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Lawsuit May Help Biota, Creator Of Bird-Flu Drug
posted by admin on 12/04/06
Global concern about bird flu has drawn some investors to follow a tiny Australian biotechnology concern that is engaged in a court fight with a British pharmaceuticals giant.
Biota Holdings Ltd., which invented the antiviral drug Relenza and licensed it to GlaxoSmithKline PLC during the 1990s, has sued Glaxo, accusing it of shirking its duty to market the product. United Kingdom-based Glaxo, which is contesting the suit, has said it scaled back marketing efforts years ago for a variety of reasons.
Relenza is a drug to fight influenza in humans, and is being stockpiled for use in the event of an outbreak of avian flu. But it has been vastly outsold by Tamiflu, made by Roche Holding AG of Switzerland.
Announcements of Relenza sales have boosted Biota's share price. On March 1, the U.S. Department of Health and Human Services said it had ordered 12.4 million courses of Tamiflu and 1.75 million courses of Relenza. The next day, shares of Biota rose 5.3% to close at 1.80 Australian dollars ($1.31), a gain of nine Australian cents. But the following day, March 3, when Biota said its first-half loss widened to A$8.7 million from A$7.1 million, the shares closed back down at A$1.71.
Sales of Relenza benefit Biota, as it gets royalty payments. But some investors may be hoping Biota can get a big gain from its suit against Glaxo, which was filed in 2004 and sought damages of as much as A$430 million ($312 million). Preliminary hearings have been under way, and a trial in Victoria Supreme Court might start this year. Dozens of lawyers for both sides are in Melbourne preparing for the trial, and Biota's legal team is poring over some 200,000 documents Glaxo has had to give it.
Amid fears of a bird-flu pandemic, Glaxo says it is increasing production of Relenza to meet growing demand from governments, some of which appear to want to diversify their stockpiles. If the trend continues, Glaxo obviously would benefit from brisker sales of Relenza -- a boon that could outweigh any damage from the suit. At the same time, recent orders for millions of doses from governments including the U.S. and France could bolster Biota's claims about the drug's potential.
Write to Nicholas Zamiska at firstname.lastname@example.org
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