Court ruling for Medytox, Daewoong's civil suit over botulinum strains' origin postponed

The court has postponed the initial ruling over the civil lawsuit between Medytox and Daewoong Pharmaceutical over the origin of the latter's botulinum toxin strains to next year.

The suit is regarding Medytox filing a civil lawsuit against Daewoong, claiming that the latter stole the BTX strain through a former Medytox employee, in 2017.

According to the Seoul Central District Court, it issued a date change order to postpone the date of judgment scheduled for this Friday to Feb. 1, 2023.

The two companies have been brawling over the origins of Daewoong's BTX strain for the past six years, both here and abroad.

Medytox first gained the upper hand after the U.S. International Trade Commission (ITC) made its final ruling that Evolus and Daewoong manufactured Nabota, its BTX, with a stolen secret process from Medytox and imposed a 21-month ban on imports and selling of Nabota in the U.S. in December 2020.

While the case had since been resolved after ITC withdrew its order upon Medytox's request as part of a three-party settlement among Medytox, its U.S. partner Allergan, and Daewoong's U.S. partner Evolus in March of last year, Medytox benefited greatly from the deal.

Under the accord, Evolus agreed to pay Allergan and Medytox upfront payments totaling $35 million over two years. During the same period, Evolus also agreed to pay Allergan and Medytox certain confidential royalties on the sales of Nabota.

Besides, Evolus also issued about 6.76 million shares of common stock to Medytox.

While the ITC ruling was believed to be the nail in the coffin regarding the controversy over the origin of Daewoong's BTX strain, the situation changed when the Seoul Central District Prosecutors' Office acquitted Daewoong of charges that the company stole Medytox's BTX technology in February this year.

"As a result of a search and seizure, digital forensic, and statements of related employees, there is no evidence to admit that Medytox's unique botulinum strain or manufacturing process information was leaked to Daewoong Pharmaceutical," the prosecutors said during that time.

The prosecution also noted that although the two companies' products come from similar source technology, it is unclear whether the similarity is due to technology theft.

Accordingly, Medytox filed an appeal with the Seoul High Prosecutor's Office.

With each side exchanging wins, the two companies have been investing heavily in the only remaining civil lawsuit, with over 40 lawyers from Korea's top legal firms, including Kim & Chang, Shin & Kim, and Lee & Ko, representing the two companies.

Seven top Korean and foreign scholars also participated in the lawsuit as witnesses in the trial.

World-renowned scholars such as Andrew Pickett, Bedford Botulinum Research Center Professor, Paul Keim, Director of the Pathogen & Microbiome Institute at Northern Arizona University, and Bart Weimer, Professor at the University of California-Davis, were called in as witnesses.

Medytox is currently asking for 50.1 billion won ($38.2 million) for damages caused by Daewoong. If Medytox wins the lawsuit, the company expects it will be able to receive a certain amount of damages from Daewoong.

However, if Daewoong wins, Daewoong will be in a position to hold Medytox accountable according to the results and had repeatedly said that it would do so in the past.

Also, if Medytox loses, its corporate image will suffer greatly, and it may further affect its ongoing ITC lawsuit with Hugel, another Korean BTX maker.

As such, as the two companies continue their fight without concessions, it is highly likely that either side will immediately appeal, depending on the results of the first trial.

"Depending on the outcome of the lawsuit, it will have a huge impact on the business performance of the losing company," an industry watcher told Korea Biomedical Review. "Therefore, Korean BTX-related companies are paying close attention to the ruling of the trial."