"There Is A Pattern Here of Behavior"

In Which We Discover the Identity of Elysium's Mystery NR Supplier

In this quiet time caused by Judge Carney's unwarranted and unnecessary delay of the California trial -- upon which BOTH of the other federal cases (New York and Delaware) are waiting to proceed -- we have time to meditate more deeply on the mountains of evidence that have been submitted to the Court.

Actually, I should not be so judgmental of the judge. His Honor's behavior, though erratic, might have a reasonable cause. Remember that Judge Carney at the parties' request first moved the trial date to October 29, then on his own moved it forward two weeks to October 15, then on his own moved it back a week to October 22, then on his own took it off calendar.

All that sua sponte tweaking suggests that the Court is struggling with some internal calendar difficulties, and my theory -- for which I have absolutely no evidence -- is that it involves a judicial clerk.

We know from common federal practice that it is the clerk, not the judge, who is tasked with reading through the exhibits and drafting the opinion ruling on the motions. We know as well that the parties submitted hundreds of exhibits -- some very lengthy, amounting to thousands of pages of text (and many hundreds of dollars in PACER bills for me -- thanks for visiting my advertising affiliates, like amazon!). And we know that clerks typically serve for one year before returning to private practice or taking a different clerkship with a different judge. And since our case is almost three years old, we are likely on our third clerk.

It takes a LOT of time and effort to get up to speed on our case, especially with all the contradictory allegations that so often look like a he-said/she-said dispute. If you DO read everything, including the text of the underlying contracts, and the negotiations leading to the final versions -- it's not difficult to perceive which side is making things up again and trying to muddy the waters.

But it takes time. So WHAT IF the changing of the clerks in Judge Carney's courtroom happened to be scheduled for September, and the previous clerk, who completely understood our case, moved on, and the new clerk, walking into a full case load, and with no clerking experience, was suddenly confronted with thousands of pages of impenetrable chaos?

It is easy for me to imagine Judge Carney first trying to move the dates forward, so the prior clerk could do most of the work, and then failing that move the dates further out to give the new clerk more time, and then finally despairing of that and push the whole thing out a few months so they could get their proper bearings.

To me, that is an explanation that at least fits the data. And it would make His Honor's unexpected behavior seem more understandable, and even quite responsible. However, it's speculation, and we'll probably never know.

But it is a blessing to be able to dive into all the new exhibits that Elysium posted with its Supplemental Briefing and have time to really dig around. Even more welcome is Elysium's new approach to redaction, which seems quite a bit more care-free, than we have previously seen. But we'll get to that.

We covered Elysium's most recent motion here, but I did not provide much analysis, because I have been around the law long enough to know that a party in their brief frames both the facts and the law to their liking -- which always makes their arguments seem sensible. Better practice is to hear the other side of the story before making any judgments. Cooley, in their response, will identify factual and legal weaknesses that make Elysium's conclusions far less obvious, and then we can weigh both sides.

Not only did I not provide much analysis before, I actually did not even hurry to read Elysium's new exhibits, because I figured that they would mostly be re-hashes of materials we have already seen.

I was mistaken.

Market Share

And even some of the older discovery materials have some undiscovered nuggets. For example, did you see this bit from ChromaDex's expert witness (Elysium's MSJ Opposition Exhibit 64 (page 76), Randal Heeb? Heeb says, "...Elysium accounts for X% of the nicotinamide riboside purchased from 2013 to 2018. ChromaDex itself is the largest seller of nicotinamide riboside products (not ingredients) through sales of its TRU NIAGEN product, with X% share of nicotinamide riboside sales..." (emphasis added) Did Dr. Heeb just say that Tru Niagen has a greater market share than Elysium Basis? That's what it sounded like:

Elysium's Big Plan

Moving on to the newer discovery materials, Exhibit 1 and Exhibit 2 and Exhibit 3 to Elysium's Supplemental Brief includes lengthy exchanges between Elysium CEO Eric Marcotulli and General Catalyst people in which Eric shares all kinds of interesting financial information, like customer lifetime value calculations, and how much Elysium spends on each of various marketing channels. And the numbers aren't redacted! There is even a cryptic suggestion to General Catalyst that if Elysium had not placed such a big order on June 30, 2016, it would have run out of inventory and "The business wouldn't exist anymore. Plain and simple."

Elysium's Retention Data:

Mystery NR Supplier

But perhaps most interesting, due to a redaction failure, we finally learn the identity of the original supplier of Elysium's Mystery NR.

Or perhaps in retrospect, maybe we already knew. For some reason, the identity of Elysium's first and second suppliers of Mystery NR has been well-guarded in the discovery materials, with names and email addresses hidden behind redaction blocks. But there were hints.

For example, some of the Certificates of Analysis produced by Elysium last summer relating to the Acetamide crisis had the primary information redacted, like this:

But they did not redact the curious phrase "PCI Stock No." Except who knows what that means?

We might have put two and two together if we had read more closely last summer the deposition of Daniel Magida, Elysium's Supply Chain Manager, offered by Elysium as Exhibit 45 to their MSJ Opposition. Magida said,

"We always had the option of placing an order with ChromaDex, but if PCI is able to get the material out in December, we're going to use the PCI material"

We also knew last summer that the original Mystery NR supplier did not like Elysium. At a deposition (Exhibit 76 to ChromaDex's MSJ), somebody from the Mystery NR supplier complained that Dan Alminana was a "bullshit artist," and that the supplier had "segregated planned time" to produce Elysium's NR, and that the supplier had been

"assured that those orders were going to be fulfilled and then out of the blue on Labor Day they sent an email telling us to stop all product...So we had a hole in our facility and...the whole situation was avoidable and unnecessary if they had simply been upfront with us from the beginning that they didn't want us to make product anymore rather than string us along until they secured their other supplies...Clearly, that was orchestrated all by Dan and that's the way he does business. It is not the way I do business so and with all the ChromaDex stuff going on, you know, it became apparent that, you know, there is a pattern here of behavior." (emphasis added)

We also knew just a little bit more about the Mystery NR supplier, because during the panicked conversations during the first half of 2017 when the supplier could not get the NR production line working, the bodies of the emails included the first names of people like Mehdi, Paresh, Chuck, Andy, and Ed. And you could sort of guess their roles -- Chuck talked about schedules; Mehdi and Paresh worked on Analytical Methods; Ed was higher up (and resisted a request from Alminana to have Morris temporarily embed with the supplier's team).

There's probably only one company that has that particular cast of characters, but which one?

Then Elysium blew the secret wide open by failing to properly redact the same Certificates of Analysis when they produced them as Exhibit 10 to their supplemental brief. Compare Elysium's August and October redactions:

And that's not the only place the name shows up. "PCI" is revealed in other documents, too, like this:

Which also gives us the full name, "PCI Synthesis."

And a little time on the PCI Synthesis website and LinkedIn reveals a match for all of the characters we found in the emails, which removes any possibility that we are talking about some other PCI or one that played some different role in this drama:

Ed is the CEO; Andy is the director of regulatory affairs; Mehdi is director of Analytical Services; Pareshkumar (at the time) did Method Development, and poor Chuck, who was directed to remove the acetamide-contaminated NR from the reactor and drum it up for shipment, was a project manager. My guess is that it was Ed who sat for the deposition, because he used phrases like "my finance people" and "It is not the way I do business," which is CEO-talk.

I feel kind of bad for PCI. On January 10, 2017, Mark Morris wrote to "Ed" and asked if there was any way to move the schedule up a week. A few hours later someone -- presumably Ed -- responded,

"You have our commitment and our full support. We want you to be successful. We will work weekends and overtime to push this along as we want to be in commercial production as much as you do. However, there is a process we need to follow so we can be successful at large scale..."

They probably did work weekends and overtime, and by summer, according to the CoA reproduced above, PCI had gotten the acetamide level down to none-detected, even though Elysium had left the specification at 275ppm.

And yet PCI got stiffed by the same "bullshit artist" who seems to have contributed so much to ChromaDex's woes.

I wonder who else might be a victim of Elysium's business practices?