Celator Pharmaceuticals just received word from the European Patent Office that its proprietary technology for making unique combinations of cancer drugs will be granted a European patent, opening the way for the Princeton, New Jersey-based privately held company to take its research base of cancer-fighting interactions overseas.

Typically, chemotherapy bombards a cancer patient with different drugs in hopes that he or she can survive the assault long enough to see cancerous cells killed off. Celator aims to make cancer treatment easier by better understanding relationships between specific drugs. When the most effective ratio between two drugs is found, it becomes proprietary intellectual property, and therefore patentable (see Celator Gets Nod on Patent).

That takes some qualification: “Whenever we can identify two compounds [acting] in a synergistic way due to a ratio between the two compounds, then it’s under our patent,” says Felix Botelho, Celator’s head of commercial development. “What we’re screening on is improved clinical outcome, so it’s beneficial to a patient, and that’s certainly a strong position to be in when you have a product that enhances efficacy.”

The pharma’s platform—dubbed CombiPlex—is now in phase-two testing with Celator’s lead compound, CPX-1. Designed as a treatment for colorectal cancer, CPX-1 joins other Celator compounds that are based entirely on industry-standard combinations. Should CPX-1 go to market, patients and investors stand to benefit.

Brenda Gavin, a founding partner of Quaker BioVentures, a Celator backer, says what appealed to her was the fact that chemotherapeutic agents had a known effect on cancer, yet were being applied in a different way. “The real question to be answered was, [is] this ratiogoing to be more effective,” she adds.

And investors are paying attention to Celator’s growth. The company completed a $40-million funding round in 2005, with Domain Associates taking the lead over TL Ventures and Quaker. “Most of the exits over the last several years have not been through the IPO, but selling the company through a larger entity,” Dr. Gavin says, “and that’s certainly a possibility.”

Contact the Writer:DMurphy@RedHerring.com

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Emails Deleted in Napster Case

For seven years, legal wrangling over copyright issues and peer-to-peer pioneer Napster has been a black eye for San Francisco-based Hummer Winblad Venture Partners. Partners would be tight-lipped when Napster came up, in part because the company they backed had been named in legal proceedings virtually since its inception.

Now, a new filing in the ongoing lawsuit between music companies and Hummer Winblad is seeking to land another haymaker. Attorneys for music labels EMI and Universal Music Group contend the venture firm not only withheld documents for several years but also told staff to delete emails relevant to the case—in a reminder about the firm’s email retention policy (see Napster VC's Fire Back).

The filing in the U.S. District Court for the Northern District of California seeks a default judgment against the firm. Absent that, it seeks jury instructions that the firm intentionally destroyed relevant evidence, and monetary sanctions against Hummer Winblad.

At press time, neither attorneys for the venture firm nor the music companies had returned calls, and Ms. Winblad had declined to comment. However, Hummer-Winblad’s attorneys are expected to file a response in coming days, and a tentative hearing on the matter is slated for early September.

Red Herring learned of the matter through John O’Reilly, publisher of Venture Capital Litigation Reporter, who has followed the Napster litigation from the start.

Retention Policy Questioned

The latest filing also pits what Ms. Winblad said in prior depositions to what she wrote in an email to her staff. In her deposition earlier in April, Ms. Winblad denied that she deleted any of her Napster-related email. “All of my emails relating to Napster were preserved by Hummer Winblad,” she testified.  

Ms. Winblad’s email, issued just after her firm invested in Napster in 2000, in part reads, “As we have all been required to surrender Napster e-mails, this should reinforce compliance with our long-standing policies. (1) We do not retain e-mails, it is your responsibility to delete your handled e-mails immediately.”

With the number of emails submitted during discovery falling off following Ms. Winblad’s missive, deposing partners became a problem for the music giant’s legal team. The filing alleges, in testy language, that several of Hummer Winblad’s partners used the absence of documents as an excuse to exhibit “litigation amnesia.”

This is not the first time that email retention policies have returned to haunt a firm. The case bears a resemblance to the legal dust-up surrounding Frank Quattrone, the former head of Credit Suisse First Boston’s tech group, who endorsed a similar email, entitled “Time to Clean Up Those Files,” reminding staff not to retain notes and drafts, which ultimately supported his conviction for obstruction of justice. The conviction was overturned in March.

Email retention, or lack thereof, is clearly a serious issue plaguing firms of every size. The U.S. Securities and Exchange Commission already requires banks and broker-dealers to retain email and instant messages for three years. And as of July, the Sarbanes-Oxley Act will require similar policies from all public companies. So, while Hummer Winblad’s culpability will be decided in court, venture capital firms ought to take note: Having a retention policy that isn’t enforced until the eleventh hour does little but lower the drawbridge for the lawyers.

Contact the Writer: LGannes@RedHerring.com