Apple Tree Partners’ life sciences venture fund has filed litigation against its controlling limited partners, claiming the investor has failed to meet its monetary commitments and warning of immediate consequences for its biotech portfolio.
“This is an emergency. In total, [redacted] portfolio companies, each incorporated in Delaware and headquartered in the United States, face imminent collapse [redacted],” the heavily redacted complaint, filed May 30 (PDF) in in the Court of Chancery in the State of Delaware, reads.
The alleged funding cutoff "has already caused layoffs and will trigger further layoffs" that could potentially impact hundreds of people, Apple Tree said in the suit.
Apple Tree’s portfolio includes about 30 companies such as metabolic-disease-focused Akero Therapeutics and small-molecule drug discoverer Deep Apple Therapeutics.
The VC is funded mainly via Rigmora Biotech Investor One and Rigmora Biotech Investor Two, according to a June 27 press release. Both funds are part of Rigmora Holdings, a family office that manages the wealth of Russian billionaire Dmitry Rybolovlev.
Apple Tree is alleging that Rigmora has purposely withheld funds over a time span of 18 months and refused to approve any new budgets, according to the court documents. The venture firm claims that the family office said it would become available for budget discussions if the VC winds down or liquidates certain companies.
Rigmora has been the key financier for Apple Tree for nearly 15 years, a relationship that apparently worked smoothly until late 2021. More recently, the office’s enthusiasm “disappeared entirely following Russia’s invasion of Ukraine in early 2022,” according to the lawsuit.
According to a statement from the Rybolovlev family trust, the firm has "contributed roughly 99% of the $2.7 billion invested in ATP Life Science Ventures," including more than $800 million since 2022.
Apple Tree's court filings are "unheralded" and in response to "legitimate requests for information" about how the VC was managing Rigmora's money, according to the Rybolovlev family trust.
"It seems to us that rather than answer those questions, the general partner is unsatisfied with the terms of the partnership agreement which limits the extent to which the general partner can call capital from us," the trust said in its emailed statement to Fierce Biotech.
Apple Tree is asking the court to find Rigmora at fault for breaching its contractual obligations, require certain payments be made and find that the family office has forfeited its voting and budget approval rights.
“We are fighting as hard as we can to ensure that our portfolio companies, and the innovations being propelled within them, can continue moving forward for the sake of stakeholders and patients,” the venture firm and biotech incubator said in a June 27 statement.
But Apple Tree isn't the only one filing litigation related to the matter.
"In order to protect our rights in light of the general partner’s conduct and its attempt to seize 50% of our interests in the fund, which we see as an obvious conflict of interest, and because of our loss of trust and confidence in it, we have sought a just and equitable winding up of the fund through the Cayman courts," the Rybolovlev family trust said. "We hope that the general partner will do the right thing by stepping aside, but if not we are confident that the Cayman court will grant the appropriate relief we seek."
Editor's note: This article was updated at 5 p.m. ET on June 30 to include a statement from the Rybolovlev family trust.