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18 December 2008

James Hatton Appears in the Vancouver Sun

Vancouver Lawyer in the Game with Pharmaceutical Giants By Gillian Shaw, The Vancouver Sun, December 19, 2008 (Farris Partner) James Hatton is working on a deal that would allow a U.S. company to test erectile disfunction drug Cialis on heart patients. Squeezing money out of investors these days is slightly tougher than getting blood from a stone, but Vancouver lawyer James Hatton is busier than ever putting together drug-licensing deals for biotech and pharmaceutical companies. It’s a little bright spot that saw Vancouver represented, at least on the legal side, in a recent $150-million US licensing deal between United Therapeutics, based in Silver Spring, Md., and international pharmaceutical giant Eli Lilly and Company. “When they came to do this deal, they normally do these things in-house, but it was an important one and they decided to retain me,” said Hatton, a partner at Farris, Vaughan, Wills & Murphy LLP. “They could have gone anywhere. “I was really happy they chose somebody in Vancouver.” Under the terms of the deal, United Therapeutics is paying $150 million US up-front to Lilly for the exclusive rights to commercialize Tadalafil in the United States for the treatment of pulmonary arterial hypertension. Lilly will purchase $150 million in common stock from United Therapeutics. In a deal similar to one struck between Victoria’s Aspreva Pharmaceuticals and Roche, the agreement involves taking a drug, in this case Tadalafil, which is marketed by Lilly for the treatment of erectile dysfunction under the name Cialis, and using it for another condition. Aspreva, which skyrocketed to success and was eventually sold to the Swiss-based Galenica Group, used the same model: taking drugs already in late stages or approved for other indications and getting the rights to use them in the treatment of other diseases. While the venture capital market is in dismal shape and investment dollars scarce, Hatton said companies are turning to licensing deals. “I would say that because access to the public markets is very difficult for research companies and biotechs in particular, it is a very busy time for licensing right now,” he said. “I am the busiest I have been in 23 years of practising.” Hatton said the major pharmaceutical companies are the only ones with money now to develop drugs, but instead of acquiring entire companies to get the investigational drugs they are interested in, they just buy what they want. “It’s a buyer’s market so they are definitely buying now, but rather than buying the whole company they are cherry-picking the drugs they want,” he said. “They are not picking up every program the companies have. But if there is an opportunity they want, they are definitely picking those up.” Hatton said he usually doesn’t handle more than two such complex licensing deals a year. “Right now I have five in the works, which is unheard of,” he said. Hatton said when a company decides to do such a deal—giving another company rights to commercialize one of its drugs—it is putting one of its most important assets at risk. “They are always carefully negotiated agreements,” he said. “Usually a big pharmaceutical company owns the rights to the drug and they have a huge investment in that. “Take Cialis for example, you are taking a drug that is a billion-dollar drug and putting it in people who are sick and in clinical trials and there is always a risk in doing that. “In this case they have done the trials but they don’t have approval yet [for use of the drug as a treatment for pulmonary arterial hypertension]. Over the long haul it will be putting this drug into some pretty sick people and any time there is an adverse event they have to worry about that. “To Lilly’s credit they decided to do that.” <Photo Download the PDF file here.

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