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One of Those “See You in Court” Moments

Here’s a messy situation that’s playing out in court:

 Incyte Corporation sued Flexus Biosciences, its CEO Terry Rosen and its president and research director Juan Jaen, on Sept. 4 in New Castle County Court.
     Incyte claims the defendants hired away Jordan Fridman, its chief scientific officer, because he was one of only a few Incyte employees privy to the successful clinical results of the cancer drug known as IDO-1 inhibitor. . .
     Incyte claims Fridman had signed a confidentiality agreement with it, but provided Flexus with trade secrets that helped the biotechnology startup sell its assets to Bristol-Meyers Squibb for $1.25 billion just 18 months after forming.

You may be wondering just what sort of trade secrets these must have been to take things from zero to a billion dollar buy-out in 18 months. The claim is that Fridman took news of the successful IDO trial along with him, and (as the filings says) encouraged the Flexus founders to “bet the company” on the same mechanism. Now that would, of course, be confidential information, and it would definitely be worth knowing. It certainly doesn’t make the second IDO program more likely to work, though, unless there’s some detail in the patient selection for the clinical trials that wasn’t obvious and was crucial for success.

But Incyte is also claiming that Fridman spent three months in between giving notice and leaving the company, all the while gathering confidential information on the IDO program. First off, I have to say that a long delay for someone at that level is a bit odd. Most of the time, you’re out the door that afternoon or in a week or two if you have time to settle things. That’s because if you’re leaving involuntarily, they generally want you out of there, and if you’re leaving voluntarily, it’s because you generally have somewhere else to go. It’s also odd that no one at Incyte seems to have known that Fridman was heading out to work for a competitor, and the only conclusion that I can draw is that he must have been deliberately noncommittal about his future plans, because you’d think that he would have been asked that a few times over a three month period. Did Fridman already have the Flexus position lined up when he gave notice (but if not, why give notice at all?) If he did have the job, though, why wait three months? It’s strange.

At the same time, though, it’s not like people needed encouragement to work on IDO as a target. Plenty of other companies are (or have been in) that space, as this article on Flexus (from Xconomy) makes clear. What key piece of information would have made their data package compelling enough for Bristol-Myers Squibb to buy the company out, that wouldn’t have been available otherwise? I almost hope that this goes to open trial just so we can have a chance of finding out, but this is the sort of case that’s usually resolved before it gets that far.

Thanks to commenter ScientistSailor for putting me on to this story.

10 comments on “One of Those “See You in Court” Moments”

  1. TOSG says:

    IDO1 inhibitors have successful clinical trial results?

    (I kid…mostly)

  2. matt says:

    How does poaching an employee get around the patents? Have biologics relied less on patents and more on lack-of-biosimilarity defenses? Was the CSO aware that somehow the patent didn’t completely cover their candidates?

    Why do I feel like there will be a counter-suit alleging all sorts of shenanigans against InCyte? Why isn’t the poached employee named in the suit–was there no theft of trade secrets, no compete clauses, etc?

  3. Falanx says:

    There’s certainly a trend in British industries to demand 3 months notice. Especially engineering… I wonder if it’s being carried across the pond?

  4. ScientistSailor says:

    Fridman could bring to Flx the unknown liabilities of the Incyte molecule, which could guide Flx to know what to fix in their program and allow them to tell BMS how their molecule is better…

  5. PorkPieHat says:

    Unabashed poaching of key employees seems to be happening a lot these days (Dicerna/Alnylam as the most recent). Regarding the purchase price, this HAS to beat the GSK price ($720M) for purchasing Sirtris when it goes through. Honestly, I did not think Chrisoph Westphal could be topped, but ole Terry Rosen seems to have one-upped him. Both Sirtris and Flexus programs were preclinical, so the prices are astounding on the face of it, but at least GSK was betting on a company that had cornered the IP market for Sirtuins. ..I dont see that being the case for Flexus. That makes the case for competitive proprietary information on the relative value of their compound compared to competitors compounds as the primary driver of the value BMS paid. Still, commmooooun, man! $800M upfront, 1.25B biobucks deal ($425 for milestones)? Wow. Plus, you’d think BMS did their homework on how unpolluted (legally) this deal was before making it.

  6. Rosen and Jaen already cashed out and moved on to a new venture, Arcus biosciences. Guess who is left holding the bag.

  7. Nerf says:

    His wife is/was the head of DMPK at Incyte so that might be kinda awkward pillow talk. Rosen & Jaen are no longer with the company (the new company that is) although Dr. Fridman is. The discovery of the Flexus inhibitor happened in the Chemistry group, and Fridman is a Biology person (although having an appropriate screen would be essential too) so he had no influence on the direction of the SAR. Just knowing something can be done is powerful knowledge.

  8. JIA says:

    This seems even more bizarre, because Incyte is currently partnering with BMS on a combo trial of their IDO inhibitor with BMS’s nivolumab (anti-PD1) – link in my handle, Clinicaltrials ID NCT02327078. So presumably BMS already had lots of access to all kinds of data about Incyte’s IDO inhibitor…. and chose to buy the Flexus molecule instead??? Maybe the confidential information that Fridman brought with him was a list of BMS’s concerns and desired target product profile for an IDO inhibitor, so that Flexus could try to “tune” their SAR to fit BMS desires.

  9. Anon12 says:

    I hate to be THAT guy here, but why didn’t the company do more to retain him? This why you have a good stock option package. It will be interesting to hear what kind of trade secrets he may or may not have taken with him. After all, to a certain degree (and at some vague point in the future) these are what many use to market themselves when looking for a new position. An insight and skill set that is rare.

  10. PorkPieHat says:

    Oh wow…if JIA is accurate, it would explain a lot! And it lays a blueprint for how to get your startup bought quickly and at a high price. My, my.

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