Cel-Sci’s (NYSE MKT: CVM) impending lawsuit against CRO InVentiv Health Clinical for Phase III enrolment failure may trigger sponsors and vendors to re-examine current and future contracts, legal experts said. Whilst the arbitration tribunal, due to begin this spring, is unlikely to trigger a flood of litigations against CROs, the case may trigger changes in current business practices and negotiations between both parties, they added.
Cel-Sci, an immuno-oncology drug developer, launched arbitration proceedings on October 31, 2013 against InVentiv Health Clinical, claiming Pharmanet, a CRO owned by InVentiv, breached contract and committed fraud in the inducement. Between January 2011 and April 2013, when Cel-Sci terminated the contract, the CRO enrolled only 117 of 880 required patients for a Phase III study of Multikine (leukocyte Interleukin injection) in head and neck cancer, said Cel-Sci CEO Geert Kersten. He said he is seeking USD 50m in direct damages, and over USD 100m in consequential damages, because of delays to the pipeline and harm to the company’s reputation. Cel-Sci replaced Pharmanet with CROs Ergomed (FTSE AIM: ERGO) and Aptiv Solutions, later acquired by ICON (NASDAQ:ICLR), in 2013, according to SEC filings.
Legal experts said they believe the Cel-Sci suit is an exception unlikely to trigger copycat lawsuits but the case could make the industry more aware of their contracts and potential weaknesses in their outsourcing relationships.