The hottest story in Israeli biotech in 2017 was the August acquisition of Kite Pharma by Gilead Sciences for 11.9 billion dollars, and the announcement in October of FDA approval of the leading drug candidate that Gilead obtained in the purchase, Axicabtagene Ciloleucel, which is being marketed under the name Yescarta for the treatment of large B-cell lymphoma.
Almost as hot a story, at least in the Hebrew press, was the ensuing (and still ongoing) legal battle between two of the academic scientists involved in the development of the technology that was the subject of the deal. And herein lies a tale that illustrates the sometimes huge difference between coming up with a good idea, and translating that idea into a commercial product, particularly in the biotech area.
What Kite developed, and what Gilead was keen on, was T-cell (lymphocyte) therapy for fighting cancer. The idea is to take a patient’s own T-cells and to genetically modify them so that they produce proteins that cause them to bind specifically to cancer cells and, upon such binding, attack the cancer cells. The modified T-cells are then reintroduced into the patient. The T-cells will now target the cancer, ideally without targeting the patient’s other cells, and without eliciting an immune response against the T-cells themselves (since the patient’s immune system recognizes those T-cells as its own). Videos illustrating the two platforms Kite is developing can be seen here.
The genesis for this theory goes back to the late 1980’s and early 1990’s, when Professor Zelig Eshhar of the Weizmann Institute had the idea if one could modify lymphocytes to produce particular proteins, one could target cancer cells with those T-cells. The first student who demonstrated proof-of-concept was Gidi Gross, although over the years a number of people in the Eshhar lab, among them my wife, worked on such targeting.
The work resulted in peer-reviewed articles. It also resulted in several patent applications which, years later, yielded US patents. In particular, US 5,906,936, (“Endowing lymphocytes with antibody specificity”), US 5,912,172 (“Endowing lymphocytes with antibody specificity”), and US 7,741,465 (“Chimeric receptor genes and cells transformed therewith”) were filed listing Zelig Eshhar, Tova Waks and Gideon Gross as inventors. A fourth inventor, Daniel Schindler, was listed on the ‘465 patent. All three patents have pre-TRIPS filing dates, but the first two US were granted in 1999 and thus expired no later than 2016. The ‘465 patent, however, was only granted in 2010, and thus if maintenance fees are paid will only expire in 2027 (assuming it survives the inevitable challenges to its validity). The first claim of this patent reads,
“1. A chimeric DNA comprising: a first DNA segment encoding a single-chain Fv domain (scFv) comprising a VL linked to a VH of a specific antibody by a flexible linker, and a second DNA segment encoding partially or entirely the transmembrane and cytoplasmic, and optionally the extracellular, domains of an endogenous protein, wherein said endogenous protein is expressed on the surface of lymphocytes and triggers the activation and/or proliferation of said lymphocytes, which chimeric DNA, upon transfection to lymphocytes, expresses both said scFv domain and said domains of said endogenous protein in one single, continuous chain on the surface of the transfected lymphocytes such that the transfected lymphocytes are triggered to activate and/or proliferate and have MHC non-restricted antibody-type specificity when said expressed scFv domain binds to its antigen.”
The ownership of the three patents has an interesting history. As with all patent applications originating at Weizmann, they were originally assigned to Yeda Research & Development Company Ltd., Weizmann’s tech transfer company. Yeda in turn licensed the patents to Baxter, but after a year or so without positive results, Baxter gave up. Yeda also assigned a one-third right in two of the applications to the NIH, which ostensibly reverted back to Yeda (although assignment record at the USPTO doesn’t seem to clearly reflect this). Yeda then offered to sell its rights in the patents to the inventors. Eshhar, Waks and Gross acted on the offer; Schindler chose to not to buy into the patent on which he was named as an inventor. So in 2004, assignments from Yeda to the three inventors were recorded at the USPTO (including a waiver of interest statement from Schindler). In August, 2011, the remaining two inventors assigned their rights to Eshhar, and in 2013, he assigned his rights in the patents to Cabaret Biotech Ltd., a company owned by him. Cabaret then licensed the patents to Kite Pharma.
According to the Hebrew press, Zelig Eshhar made about 71 million dollars as a result of the sale of Kite Pharma, most of it in the form of stock. At which point Gidi Gross filed suit, claiming he is owed 15% of that $71 million. Last week, Zelig’s lawyers fired back, saying that Dr. Gross was not only fully compensated but given more than his financial due by Zelig.
As the Israel court system is notoriously slow, I don’t expect a resolution of this matter for several years. But living in Rehovot and having not only a spouse but friends I see regularly who worked in the Eshhar lab, the case has been a topic of conversation. And it highlights the disconnect many people between being credited with research and the financial gain that comes with successful commercialization.
In terms of credit, between 1989 and 1996, Gross and Eshhar were co-authors on at least 10 papers; two more such papers were published more recently, in 2014 and 2016. Gross was listed as first author on several of those papers. Additionally, Gross is listed as one of the inventors on the three aforementioned patents. Hence no one denies that Dr. Gross made contributions to the development T-cell targeting.
On the other hand, insofar as commercialization goes, it was Professor Eshhar who for nearly 30 years maintained the belief that modification of T-cells could result in therapy. As my wife put it, when she worked on her PhD, all the mice died. Not just hers, but those of her fellow students as well. Additionally, at the time, there were other labs working on the same general idea, and they were actually considered to be farther along in developing the technology. Yet they didn’t manage to commercialize it. Baxter tried, but gave up on the project. Yeda, unable to find any suitors, gave up on the project. But Zelig persisted. And eventually someone became convinced that despite the previous failures, this technique could work, a belief borne out by the approval of Yescarta. That’s why Zelig is making over $70 million on the deal. It’s a point that patent attorneys and entrepreneurs appreciate, but one often lost on people not familiar with the commercialization process.
The terms of the 2011 assignment from Waks and Gross to Eshhar aren’t public. It’s possible that Zelig orally promised Gidi a percentage of future profits or shares or whatever, but even if that’s so – and Eshhar disputes that such a promise was even made - it seems that the 15% that Gross now claims he is owed wasn’t set forth in a written document, since such a document would presumably have been included in the court filings, and the Hebrew press doesn’t mention such a document. The Hebrew press has reported that Yeda is entitled to about 0.2% of $71 million; clearly, while Yeda is no doubt smarting right now about having given up on this technology, the agreement setting forth the terms of the 2004 transfer of ownership from Yeda to the inventors was in writing, and Yeda has (thus far) had the good sense not to sue to try to get more than it agreed to. Oral agreements constitute agreements under Israel law, but obviously the evidentiary burden on the party asserting the existence and the contents of an oral agreement is high.
Of course, it’s equally plausible that the lawsuit is the result of seller’s remorse, and that Gross now thinks he should have demanded more back in 2011. And he may feel that, despite being credited on papers and patents, he feels he hasn’t been given sufficient credit for his role: in 2015, Zelig Eshhar was given the Israel Prize by the State of Israel for his work in the development of chimeric T-cell; Gidi Gross was not so honored.
The unfortunate part of this story is that, by all reports, Gross and Eshhar remained not just colleagues but friends long after a Gross had left the lab.