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GSK sued for 'abandoning' Relenza

Published on 14/05/04 at 10:42am

Biota, the Australian biotech company that discovered Relenza, is taking GlaxoSmithKline to court, alleging that it failed to properly launch and support the influenza treatment.

After the breakdown of two years of talks between the companies, Biota is seeking an unspecified amount in damages for lost royalty revenues to date as well as future losses for the rest of Relenza's patent life.

John Grant, chairman of Biota, said: "Litigation was the only reasonable option left to us to retrieve the substantial value we believe exists in Relenza."

GSK licensed the product from Biota in 1990 and after its launch, captured 50% of the then emerging market for neuraminidase inhibitor (NAI) flu drugs in 1999/2000. But Biota said product sales went into free fall the following year after GSK cut virtually all its promotional efforts for the drug.

Four years later, Relenza held just 3% of the NAI global market, which in 2003 was worth an estimated $330 million.

In the UK, Relenza suffered the effects of a government-backed campaign promoting free flu immunisations for at risk groups and restrictive rulings from NICE.

In its first ever appraisal in 1999, NICE controversially ruled that Relenza was neither cost nor clinical effective, although it did subsequently recommend use of the drug for at risk groups. A further appraisal in 2002 gave a highly restricted recommendation for both Relenza and its main rival, Roche's Tamiflu.

GSK chose not to challenge that guidance, but Roche went on to win an appeal, gaining a new recommendation relating to flu prevention. But NICE stressed that vaccination remained the most cost-effective defence against flu.

Last year Tamiflu increased its global sales by 184% to CHF431 million after a severe influenza outbreak in Japan and an early start to the US flu season.

Biota's agreement with GSK entitles it to a 7% royalty on GSK sales of Relenza, which last year brought it less than $1 million in revenue. If the drug had achieved Tamiflu's market penetration, Biota says its royalty revenue from the drug would have been $35 million.

Chief executive of Biota and former head of Pharmacia Australia Peter Molloy said: "Relenza was a breakthrough influenza drug that had great potential, but it was effectively abandoned at birth.

Mr Molloy blamed the after-effects of the 2000 merger between Glaxo Wellcome and SmithKline Beecham to form GSK, for killing off Relenza.

"After a merger, the one thing you are looking for is cost savings. So here's Relenza. You've just launched it and it's a bit of a pain because it's very seasonal -there's a three to six month window where you make all your sales and the opportunity fluctuates wildly from year to year.

"So you say, 'Let's drop this one. What else have we got? Why don't we push that new asthma drug?'" he told The Australian.

Biota's licence agreement obliged GSK to use its 'best endeavours' to make Relenza a success. According to Mr Molloy, under Australian law, this meant GSK should have left no stone unturned in its promotion of Relenza.

But Biota said GSK breached their agreement by restricting Relenza to its proprietary Diskhaler system, withdrawing support for post-approval clinical studies and withdrawing promotional support for the product.

The biotech also said GSK only launched its product in around 30 of the 70 countries in which it was registered.

GSK is particularly reliant on licensing drugs from other companies to stock its product pipeline and leads the pharmaceutical industry in this type of activity.

Since 1988 GSK in-licensed 80 drugs from other companies, well above big pharma's average of 31, according to a study last year by Wood Mackenzie, and more than half of these deals have occurred since 1998.

Before Biota's action against GSK a number of other high profile deals between big pharma and biotech companies had also recently hit problems.

In November 2003 Pfizer walked away from a co-marketing deal with Celltech for its rheumatoid arthritis drug CDP870 after the UK biotech would not meet its demands for higher rewards from the collaboration.

The deal was originally struck in early 2001 with Pharmacia, but after Pfizer acquired the company last year it sought to renegotiate a deal that it believed overly favoured Celltech.

Meanwhile, Cambridge Antibody Technology's (CAT) ongoing dispute with Abbott has gone to the High Court in London. The companies disagree over the payment of royalties for the rheumatoid arthritis treatment Humira, which CAT co-developed with Knoll, now part of Abbott.


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