Teva sabotaged drug to save Copaxone sales, claims ProNeuron
Now its suing to get back its rights to COP-1 molecule
Teva Pharmaceuticals (TASE, Nasdaq: TEVA) is not only hurting ProNeuron Biotechnologies and its rights. It's hurting the public of patients suffering from neuro-degenerative diseases. How? According to all the preclinical data in the possession of ProNeuron and Teva itself, the clinical trial Teva is conducting is doomed to fail, or unfortunately, to produce results that are not optimal in the treatment of degenerative conditions of the nervous system."
Harsh words about Teva, which is the most highly-esteemed company on the Tel Aviv Stock Exchange. Worse, they appear in ProNeuron's lawsuit, delivered to the Tel Aviv District Court on Wednesday. Note ye that Teva owns 13.3% of the startup.
ProNeuron wants the court to terminate its agreement with Teva, dating from 2003 and updated in 2005. It hopes the court will give it back exclusive rights to continue developing the drug to treat neuro-degenerative conditions.
The lawsuit could well hurt Teva's image, and also sales of Copaxone, its proprietary treatment for relapsing/remitting multiple sclerosis, which generated sales of $1.4 billion in 2006.
If ProNeuron proves its claims, Teva could be in a sticky legal situation, and possibly also face a class action by shareholders, patients with MS and patients taking part in clinical trials to treat ALS - amyotrophic lateral sclerosis, better known as Lou Gehrig's disease - a degenerative, fatal meuromuscular condition.
The whole thing started with an agreement between Teva and Yeda in 1986. Yeda commercializes intellectual property developed at the Weizmann Institute. It licensed Teva to use a molecule called COP-1 to develop a treatment for MS.
Ten years later, Yeda gave ProNeuron a license to use COP-1 to develop drugs to treat neuro-degenerative diseases, which are characterized by the death of nerve cells and gradual impairment of the body's control systems. The symptoms can range from forgetfulness to the loss of cognitive ability, as in the case of Alzheimer's, or blindness, as in glaucoma.
The initiative to ask Yeda for the license was based on the studies of Prof. Michal Schwartz, who studied people with glaucoma. She found that COP-1 has neuro-protective capabilities when administered at low doses, when given once a week, or even once a month. Copaxone, which is based on COP-1, is given frequently - every day - to MS sufferers.
Her finding could have implications for the treatment of MS and Teva's income from Copaxone.
ProNeuron claims that subsequent to the Yeda license, it carried out studies and preclinical trials at a cost of tens of millions of dollars, which proved the molecule's efficacy in treating neuro-degenerative diseases.
It claims to have proven that when COP-1 is given at low doses, it protects patients from certain neuro-degenerative conditions.
These studies, ProNeuron claims, were behind the interest Teva showed in buying ProNeuron's knowhow and intellectual property. In 2003 Teva and ProNeuron, and Teva, ProNeuron and Yeda, signed agreements, under which ProNeuron gave Teva a secondary license to use COP-1 to develop and commercialize a molecule to treat neuro-degenerative diseases.
Teva and ProNeuron subsequently set up a joint venture and determined milestones for the development of the drug, and royalties to ProNeuron.
ProNeuron claims that one of Teva's fundamental undertakings, based on the 2005 agreement, was to start clinical trials to test the efficacy of the drug, no later than October 2006. The agreement stated that Teva could defer the deadline to October 2007, if it paid ProNeuron $5 million compensation.
The two companies cooperated on preclinical trials, which aimed to identify the specific neuro-degenerative disease that the first-phase clinical trial would target. They also sought to identify the optimal drug regimen to treat the disease with the greatest efficacy and lowest risk.
ProNeuron claims that the results of the preclinical trials they did for five years clearly indicated that the molecule and its derivatives (including Copaxone) were effective, using models of glaucoma and Huntington's disease - but only when given in low doses. The molecule proved ineffective in ALS models. MS patients are given daily injections of Copaxone.
ProNeuron thought the results of the preclinical trials would serve as a base on which to plan and carry out the clinical trials, based on Teva's undertakings. But reality was otherwise.
It claims that in February 2006, Teva negotiated to delay starting the trial by a year, arguing that based on the preclinical results, it couldn't start the clinical trials as planned.
Teva explicitly stated during the negotiations that it had no indication indicating the efficacy of the molecule to treat ALS, ProNeuron claims.
To ProNeuron's surprise, it says, a few days later, Teva told it that it means to start clinical trials of COP-1 to treat ALS, though the preclinical trial results were adverse. Moreover, Teva meant to test daily administration of the drug, as given to MS patients. ProNeuron however argued that a daily regime had failed all preclinical tests, and that everybody agreed it was unsuitable to treat neuro-degenerative diseases.
Teva changes its spots
ProNeuron also claims that Teva provided no explanation for its conduct, which was characterized by bad faith and extreme unreasonableness.
The startup may have shed light on Teva's conduct, mainly in that the drugs giant changed its spots: it had declared to ProNeuron that it was not prepared to conduct the clinical trial based on its undertaking from 2005, but then suddenly wanted to start the trial immediately, regarding ALS.
The secondary licensing agreement ProNeuron signed with Teva in 2005 ruled that after the clinical trial began, ProNeuron would lose its right to terminate the agreement in the event of breach by Teva. In that event, the only remedy to which it could aspire, would be to sue for compensation.
What that means is that the moment Teva began the clinical trial, ProNeuron would be at its mercy regarding further development and commercialization of a drug or drugs based on COP-1.
ProNeuron also claims that Teva's decision to start a trial that had been hastily put together, rather than planned properly, was designed to create failure. It would then gain three things, ProNeuron argues:
1. ProNeuron would lose its right to terminate the licensing agreement, as said above.
2. If Teva had carried out a properly planned trial that worked, and found for instance that low dosages of Copaxone - weekly, let's say - were better in the treatment of neuro-degenerative disease, it could impair future sales of Copaxone. It might also have found that a weekly shot of Copaxone is as effective as daily shots.
3. Teva would have saved millions in the form of compensation to ProNeuron if it neglected to start the clinical trial by the deadline.
ProNeuron claims that Teva tried to distinguish Copaxone for drugs, by trying to find a new derivative of COP-1 to treat neuro-degenerative diseases through weekly injection, or monthly. Copaxone as said is given every day.
Bad for patients
The startup charges that Teva started testing a molecule called TV5010, a derivative of COP-1 with a higher molecular weight. The trial failed, ProNeuron says.
Teva found that TV5010 had not reached a level of development that allowed clinical trials to start by the time it had undertaken, namely October 2006. Also, the attempt to distinguish Copaxone did not work out, because the test results showed no difference between treatment with TV5010 and Copaxone.
Teva itself reported in its financial statement for the year 2006 that the TV5010 trial, administered by weekly subcutaneous injection, was halted at the end of 2006.
ProNeuron claims that Teva's failure to distinguish Copaxone put Teva into a conflict of interest, between its desire to maximize Copaxone sales, and its contractual duty toward the startup, to conduct a properly planned clinical trial process that would prove the efficacy of the drug in treating neuro-degenerative diseases.
Teva, says ProNeuron, preferred to protect Copaxone, and commenced a hastily thrown-together experiment that aimed at an unsuitable therapeutic target, and in a manner that assured ? based on the preclinical results ?it would fail.
Not only did Teva hurt ProNeuron and its rights: it also hurt the public of people with neuro-degenerative diseases, the startup argues. It knew the test would fail or be sub-optimal and might even shorten the life of the test subjects. And now ProNeuron wants its rights to the molecule back.