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US biotech pursues Cetero for drug development delay costs

By Nick Taylor+

09-May-2012

A US biotech is seeking $250,000 from Cetero to cover drug development delays caused by alleged breaches of contract.

Kythera Biopharmaceuticals is asking Cetero for close to $250,000 (€190,000) to offset costs it claims were incurred after the CRO (contract research organisation) breached the terms of their contract. In a court filing Kythera said Cetero used the wrong isomer in work on its lead compound, AIX-101.

A legal team representing the biotech wrote: “Kythera expended significant internal resources and delayed its ATX-101 development programme to determine the cause of the results produced under the Second Addendum.

Kythera claims management at Cetero later said the wrong isomer, or DC standard, was used in the work done under the Second Addendum. The court objection says use of the correct isomer would have prevented the delays and saved Kythera $245,597 in costs associated with further services.

Work on a Fourth Addendum is planned but on hold, in part because of allegations of earlier contract breaches. The biotech wants assurance from the new owners that they have identified the cause of the failing and details of how they plan to prevent a reoccurrence.

Kythera cannot risk another failed study, and the delay and cost associated therewith, as a result of [Cetero’s] failure to comply with the terms of the master agreement”, the legal team for the biotech wrote.

Specialty pharma firm QRxPharma is also concerned about delays. “The debtor has advised QRx that it will not be able to complete its performance under either of the Work Orders on time. Because of the possibility of further delays…QRx reserves its rights to present a claim”, the objection reads.

Generic objections

The court handling the Cetero case has also received objections from generics manufacturers, such as Perrigo and Par Pharmaceutical, which traditionally accounted for the bulk of business at the CRO.

Perrigo has applications pending at the US Food and Drug Administration (FDA) that include studies that were performed by the debtors. The FDA may request certain reformatting, reanalysis or further work related to studies”, a legal team representing Perrigo wrote in an objection to the court.

The work was done under master services agreements which, Perrigo says, state Cetero must do any reanalysis for free. Perrigo is concerned the “broad language” used in filings by Cetero frees the CRO from meeting its reanalysis obligations.

Par Pharmaceutical also filed an objection. The US-based generics manufacturer is trying to reach an agreement with Cetero but, “out of an abundance of caution”, posted the objection to make sure it gets credits still owing.

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