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Dana-Farber Scientists Leave Board of Startup in Legal Battle with Cancer Center

Xconomy Boston — 

Boston-area researchers have resigned from the board of a West Coast biotech startup, Gatekeeper Pharmaceuticals, which is at odds over technology rights with major players in the biotech community.

Gatekeeper, based in Millbrae, CA, is in a legal battle with Dana-Farber Cancer Institute in Boston and Novartis Institutes for BioMedical Research in Cambridge, MA, over control of a potentially important drug for lung cancer. After granting Gatekeeper an option on the drug and related molecules in 2009, Dana-Farber sued the startup in September 2010, asking the court to let it out of that agreement. The cancer center indicated in its complaint that the Novartis Institutes for BioMedical Research, an R&D unit of Swiss drug giant Novartis, believes it owns rights to the molecule because it funded the research that led to its discovery at Dana-Farber. (The Novartis unit made its own filing to that effect in December.)

Now the four scientists who served as directors of Gatekeeper—Nathanael Gray, Jeffrey Engelman, Pasi Janne, and Kwok-Kin Wong—are stepping down from the startup’s board and selling a majority of their shares to the firm’s president, John Chant, according to documents filed in federal court in Boston this week. The deal puts Chant in control of how to proceed with the case, over which he and the board had clashed on a number of issues.

This case, which has exposed the wrangling over technology rights that might otherwise occur behind closed doors, has gained wide media coverage. At the center of the dispute is a molecule known as WZ4002, which could become an important new treatment for lung cancer, the No. 1 cause of cancer deaths in the U.S. The drug hasn’t been tested in humans, but a December 2009 paper in Nature showed data from lab tests that indicate the molecule was able to overcome a gene mutation in lung tumors that causes resistance to existing treatments.

John Mirick, an attorney who Gatekeeper’s former board members had hired to represent the startup in the case, said that the ex-directors want to focus on being doctors and researchers. He declined to offer details about the terms of their deal with Chant. Chant’s attorney, Timothy Scott, also said that the agreement was confidential. Scott and his firm are now taking over the case on behalf of Gatekeeper.

“It’s hugely significant,” Scott said of the agreement, “because it eliminates all the procedural complications of the case.”

For one, Chant is dropping his motion to intervene in the case as a separate party. With majority control of Gatekeeper’s stock, he is taking over responsibility for the firm’s part in the case. (The startup’s former board members had previously told Chant that they would make legal decisions for the firm). Though now moot, Chant’s motion had argued that Gray, Janne, and Kwok-Kin Wong had conflicts of interest in the case because they hold jobs at Dana-Farber and that Engelman, who works at Massachusetts General Hospital, had received pay as a consultant for Novartis.

Now that Chant is in control of Gatekeeper’s part in the case, Scott said, the legal dispute can focus on the key issues such as who controls rights to the technology from Dana-Farber and whether Dana-Farber has acted properly in its handling of the matter. Also, Chant is no longer going after the startup’s former directors for breach of fiduciary duty, according to a court record.

A meeting has been set for January 24 for the attorneys in the case and federal judge Douglas Woodlock to review the schedule for the lawsuit, according to a court record. If the case goes to trial, it’s not likely to be resolved anytime soon. Unfortunately, uncertainty over who owns rights to the disputed cancer molecule might slow its development for patients who need it the most. Of course, you never know how much patients are going to benefit from a drug until it undergoes clinical testing.

Still, there are a slew of rival drug developers in this field. For one, Waltham, MA-based Avila Therapeutics is doing research on a drug to combat the same lung cancer mutation as the Dana-Farber molecule addresses. And with an estimated 157,300 deaths from lung cancer in this country last year and a huge market need, expect to see more and more companies pursue this cancer target.