The Leonard and Madlyn Abramson Family Cancer Research Institute, part of the Abramson Cancer Center at the University of Pennsylvania, alleges in the complaint that Dr. Craig B. Thompson and Agios Pharmaceuticals Inc. are developing cancer drugs based on  research conducted while Thompson worked at the institute.  Thompson is currently the President and Chief Executive Officer of Memorial Sloan-Kettering Cancer Center in New York although Sloan-Kettering is not a party to the suit.

According to the complaint filed in the US District Court Southern District Of New York, the Institute was created by an agreement between The Abramson Family Foundation and the Trustees of the University of Pennsylvania. The Foundation donated over $110 Million Dollars to the Institute with the condition that the money was to be used to explore new and different approaches to cancer treatment.

Dr. Thompson later created a for-profit corporation that he concealed from the Institute. After a name change, that entity became the Defendant Agios Pharmaceuticals, Inc. Dr. Thompson did not disclose to the Institute that at least $261 million had been obtained by Agios for what was described as its “innovative cancer metabolism research platform” – i.e., the description of Dr. Thompson’s work at the Institute. Dr. Thompson did not disclose that Agios was going to sell to Celgene Corporation an exclusive option to develop any drugs resulting from the cancer metabolism research platform.

Dr. Thompson joined the Institute in June of 1999 as Scientific Director and his duties included directing, overseeing and managing the Institute’s Cancer Cell Biology Program.  Thompson’s work at the Institute included developing a cancer metabolism research platform that would examine the role that metabolic changes play in the origins and progression and death of cancer cells and discovered that cancer cell growth requires an enzyme not previously implicated in cancer.

In 2005, Dr. Thompson acknowledged in a memo to the Institute that: “Over the past six years, the Institute has developed considerable intellectual property.” That memo further noted that: “Drs. Thompson and [other Institute personnel] are exploring the possibility of forming a non-profit development and therapeutics company through which the Institute could capitalize on its intellectual property.”

In 2007, Dr. Thompson reported that his work at the Institute definitely provided evidence that regular or intermittent use of drugs such as metformin could reduce the risk of cancer. He also reported that researchers at the Institute had found that an agent called AICAR had an effect similar to that of metformin in suppressing the growth of breast cancer cells.

The Institute Agreement provides for Institute-Supported Research, as follows:

“All right, title and interest with respect to all technical information, know-how, trade secrets, developments, software, methods, techniques, formulae, data, processes, inventions, discoveries, improvements, and other proprietary ideas and intellectual property (together ‘Intellectual Property’), whether or not patentable or copyrightable, that are conceived, discovered, developed or reduced to practice pursuant to or in the course of Institute Research Programs whose budgets are funded solely by the Institute (‘Institute-Supported Inventions’) will be the sole property of the Institute, subject to the other provisions of this Article 5 and the [Faculty Rights].”

On August 7,2007,  Agios was incorporated in Delaware under the then utilized name of Cancer Metabolism Therapeutics, Inc., which Thompson did not disclose to the Institute. Thompson is listed as a director of Agios beginning with its 2007 Annual Report, which was also not disclosed.

In 2009, Agios  acknowledged that Thompson was Director of the Abramson Cancer Center at the University of Pennsylvania and that Thompson was one of the three founders of Agios.  It also announced the publication in Science of an article co-authored by Dr. Thompson titled “Understanding the Warburg Effect: The Metabolic Requirements of Cell Proliferation.”

In late 2010, Thompson took a one year leave of absence from the Institute, during which he commenced work as the President and Chief Executive Officer of Sloan-Kettering and continued his affiliation with Agios.  Dr. Thompson terminated his employment  with the Institute and the University on October 31,2011.

As part of the April 15,2010 press release, Agios described itself as “dedicated to the discovery and development of novel therapeutics in the emerging field of cancer metabolism.” Agios further noted that: “The Company’s founders [including Dr. Thompson] and scientific advisors represent the core thought leaders in the field of cancer metabolism responsible for key advances, insights and discoveries in the field.”

An October 2011 reporting noted that “Agios’s scientific co-founders were three of the most renowned pioneers of cancer metabolism,” with one of them being Dr. Thompson. That reporting stated that “Craig Thompson from the University of Pennsylvania” and two others had “discovered that targeting certain metabolic enzymes could fundamentally alter cancer pathways” and took steps “to turn that discovery into a company that could be a ‘prolific discoverer of new products.’”

On November 17,2011, it was publicly reported that Agios received an additional $78 million investment from existing and new funding sources to focus on “inborn errors of metabolism.”

The Institute now believes that Thompson may have conveyed to Agios rights and/or interests related to intellectual property and inventions funded in part or in whole by the Institute, including, but not limited to, the cancer metabolism research platform that formed the focus of Dr. Thompson’s work, that was funded in part or in whole by the Institute.

Accordingly, the Institute claims to have suffered damages in an amount estimated to ultimately exceed $1 billion.

Ultimately, this will come down to facts that can be proven through written documents.  You can bet that the Institute will be subpoenaing every written document, email, telephone record and any other bit of digital fingerprint they can find to try to determine what was invented as well as when and where it was invented.

An invention takes two steps, conception and reduction to practice.  The trick will be showing who knew what and when did they know it.

Other famous IP Theft cases

A U.S. District Court ordered Nobel Prize winner and former Yale University professor John Fenn, 87, to pay Yale $545,000 in royalties and penalties, and pay their legal bills of almost $500,000 calling Fenn’s actions “fraud” and “civil theft” when he licensed the rights to U.S. Patent No. 5,130,538 to a company he partly owned.

More on the Fenn case here.

In one of the few cases where the inventor went to jail, Petr Taborsky, a former student at the University of South Florida, went to jail as a result of a dispute over technology ownership. In that case, Taborsky worked as undergraduate lab assistant on a sponsored research project and discovered a potential way to make kitty litter useful in cleaning human waste water. He was convicted of grand theft and theft of trade secrets and sentenced to probation.

Read about the tale of Taborsky here.

Related posts:

1. Research Tax Credits and Grants, Capped at $1 Billion, Boon for Small to Mid-sized Biotech Companies
2. Biotech Drugs: How to Spend $1.2 Billion
3. FTC Sues Drug Company for Paying Competitors to Delay Generic Launch

BIO’s set of policy proposals address two vital needs: 1) the need to re-engineer the biotech economic model, and 2) the need to re-invent the idea-to-market pathway for biotech cures and other products.

Below is that plan:

Creating an FDA that Turns Hope into Cures

The American population is growing older — life expectancy is up by a decade since 1965 and 72 million Baby Boomers are about to enter Medicare. It has never been more critical to support an industry that is working to cure diseases and will impact all Americans by saving lives and dollars. It is imperative that the U.S. Food and Drug Administration (FDA) recognizes its national role in advancing innovation by reviewing innovative products in a timely manner and promoting a consistent and science-based decision making process that is reflective of patient needs.. By facilitating the creation of a 21st century FDA and more effective clinical research and development processes, the proposals below help establish a clear and effective pathway for turning hope into cures.

Elevating FDA and Empowering Operational Excellence

Include Innovation in FDA’s Mission Statement

FDA must have both the capacity and commitment to incorporate the latest scientific advances into its decision-making so that processes can keep pace with the tremendous potential of companies’ cutting-edge science. Congress can help encourage medical breakthroughs by updating FDA’s mission to incorporate modern scientific tools, standards, and approaches.

Establish a Fixed Term of Office for the Commissioner of Food and Drugs

Encouraging consistent and stable leadership at FDA — with protection from the political influence that typically occurs during a Presidential Administration transition — would better equip the agency to fulfill its mission as a science-based regulator to promote and protect the public health. The law should be amended to provide that the President appoint the Commissioner to a six-year term of office. Once confirmed, the Commissioner would be removable by the President only for pre-specified reasons — neglect of duty, malfeasance in office, or an inability to execute the FDA’s mission.

Grant FDA Status as an Independent Agency

The FDA regulates nearly a quarter of the consumer goods supplied to the American public. As such, the agency should have the same authorities to make budget, management, and operational decisions as afforded other independent agencies such as the Environmental Protection Agency. This would empower the agency to work more effectively with the President and Congress to carry out its mission to promote and protect the public health, and would also enhance the agency’s ability to obtain quality and consistent leadership.

Establish an External Management Review Board for FDA

The FDA is a large, complex organization. Amending the law to establish a Management Review Board (consisting of experienced external advisors) that conducts periodic reviews of FDA’s management and organizational structure and provides fresh, visionary, and independent thinking and recommendations on how to improve FDA’s ability to fulfill its mission could help the agency address its chronic operational challenges.

Advancing Regulatory Science & Innovation

Release FDA Funding to Support Regulatory Science Public-Private Partnerships

Congress established an independent, nonprofit foundation to support public-private partnerships for the purpose of advancing FDA’s mission through, for example, the formation of collaborations to advance the use of biomarkers, surrogate markers, and new trial designs to improve and speed clinical development. However, Congressional appropriations bills have subsequently restricted FDA’s ability to transfer federal funding to the foundation. These funding restrictions should be lifted so that the foundation can fulfill its intended purpose and promise

Create an FDA “Experimental Space” to Pilot Promising New Scientific and Regulatory Approaches The FDA has developed several initiatives to advance regulatory science. However, FDA’s ability to incorporate modern science into its regulatory processes has been limited because there is no entity within the agency with unified responsibility for systematically analyzing the findings and recommendations from these initiatives, and with clear authority to pilot promising scientific and regulatory approaches. An FDA “Experimental Space,” led by a new Chief Innovation Officer, should be established with the responsibility and authority to ensure that promising new approaches are integrated into agency operations at all levels.

Enhance FDA’s Access to External Scientific and Medical Expertise

Scientific and medical knowledge, techniques, and technology are advancing at a more rapid pace today than at any other time; however, FDA’s capacity to access information about these advances has not kept pace despite the widespread perceptions of the agency as the global standard bearer for science-based regulatory review. It is essential that FDA’s access to scientific and medical advice be enhanced by improving the operations of FDA Advisory Committees, establishing Chief Medical Policy Officers in the immediate offices of the Center Directors, and providing FDA staff with additional avenues for accessing external scientific and medical expertise.

Enabling Modernized Patient-Centric Clinical Development

Increase Access to Innovative Therapies through Progressive Approval

Patients, particularly those with illnesses for which no adequate therapy exists, want access to promising new therapies earlier in the drug development process. Expanding and improving the accelerated approval pathway into a progressive approval mechanism would provide patients timely access to needed therapies, while helping ensure smaller biotech companies are able to maintain operations through extensive phase III clinical testing. Only innovative products for unmet medical needs, significant advances to standard of care, targeted therapies, or those that have been approved by the European Medicines Agency or other mature regulatory agencies would qualify for progressive approval.

Related posts:

1. BIO: Unleashing the Promise of Biotechnology (pt.3)
2. BIO: Unleashing the Promise of Biotechnology (pt.1)
3. BIO: Unleashing the Promise of Biotechnology (pt.2)

BIO’s set of policy proposals address two vital needs: 1) the need to re-engineer the biotech economic model, and 2) the need to re-invent the idea-to-market pathway for biotech cures and other products.

Below is that plan:

Policies to Stimulate a Bio-based Economy

The “Bio-based Economy” refers to economic activity and jobs generated by:

• the use and conversion of agricultural feedstocks to higher value products;
• the use of microbes and industrial enzymes as transformation agents or for process changes; and
• the production of bio-based products and biofuels.

The proposals below seek to elevate the concept and awareness of the bio-based economy and highlight the outstanding job creation and rural/rust belt economic development potential of industrial biotechnology and biorefinery commercialization.

Agriculture

Reauthorization and Enhancement of the Biomass Crop Assistance Program (BCAP)

BCAP is the key program encouraging and facilitating farmers and landowners to produce new purpose grown energy crops (PGECs) for advanced biofuels and bio­based products. Beyond reauthorizing the program through December 2017, we can further enhance it by:

1. Ensuring funds are directed primarily to production of next generation crops for biofuels and bioenergy;
2. Establishing a dedicated funding mechanism for awarded contracts;
3. Providing for eligibility of non-food Title I crops; and
4. Clarifying eligibility of certain other PGECs.

Federal Crop Insurance for Purpose Grown Energy Crops Currently, there is no formal federal crop insurance program available to producers of new PGECs. Requiring the U.S. Department of Agriculture’s Risk Management Agency to finalize its ongoing feasibility study of developing a crop insurance program for certain biofuels and bio-product feedstocks – and appropriately funding the Commodity Credit Corporation -would enable the formal establishment of such a program.

Feedstock Sustainability Enhancement Grants The continued development of domestic sources of energy, including for biofuels and renewable chemicals, depends upon the sustainable availability of consistent, high yield, good quality feedstocks. Establishing a grant program through the U.S. Departments of Agriculture and Energy would enable the funding of demonstration projects that utilize practices to enhance biofuel and bioenergy feedstock sustainability.

Codifying and Expanding the Definition of Renewable Chemicals

Many of the programs in the 2008 Farm Bill’s Title IX renewable energy programs are not available to renewable chemicals and bio-based products, despite their profound potential benefits to rural America. Codifying a more expansive definition of eligible renewable chemicals and bio-based products would enable enhanced participation of renewable energy projects in programs such as the Biorefinery Assistance Program and Rural Energy for America Program.

Tax

Tax Credit for Production of Qualifying Renewable Chemicals

Renewable chemicals and bio-based plastics represent an important technology platform for reducing reliance on foreign oil, creating green U.S. jobs, increasing energy security, and reducing greenhouse gas emissions. By providing a renewable chemicals tax credit in the form of a federal income tax credit for domestically produced renewable chemicals, Congress can create jobs and other economic activity and can help secure America’s leadership in the important arena of green chemistry. The credits would be general business credits available for a limited period per facility, and taxpayers would be subject to a competitive application and review process to ensure conformance with legislative intent.

Tax Code Reforms to Increase Availability of Advanced Biofuels and Facilitate Energy Security

Current tax law on advanced biofuels does not provide an ordered pathway toward U.S. energy security. Policymakers can help incentivize bringing commercial volumes of affordable advanced biofuels to market in the near term by amending the current tax code to:

1. Extend the Cellulosic Biofuel Production Tax Credit through 2016 and add eligibility for algal biofuels;
2. Allow advanced biofuel facility developers the option of electing to receive an investment tax credit;
3. Provide for eligibility of biorefinery retrofit projects;
4. Provide eligibility to federal Section 1603 Grants in Lieu of Tax Credits program; and
5. Extend and expand eligibility for cellulosic biofuel property accelerated depreciation.

Defense

Strategic Biorefinery Initiative and Offtake Authority

Development of domestic sources of renewable biofuels and bio-based products would yield substantial energy security benefits. The Department of Defense is uniquely positioned to help accelerate production and deployment of these vital products through establishment of a Strategic Biorefinery Deployment Program to finance construction of the first five commercial military advanced biofuel biorefineries. Under such a program, a biorefinery “fly-off” would identify and fund construction of the most promising projects. The authority to enter into long-term (up to 15 years) offtake agreements for procurement of advanced biofuels for military use would further enhance the Department of Defense’s ability to facilitate development of domestic sources of renewable biofuels.

Energy

Repurpose and Retrofit Grant Program for Expanding Production of Advanced Biofuels

Repurposing or retrofitting existing idled or underutilized U.S. manufacturing facilities is one of the most time and cost effective ways to build out the advanced biofuels and renewable chemicals sector. Establishing a federal matching grant program through the U.S. Department of Energy to fund up to 30% of costs would facilitate investments in such repurposing and retrofitting projects while helping to rapidly expand U.S. production capacity for advanced biofuels and renewable chemicals.

Synthetic Biology for Enhanced Sustainability of Biofuels and Renewable Chemicals

The advancing field of synthetic biology has the potential to enhance greatly both the economic and environmental sustainability of fuels and chemicals manufacturing. Establishing a Synthetic Biology Research and Development Grants Program through the U.S. Department of Energy would support research that could help enable the cost-effective sustainable production of advanced biofuels, renewable chemicals and other technologies that reduce or minimize greenhouse gas emissions, including biological processes for removing carbon dioxide from the atmosphere.

Industrial Bioprocess R&D Program

The use of industrial biotechnology for the production of renewable chemicals and bio-based products is enabling dramatic improvements in industrial energy efficiency as well as a host of renewable alternatives to traditional petrochemical-based products. Establishing an Industrial Bioprocess Research and Development program through the Department of Energy would fund projects in industrial biotechnology for renewable chemicals, bio-based products, and renewable specialty chemicals.

See also:

BIO: Unleashing the Promise of Biotechnology (pt.1)
BIO: Unleashing the Promise of Biotechnology (pt.2)
BIO: Unleashing the Promise of Biotechnology (pt.4)

Related posts:

1. BIO: Unleashing the Promise of Biotechnology (pt.1)
2. BIO: Unleashing the Promise of Biotechnology (pt.2)
3. BIO Hosts U.S./China Biotechnology Examiner Workshop with USPTO and China’s SIPO

BIO’s set of policy proposals address two vital needs:

1) the need to re-engineer the biotech economic model, and
2) the need to re-invent the idea-to-market pathway for biotech cures and other products.

Below is that plan:

Small Business Tax Incentives

Removing Financing Restrictions: Section 382 Net Operating Loss Reform

Section 382 of the Internal Revenue Code restricts the usage of net operating losses by companies that have undergone an “ownership change.” However, small biotech companies are unintentionally caught in its scope due to their reliance on outside financing and investment deals. Exempting net operating losses generated by qualifying research and development by a small business from Section 382 and redefining “ownership change” to exclude certain qualified investments (like those in rounds of venture financing) would enable small biotech companies to increase their value when preparing for mergers or initial public offerings.

Source: Therapeutic Discovery Project Post-Award Survey.
Penn Schoen Berland, prepared for BIO.

Increasing R&D Investment: Tax Holiday on Repatriated Investments in Small Biotechs Many small biotechnology companies rely on collaborations with large multi-national corporations to fund their research and development. A repatriation tax holiday on funds brought back to the United States from abroad would incentivize these large companies to repatriate earnings they are holding overseas and give them the ability to invest in and collaborate with small biotechs conducting groundbreaking research here at home.

Rewarding Innovative R&D Businesses: U.S. Innovation Box

Many Western European countries have implemented reduced corporate tax rates on income stemming from certain types of intellectual property. Allowing for a reduced corporate rate on this type of income would make investment in U.S. biotechnology more attractive and competitive, and would provide innovative companies with a greater return on their R&D expenses — allowing them to undertake more research projects here in the United States.

Source: Reuters: “Analysis: Big Pharma strips down
broken R&D engine,” 11 May 2011.

Supporting Industry Collaborations: Section 197 Amortization Reform

Small biotechs typically have intangible assets that are amortizable under Section 197 of the Internal Revenue Code. Reforming that law to provide for faster cost recovery for intangible assets acquired by investors would encourage large company investors to invest at an earlier stage in small biotech companies’ research.

See

BIO: Unleashing the Promise of Biotechnology (pt.1)
BIO: Unleashing the Promise of Biotechnology (pt.3)
BIO: Unleashing the Promise of Biotechnology (pt.4)

Related posts:

1. BIO: Unleashing the Promise of Biotechnology (pt.1)
2. BIO Hosts U.S./China Biotechnology Examiner Workshop with USPTO and China’s SIPO
3. BIO 2011: BIO International Convention on June 27-30, 2011

The Biotechnology Industry Organization had looked at the changes to our policy environment that would incentivizes companies to develop the breakthrough cures, treatments, enhanced agricultural products, vaccines and biofuels.
BIO notes that biotech research and development is a particularly high-risk undertaking because of the substantial start-up costs, lengthy experimentation period, and possibility that the technology will not prove viable.

BIO believes that fully realizing the promise of biotechnology requires a comprehensive national strategy that fine-tunes some policies and overhauls others.

BIO’s set of policy proposals address two vital needs for ensuring biotechnology innovation and industry growth:

1) the need to re-engineer the biotech economic model, and

2) the need to re-invent the idea-to-market pathway for biotech cures and other products.

Below is that plan:

I. Promoting Investment in Innovation

Congress has historically provided tax incentives to high-risk endeavors (such as oil and gas exploration, alternative energy, and high-tech start-ups) as a means for encouraging new investment. However, current tax law does not do enough to foster investment in health care, green technology, or energy-focused biotechnology companies. Given the economic and societal benefits of ensuring a robust biotech industry in the United States, it is imperative that Congress and the Administration adopt policies that recognize the unique financial structure and capital needs of biotech companies.

Features Of The Typical Biotech Company
• Unprofitable—3 or more years away from having product revenue
• Private company (70% of the biotech industry is private)
• Fewer than 50 employees
• Completed one round of venture capital financing

The proposals are designed to incentivize investors, strengthen small business, and promote innovation.

Small Business Investor Incentives

Incentivizing Small Biotech Investment: Angel Investor Tax Credit

Modeled after numerous state programs, a federal Angel Investor Tax Credit would provide an incentive for individuals to invest in emerging biotech companies researching innovative technologies. To be eligible, investors would have to invest in a company with fewer than 500 employees performing qualifying research. The credit would be equal to 50% of their investment.

Worldwide, 35% of pharmaceutical companies
outsourced projects to Asia in 2009, with
China and India the top two destinations.
Source: “Annual Outsourcing Survey,” Contract Pharma (2009)

Stimulating Private Capital for Biotechnology: R&D Partnership Structures

Due to the lengthy drug development process, small biotechnology companies often have difficulty obtaining early-stage financing for their research and development and, because they are not yet profitable, are unable to immediately use their tax assets (i.e., tax credits and losses) to offset income. The development of new partnership structures that allow a biotech company’s investors to offset their income with the company’s tax assets would significantly stimulate much needed private investment in biotechnology.

Improving Capital Gains Treatment for Small Businesses: Section 1202 Reform

Section 1202 of the Internal Revenue Code provides for a reduced capital gains rate for qualified investments in certain small business stock. However, due to the valuable intellectual property and successive rounds of financing inherent in biotech innovation, biotech companies do not meet the definition of qualified small businesses under Section 1202. Modifications to the small business definition and other changes in Section 1202 would encourage investment in research performed by capital-intensive, small biotech companies.

In India, the Biotech Industry Partnership
program provides grants and soft loans to
companies conducting high-risk research, which
has fostered a 20% annual growth rate.
Source: Global Biotechnology Report 2008, Ernst & Young

Doubling Private Funding: Matching Grants for Investments in Start-Ups

A small business early-stage investment program would provide matching grants to venture capitalists that specialize in funding small, innovative companies. The government grants would match investments in targeted small businesses, including emerging biotech companies, essentially doubling their financing by enabling seed financing to spur further investment.

Venture Capital Investing In Biotech Has Declined and Remains Largely Stagnant
• According to Pricewaterhouse Coopers, the first quarter of 2011 marked
the fewest biotech venture deals of any quarter since 2003.
• The average deal for the first round of funding in the first quarter of 2011
was $2.2 million, the smallest average size for such deals since 2005.
• In 2007, U.S. biotech companies raised $5.2 billion in venture financing.
In 2010, the industry raised just $3.7 billion in venture capital, 30% less than 2007’s total.
• The troubled IPO market and financial crisis have contributed to
the reduced size of the United States biotech industry.
The number of public biotech companies in the U.S. has decreased by 25% since January of 2008.

See

BIO: Unleashing the Promise of Biotechnology (pt.2)
BIO: Unleashing the Promise of Biotechnology (pt.3)
BIO: Unleashing the Promise of Biotechnology (pt.4)

Related posts:

1. BIO Hosts U.S./China Biotechnology Examiner Workshop with USPTO and China’s SIPO
2. Biotech Business Trends Looking Good
3. BIO 2011: BIO International Convention on June 27-30, 2011