Venture Capital Firm Apple Tree Partners Sues Key Investor Amid Biotech Portfolio Crisis

Apple Tree Partners, a prominent life sciences venture capital firm, has filed a lawsuit against its controlling limited partners, alleging a failure to meet financial commitments that threatens the survival of its biotech portfolio. The legal action, filed on May 30 in the Delaware Court of Chancery, paints a dire picture of the fund's current situation and its potential impact on the broader biotech industry.

Legal Battle Unfolds as Biotech Companies Face "Imminent Collapse"

According to the complaint, multiple portfolio companies are at risk of "imminent collapse" due to the alleged funding cutoff. Apple Tree Partners warns that this financial crisis has already led to layoffs and could potentially impact hundreds of employees across its approximately 30 portfolio companies, which include notable firms such as Akero Therapeutics and Deep Apple Therapeutics.

The venture firm's primary funding source comes from Rigmora Biotech Investor One and Rigmora Biotech Investor Two, both part of Rigmora Holdings. This family office manages the wealth of Russian billionaire Dmitry Rybolovlev and has been a key financier for Apple Tree for nearly 15 years.

Allegations of Withheld Funds and Strained Relations

Apple Tree alleges that Rigmora has deliberately withheld funds over an 18-month period and refused to approve new budgets. The venture firm claims that the family office indicated it would only engage in budget discussions if Apple Tree agreed to wind down or liquidate certain companies.

The lawsuit suggests that the previously smooth relationship between Apple Tree and Rigmora deteriorated following Russia's invasion of Ukraine in early 2022. However, the Rybolovlev family trust contests this narrative, stating that they have "contributed roughly 99% of the $2.7 billion invested in ATP Life Science Ventures," including more than $800 million since 2022.

Counterclaims and Conflicting Narratives

In response to Apple Tree's legal action, the Rybolovlev family trust has characterized the court filings as "unheralded" and a reaction to "legitimate requests for information" about the VC's money management practices. The trust further claims that Apple Tree is dissatisfied with partnership agreement terms that limit the extent to which the general partner can call capital.

Adding another layer to the legal dispute, the Rybolovlev family trust has announced its own litigation, seeking a "just and equitable winding up of the fund through the Cayman courts." They cite concerns over Apple Tree's conduct and an alleged attempt to seize 50% of their interests in the fund, which they view as a conflict of interest.

As this complex legal battle unfolds, the future of Apple Tree Partners' biotech portfolio hangs in the balance, with potential far-reaching consequences for the life sciences industry and ongoing research and development efforts.