York, Pa.-based Unilife has scored a big win after a whistleblower acknowledged that he was wrong in alleging the company failed to comply with FDA requirements.

Talbot (Todd) Smith made the admission in a federal court in Philadelphia Aug. 18, nearly three years to the day after bringing suit against Unilife. He had accused the company of retaliatory termination for disclosing protected disclosures related to shareholder fraud and noncompliance with FDA requirements.

“I now understand that there were no violations of FDA regulations during my tenure at Unilife,” Smith said during the dismissal of the suit, according to a Unilife release.

“In addition, in the summer of 2011, Unilife issued press releases, which stated that they had begun shipments of validated Unifill product to customers. I now understand that the production process was, in fact, validated.”

Validation Suspicions

Smith served as vice president of integrated supply chain at Unilife from September 2011 through August 2012. In his amended complaint, Smith alleged that the company had lured him to join with false assertions that the Unifill prefilled syringe had been validated and that shipments had been made to Sanofi, which had acquired exclusive rights to negotiate the purchase of the product in 2008.

However, despite company press releases in the summer of 2011 saying shipments and sales of the product had begun, Smith alleged that the required FDA validation process was not completed until March 30, 2012. That meant the company either was shipping products before they were validated or it was shipping samples and not making the sales it had claimed in the press releases.

Smith became increasingly concerned, airing his misgivings to his supervisor, Ramin Mojdeh. Rather than listen to his concerns, Mojdeh allegedly told Smith he “was following the rules and procedures established by the FDA too closely,” and thus slowing down production.

Undeterred, Smith kept making complaints and, in one instance, opened a CAPA when unreleased product was allegedly shipped to an external laboratory for testing without proper procedures being followed.

Smith also accused the company of misleading investors by overstating customer demand and manufacturing capacity.

After what he saw as more violations, Smith made an anonymous report to the Unilife board of directors alleging unethical activities, including stock fraud, suppression of negative information, compromise of the quality system and retaliation against whistleblowers. The latter charge related to Smith’s allegation that a reduction in workforce as a result of a lack of customer demand for Unilife products included many employees who had refused to participate in the company’s unlawful activities.

His supervisor was provided a copy of the allegations, and Smith ultimately was terminated.

Counterclaims

Unilife denied all of Smith’s allegations and filed counterclaims. The company accused him of secretly recording a conversation with Mojdeh in violation of the Pennsylvania Wire Tapping and Electronic Surveillance Control Act.

As part of the case’s dismissal, Smith has agreed to pay to settle Unilife’s claims against him.

The case, Talbot (Todd) Smith v. Unilife Corporation, Unilife Medical Solutions, Inc., Alan Shortall and Ramin Mojdeh, was filed in the U.S. District Court for the Eastern District of Pennsylvania. — Elizabeth Hollis