Six months after the federal government initiated a review of its main study and put a freeze on its finances, causing widespread layoffs, local business leaders expect the fate of the once-heralded biotech startup Renaissance RX to be resolved soon, according to internal emails between the company and state economic development officials.

The emails, obtained by The New Orleans Advocate through a public-records request, offer a look at when and why federal Medicare officials decided to intervene and how many employees that decision affected.

The series of events began just months after the state announced a generous incentive-based deal with the firm, which promised a major expansion in the Central Business District. Nationwide, Renaissance’s workforce was expected to swell by the hundreds.

Instead, by early this year, Renaissance employed fewer than 60 people in Louisiana, down from 100 last year, according to the emails. Across the country, more than half of its 800 employees have been let go since last fall. And the company’s plans to move its corporate headquarters to 301 St. Charles Ave. — announced with fanfare in September — have been shelved.

In fact, the numbers have fallen further still in the last couple of months. “We have downsized somewhat from February 2015, however, so current numbers would look different,” Brandy Sheely, Renaissance’s general counsel and chief compliance officer, said by email Saturday. “We are deeply regretful that so many of our valued employees (and contractors, for that matter) have been impacted by a situation we have few answers about and little ability to control.”

The firm, which performs genetic testing that helps doctors tailor medications for individual patients, has apparently been in limbo because of the Medicare review. The anti-fraud measure taken by the federal government has cut off the company’s cash flow for its main effort, a 250,000-patient registry designed in part to determine whether using pharmacogenomic data results in a meaningful change of a patient’s dose regimen.

The emails include correspondence between Renaissance and Louisiana Economic Development, the state’s economic development arm, from early 2014 through February 2015. During that time, the firm’s fortunes appeared to shift dramatically: Once seen as a post-Katrina standout that local business leaders hoped would be a leader in diversifying New Orleans’ tourism-based economy, Renaissance has been hobbled, with onlookers just hoping it will survive.

The company, which started with five employees in the New Orleans BioInnovation Center in 2012, gathers its data by taking swabs inside patients’ cheeks. The resulting genetic information is used to determine if a patient is being prescribed the right dosage of a medicine.

In September, the firm announced plans to spend $8 million on a new 30,000-square-foot headquarters on St. Charles Avenue and add 425 workers to the 80 it already had working in the city. The local investment was backed by $925,000 in performance-based grant money from the state.

Two months later, Renaissance founder Dr. Tarun Jolly announced that TPG Growth, an arm of the global investment giant TPG, had made “a significant investment” in the company, although the amount was not disclosed.

But by February, a company spokeswoman confirmed what others had been whispering about: that the company had been laying off staff at a rapid clip.

Signs of trouble

As late as December, LED officials still saw the project as a win, listing Renaissance’s expansion among the agency’s highlights for 2014.

But signs of trouble already had emerged by then.

Renaissance officials learned about the government’s review around Thanksgiving, and they knew it was triggered by a huge jump in the company’s Medicare billings, from $3 million in 2013 to $120 million a year later, the emails show.

That steep increase set off a red flag at a time when President Barack Obama’s administration had stepped up efforts to weed out Medicare fraud, which costs the federal government hundreds of millions of dollars a year. While its review is underway, Renaissance’s Medicare reimbursements are on hold, a crippling tie-up that may last upward of six months, perhaps ending by May.

The company has been holding off on making any new hires until then to shore up its cash reserves, the emails show. But company officials still say they’re confident they’ll get a clean bill of health from the feds.

In late January, after hearing “information on the street” that the firm was facing setbacks, Charlie Romaine, an assistant LED director, followed up with it and reported the findings to his colleagues.

“Renaissance confirmed that there are zero issues or discrepancies that would prevent passing the review,” Romaine wrote in an email, adding: “This should give you an understanding in the event you are contacted by any media (which I don’t foresee).”

But even as they offered what appeared to be a show of confidence, the emails also show that state officials were uncomfortable with some of what they were learning.

“This article is not pretty,” Romaine wrote to a colleague only days later, after the first report appeared that Renaissance was laying off staff. “My guess is the truth is somewhere in the middle.”

Romaine did not return a call Friday.

Protecting the state

By early February, LED had scrubbed references to the firm from its online archive of news releases, and it deleted praise for Renaissance from an upcoming edition of Louisiana Economic Quarterly, a glossy magazine that promotes the state’s economy. The call to remove it from the website apparently came straight from the top: LED Secretary Stephen Moret inquired about it in a Feb. 4 email to a staffer.

State and local officials have stressed that Louisiana’s incentive offers for new companies, while generous, typically contain provisions that protect the state in case a project runs into trouble.

In an email Friday, Moret reaffirmed those protections as he sought to distance himself from the deal. “Candidly, I have had very little involvement with that project, and all the incentive arrangements with LED were postponed when we learned of the company’s expansion delay,” he wrote.

Louisiana’s incentive package to Renaissance included performance-based grants, payroll rebates and job training that together were estimated to be worth $28.6 million, according to a letter LED sent the firm last year.

Most of it — $21.3 million — was tied to the state’s Quality Jobs program, which offers payroll rebates for new full-time jobs paying at least $14.50 an hour in a handful of target industries.

The state’s deal hinged upon Renaissance reaching several benchmarks. It had to spend at least $8 million on its expansion by 2016 and ramp up its workforce to 800 by 2019, putting its total payroll above $43 million.

While there’s no evidence that Renaissance got special inducements that would not have been afforded to any other similar company, it does have a connection to Gov. Bobby Jindal: Jolly, the founder, is a cousin of Jindal’s wife, Supriya.

The emails make clear that LED officials were at least aware of that connection.

One email to Moret noted the “brother-in-law connection” — a government term used to guard against nepotism — and asked him to let Jindal’s executive counsel, Thomas Enright, know about the deal’s specifics.

The firm’s incentive package consists almost entirely of off-the-shelf benefits regularly offered to qualifying businesses. “Only info we have on BIL (brother-in-law) connection came from 4th floor when we were planning the announcement,” Moret wrote back, referring to the location of the governor’s office. “We were not aware of that connection before planning the announcement and have not asked for that kind of info from BIL.”

Future outlook unclear

What the future holds for Renaissance is unclear. Michael Hecht, president and CEO of Greater New Orleans Inc., a regional economic development alliance, said he remains optimistic that the firm “is going to make it through the review and will be able to resume normal growth.”

Even if it doesn’t, Hecht said, it shouldn’t be cause for too much hand-wringing. Many up-and-coming tech firms face challenges and roadblocks, he noted; it’s all part of the natural rhythm of developing high-growth companies in a new, emerging industry.

“Regardless of the outcome of Renaissance, it is still a positive sign for the nascent biotech community that companies are being started and growing on a regular basis,” he said. “Some of these companies will go on to great success; some will not make it. These are all natural parts of an industry cluster.”

As Renaissance sorts through its financial woes, it’s also dealing with a breach-of-contract lawsuit filed by a former interim CEO.

In the lawsuit, filed Jan. 6 in Civil District Court, David Guzan claims that he is owed perhaps more than $1 million in compensation, including unpaid wages, management fees, ownership interests in companies and damages.

That legal problem, taken together with scuttling of plans to move Renaissance’s headquarters to the Central Business District, has led some observers to wonder whether the firm has permanently lost its momentum and if it truly expects to regain it once the federal review is complete.

“I do not think that anyone knows precisely why the review was triggered or how long it will take,” Sheely, the firm’s general counsel, wrote, blaming its issues on a claims processor.

Regardless of how it all shakes out, Hecht believes the situation should not set back the city’s efforts to expand its burgeoning biotech sector.

“The business community is taking the Renaissance RX situation in stride,” he said, in part “because of our maturation as an entrepreneurial community” and in part “because we simply have so many other deals going on at the same time.”

Follow Richard Thompson on Twitter, @rthompsonMSY.