Photo/IllutrationNobel Prize winner Tasuku Honjo, a distinguished professor at Kyoto University, talks about his efforts to get more compensation from Ono Pharmaceutical Co. The news conference was held April 10 in the presence of his lawyer, right. (Ryosuke Nonaka)

Nobel laureate Tasuku Honjo is not resting on his laurels.

There's way too much at stake for that: 83 billion yen ($742 million), and counting, if his lawyer's calculations are right.

Honjo, 77, is embroiled in a dispute with Ono Pharmaceutical Co. over patent compensation he feels entitled to for his input in the development of an innovative immunotherapy cancer drug that is earning the company a fortune.

The distinguished professor of molecular immunology at Kyoto University who won the Nobel Prize in Physiology or Medicine in 2018 contends that the terms of compensation were not fully explained to him when he signed the contract with Ono Pharmaceutical.

In short, he feels short-changed, big-time.

He has refused to accept payments set aside by the drug maker under the provisions of the contract on grounds he is owed a much vaster amount.

Honjo gave a news conference at Kyoto University on April 10 to air his grievances over the issue, the first time for him to publicly do so.

“Japan’s life sciences will be ruined unless a fairer model of academia-industry tie-ups is developed,” he stated.

In 1992, Honjo identified PD-1, a molecule that works to apply the brakes on immune responses. He later showed that finding could be applied to cancer immunotherapy.

He applied jointly with Ono Pharmaceutical for a patent in 2003 on the basis of the research results.

The company subsequently teamed up with leading U.S. drugmaker Bristol-Myers Squibb Co. (BMS), to jointly develop Opdivo. The drug transfigured cancer treatments so drastically that a U.S. research firm forecast that the global market for Opdivo and similar drugs will soar to 4.5 trillion yen ($40 billion) in 2024 from 1.2 trillion yen in 2017.

A lawyer representing Honjo said Ono Pharmaceutical has deposited 2.6 billion yen as his client's share based on the contract signed in 2006. The funds, which are in the care of a legal affairs bureau, remain untouched.

The lawyer argued that his client should be entitled to receive a percentage of revenue from three sources: Ono Pharmaceuticals’s own sales, royalties it receives from BMS, and royalties it receives from other companies that have developed similar drugs.

According to the lawyer's provisional calculations, Honjo is currently owed 83 billion yen, with more to come in the future.

Honjo envisions using part of the compensation to set up a fund to assist young scientists.

An expert in Patent Law noted that having signed the initial agreement in his own hand, Honjo would likely get little joy from a court in having the document rescinded.

For this reason, Honjo and his team are hoping to sway public opinion and sympathy as they move forward.

For its part, Ono Pharmaceutical explained that it invested tens of billions of yen in commercializing Opdivo at the stage when the efficacy of cancer immunotherapy had yet to be established.

The company would encounter difficulty explaining to its shareholders about any payments not stipulated in the agreement.

“There is a big gap (between Honjo’s arguments and our own),” a company representative said. “We hope to have more talks with him.”

One scientist, by contrast, struck a compensation deal that made him rich beyond his dreams.

Satoshi Omura, distinguished emeritus professor of pharmacy at Kitasato University who received a Nobel Prize in 2015, helped develop ivermectin, an anti-parasite drug widely used on livestock. To date, Omura has received more than 20 billion yen in compensation.

CUT OF THE PROFITS

While universities in charge of basic research produce the seeds of new drug development, the pharmaceutical industry follows up with extensive R&D and trials before putting new drugs on the market.

As such, the two camps play mutually complementary roles. But how to strike a balance between the shares of both parties is tricky.

Basic research, an indispensable element in new drug development, along with other forms of technological innovation, is mostly in the domain of universities in Japan.

Businesses then come in play that focus on “open innovation” and apply research work by universities and other external parties in product development.

Due to budget cuts by the government, universities are facing shrinking budgets for research and personnel expenses. This means they have to procure funding on their own to proceed with basic research.

Income from businesses that promote their efforts forms one of the pillars of those financial resources.

From a national perspective, it would make sense if the industrial sector returned large sums of money to universities when they reap the proceeds of the research.

On the other hand, industrial players take huge development risks. Demanding the appropriate share could well be viewed as the natural order of things, certainly at the corporate level.

It is said that only one in 10,000 projects to market a new drug product is successful. When a company hits the jackpot, it is usually entitled to monopolize the profits for only a decade or so before the patent expires.

“Some sort of legal framework is needed if you want a company to part with more of its profits,” said Koichi Sumikura, a professor of intellectual property policy with the National Graduate Institute for Policy Studies in Tokyo.

As the law now stands in Japan, universities don't stand much of a chance in seeking more compensation from businesses for joint university-business patents.

“Amendments to the Patent Law should be considered if more academia-industry cooperation is to be pursued in Japan in the years to come,” Sumikura said.

(This article was compiled from reports by Roku Goda and Hisatoshi Kabata.)