Astex Therapeutics Ltd v Astrazeneca AB
| Jurisdiction | England & Wales |
| Judge | Mr Justice Arnold |
| Judgment Date | 21 June 2017 |
| Neutral Citation | [2017] EWHC 1442 (Ch) |
| Court | Chancery Division |
| Date | 21 June 2017 |
| Docket Number | Case No: HC-2015-004768 |
[2017] EWHC 1442 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building
Fetter Lane, London EC4A 1NL
Mr Justice Arnold
Case No: HC-2015-004768
Charles Béar QC, Josephine Davies and Andrew Lomas (instructed by Clifford Chance LLP) for the Claimant
James Mellor QC and James Whyte (instructed by Marks & Clerk Solicitors LLP) for the Defendant
Hearing dates: 4–5, 8–12, 15–19, 24–25 May 2017
Contents
Topic Para
| Introduction | 1–7 |
| The Agreement | 8–30 |
| The 2009 Agreement | 31–32 |
| The factual witnesses | 33–39 |
| Astex's witnesses | 34 |
| AstraZeneca's witnesses | 35–36 |
| Missing witnesses | 37–39 |
| The expert witnesses | 40–49 |
| Factual background to the Agreement | 50–73 |
| Technical background | 50–55 |
| Drug discovery | 56–73 |
| Work done by each party on BACE prior to the collaboration | 74–83 |
| AstraZeneca's work | 75–81 |
| Astex's work | 82–83 |
| The parties' reason for entering into the collaboration | 84–86 |
| Interpretation of the Agreement | 87–151 |
| The duration of the Program | 89–112 |
| The selection of Hits, Leads and CDs | 113–119 |
| The definition of Collaboration Compound | 120–146 |
| No AFFITS | 123–123 |
| Structure of the definition | 124–127 |
| "Chemical structure modification" | 128–132 |
| "Lead criteria" and "CD criteria" | 133 |
| "A hit" and "a Lead Compound" | 134–135 |
| "Aiming to/at" | 136–140 |
| "Direct result" | 141–146 |
| Expiration of the Agreement | 147–151 |
| The facts concerning the development of CD1 and CD2 | 152–337 |
| Work during the Collaboration Term | 153–196 |
| Discovery of the amidine motif | 153–157 |
| The "kick-off" meeting | 158–159 |
| Overview of work from May 2003 to the end | 160–163 |
| of March 2004 | |
| ICs and APs | 164–166 |
| DIHIs | 167–172 |
| Bicyclic DIHIs | 173–174 |
| DHIZs (AIMs) | 175–188 |
| Transfer to Södertälje and winding up | 189–196 |
| collaborative work | |
| The development of CD1 | 197–246 |
| Work on the DHIZ series at Södertälje | 199–206 |
| Identification of the ISIN series by Wilmington | 207–218 |
| The development of ISINs, THIPs and substituted | 219–234 |
| ISINs | |
| From June 2007 to March 2008 | 235–237 |
| March 2008 to December 2009 | 238–245 |
| The components of CD1 | 246 |
| The development of CD2 | 247–313 |
| The computational workshop in September 2005 | 247–275 |
| Dr Kolmodin's pKa model | 276–300 |
| Introduction of a cyclohexyl A ring | 301–308 |
| Spirofication | 309–312 |
| The components of CD2 | 313 |
| Subsequent events | 314–337 |
| Jeppsson | 314–315 |
| Communications in relation to CD2 | 316–337 |
| Is CD1 a Collaboration Compound? | 338–352 |
| Is CD2 a Collaboration Compound? | 353–364 |
| Astex's application to re-re-amend its Particulars of Claim | 365–374 |
| Is AstraZeneca entitled to recover the milestone payments in | 375–398 |
| respect of CD1? | |
| The law | 377–378 |
| The facts | 379–395 |
| Conclusion | 396 |
| Expiry of the Agreement | 397 |
| Summary of conclusions | 398 |
Introduction
Alzheimer's Disease ("AD") is a major health issue. At present, there is no cure or treatment for the condition. Since the early 1990s, it has been hypothesised that the development of the amyloid-ß ("Aß") plaques in the brain associated with AD is connected with the breakdown of amyloid precursor protein ("APP") caused by cleaving enzymes including ß-secretase or BACE ( Beta-site Amyloid precursor protein Cleaving Enzyme). Accordingly, the development of a BACE inhibitor has long been a goal of many companies in the pharmaceutical industry.
The Defendant ("AstraZeneca") was at all material times, and remains, a substantial pharmaceutical company. At the relevant times, the Claimant ("Astex") was a small drug discovery company which was reliant upon collaborations with larger pharmaceutical companies, although it became part of the large Otsuka Group in October 2013.
In 1999 AstraZeneca commenced a BACE inhibitor project at its site in Wilmington in the USA. In 2002 Astex also started work on developing a BACE inhibitor. On 21 February 2003 the parties entered into a Research Collaboration and Licence Agreement ("the Agreement") to collaborate on the development of a BACE inhibitor. The Agreement provided among other things for a collaborative research project which after a Collaboration Term could be continued by AstraZeneca alone; for certain milestone payments to be made by AstraZeneca to Astex in certain circumstances; for AstraZeneca to own any selected Candidate Drug and any associated intellectual property rights; and for Astex to receive a royalty on sales of any Licensed Product which contained a Collaboration Compound as defined in Section 1.7 of the Agreement.
The Collaboration Term lasted from 21 February 2003 until 20 April 2005. Thereafter AstraZeneca continued the project on its own, primarily at its site in Södertälje in Sweden. Some years later, two compounds referred to internally by AstraZeneca as AZD3839 and AZD3293, and referred to in these proceedings as CD1 and CD2, were developed. Both CD1 and CD2 were nominated by AstraZeneca as Candidate Drugs under the Agreement and milestone payments were made by AstraZeneca to Astex in respect of CD1. CD1 progressed to Phase I clinical trials, but subsequently its development has been discontinued. The structures of CD1 and CD2 are shown below, with three of the rings marked A, B and C for identification.
In September 2014 AstraZeneca announced that it had entered into an agreement with Eli Lilly ("Lilly") under which Lilly was to conduct a large scale Phase II /III clinical trial of CD2. CD2 is currently in the Phase III arm of that trial. On 24 February 2015 AstraZeneca informed Astex that it had reviewed the position and now considered that neither CD1 nor CD2 were Collaboration Compounds within the Agreement. That led to this action.
The principal issues are as follows:
i) is CD1 a Collaboration Compound?
ii) is CD2 a Collaboration Compound?
iii) if CD1 is not a Collaboration Compound, is AstraZeneca entitled to recover the milestone payments it paid in respect of CD1?
iv) is the Agreement capable of expiring?
The resolution of these issues depends in part on the interpretation of the Agreement and in part on the factual questions of precisely how CD1 and CD2 were developed. Although Astex relies upon AstraZeneca's statements and conduct both at the time of, and subsequent to, the development of CD1 and CD2, as shedding light on the answers to the factual questions, it is common ground that such statements and conduct are inadmissible as aids to construction of the Agreement. Furthermore, Astex does not contend that AstraZeneca is estopped by those statements or conduct.
The Agreement
The Agreement is a lengthy, detailed and complex agreement running to 67 pages (albeit double-spaced). It has the appearance of being professionally drafted, in the sense of being drafted by a person or persons with legal expertise. Although neither party is American, the language of the Agreement mainly (although not entirely) has American spellings. Although the Agreement must be interpreted as a whole, I obviously cannot set it all out. I shall, however, set out the principal provisions which are relevant to the issues. I shall adopt the terminology used in the Agreement of referring to its provisions as "Sections".
The Agreement begins with five recitals, of which the first and fourth are as follows:
"WHEREAS, ASTRAZENECA currently performs an internal project aiming at the discovery and development of novel therapeutic pharmaceutical products active at the Target (as defined below) for treatment of Alzheimer's disease or senile dementia (the 'Project'); and
…
WHEREAS, the Parties wish to engage in a collaborative research program under the Project utilising ASTEX's proprietary Pyramid TM technology for discovery of novel chemical leads active against the Target and suitable for development for treatment of Alzheimer's disease or senile dementia (the 'Program')."
Section 1 of the Agreement contains a long series of definitions, including the following:
"1.2 'Affinity Hit' or 'AFFIT' means any Material that shows specific binding to the Target in the screens performed under the Program, meeting the criteria set forth in the Research Plan provided, however, that if any such Material is later selected as a Hit it ceases to be an AFFIT and shall for all purposes thereafter be regarded only as a Hit.
…
1.4 'AFFIT Optimisation' means chemical structure modification performed as part of the Program, starting from AFFITs and aiming to generate optimised AFFIT structures ('AFFIT Improvements') that, together with AFFITs, form the bases for identification of Hits.
…
1.6 'Candidate Drug' or 'CD' means a Collaboration Compound satisfying ASTRAZENECA's pharmacological and pharmaceutical criteria for clinical testing, as outlined in the Research Plan, and which compound has been selected for clinical testing by the JEC or ASTRAZENECA.
1.7 'Collaboration Compound' means all Hits, Lead Compounds, CDs and other substances and structures discovered or identified as a direct result of AFFIT Optimisation, Hit Optimisation or Lead Optimisation and any metabolites, prodrugs, isomers and enantiomers referable to any of the foregoing. In the event of a dispute between the Parties as to whether or not a given substance or structure was discovered as a direct result of Hit Optimisation or Lead Optimisation the Parties' internal laboratory books and records from the relevant process through which such substance or structure was discovered shall serve as exclusive evidence to resolve any such dispute. For the avoidance of doubt, AFFITs and AFFIT Improvements do not constitute Collaboration...
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...and the absence of any explanation as to the absence of three of them was criticised. In Astex Therapeutics Ltd v Astranzenca AB [2017] EWHC 1442 (Ch) the High Court was invited to draw inferences against the defendant on the basis that it had not called witnesses who were former employees ......
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