The USA’s Verus Pharmaceuticals is suing AstraZeneca for $1.28 billion, following the Anglo-Swedish drugmaker’s decision to terminate a deal to take on the former’s paediatric asthma development programmes.

The two companies linked up in December 2007 in a deal that saw AstraZeneca agree to pay up to $310 million, including a $30 million upfront fee. That agreement included the North American rights to Captisol (enabled budesonide solution), a proprietary short-acting beta agonist solution and Verus’ delivery device eFlow.

The latter would have been used to develop a new formulation of the active ingredient in the asthma drug Pulmicort (budesonide), with a specific focus on Pulmicort Respules, for children as young as 12 months, which makes up 90% of the $982 million that the drug brought in in the USA in 2008.

According to Verus, AstraZeneca agreed to pursue development of the drug at least up to a US Food and Drug Administration meeting at the end of the mid-stage of clinical trials. However, in November, the drug major told Verus that due to toxicity results, the product’s development was not “practicable” and the FDA proceeding was “not feasible,” according to the lawsuit

A month after, it is claimed that AstraZeneca refused to let Verus exercise a repurchase option under their agreement, arguing that the deadline had passed. It also terminated third-party contracts it received under the deal to “sabotage Verus’s chances of receiving FDA approval,” the San Diego-based company alleges.

Soon after, AstraZeneca signed a deal with MAP Pharmaceuticals to develop and commercialise a nebulised formulation of budesonide, However, in February, a late-stage trial of unit dose budesonide, for the potential treatment of children with asthma did not meet its co-primary endpoints.

Verus is arguing that once AstraZeneca entered into a deal with MAP, it sought to kill any competition by destroying Verus' ability to develop the drug on its own. The suit, which is seeking $280 million in compensatory and $1 billion in punitive damages, claims that the drug major’s actions “were motivated by fear and unmitigated greed”.

AstraZeneca does not see things that way, however, and spokewoman Emily Denney said in an e-mailed statement to Bloomberg that “after careful consideration and deliberation, the collaboration terminated under the express terms of the agreements, when AstraZeneca elected not to exercise its absolute contractual right to proceed with the project”. She added that “AstraZeneca denies any allegation that it acted improperly or illegally in connection with Verus.”