanka, Senanayake, Jiang, Trice, Liang, and Ryan), including breaches of fiduciary duty and duties of confidentiality, and allege that these actions caused damage to Med-Life.

Damages and Disgorgement

Paragraphs 62 and 63 allege that the Defendants’ actions are causing confusion in the marketplace and the scientific community, hindering Med-Life’s commercialization efforts, and that any revenues earned by Prodrome or PHCI from the alleged use of PDI Purchased Assets are, in equity, the property of Med-Life.

Relief Requested

64. The Plaintiff therefore claims as against the Defendants, YOLBOLSUM CANADA INC., PRODROME SCIENCES INC., PRODROME HEALTH CENTERS INC., DAYAN GOODENOWE (also known as DAYAN GOODNOUGH), MONTE GORCHINSKI, ERIKA SHKLANKA, VIJITHA SENANAYAKE (also known as GAMARALLAGE SENANAYAKE), YANQIU JIANG, AUDREY TRICE (also known as AUDREY REIDT), ELLEN LIANG (also known as JIAQI LIANG), IAN WRIGHT, JOHN RYAN, KEVIN PERROTT, JANA HORSNALL, and TANYA SCHELL, the following:

a. judgment for damages and/or for breach of contract and/or the torts of trespass to goods, conversion, conspiracy, and/or the unlawful means tort, in excess of Ten Million Dollars ($10,000,000.00) or such other amount as may be proven at trial;

b. aggravated and punitive damages in light of the Defendants’ malicious and high-handed conduct in conspiring to interfere with Med-Life’s lawful use of its property;

c. interim, interlocutory and permanent injunctions to protect Med-Life’s interest in the PDI Purchased Assets including, but not limited to, injunctions:

  i. restraining the Defendants from using the PDI Purchased Assets or any assets or techniques derived therefrom; and

  ii. restraining the Defendants from representing to any persons that they have the right to use, or to carry on business using, the PDI Purchased Assets or any assets or techniques derived therefrom;

d. interest pursuant to The Pre-judgment Interest Act, SS 1984-85-86, c P-22.2;

e. the costs of this action on a solicitor and his own client, full indemnity basis; and

f. such further and other relief as this Honourable Court may deem just.

65. The Plaintiff further claims as against the Defendants YOLBOLSUM CANADA INC., PRODROME SCIENCES INC., PRODROME HEALTH CENTERS INC., and DAYAN GOODENOWE (also known as DAYAN GOODNOUGH), the following:

a. an accounting of all revenues earned by Prodrome and PHCI which are or may be derived from the improper use of the PDI Purchased Assets;

b. disgorgement of all such revenues to Med-Life, in an amount to be proven at trial; and

c. a constructive trust over the assets of Prodrome and PHCI to the extent of the revenues so earned.

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DATED at Saskatoon, Saskatchewan, this 7th day of June, 2019.

MLT AIKINS LLP Per: Douglas C. Hodson, Q.C. Solicitor for the Plaintiff, Med-Life Discoveries LP, by its general partner Med-Life Discoveries GP Inc.

Address: 1500, 410 22nd Street E, Saskatoon SK S7K 5T6 File No: 60754.2