Nuvo Research files lawsuit against Mallinckrodt claiming breach of licensing agreement

Nuvo Research, a Canadian specialist pharmaceutical company, has commenced legal action against Mallinckrodt by filing a complaint in the United States District Court for the Southern District of New York.

The complaint asserts that Mallinckrodt has breached its contractual obligations to Nuvo as set out in a Licensing Agreement dated 15 June, 2009 by which Nuvo licensed to Mallinckrodt the rights to market and sell non-steroidal anti-inflammatory drug Pennsaid and follow-on product Pennsaid 2% in the US.

The complaint asserts that Mallinckrodt breached the License Agreement in several respects. Most significantly, Mallinckrodt 'wilfully failed to conduct certain clinical studies required under the contract that are critical to regulatory approval, marketing and sales of Pennsaid 2% throughout the world'.

The complaint also alleges, among other things, that Mallinckrodt made significant errors in certain clinical studies for which it was responsible, failed to apply requisite efforts to commercialise Pennsaid in the US and has 'wilfully refused to pay the full milestone payments due to Nuvo under the License Agreement'.

Nuvo said it is seeking damages of not less than $100m and a declaration that it is entitled to terminate the License Agreement which would result in the rights to market and sell Pennsaid and/or Pennsaid 2% in the US reverting to Nuvo.

'We are disappointed that we have had to initiate legal proceedings against Mallinckrodt,' said John London, Nuvo's President and Co-CEO.

'Our board has not taken this decision lightly. However, given what we believe are clear material breaches of the License Agreement and Mallinckrodt's refusal to consider appropriate and fair compensation to Nuvo, we have proceeded with legal action to protect the interests of Nuvo and its shareholders.'