Immunomedics launches claim againstPharmacia & Upjohn for $60 million

September 11, 1996

MoAb firm says Pharmacia left it in the lurchMonoclonal antibody developer Immunomedics has filed a $60 millionarbitration claim against Pharmacia & Upjohn, charging thepharmaceutical giant with breach of contract after it terminateda

MoAb firm says Pharmacia left it in the lurch

Monoclonal antibody developer Immunomedics has filed a $60 millionarbitration claim against Pharmacia & Upjohn, charging thepharmaceutical giant with breach of contract after it terminateda licensing agreement for U.S. and Canadian sales of Immunomedics'CEA-Scan agent.

Immunomedics originally signed the licensing deal in 1991 withAdria Laboratories, and it was transferred to Pharmacia afterthe Swedish company acquired Adria's parent in 1993. Pharmaciaterminated the agreement in July 1995, however, saying that itwas scaling back its oncology sales force (SCAN 8/16/95). Pharmaciamerged with Upjohn last year.

Pharmacia's action came at a critical point in CEA-Scan's approvalprocess, according to Paul Herron, director of finance for Immunomedics.At the time, the Morris Plains, NJ-based company was involvedin delicate negotiations with the Food and Drug Administrationover CEA-Scan's product license application, which the FDA haddeemed "not approvable" in 1994. The FDA finally signedoff on the PLA in June (SCAN 7/17/96).

"This (claim) goes to the fact that (Pharmacia) terminatedthe agreement as we were nearing the approval of the product,"Herron said. "They left us without a partner as we were approachinga critical phase in our launch preparation."

Immunomedics did not come away from the relationship completelyempty-handed, however. The company received a total of $12.5 millionfrom Adria/Pharmacia between 1991, when the deal with Adria wassigned, and the termination of the relationship.

Immunomedics ultimately found a new partner, Mallinckrodt Medical,to replace Pharmacia in the U.S. and Canada. But the company claimsthat it suffered $60 million in damages due to failed paymentsand loss of revenue caused by Pharmacia's action. Immunomedicsbelieves that Pharmacia failed to make certain milestone paymentsand did not develop a marketing plan for CEA-Scan.

Immunomedics filed the claim after negotiations with Pharmacia& Upjohn failed to come up with a settlement acceptable toImmunomedics, Herron said. The company's damage claim does notinclude punitive damages it believes should be assessed againstPharmacia & Upjohn.

The Immunomedics claim now heads to an arbitration panel, asstipulated by the contract between the companies. Resolution ofthe dispute is expected in the next six to 12 months, accordingto Herron.

A spokesperson for Pharmacia & Upjohn declined to commenton the claim, citing the pending arbitration action.