Eli Lil­ly or­dered to pay roy­al­ties on block­buster di­a­betes drugs, though ex­act dam­ages are un­clear

A fed­er­al court found Eli Lil­ly in breach of a roy­al­ty agree­ment with an Ari­zona com­pa­ny, like­ly send­ing the case — which deals with Lil­ly’s block­buster di­a­betes drugs — to a tri­al.

The Ari­zona Dis­trict Court or­dered Lil­ly to pay the roy­al­ties to Tuc­son, AZ-based Re­search Cor­po­ra­tion Tech­nolo­gies, per an opin­ion de­liv­ered Tues­day, stem­ming from a 1990 agree­ment in­volv­ing ma­te­ri­als used in man­u­fac­tur­ing Lil­ly’s in­sulin prod­ucts. Lil­ly had agreed to pay a 2% roy­al­ty on world­wide sales, and the ex­act amount of dam­ages will be de­ter­mined in a tri­al, Judge Scott Rash wrote.

In re­sponse to the news, a Lil­ly spokesper­son sent End­points News the fol­low­ing state­ment: “We strong­ly dis­agree with the de­ci­sion and vig­or­ous­ly con­tin­ue to de­fend our po­si­tions. The suit does not af­fect Lil­ly’s abil­i­ty to con­tin­ue man­u­fac­tur­ing and dis­trib­ut­ing Hu­mulin (hu­man in­sulin), Hu­ma­log (in­sulin lispro in­jec­tion) or r-glucagon.”

Back in 1990, Lil­ly en­tered in­to an agree­ment with the now-de­funct oil com­pa­ny Phillips Pe­tro­le­um to uti­lize the lat­ter’s yeast ex­pres­sion tech­nol­o­gy for mak­ing reagents, agree­ing to pay roy­al­ties in ex­change for any prod­uct re­sult­ing from the tech. Phillips sold the tech­nol­o­gy to RCT in 1993 and Lil­ly con­tin­ued the agree­ment.

One of the yeast strains and four ex­pres­sion vec­tors from this tech­nol­o­gy end­ed up com­pris­ing key as­pects of Lil­ly’s in­sulin prod­ucts, along with a sep­a­rate E. coli ex­pres­sion sys­tem and oth­er ma­te­ri­als. Though Lil­ly and RCT don’t dis­pute the con­tract’s lan­guage and that none of these plat­forms in­di­vid­u­al­ly make up the drugs’ ac­tive phar­ma­ceu­ti­cal in­gre­di­ent, they in­ter­pret­ed the lan­guage dif­fer­ent­ly and dis­agreed over whether the el­e­ments from RCT’s tech help make up the re­sult­ing drug.

The court was tasked with de­ter­min­ing if Lil­ly’s di­a­betes drugs con­sti­tute an “end prod­uct,” or a ther­a­peu­tic prod­uct sold to con­sumers. RCT ar­gued the orig­i­nal con­tract states any el­e­ment “pro­duced by” the tech­nol­o­gy that ends up in an end prod­uct falls un­der the roy­al­ty agree­ment, which would in­clude the yeast strain and four ex­pres­sion vec­tors.

Lil­ly’s de­fense, how­ev­er, cen­tered on a bit of lin­guis­tic sleight of hand, claim­ing noth­ing in the drugs con­tains any­thing “ex­pressed by” the spe­cif­ic yeast and vec­tor tech­nol­o­gy. As such, Lil­ly ar­gued, the di­a­betes and in­sulin drugs it has sold for bil­lions of dol­lars can­not be con­sid­ered “end prod­ucts.”

Rash sided with RCT’s in­ter­pre­ta­tion, not­ing both sides agreed the con­tract’s lan­guage is un­am­bigu­ous. “To adopt Lil­ly’s in­ter­pre­ta­tion would ren­der the roy­al­ty terms and de­f­i­n­i­tions of ‘End Prod­uct’ and ‘Reagent’ in­ef­fec­tive and mean­ing­less,” Rash wrote in his opin­ion.

He lat­er added:

Un­der Lil­ly’s de­f­i­n­i­tion, where “pro­duced by” means “ex­pressed by,” an End Prod­uct could nev­er be made un­der the Agree­ment, be­cause, as set forth above, ex­pres­sion sys­tems pro­duce pro­teins — not APIs … As such, un­der Lil­ly’s de­f­i­n­i­tion, much of the con­tract would be ren­dered su­per­flu­ous.

On top of this, Rash found Lil­ly in breach of an­oth­er part of the agree­ment, say­ing it failed to no­ti­fy RCT that it had be­gun re­ceiv­ing ma­te­ri­als from else­where to pro­duce its di­a­betes drugs. In 2001, Lil­ly grant­ed No­var­tis’ San­doz unit a sub­li­cense of the RCT tech but didn’t tell RCT un­til 2015. Had RCT known soon­er, it would have act­ed to rene­go­ti­ate the roy­al­ty agree­ment and in­stead was forced to lit­i­gate, the com­pa­ny ar­gued.

Though Lil­ly will have to pay dam­ages about the fail­ure to no­ti­fy, Rash not­ed the big drug­mak­er did not pro­vide San­doz with any con­fi­den­tial in­for­ma­tion. Fur­ther pro­ceed­ings will take place re­gard­ing a three-month pe­ri­od in 2016 over a dis­pute re­gard­ing when the roy­al­ty agree­ment end­ed.

Roy­al­ties have been a con­stant part of court fights in the drug de­vel­op­ment world, with sev­er­al com­pa­nies butting heads over po­ten­tial­ly mas­sive sums. For ex­am­ple, in De­cem­ber 2019, a ju­ry held Gilead li­able for 27.6% of roy­al­ties in a patent case against Bris­tol My­ers Squibb and Sloan Ket­ter­ing. And ear­li­er this year, No­var­tis was or­dered to pay Dai­ichi Sankyo roy­al­ties on the can­cer drug Tafin­lar.

Spe­cial re­port: Meet 20 ex­tra­or­di­nary women who are su­per­charg­ing bio­phar­ma R&D

Even though many biopharma leaders have come together in recent years to address its gender gap, the consensus is clear: We still have a long way to go.

Companies this year were 2.5 times more likely than last year to have a diversity and inclusion program in place, according to a recent BIO survey, but women are still largely absent from executive roles. Getting women to enter the industry isn’t the problem — studies show that they represent just under half of all biotech employees around the world. But climbing through the ranks can be challenging, as women still report facing stereotypes, and, unfortunately, harassment.

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Op­ti­miz­ing Oral Drug De­liv­ery us­ing Zy­dis® Oral­ly Dis­in­te­grat­ing Tablet Tech­nol­o­gy to Ad­dress Pa­tient Chal­lenges

KEY POINTS

Patients prefer oral dosing, but swallowing tablets can be a challenge for many patients.
The Zydis® orally disintegrating tablet (ODT) platform addresses challenges associated with oral dosing, expanding benefits for patients and options for healthcare providers.
A strong growth trajectory is expected for ODTs given therapeutic innovation and continued technology development.

Many patients prefer conventional tablets for the administration of medications, but some geriatric and pediatric patients and those with altered mental status and physical impairments find swallowing tablets to be difficult. Orally disintegrating tablets (ODTs), which dissolve completely without chewing or sucking, offer a patient-friendly dosage form for the administration of small-molecule drugs, peptides and proteins. With the potential for multiple sites of drug absorption, often faster onset action for the active pharmaceutical ingredient (API), and potentially greater bioavailability, ODTs are an attractive option for drug developers considering first-to-market formulations or product line extensions of existing drugs with compatible API. In this report, we look at how innovation in the industry-leading Zydis ODT platform is expanding oral formulation options and bringing benefits to patients.

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Geoffrey Porges (SVB Leerink)

The 2022 wave com­ing? Top an­a­lyst says Big Phar­ma will have more than $1T avail­able to sat­is­fy its grow­ing ap­petite for biotech M&A

All through this year you could practically feel the frustration of the biotech investor class as M&A activity continued to drag behind expectations — or desires. Buyouts of public companies provide the essential juice for keeping stocks lively, and there’s been a notable lack of juice in 2021.

So is all that about to change, big time?

SVB Leerink’s Geoffrey Porges, a longtime student of biotech M&A, thinks so. In a lengthy analysis he put out last week, Porges totted up the cash flow of the major pharmas and determined that there was a good long list of industry buyers who would have around a half trillion dollars of cash to play with in 2022. Leverage that up with added debt and you could get that deal cache to $1.6 trillion.

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Mar­ket­ingRx Matchup: How Ab­b­Vie and Bio­haven ads rank in head-to-head mi­graine chal­lenge

Are you ready to rumble? DTC brands that is. MarketingRx is launching a new monthly feature today called MarketingRx Matchup. We’re pitting two pharma brands’ DTC advertising in the same therapeutic category against each other to find out what consumers and patients really think.

Market research company Leger is handling the polling and analysis each month, and I’ll be writing up the results — along with my own take — inside MRx on the first Tuesday of the month.

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Wendy Lund, Organon chief communications officer

Q&A: Organon chief com­mu­ni­ca­tions of­fi­cer Wendy Lund talks about the Mer­ck spin­off, women’s health and why it mat­ters

One of Wendy Lund’s earliest jobs was head of marketing at Planned Parenthood. As the youngest person on its management team, she introduced them to emerging new technologies, and in return, she learned the importance of fighting for what you believe in.

Now as chief communications officer at Organon, the women’s health company recently spun off by Merck, Lund is keeping that point top of mind. That’s in part because women’s health hasn’t been a spotlight therapy area for Big Pharma in years. Several companies have spun off, sold or at least considered selling women’s health assets to focus on “core” products.

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Mar­ket­ingRx roundup: Pfiz­er re-ups pneu­mo­nia ads as Mer­ck threat looms; Re­al Chem­istry founder CEO Jim Weiss steps back

Every autumn, leaves fall from the trees and people start holiday shopping – and for the last few years Pfizer debuts a new “Know Pneumonia” awareness TV ad. This year the commercial, launched a week ago, features different people who talk about why they got vaccinated against pneumococcal pneumonia. Actors portray a young female firefighter with asthma, a mechanic with heart disease and an older woman with her grandchild. A Pfizer spokesperson declined comment on the latest iteration of the long-running campaign.

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Klick Health agency employees appear in its annual holiday greeting video with this year's theme to #SpreadJoy (via Klick Health)

Klick Health hands out $100 bills in an­nu­al hol­i­day greet­ing that’s turned in­to de­fault re­cruit­ing tool

Editor’s Note: For more news, analysis and exclusive coverage from the marketing beat, subscribe to the Endpoints MarketingRx weekly report in your reader profile.

What would you do with $100 and the simple instruction to “spread joy?” That’s what pharma and healthcare agency Klick Health asked its employees as part of its annual holiday greeting for clients, friends and future recruits.

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Warren Huff, Reata CEO

FDA slams Reata's kid­ney drug as in­ef­fec­tive ahead of ad­comm meet­ing

The FDA on Monday offered an overwhelmingly negative opinion on Reata Pharmaceuticals’ potential drug to slow the loss of kidney function in those with the rare disease Alport syndrome, according to briefing documents released ahead of an advisory committee meeting Wednesday.

The agency’s review team said it “does not believe the submitted data demonstrate that bardoxolone is effective in slowing the loss of kidney function in patients with AS and reducing the risk of progression to kidney failure.” Originally developed as a cancer drug, bardoxolone was later scuttled by Reata almost a decade ago as a chronic kidney disease drug due to deaths in a Phase III trial.

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No­var­tis pe­ti­tions FDA to block 18 gener­ic com­peti­tors for its megablock­buster heart drug un­til 2024

Novartis is looking to milk one of its most prized possessions a little while longer without any generic competition, mostly because of a newly approved use that the Big Pharma won earlier this year for its megablockbuster heart drug Entresto.

In addition to battling (and winning) litigation last month to block a handful of Indian generics from entering the market early alongside Entresto, the company last week petitioned the FDA to try to stop a total of 18 Entresto generics from launching before 2024 at the earliest.