Advocate staff photo by JOHN McCUSKER -- 301 St. Charles Ave is home to biotech firm Renaissance Rx.

The former interim CEO of Renaissance RX, a New Orleans start-up company that performs genetic testing to help tailor medications for individual patients, is suing the firm’s founder for breach of contract. Meanwhile, a local legal journal reported last week that the firm was laying off staff and experiencing financial disarray after federal funding was pulled for a government-funded study it was leading.

Taken together, the developments have grabbed the attention of some local economic development leaders and public officials, who are watching carefully to see what happens to a company that once was lauded locally as a standout among a crop of home-grown start-ups that local officials hope to cultivate and promote to help diversify New Orleans’ tourism-based economy.

Renaissance, which started with five employees in the New Orleans BioInnovation Center in 2012, performs pharmacogenetic testing to show how individual patients respond to specific medications based upon their genetic makeup. The company takes a swab from inside a patient’s cheek to gather the genetic information needed to evaluate whether the patient is being prescribed the right dosage of a medicine.

In September, the company said it planned to spend $8 million on a new headquarters in the Central Business District and to add 425 workers to the 80 it already had working in the city, out of more than 800 nationwide. The local investment was backed by $925,000 in grant money from the state.

The company said it would consolidate its operations into a 30,000-square-foot building at 301 St. Charles Ave. from smaller spaces at the New Orleans BioInnovation Center and offices on La Salle and Poydras streets.

At the time, Louisiana Economic Development Secretary Stephen Moret lauded New Orleans as “the greatest comeback city of the 21st century in America.”

“The remarkable growth of hometown Renaissance RX adds yet another significant economic development win in our state,” Moret said.

Two months later, Renaissance founder Dr. Tarun Jolly announced that TPG Growth, part of the global investment firm TPG, had made “a significant investment” in the company, although terms of that deal were not disclosed.

Now, local observers are wondering whether that trajectory may have changed.

The Louisiana Record, a local legal journal owned by the U.S. Chamber Institute for Legal Reform, reported last week that Renaissance has instituted major layoffs in recent weeks after Medicare suspended funding of the company’s main study, a 250,000-patient registry designed in part to determine whether using the pharmacogenomic data results in a meaningful change of a patient’s dose regimen.

Ultimately, the company’s testing attempts to show how a patient responds to specific medicines based on his or her genetic makeup. That knowledge would allow physicians to prescribe medications and dosages that are best suited for each patient.

The Record’s report, which cited unnamed employees, said the biotech firm was laying off staff after Medicare suspended its funding pending a review of the study.

Asked last week whether he was aware of layoffs at Renaissance, Moret said in an email that the company “has communicated to LED that they expect to restart their growth plan in the near future (i.e., sometime in the next few months, but potentially sooner) once they work out a reimbursement issue with Novitas Solutions, a claims processor.”

After initially agreeing to discuss The Record’s allegations, Renaissance spokeswoman Amy Dye did not respond to multiple requests for comment. Jolly did not respond to an email seeking comment.

Tony Salters, a spokesman for Medicare, said he could not comment on “proprietary concerns” and said the Centers for Medicare and Medicaid Services would “not comment on provider entities, alleged suspicion of fraud or any active or ongoing investigations.”

Meanwhile, last month’s civil suit by a former Renaissance interim CEO, David Guzan, claims that his business relationship soured with Jolly, the company’s founder. It alleges that he is owed perhaps more than $1 million in compensation, including unpaid wages, management fees, ownership interests in companies and damages.

The lawsuit, filed Jan. 6 in Orleans Parish Civil District Court, outlines a series of business arrangements that Guzan and Jolly were involved in through several limited-liability companies that each owned.

Guzan was the CEO of one of Jolly’s firms, Louisiana Pain Specialists, for 16 months beginning in October 2012, according to the lawsuit. Guzan gave Jolly his 90-day notice in September 2014 and resigned early two months later. The lawsuit claims that he is still owed more than $222,300 in compensation.

Guzan’s 12-page suit also claims that he is owed more than $81,300 in fees for managing another outfit, Crescent View Surgery Center, which was a joint venture between him and Jolly. He also contends that he’s owed the balance of the management contract, which runs through May 2017. He also claims to be owed a small ownership stake in Crescent View.

Perhaps the largest claim in Guzan’s suit is tied to his nearly one year on the job at Renaissance, for which he alleges he is owed a 1 percent stake in the company.

An undated memo included with the lawsuit that appears to have been written late last year offers what is purportedly a stark back-and-forth dialogue between the two men. In it, Jolly criticized Guzan’s job performance at the company, telling him that under his helm, the company was “stagnant at best or negative.”

Guzan told Jolly in a September email that he had accepted the position based on the belief that his 1 percent stake would be worth $1 million.

Jolly disputed the idea that Guzan’s contributions to Renaissance justified a 1 percent stake, saying he was “truly shocked that you continue to value your contributions as significant enough,” according to the court filing.

“To be fair, I have always intended to give you something for the efforts placed outside of (Louisiana Pain Specialists) in the beginning,” Jolly wrote, according to the memo. “At the same time, this organization was also 95 percent established when you started, and most if not all of the growth the company experienced came only after you had stopped playing an active role with the company (and truly after you resigned as CEO).”

Instead, Jolly offered $75,000 and said the company was “barely able to make it stay afloat” during Guzan’s time at the helm.

Jolly noted that the two men had once expected business to increase tenfold within the first three years, but at that point they were “two years into this and far from that type of growth.” He added that Crescent View was not profitable and that Louisiana Pain Specialists had taken out more than $750,000 in credit under Guzan’s watch.

For his part, Jolly allegedly contended that he was trying to be fair but also to watch out for his own interests.

“I will always continue to be a man of my word,” he wrote, according to the court filing, “but I want you to understand that this is a two-way street and there have been many promises on your side I feel have not been delivered on.”

Follow Richard Thompson on Twitter, @rthompsonMSY.