Alleged Theft of Trade Secrets for a Drug in Development

Professor Sean Nicholson and Cornerstone Research analyzed the loss in value of a drug in development due to the advantage that the manufacturer of a competing drug in development obtained by allegedly stealing trade secrets.

Two pharmaceutical manufacturers were collaborating on a novel drug in the early stages of development. The plaintiff alleged that the defendant stole the plaintiff’s trade secrets, annulled the collaboration, and clandestinely developed a competing drug. The plaintiff also claimed that knowledge of trade secrets gave the defendant a head start in developing its own drug.

Defense counsel retained Professor Sean Nicholson of Cornell University and Cornerstone Research to analyze the loss in value of the plaintiff’s drug due to the defendant’s head start and to evaluate the damages estimated by the plaintiff’s expert. Professor Nicholson analyzed the various drivers of value for the plaintiff’s drug, such as projected sales, marketing expenditures, research and development expenses, cost of capital, and timing of launch of competing drugs.

Professor Nicholson drew on his expertise in drug valuation to analyze the various drivers of value.

Professor Nicholson also calculated the alleged loss in value of the plaintiff’s drug for different levels of head start obtained by the defendant (e.g., one year, two years). His analysis demonstrated that the damages estimate of the plaintiff’s expert was inflated because of inappropriate assumptions about the drivers of drug value.