AstraZeneca Sues Former Executive over Move to Rival GSK

FT/

AstraZeneca PLC has sued a former top business development executive to delay him taking a job at rival GSK, claiming he received awards worth over £600,000 to sign a non-compete agreement.

Chris Sheldon, who led investor relations and before that oncology dealmaking at AstraZeneca, resigned earlier this month and intended to start work at GSK in September, in a role responsible for business development across all therapy areas.

But AstraZeneca alleges this breaches a non-compete agreement that Sheldon signed, promising not to facilitate competition for a period of six months after leaving the company. The company said that in return, he received performance share plan awards worth £644,553.

The Anglo-Swiss drugmaker claims there is a “real and substantial risk” of Sheldon breaking this agreement if the court does not stop him and insists he wait until February to start work at GSK. It added that he was “privy to highly confidential information” about existing medicines, drugs in the pipeline, business development and commercial strategy.

Sheldon has not yet filed a response to the lawsuit. He denies the allegations or any wrongdoing.

According to the court filing, Sheldon had already promised to not work for GSK on oncology in the short term but had not made a similar commitment in other areas. Sheldon informed AstraZeneca of his intention to move in April this year and was placed on gardening leave in May.

“He threatens and intends to start work for GSK in a role in which he will be directly and/or indirectly facilitating competition with aspects of the respiratory, oncology, immuno-oncology, cardiovascular, renal, diabetes, and/or Covid-19 related therapies pharmaceutical business carried on by AZ,” AstraZeneca’s lawyers wrote in the filing.

AstraZeneca sued a former executive Luke Miels in 2017 after he announced he was going to join GSK as its chief commercial officer, which delayed his arrival.

The UK Supreme Court ruled in 2019 that companies can enforce restrictive covenants in employment contracts, which are commonly used for staff who work in knowledge-based professions such as financial services.

The 2019 Supreme Court case was based on Mary-Caroline Tillman, a consultant headhunter at Egon Zehnder, who had left the headhunter in 2017 to join a direct competitor. Egon Zehnder went to court to seek an injunction to delay her move.

The case centred on whether covenants in her employment contract, which prevented her from being “interested” in competitors until six months after she left, were too broad and unenforceable. But the Supreme Court ruling found that her employer could enforce reasonable restrictions.

Pascal Soriot, chief executive of AstraZeneca, has strengthened the business over his 10-year tenure, investing heavily in research and development and overseeing successful drug launches, particularly in cancer.

GSK has been trying to catch up, including by re-entering oncology having left the disease area in 2015. After spinning off its consumer health division earlier this month, it will have more money to invest in deals.

AstraZeneca and GSK declined to comment.

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