Judge says company was built on theft
Published 12:00 am Friday, October 3, 2003
ST. PAUL (AP) &045; An Albert Lea company hoping to break into the high-stakes estrogen-replacement market stole trade secrets from pharmaceutical giant Wyeth, lied about it and repeatedly attempted to conceal evidence, a judge concluded.
U.S. District Judge Joan Ericksen, who previously shut the company down with a permanent injunction, issued a memorandum Thursday calling Natural Biologics &uot;a company built on misappropriation.&uot;
Ericksen had particularly harsh criticism of company founder and president David Saveraid for his role in copying Wyeth’s process for obtaining a hormone replacement drug from the urine of pregnant mares, a decades-old process that no other pharmaceutical company has been able to duplicate.
&uot;Before forming Natural Biologics, he (Saveraid) had worked most of his career as an agricultural salesman,&uot; Ericksen wrote. &uot;None of his prior work experience involved chemistry lab work, chemistry processes, extraction processes or chemistry of any kind.&uot;
The memo followed an order two weeks ago when Ericksen barred Natural Biologics from further use of the extraction process, told it to suspend any research, and ordered it to destroy all the estrogen replacement product it had manufactured.
About two dozen workers lost their jobs as a result.
New Jersey-based Wyeth makes the hormone-replacement drugs Premarin and Prempro. Annual sales of the products, used by post-menopausal women, exceed $1.5 billion and about 5.5 million women use the drugs.
Natural Biologics went commercial in 1997 after several years of research and development, hoping to manufacture a generic version of Wyeth’s drugs and tap into that market, which has plateaued lately over concerns about side effects.
Natural Biologics’ attorney, Richard Mark, said the company plans an appeal of the judge’s injunction.
&uot;We think there’s a different way to look at this,&uot; Mark said. &uot;We believe there is another version of what she found to be misappropriation.&uot;
Wyeth filed its trade-theft lawsuit against Natural Biologics in 1998 and went to trial last November. Wyeth had key evidence in the form of telephone records between Natural Biologics and a Canadian chemist, Douglas Irvine, a former Wyeth employee with intimate knowledge of the estrogen extraction process.
Although the two sides initially claimed they did not know each other, Irvine eventually acknowledged their conversations. More than 50 phone calls between the two were discovered by Wyeth’s attorneys.
Ericksen noted that Saveraid and Natural Biologics had no business before he hooked up with Irvine other than &uot;a leased truck, equipment to collect urine, and improvements to a barn for seven or eight horses.&uot;
The judge was critical of Saveraid’s ongoing denials of his communications with Irvine and his destruction of company records relating to the development of the hormone extraction process. Ericksen said evidence clearly demonstrated that Natural Biologic’s process was copied from Wyeth.
Ericksen even noted that Saveraid bragged to an executive at another pharmaceutical company in the mid-1990s about Natural Biologic’s relationship with &uot;a consultant with 20 years of service working in development of the original product.&uot;
&uot;David Saveraid made a conscious and deliberate decision to give false testimony about whether he knew Dr. Irvine,&uot; Ericksen said. &uot;David Saveraid continued to give false testimony at trial. He falsely testified that he had not violated court orders, that he had not destroyed evidence … that he did not know until 2001 that Dr. Irvine was a former Wyeth chemist.&uot;