Glaxo is using delaying tactics: Biota CEO

By Ruth Beran
Wednesday, 14 December, 2005

The CEO of Melbourne company Biota Holdings (ASX:BTA), Peter Cook, believes GlaxoSmithKline is using delaying tactics in the current court case before the Victorian courts, in which Biota is suing GSK for up to AUD$430 million.

"It is clear from the actions of GSK that they are pursuing a particular strategy to do with delay," Cook told Australian Biotechnology News today. "While that is frustrating to us, and we presume the court, we recognise the tactic but in no way does it dilute our belief into the fairness of our claim and that we will continue to pursue it."

GSK has been directed by the court to provide Biota with about 60,000 documents relevant to Biota's claims against the multinational pharmaceutical company.

"My interpretation of what I am seeing from GSK is to delay," said Cook, a former executive at Fauldings and CEO of Orbital Corp, who replaced Peter Molloy as CEO earlier this month.

"In a gentlemanly way I'll accept that in a large organisation like GSK, which has undergone a merger in the period, we have to be cognisant that the information that we are seeking may prove to be difficult to locate and extract and provide in a timely manner to the court. This all boils down to a case of what constitutes reasonable conduct and reasonable behaviour, and ultimately the court will determine that."

Biota is alleging that GSK failed to promote and support its anti-flu drug Relenza in the five years since it was launched. Biota earns a 7 per cent royalty on sales of Relenza.

Since April 2005, directed by the court, GSK has delivered more than 120,000 documents to Biota. At a hearing on December 7, the court ordered GSK to provide Biota with three additional tranches, each of which are to consist of 20,000 documents or more, by December 14, February 6, 2006 and March 10, 2006.

"Some of these documents will be in different systems and in different files throughout the world," said Biota CFO Damian Lismore. "We recognise that it's a big ask but it's good to see this level of commitment. We're now seeing a requirement for true focus on GSK."

The court will review GSK's provision of documents to Biota at a further hearing scheduled for March 24, 2006.

But Biota is now doubtful that GSK will complete the task of providing all of its relevant documents to Biota by March 2006. Biota has received legal advice that the trial will not start until at least six months afterwards, which means the earliest date of the trial commencing will be late 2006. Lismore estimated that the trial would take about three months once it began.

"Biota remains of the view that it has a strong case and will continue to press forward with it as quickly as possible," the company said in a statement.

Revised damages

In July, Biota estimated that its loss and damages against GSK were between $308 million and $430 million. But that figure may change after the company receives more documents from GSK -- and in light of recent stockpiling of antiviral drugs, including Relenza, by governments fearful of an influenza pandemic.

"GSK has been particularly recalcitrant over the last 10 years in providing us with information," Biota's former CEO, Peter Molloy, told the firm's AGM in October.

He added that the license agreement signed in relation to Relenza meant that Biota lacked a clear view of GSK's sales of the drug. "If we were looking at signing them up today we would have a very different contract," he said.

Mediation was held between GSK and Biota on November 9-10, but no settlement was reached.

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