WESTMINSTER, Colorado (Michigan News Source) – The legal fight over Reven Holdings’ shuttered drug program, RJX, took another turn this week when the U.S. Court of Federal Claims declined to dismiss the company’s lawsuit and instead ordered both sides to submit supplemental briefs.

Judge Marian Blank Horn wants more clarity on whether the SEC’s sweeping asset freeze amounts to a government “taking” under the Constitution – a claim that could open the door to damages in the billions. Blank Horn was first appointed by President Ronald Reagan in 1986 and then re-nominated in 2003 by President George W. Bush for another term.

From “miracle drug” to frozen assets.

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RJX, described as a potential life-saving therapy for severe inflammation and a multitude of conditions such as sepsis, never made it out of clinical development. The SEC (U.S. Securities and Exchange Commission) intervened in December 2022, filing its enforcement action under seal and winning an ex parte order that froze all of Reven’s assets, including intellectual property and even personal accounts of company officers. Executives argue the move destroyed their ability to fund research, pay staff, and advance RJX to market

As we reported last month, the freeze devastated not only Reven’s operations but also the lives of patients and families who had pinned hopes on RJX. Greg Merilatt, 78, who took the drug and is also a shareholder told Michigan News Source that the SEC “shut everything down” and he added “the SEC is supposed to protect us as shareholders and all they did is cripple us.”

The court’s questions are many.

Judge Blank Horn’s order directs the plaintiffs (Reven) to file a supplemental brief by October 21 and the defendants to respond by November 11, while raising numerous questions for both sides to address.

Among the many issues asked about is whether the SEC’s enforcement action should be seen as a valid exercise of police power. The defendant argues that Reven “voluntarily entered a highly regulated industry” and is subject to securities law. Reven counters that the SEC has no authority over drug development, and that freezing patents and clinical assets effectively stripped the company of its most valuable property.

Judge Horn asked both sides to explain other issues including:

  • Whether Reven’s ongoing appeal in the Tenth Circuit undermines its takings claim.
  • If the SEC’s freeze constitutes a permanent taking or a temporary one.
  • Whether the district court erred in not permitting an evidentiary hearing on the SEC’s motion for a preliminary injunction.

What’s at stake.

The outcome could shape more than Reven’s future. If the court finds a taking, it could set precedent for how far federal agencies may go in enforcement without triggering constitutional liability. For Reven, it’s a chance to claw back value for shareholders and, potentially, revive RJX’s stalled development.

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Michigan News Source reached out to Peter Lange, Reven’s CEO, about the latest development and he said, “We are pleased to see movement in the case. We will refrain from making any further comments at this time.”

For now, the fate of RJX – and whether Reven can recover from the freeze – remains entangled in two separate courts with the other case on the asset freeze in the U.S. District Court in the District of Colorado. But Judge Horn’s order in the Court of Federal Claims signals that the constitutional questions at the heart of the dispute will not be brushed aside.