Medytox said Tuesday that the U.S. International Trade Commission ruled in favor of the company's complaint about Daewoong Pharmaceutical’s alleged stealing of its trade secrets to develop Nabota, the latter’s botulinum toxin (BTX) product.
In its preliminary verdict, the ITC also recommended a ban on the imports of Nabota in the U.S. for the next decade.
After a yearlong investigation, the decision came after Allergan and Medytox submitted a complaint to the ITC claiming that Daewoong developed the treatment using stolen manufacturing secrets and turncoat former employees in January last year.
"While the full text of the ruling has not yet been made public, the main contents of the ITC's ruling states that Medytox's BTX strain and manufacturing process are trade secrets that must be protected. Medytox and Allergan each have commercial interests protected against trade secrets, and Daewoong stole the business secrets of Medytox," a Medytox spokesperson said. "This decision revealed that Daewoong Pharm used Medytox strains and manufacturing techniques."
The ruling is significant as it has objectively proved that Daewoong had falsified the origin of the strain and manufacturing process to regulatory authorities and customers in many countries for many years, he added.
Daewoong had been refuting such allegations that the complaint filed by Medytox and Allergan was only part of their strategy to keep the company from entering the Botox market, posing a threat to the would-be market entrants and hurting the interests of the U.S. consumers.
Daewoong had hoped that it would get a favorable ITC preliminary ruling, coming in the wake of the Korean regulator’s decision to revoke the sales license of its rival botulinum toxin product, Meditoxin, for fabricating test data.
Daewoong claimed that the ITC's decision is a non-binding advisory and that it would make efforts to reverse the final verdict.
"It is clear that ITC's ruling that Daewoong stole Medytox's manufacturing technology, while recognizing its jurisdiction and trade secrets, is clearly a misjudgment," Daewoong said. "We will actively clarify the misjudgment and win the final verdict."
Despite Daewoong's claims, the possibility of the ITC's decision changing seems highly unlikely as the preliminary ruling of the ITC is rarely overturned later. The ITC plans to make the final ruling in November.
After the ITC's final decision, the exclusion order is subject to the last review by the U.S. President Donald Trump, where he may veto the decision for policy reasons. However, this seems to be a longshot for Daewoong. It has been rare in history where the U.S. chief executive vetoed an ITC determination.
The ITC ruling is also likely to have a significant impact on the local and U.S. BTX market and influence other legal battles involving the two companies. Medytox plans to use the ITC decision to confirm its allegations of Daewoong's botulinum strain and manufacturing technology theft in Korea’s civil and criminal courts.
The U.S. trade agency's ruling has also brought mixed results on the share prices of the two companies.
As of 10 a.m. Tuesday, Medytox's share price shot to 215,800 won ($181), up 30 percent from the previous trading day. Daewoong Pharmaceutical's shares dropped 14.2 percent to 114,500 won.
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