Kolon Life Sciences took on the largest litigation amount as the defendant among Korean drugmakers in 2020.
The company's lawsuit centers on Invossa-K, gene therapy for osteoarthritis, which suffered a fatal blow after the Ministry of Food and Drug Safety ordered the company to discontinue its manufacturing and sales in 2019 for having a cell line different from the one permitted by the regulatory agency.
The International Chamber of Commerce (ICC) also decided that the company should Mitsubishi Tanabe Pharma about 43 billion won ($39.1 million), including a 26.4 billion won upfront payment, interest, and compensation, on Jan. 12.
The ICC's ruling came after Mitsubishi Tanabe told Kolon Life that it would cancel the previously signed license agreement as the latter did not deliver clinical trial data properly, failing to fulfill its obligations. As Kolon Life Science has to return the upfront contract fee to Mitsubishi Tanabe, the company’s operating loss snowballed to 25.1 billion won.
The company also had to reflect about 16 billion won, including litigation and interest expenses, in the non-operating income category. That caused Kolon Life Science's before-tax loss from continuing operation to increase from 4.5 billion won in the third quarter to 43.6 billion won in the fourth quarter, and raised the loss ratio to equity to 76 percent, according to the report.
As the ratio rose above 50 percent for the second consecutive year, Kolon Life Science became designated an administrative issue by the financial regulator. In 2019, the ratio stood at 79 percent.
Medytox and Daewoong also spent more than 40 billion won together in litigation fees due to their brawl over the latter's botulinum toxin strain origin.
As the U.S. International Trade Commission (ITC) delayed making its decision numerous times last year, fees tied to the lawsuit quickly escalated for both companies.
Ahead of ITC's preliminary judgment, Daewoong spent 13.7 billion won in gathering the evidence in the first quarter to adhere to ITC's discovery request. The discovery request is a procedure that compels a company to submit evidence regarding the dispute before the trial.
The company had hoped that its litigation costs would go down after submitting the data but said it invested a similar amount during the second and third quarters as the case dragged on until nearly the end of 2020.
Medytox also spent a significant amount of money on lawsuits. "Our litigation expense wasn't as much as Daewoong, but it did cost a lot," a company official said to Korea Biomedical Review. "However, we are unable to disclose specific amounts due to the company's regulation." Industry insiders speculated that the company spent about 20 billion won in litigation expenses last year.
Other local biopharmaceutical firms and ventures faced lawsuits against them from other businesses for various reasons.
Sillajen agreed to pay $4.85 million to Fortis Advisors LLC, which filed a $34-million suit against the company for a milestone payment in October last year. Fortis Advisors represents the old shareholders of Jennerex Biotherapeutics, the original developer of the anticancer virus Pexa-Vec, currently owned by Sillajen.
Sillajen had promised to make a down payment to the old shareholders of the U.S. company at the time of its acquisition and provide an additional milestone fee worth 75 percent of the stake in Jennerex. However, Fortis Advisors filed a suit with the Delaware Superior Court in September 2018, claiming that Sillajen did not pay the $34 million milestones.
Sillajen insisted that it had no obligation to make the payment because it ran the trials without marketing rights. However, the company decided to settle the case after considering the risk of the case dragging on, and Fortis Advisors dropped the case due to the payment.
Cellumed, a local medical device firm, had to pay 1.5 billion won to Buechel-Pappas Trust after losing in a U.S. appellate court in February last year.
Buechel-Pappas Trust filed a 4.1 billion won suit against the company regarding non-payment of royalties related to its artificial joint sales in 2013. As a result of losing the lawsuit, the company recorded an outstanding royalty payment of 1.5 billion won and a provision for litigation worth 2.5 billion won tied to the litigation.
Youngjin Pharmaceutical received a claim for damages worth 15.3 billion won for failing to comply with a contract signed with RnS Bio, a former partner.
Youngjin acquired the sales right for the Utoma, an atopy drug, in 2016, and RnS developed the Utoma Topical solution through a contract with Youngjin.
However, due to problems in the contract, the Ministry of Food and Drug Safety revoked the license for the drug.
As a result, RnS was no longer allowed to sell the product. The company filed a lawsuit against Youngjin to take responsibility for the license revocation's financial damages.