ALBANY, N.Y. (CN) - A "novel thyroid hormone" that could help treat cancer, diabetes and wounds is ensnared in a maze of licensing agreements focused more on propping up a financially ailing foundation than capitalizing on the research, a pharmacy college claims in $10 million complaint.
The Albany College of Pharmacy and Health Sciences claims the delays in developing and commercializing the invention "have substantially damaged and diminished the value" of the invention.
The college sued the CLF Medical Technology Acceleration Program, and the Charitable Leadership Foundation, in Albany County Court.
The Charitable Leadership Foundation was founded by a philanthropic Albany family to underwrite endeavors in science and education. CLF Medical Technology Acceleration, a nonprofit, was created by the foundation.
The thyroid hormone invention was developed jointly by Dr. Paul Davis, a physician and onetime director of the Ordway Research Institute in Albany, and Shaker Mousa, a professor at the Albany College of Pharmacy and chairman of its Pharmaceutical Research Institute. Davis assigned his interests in the invention to Ordway and Mousa assigned his to the college, the complaint states.
Ordway and the college signed an agreement in 2004 to oversee the invention, with Ordway given the responsibility of securing intellectual property rights, licensing agreements and sponsored research opportunities, according to the complaint.
Two years later, CLF Medical became a party to the agreement, and "assumed all patent and licensing costs for the joint invention and agreed to fund research regarding the joint invention," the complaint states.
Like CLF Medical, Ordway had ties to the Charitable Leadership Foundation's founding Liebich family, whose Albany food-services business became part of giant Sysco Corp. Richard Liebich launched Ordway in 2002 with the goal of creating a biotechnology research hub in Albany through top-shelf facilities and world-class scientists.
But unbeknownst to the college, CLF Medical and Ordway created a side agreement in 2006 that gave CLF Medical an exclusive license for the joint invention, according to the complaint.
After finding out about the pact, the college consented to the agreement in 2008, but demanded to be kept apprised of ongoing licensing negotiations - a provision that has never been kept, the complaint states.
By early 2009, CLF Medical stopped funding research aimed at commercializing the invention, according to the complaint, and failed to pay for ongoing intellectual property protections. Later that year, CLF Medical began making plans to dissolve and transfer its assets to the Charitable Leadership Foundation.
The college was not notified of those plans until January 2010, the complaint states. In the next month, the college and CLF Medical exchanged letters on how such a transfer might affect the agreements they had.
In April 2010, according to the complaint, the foundation gave Ordway an exclusive sublicense to use the thyroid hormone in cancer prevention and treatment - again without the knowledge or consent of the college. Ordway agreed to pay the foundation $4.1 million for the sublicense by April 31, 2010, a deadline that was extended to April 5, 2011.
The foundation never accounted to the college for the $2.2 million it ultimately received from Ordway, the complaint states.
At the time, the foundation "was facing significant financial distress," according to the complaint, which it did not disclose to the college.
CLF Medical and Ordway also "concealed their financial distress while negotiating agreements" in 2006 and 2008, knowing they could not be honored, the complaint states.
Meanwhile, "substantial assets" of the foundation, CLF Medical and Ordway were "diverted to fund other ventures" - including a for-profit business of the foundation, Care Support of America, which offers coordinated care for advanced illnesses - though they should have been put toward commercialization of the invention, according to the complaint.
In April 2011, Ordway filed for Chapter 11 bankruptcy protection, a case that later was converted to a Chapter 7 liquidation, the Albany Times Union newspaper reported.
The lab essentially disbanded as many of its researchers left and its equipment was sold off to pay creditors.
The newspaper reported that the bankruptcy trustee overseeing the case filed a lawsuit against Richard Liebich and Ordway's former board of directors, alleging they had endangered the lab's finances through transactions with the Charitable Leadership Foundation.
But Liebich told the newspaper that it was the bankruptcy filing that triggered a chain of events that financially affected affiliates of the foundation.
The college's complaint states that the College of Pharmacy, with the consent of the bankruptcy trustee, asked for custody of the patent files for the thyroid hormone invention, but the foundation, CLF Medical and Ordway rejected the request.
The college claims the agreements signed by the foundation, CLF Medical and Ordway; the payments made by Ordway to the foundation; and the transfer of assets to other ventures were "fraudulent transactions" made "with actual intent ... to hinder, delay or defraud" the school and creditors of the defendants.
"In the alternative," the complaint states, "fraudulent transactions were made without fair consideration, leaving the defendants with insufficient assets to fulfill their obligations under these agreements and therefore these transactions were fraudulent as to ACPHS [the college]."
The college also alleges in the complaint that Liebich and the defendants "formed a conspiracy to fraudulently obtain, convey, conceal and dispose of the interest of ACPHS in the joint invention."
The college wants the court to find the 2006 and 2008 agreements and the later sublicense agreement void and unenforceable, through "fraud in the inception" or due to material breaches by the defendants.
It asks for $10 million in damages with interest from April 1, 2006, plus costs and fees.
Representing the college is its general counsel, Gerald H. Katzman.
According to the complaint, the thyroid hormone could have these medical applications: (1) promotion by thyroid hormone of wound healing: (2) thyroid hormone is an angiogenic agent in the coronary arteries or in atherosclerotic large vessel disease of the extremities; (3) thyroid hormone as a permissive factor in the development of diabetic retinopathy; (4) thyroid hormone as a permissive
factor in tumor-related angiogenesis; (5) inhibition of neovascularization by thyroid
hormone-dependent and thyroid hormone-independent mechanisms by Tetraiodothyroacetic acid (tetrac); (6) reduction by tetrac of metastasis of tumor cells whose mobility is subject to enhancement by thyroid hormone; (7) promotion of muscle glucose uptake and lowering blood sugar that is independent of insulin by L-thyroxine (T4); and (8) composition of matter for the reformulation of 3,5,3'-triiodo-L- thyronin (T3), GC1, tetrac and T4."