Nevada company sues Lilly for breach of contract over Alzheimer’s drug

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A Nevada-based biotech company is suing Eli Lilly and Co., saying the Indianapolis-based drugmaker is refusing to pay royalties on patented technology it claims is used in Lilly’s pending new treatment for Alzheimer’s disease.

PDL BioPharma Inc., based in Reno, filed suit in U.S. District Court in Indianapolis on Dec. 21 against Lilly, claiming “anticipatory breach of contract.”

According to the suit, PDL claims it pioneered the field of antibody humanization, the process by which an animal antibody created in the laboratory can be modified through genetic engineering techniques to avoid rejection as a foreign substance by the human immune system.

PDL claims Lilly is using the technology in its new drug for Alzheimer’s disease called donanemab, which is under review by the Food and Drug Administration. Lilly has said it expects the FDA to approve the drug in the first quarter of this year.

Analysts predict donanemab could reach annual sales of $5 billion or more.

PDL said its patented technology is covered under licensing agreements the two companies signed in 2000 and 2009. PDL also licensed the patents to “many other pharmaceutical and technology companies.”

“These companies have utilized PDL’s inventions to create blockbuster drug therapies, sales of which have generated many billions of dollars in revenues, as well as substantial royalty payments to PDL,” the lawsuit said.

Lilly originally used the technology in developing an earlier, unsuccessful treatment for Alzheimer’s disease called solanezumab, and later used it in developing donanemab, PDL claims.

Lilly told IBJ the lawsuit was “baseless.”

“PDL played no role in developing donanemab, and Lilly did not use any PDL technology in developing donanemab,” Lilly said in an emailed statement. “PDL has no plausible claim to royalties and its lawsuit should be dismissed.”

PDL, for its part, said in the court filing that donanemab is a licensed product that incorporates PDL’s technical information, and said that Lilly will owe it unspecified royalties under the 2009 licensing agreement.

The two companies have exchanged six letters on the issue but have been unable to come to an agreement, PDL said. The company is asking the court to declare that donanemab is a licensed product under the agreement and that it incorporates PDL’s technical information. It is seeking unspecified royalties and other awards.

PDL, formed in 1986 as Protein Design Labs, dissolved in 2021 after failing to find a buyer. Its corporate existence is currently set to expire in October, but the company said it will extend its corporate existence as necessary to pursue the claim against Lilly.

The case was assigned to Judge James Patrick Hanlon.

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