Collagen Corp. names two former employees as additional defendants in trade secrets lawsuit against Matrix Pharmaceutical Inc.; former employees provided confidential files, budgets and drawings to potential competitor.

PALO ALTO, Calif.--(BUSINESS WIRE)--Sept. 12, 1995--Collagen Corp. (NASDAQ:CGEN) Tuesday announced that it has filed an amended complaint in its lawsuit against Matrix Pharmaceutical Inc. for theft of trade secrets.

The amended complaint, filed in Santa Clara County Superior Court, names two former Collagen employees as additional defendants in the suit.

In its original complaint, filed in December, 1994, Collagen Corp. alleged that Matrix gained unlawful access to Collagen's proprietary process for the large-scale production of highly purified fibrillar collagen by hiring 10 former employees knowledgeable about Collagen Corp.'s manufacturing processes.

In the amended complaint, Collagen names Steven W. Carlson and Daniel R. Prows as additional defendants. Carlson worked for Collagen for eight years, serving as Collagen's director of manufacturing and associate director of finishing and distribution.

Prows held a series of positions during his 11-year tenure with Collagen and was bulk production supervisor at the time of his departure in 1992.

In the amended complaint, Collagen Corp. discloses that during the discovery process initiated after the filing of this lawsuit, it learned that Matrix was in possession of several boxes of files and other materials taken from Collagen by Carlson.

Many of these documents discuss Collagen's proprietary manufacturing process, while others contain details about Collagen's manufacturing facility in Fremont, Calif. In addition, these files contained proposed budgets, production forecasts and schedules, sales forecasts and a capital allocation plan.

Collagen alleges in its new filing that Matrix concealed the fact that it was in possession of the files, and that Matrix initially refused to return the files to Collagen. Matrix turned over the files only after Collagen sought a court order.

In addition, the amended complaint alleges that through the discovery process, Collagen uncovered records maintained by Prows relating to Collagen's proprietary process and that very soon after his arrival at Matrix, Prows provided strikingly similar schematics to the same vendor used by Collagen.

The amended complaint also responds to an assertion made by Matrix following the commencement of the action, to the effect that Collagen Corp.'s collagen is "equivalent" to that produced by Koken Co. Ltd., a Japanese company whose collagen has been used by Matrix in its human clinical trials.

In fact, Koken's collagen has not been approved by the FDA and in the recent past, the FDA has advised Koken that its products may not enter this country. In light of these circumstances, Collagen has decided to withdraw its permission to allow Matrix to reference Collagen's FDA Pre-Market Approval files.

"We are extremely disappointed that our former employees have apparently been engaging in the willful misappropriation of trade secrets for the purpose of passing them on to a potential competitor," said Howard Palefsky, Collagen Corp.'s chairman and chief executive officer.

"Collagen Corporation has spent 20 years and millions of dollars developing proprietary manufacturing processes that have been certified as meeting the highest U.S. and international quality standards. We do not intend to lose our competitive advantage by allowing other companies to recruit our employees in order to misappropriate our intellectual property," Palefsky added.

Collagen Corp., based in Palo Alto, is a technology-based company that develops, manufactures and markets biomedical devices for the treatment of defective, diseased, traumatized or aging human tissue.

CONTACT: Edelman Public Relations

Jon Greer, 415/433-5381