Akela Pharma to sue LAB Research over tox studies

By Kirsty Barnes

- Last updated on GMT

Related tags: Lab research, Initial public offering, Contract research organization

Akela Pharma has notified LAB Research of its intention to initiate
legal proceedings to recover the cost of preclinical
studies it ran in Hungary that were rejected by the US
regulatory authorities.

The Canadia-based non-clinical contract research organisation (CRO) has revealed it has received a revised demand letter from Akela Pharma, outlining its plans to "initiate legal recourses​" against LAB Research's Hungarian subsidiary. The complaint is in relation to the six month inhalation toxicology studies completed on Fentanyl TAIFUN by the CRO in Hungary, which were subsequently "rejected​" by the US Food and Drug Administration (FDA) in January this year, the firm said. Fentanyl TAIFUN is Akela Pharma´s lead drug product, and is a fast-acting fentanyl formulation delivered using the company's TAIFUN dry powder inhaler platform, for the treatment of breakthrough cancer pain. According to Akela Pharma, the studies were "deemed invalid​" and rejected by the FDA on the basis of good laboratory practice (GLP) deviations, of which Akela Pharma said it was already aware of at the time of filing. "No toxicological reasons were cited (by the FDA),"​ the company added. Over the last year, LAB Research has proposed a series of initiatives aimed at addressing the highlighted deviations, said Akela Pharma, all of which have to date been rejected by the pharma firm. As such, Akela Pharma is now seeking reimbursement of the costs of the studies, which amounted to €2.74m, in addition payment of the costs it will incur in having to repeat the studies, evaluated at $5m. The pharma firm is also demanding damages to the tune of $20m, representing the licensing fees the company claims it would have received by now from a "potential partner​" (Janssen Pharmaceutica), had everything run smoothly. Moreover, the company reaffirmed its intention to seek "damages associated with the reduced market capitalisation and loss of rights under the existing licensee​". However, at this point, the value of this reduced market capitalisation could not be calculated by the firm. Commenting on the situation, Luc Mainville, president and CEO of LAB Research said: "Our decision to communicate this event is strictly to provide full disclosure about this potential litigation. LAB Research and its insurer take no responsibility for any claims or damages associated with or resulting from the decision by the FDA to reject the studies and intend to vigorously contest such claims should they materialise​". "Furthermore, under the contract signed concurrently with the Initial Public Offering (IPO), LAB Research cannot be held liable for any incidental, indirect or consequential damages of Akela Pharma and LAB Research's liability is limited to the amount received for such study work and, even in the case of gross negligence, cannot exceed two times the amount received for the study​," he said. Canadia-based Akela Pharma is a specialty pharmaceutical company focusing on the inhalation and pain markets. Until 2006 it was actually the parent company of LAB Research, prior to its IPO, after which point it changed its name from Lab International to its current name.

Related topics: Preclinical Research, Preclinical

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