Biological Disaster

Zonagen Inc. took its name from Bonnie Dunbar's groundbreaking research into contraceptive vaccines. Then, when she wasn't looking, the company took her research.

The preliminary agreement, a term sheet dated August 3, 1987, was relatively straightforward: Dunbar and Baylor College of Medicine each received 27.5 percent ownership in the company; BCM Technologies was granted an additional 2.9 percent share for brokering the deal. The investors owned the balance of the new company, plus an exclusive license to any patents and trademarks resulting from the contraceptive technology.

Dunbar would also be named Zonagen's chief scientific adviser and, at her request, she was granted "reasonable attorneys' fees" to pay for the review of documents. Dunbar hired attorney Bob Hinton, who offered advice on the term sheet, as well as Dunbar's consulting agreement with Zonagen, a document that bore a striking resemblance to the unexecuted agreement proposed under the Baylor-Phillips venture.

That was the end of Hinton's involvement. Sutter had capped Dunbar's legal expenses at $3,000, and by the time Dunbar started preparing her patent application in early October, she already owed Hinton $2,950. This is noteworthy because the circumstances surrounding preparation of the patent documents are a key issue in Dunbar's lawsuit against Fulbright & Jaworski. The inventor says she and the Fulbright patent attorney, Rosanne Goodman, began drafting the application on October 5, after Dunbar learned that an article describing the zona pellucida vaccine was set to be published on October 8.

According to Dunbar, during the rush to get the patent application drafted and in the mail by October 7, Goodman produced a second document for Dunbar to sign. Called an "Assignment," it transferred all rights to the zona pellucida technology from the scientist to Baylor College of Medicine. When Dunbar asked Goodman why her invention needed to be assigned to Baylor, Goodman told her that Baylor's Policy on Patents and Inventions required it.

In December 1987, Dunbar was asked to sign yet another document, this one entitled "Assignment Agreement." It transferred the zona pellucida technology --whose definition within the document consisted of one-and-a-half pages of single-spaced legalese -- to Baylor, which then passed it on "for good and valuable consideration" to BCM Technologies. Finally, Zonagen received from BCM Technologies "all rights, title and interest throughout the world in the Technology."

In other words, while presuming to represent Bonnie Dunbar's interests, Fulbright & Jaworski and BCM Technologies gave the zona pellucida technology to Zonagen, making sure that, should the scientist and the company part ways, the vaccine would remain the property of Zonagen. Almost as troubling, Fulbright & Jaworski and BCM Technologies also gave to Zonagen any future claim Baylor College of Medicine might have to the research.

If anyone cared what that meant for Bonnie Dunbar's career --not to mention the prospects for a human contraceptive vaccine -- they haven't tried to rectify the situation. Baylor has made no effort, legal or otherwise, to retrieve Dunbar's research, nor does anyone at the college think it would do much good.

"In this case, the research was transferred for stock," says Dalton Tomlin, Baylor's general counsel (Sam Crocker, one of the architects of the Zonagen deal, retired two years ago). "Baylor doesn't have a string to pull it back, even if a company doesn't behave the way we wish that it did. I'm not suggesting that's true of Zonagen. It varies from start-up company to start-up company."

That might be true, says Mike Butler, Dunbar's attorney, but why this type of arrangement, with this particular company?

"There's no doubt in my mind that Sutter and everybody at Zonagen knew about the problems with the ABI deal," Butler says. "And somebody said, 'We don't want that to happen to us. If we're going to get into this technology, we're going to control it.' And that was the way they set it up -- without telling her that's what they were doing."

Looking back, Bonnie Dunbar now realizes that the beginning of the end of her ill-fated relationship with Zonagen was the hiring of Joe Podolski in 1989. Even now, she talks about what great possibilities Zonagen had; how, with the right management team, the company could be making a real contribution, which, in her admittedly naive opinion, is something more companies should aspire to.

Instead, under Podolski, Zonagen is a phantom company, a make-believe outfit that manufactures myths and stories for investors. How else to explain Zonagen's constant stream of press releases that hype Vasomax, whose relative ineffectiveness was revealed in June at the American Urological Association's annual meeting in San Diego?

According to data presented at the meeting, 51 percent of men who took 40 milligrams of Vasomax, the recommended dosage, were able to achieve intercourse, compared to 38 percent of men who took a placebo. By comparison, Pfizer reported a success rate of 70 percent during its trials of Viagra. And, if 38 percent of the men in Zonagen's study were able to perform intercourse using a sugar pill, then a 51 percent success rate is not that impressive.

Indeed, as Dunbar's attorney, Mike Butler, notes: "When you think about it, Bonnie's vaccine is potentially the most valuable thing Zonagen has."

Maybe Joe Podolski realized that at one point, maybe not. But it's difficult to give the benefit of the doubt to a guy who actually brags about taking advantage of loopholes in an inventor's patent application.

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