The London Complex Litigation & Dispute Resolution team has achieved success for Cycle Pharmaceuticals Ltd in a High Court trial: Eteboxagu AB v Cycle Pharmaceuticals Ltd [2023] EWHC 462 (Comm). Cycle supplies a drug used to treat hereditary tyrosinemia type 1 (NITYR®), a rare genetic disorder that can cause hepatic, renal and neurological complications. Cycle is party to an agreement which requires it to pay royalties to Eteboxagu based on its “relevant revenues”, being its “gross income” on sales of NITYR®.
The key question for the Court was whether Cycle was entitled to deduct substantial rebates payable in the United States pharmaceuticals market for the purpose of calculating the royalty. Eteboxagu argued that these rebates could not be deducted under the agreement. The way in which specialist drugs are sold in the United States pharmaceuticals market was highly relevant to this question. Cycle also argued that a distributor, Cardinal, and a speciality pharmacy, Diplomat, who were both involved in the supply of NITYR® in the United States were not “distribution partners” under the agreement, which could have impacted on the level of royalty payable. On Eteboxagu’s argument, Cycle had underpaid royalties of around US$1.5m up to the end of 2021, and the obligation to pay royalties is continuing.
In a judgment handed down on 6 March 2023, Julia Dias KC (sitting as a Deputy Judge) held that Cycle is entitled to deduct the rebates in calculating the royalty and that Cardinal and Diplomat are not its “distribution partners” under the agreement: Eteboxagu AB v Cycle Pharmaceuticals Ltd [2023] EWHC 462 (Comm). In addition to determining the issues of contractual construction, the Deputy Judge dismissed a claim that Cycle was estopped from arguing the agreement permitted it to deduct the rebates.
Goodwin leveraged its expertise in the life sciences and biotech sectors to achieve success for Cycle in this commercial contract dispute. Oliver Glynn-Jones and Grace Boos acted for Cycle on this matter, along with Matthew Parker KC of 3 Verulam Buildings.