Dana-Farber and Bay-Area Startup File Responses in Lawsuit Over Rights to Cancer Molecule

11/10/10

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Chant’s motion to intervene in the case. Gatekeeper also filed an affidavit from its board members that exposes disagreements between Chant and the directors on a variety of issues related to its dispute with Dana-Farber and Novartis.

An early disagreement was over whether to file a lawsuit against Dana-Farber for breach of contract earlier this year, after the cancer institute informed the startup that it had determined that Novartis had rights to the technology that Dana-Farber had previously agreed to license to Gatekeeper. “[Chant] wanted to pursue a damage claim rather than to pursue product development based on the patent rights,” Gatekeeper’s affidavit says.

Gatekeeper’s affidavit also addresses Chant’s claim that the firm’s board members are conflicted in the case. Though three of the board members work for Dana-Farber and the fourth has done occasional consulting for Novartis, “neither Novartis nor Dana-Farber, directly or by implication, had used those relationships to put pressure on the board [of Gatekeeper] with respect to the license,” it says.

Gatekeeper’s board told Chant on September 8 of this year to hold off from any further talks with lawyers or making agreements on behalf of the startup without the board’s review, according to the affidavit. It says that the board later learned that Chant, despite its instructions, had secured a lawyer to work on the case on September 14 and had contacted Novartis on the same date. And after Dana-Farber filed its lawsuit against Gatekeeper, Chant told the board that any settlement with the cancer institute would need to include $750,000 in deferred and future compensation for him and $600,000 of the same type of payment for Chris Carthy, whom Chant had recruited to help the startup raise funds, according to the affidavit. “The Board concluded that Mr. Chant was primarily concerned for his claim for salary and benefits, rather than the interests of the stockholders,” the affidavit says.

A phone message was left with Chant on Tuesday afternoon but he did respond before the deadline for this article yesterday evening.

John Mirick, an attorney for Gatekeeper, declined to comment for this article. A message left with one of Dana-Farber’s attorneys at the Boston office of Mintz Levin yesterday afternoon was also not returned.

Time will tell whether the court will grant Chant’s motion to intervene in the case. It will be an interesting ruling to watch, in part because so many biotech startups seek licenses from the institutions where their founding scientists work. Should Chant prevail in his argument that such ties present conflicts of interest in legal disputes between such startups and their founders’ employers it could have implications far beyond the Dana-Farber/Gatekeeper case.

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