Inovio Can't Force Supplier To Share COVID-19 Vaccine Tech

By Dorothy Atkins
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Law360 (June 26, 2020, 7:06 PM EDT) -- A Pennsylvania state judge on Thursday rejected vaccine maker Inovio Pharmaceuticals' bid to force its supplier to share its technology with potential rivals in order to mass-produce Inovio's candidate for a COVID-19 vaccine, ruling that Inovio's claims are "too speculative" to justify compromising the supplier's proprietary manufacturing process.

In an eight-page order, Montgomery County Court of Common Pleas Judge Jeffrey Saltz denied Inovio's petition for a preliminary injunction seeking to require its Texas-based supplier, VGXI Inc., to hand over its proprietary manufacturing technology to up to 10 other companies due to VGXI's purported limited ability to fill Inovio's vaccine requests quickly.

The judge noted that Inovio's dispute is both "exceedingly timely and exceedingly difficult." But the judge said ultimately the factual basis for Inovio's claims are too speculative to warrant the extraordinary injunctive relief it requests, particularly since Inovio has not shown that other companies can't make the vaccine without VGXI's property.

"Certainly in assessing the balance of harms, the protection of private property is outweighed by the savings of hundreds of thousands of lives," the opinion says. "But in view of Inovio's inability to show that such a saving of human lives will occur only if a preliminary injunction is issued, VGXI's property interests cannot be ignored."

Inovio hit VGXI and its South Korean parent, GeneOne Life Science Inc., with a lawsuit earlier this month, claiming that it is holding the development of Inovio's COVID-19 vaccine hostage, despite their 2008 agreement that requires VGXI to share its manufacturing methods with Inovio or other suppliers if it can't make the products.

The suit argues that VGXI is already at capacity and demands that it share its technology so that Inovio can meet its goal of making 1 million doses of its DNA-based vaccine, which is currently in the first phase of clinical trials, by the end of the year.

The suit claims breach of contract and seeks a declaratory judgment that VGXI has to share its technology, along with damages.

According to the suit, Inovio obtained a sample of the COVID-19 virus DNA from China in January, which it "used to design a construct for a DNA vaccine candidate to protect against the virus." The company was later hit with stock-drop and derivative lawsuits after CEO J. Joseph Kim twice claimed that Inovio had a vaccine "in a matter of about three hours" when it was only the construct, or first stages, of the vaccine.

On Thursday, Judge Saltz rejected Inovio's arguments and denied the motion for preliminary injunction. The judge reasoned that although granting Inovio's request would clearly not harm the public's interest, Inovio hasn't shown that issuing such an injunction is necessary, since witnesses have testified that other companies can manufacture Inovio's vaccine.

Judge Saltz said Inovio's assertion that it will need to scale up production quickly is also speculative, because its vaccine may not prove to be the silver bullet that the company hopes it to be, even if it appears to be promising during early trials.

"The history of pharmaceutical research contains countless examples of treatments that initially showed promise but ultimately failed to prove themselves safe and effective," the opinion says. "Again, the speculative nature of Inovio's predictions weigh against the issuance of an injunction."

The judge emphasized that granting the injunction could significantly harm VGXI and jeopardize its proprietary manufacturing process by requiring it to hand over its confidential information to other companies, some which may be located in other countries that have less stringent intellectual property laws.

The judge added that it's not clear that VGXI could have anticipated the threat to its IP rights when it entered its agreement with Inovio in 2008, and there are significant issues over what information VGXI would even be obligated to transfer and how its staff would do that if an injunction were issued.

"In the face of the devastation that the COVID-19 pandemic has caused and will continue to cause, it may be tempting to conclude that even the possibility, however uncertain, that Inovio's vaccine may be the best and fastest way to bring the pandemic to an end is a sufficient basis for granting its petition," the opinion says. "But following that temptation would be a misuse of the extraordinary power of the court to order injunctive relief."

VGXI's counsel said in a statement Friday that the company is pleased with the court's decision and it remains committed to helping find a cure.

Inovio said in a statement that it is exploring its legal options, including filing an immediate appeal. It's also continuing discussions with third-party manufacturers to support the "rapid and large-scale manufacturing" of the potential vaccine, the statement said.

On Friday, a notice of appeal had been filed in trial court, according to the case docket.

Inovio is represented by Michael J. Klisch, Joshua Siegel and Robert T. Cahill of Cooley LLP, and John C. Romeo and Stephen J. Finley of Gibbons PC.

VGXI and its parent company are represented by Daniel E. Rhynhart and Michael Iannucci of Blank Rome LLP.

The case is Inovio Pharmaceuticals Inc. v. VGXI Inc. et al., case number 2020-06554, in the Court of Common Pleas of Montgomery County, Pennsylvania.

--Additional reporting by Matthew Santoni. Editing by Adam LoBelia.

For a reprint of this article, please contact reprints@law360.com.

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