The University of Alabama in Huntsville (UAH) announced the settlement of their suit against Nektar Therapeutics and Dr. Milton Harris, the founder of Nektar Alabama and a former employee of UAH, in exchange for a total cash payment of $25 million.

Under the terms of the agreement, Nektar and Dr. Harris have jointly made an upfront payment totaling $15 million to UAH. In addition, Nektar will pay UAH the sum of $1 million per year for ten years. UAH currently plans to apply the funds towards its endowment and to fund scholarships for the entire campus, including chemistry and biology programs. In exchange, UAH has agreed to dismiss all claims related to the Nektar PEGylation patent portfolio and Nektar has agreed to dismiss all counterclaims.

UAH had sued Nektar Therapeutics AL and Nektar Therapeutics in United States District Court for patent infringement, breach of contract license, violation of the Alabama Trade Secrets Act and unjust enrichment. Harris and another researcher developed a PEGylation technology, which was patented by UAH. PEGylation technology is based on the use of non-toxic polyethylene glycol (PEG) polymers, which can be attached to most major drug classes, including proteins, peptides, antibody fragments, small molecules, and other drugs and is used in eight approved products in the U.S. and/or Europe today.

With PEGylation technology, polyethylene glycol (PEG) polymer chains are attached to a drug, which sustain bioavailability by protecting the drug molecules from immune responses and other clearance mechanisms. In an aqueous medium, the long, chain-like PEG molecule is heavily hydrated and in rapid motion. This motion causes the PEG to prevent the interference of other molecules.

The university entered a royalty agreement with Harris for products developed out of the discovery, and Harris created Shearwater Polymers, a company bought by Nektar in 2001 for $197 million in cash and stock, to pursue manufacturing of PEG-related products. UAH claimed that Harris, without UAH’s knowledge, made a number of other discoveries related to the PEG technology in the following years and patented 28 of them and that Harris was required to notify UAH of any discovery related to the original PEG patent, and the lawsuit contends that the patents are “obvious derivatives” of and “equivalent” to the original PEG patent.

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