Clal Biotechnology Industries Ltd. (TASE: CBI) announced yesterday that it had filed a $200 million suit against drug company Hyperion Therapeutics Inc. (Nasdaq: HPTX) in the US in the State of Delaware Court, citing decisions by Hyperion that it alleges were "commercially unreasonable, rash and ill-considered, and were not based on careful analysis of the alternatives."
Hyperion acquired Andromeda Biotech, which was developing Type 1 (juvenile) diabetes drug DiaPep277, in June, after several months of stringent professional examinations. But on September 8, Hyperion announced that it was halting development of Andromeda's drug after claiming that the Israeli company's employees had falsified clinical trial results. Following that announcement, Clal Biotechnology's share plunged, and the company announced it was writing off NIS 506 million.
On Sunday, Clal Biotechnology, whose CEO is Reuven Krupik, announced that it had contacted Hyperion in order to obtain documents and information backing up its claims. Clal Biotechnology and Hyperion representatives met in the US.
Clal Biotechnology says in its statement of claim that Hyperion's decision to halt development of the drug was unreasonable "even if there is a basis for Hyperion’s allegations concerning the alleged misconduct by certain Andromeda employees and its external research advisor."
Clal Biotechnology points out that it agreed to accept from Hyperion a relatively low upfront payment at the time of the sale of Andromeda, with the remainder in the form of contingent payments based on milestones and sales. "Therefore," Clal Biotechnology alleges, "Hyperion’s breach of the share purchase agreement and conduct have caused substantial damage to CBI (which was reflected by a sharp drop in its market capitalization), other stakeholders and the future of the drug."
Published by Globes [online], Israel business news - www.globes-online.com - on September 23, 2014
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