Eli Lilly has agreed to fork out $18m (€12.8m) to settle an ongoing lawsuit with one of its former biotech research partners and in doing so has avoided a court battle earmarked for next year.
Prior to the relationship turning sour, the two firms had collaborated since 1997 using this technology to develop an oral formulation of Lilly's injectible osteoporosis drug Forteo (teriparatide [rDNA origin]) - a synthetic form of the parathyroid hormone (PTH).
The dispute between the drug giant and Emisphere, a drug delivery firm that specialises in formulating injectible drugs into oral and other forms, first began in 2003 after an alleged breach of contract regarding the use of Emisphere's "carrier technology" in relation to work on an oral form of PTH.
Emisphere delivered a notice to Lilly alleging that it was in material breach of certain research and collaboration agreements, which Lilly denied. Emisphere subsequently terminated its license and collaboration agreements with Lilly as of August 2004.
Following legal tooing and froing as to whether Emisphere was within its rights to terminate these contracts, at the beginning of 2006 an Indianapolis court handed down an opinion in favour of Emisphere and its three court contentions, stating that: "Lilly did not act in good faith and did not deal fairly with Emisphere. The breach of trust went to the root of the parties' agreement, and it was serious enough to support termination of the all contracts."
Following this week's court settlement, Eli Lilly is required to will pay Emisphere the money by next week.
Commenting on the decision, Lilly spokesperson Mark Taylor told Biopharma-Reporter.com: "We are admitting no wrongdoing through the settlement."
"We have entered into this agreement to avoid any further cost and distraction that litigation will bring."
Meanwhile, Taylor said that the firm has shelved the idea of developing an oral form of Forteo: "Through our assessments we didn't recognise any clear benefit of using Emisphere's technology with Forteo and decided not to pursue this [oral formulation] avenue any further."
Meanwhile, Lilly announced yesterday that a Phase III trial of its inhaled insulin product will finish in time to allow the firm to file for US Food and Drug Administration (FDA) approval in 2009.
Lilly is one of three big firms at the forefront of pioneering the new inhaled delivery method of insulin, along with Pfizer and Novo Nordisk.
Pfizer beat Lilly to market when it launched the world's first inhaled insulin device, Exubera, early last year, amidst much fanfare. However, the product has to date been a huge disappointment for the firm, who was pinning its hopes on a blockbuster.
Developed in conjunction with Alkermes, Lilly's device, AIR Insulin, is smaller than the Exubera device, roughly the size of a marker pen, and has not yet shown the same questionable effects on lung function as Exubera.
These two factors may provide Lilly's product with a marketing advantage upon its eventual launch, although it is still largely unclear whether the product will be able to fare any better, considering the tough business environment it faces, where patients have not been largely receptive to such a device, due to its cost, size, and the fact that it still does not completely replace the need for insulin injections.