Medytox, Daewoong benefit as Botox deal nullifies ITC ban
The settlement was signed between Medytox, its U.S. partner Allergan and Evolus, the Korean company announced in a public filing Monday.
Evolus is the global distributor of Nabota, the botulinum toxin brand from Daewoong Pharmaceutical which recently lost a U.S. International Trade Commission (ITC) suit against Medytox. As a result, Nabota — or Jeuveau, as it is marketed in the United States — was banned from being imported to the United States for 21 months.
The deal between the three parties nullifies the ITC decision as it gives Evolus license to produce and distribute botulinum toxin products using Medytox technology.
In exchange, Evolus has offered a license fee of $35 million to Allergan and Medytox, to be paid over a two-year period. How that will be divided between the two companies was not disclosed.
For the next 21 months, Evolus will pay royalty fees to Allergan and Medytox, proportional to Nabota’s U.S. sales. During that period, Medytox will additionally receive royalty fees from Evolus for Nabota sales outside the U.S. market, including in Europe, Canada, Russia and Japan.
Once the 21-month period expires, Medytox will be the sole recipient of Evolus royalty fees. It was undisclosed until when that bilateral contract holds effect.
As part of the settlement, Medytox will acquire 16.7 percent of Evolus, becoming its second largest stakeholder.
The three parties agreed to dismiss legal charges against each other in the United States, including a civic suit Medytox filed in 2017 against Evolus and Daewoong Pharmaceutical in California.
Earlier this month, Evolus and Daewoong filed a request to the U.S. Court of Appeals to revoke the ITC decision. That will be halted as well, as the ITC import ban is no longer effective.
As Daewoong was not part of the agreement, legal suits between the two companies in Korea will continue.
While Daewoong welcomed the fact that its business risk in the U.S. market was resolved, it remained firm that it would continue its legal fight against Medytox.
“We never agreed to the settlement,” Daewoong said in a Monday statement. “The company was confident that the appeals court would prove Medytox’s claims to be false. It’s a pity the opportunity to prove the ITC’s decision wrong was lost.”
The Korean company has claimed that the ITC made a misleading decision with the intention of protecting Allergan's business.
Setting aside the ongoing legal fights in Korea, investors and analysts viewed the U.S. settlement as positive for both companies: On Monday, Daewoong Pharmaceutical’s stock price jumped 14.34 percent from the previous trading day to close at 155,500 won ($139). Medytox’s stock price soared 30 percent to 197,600 won.
Despite the ITC’s final ruling in its favor, Medytox’s stock price had fallen for three trading days straight after the announcement was made on Dec. 17. The decision was seen as only a partial victory because Nabota’s import ban was reduced to 21 months, instead of the 10 years suggested in the ITC’s initial determination in July.
“The market reaction was cold because the import ban was shortened and the results didn’t seem to have any practical value to Medytox,” said Sun Min-jung, an analyst at Hana Financial Securities in a Monday report. “However, this settlement will result in substantial gains.”
Considering the payment, royalty fees, the new status as Evolus’ second largest stakeholder and Evolus’ recognition of the technology infringement, Sun estimated the agreement’s value at 149 billion won.
For Daewoong’s Nabota as well, the agreement by its global distributor reduces risks in the United States, which has the world’s largest botulinum toxin market, and potential disputes in other markets.
“All legal suits filed by Medytox in the United States will be lifted — that’s a positive factor for [Daewoong] as it rules out Nabota’s sales suspension, originally expected for one to two years, as well as massive litigation costs,” said Lee Hye-rin, an analyst at KTB Investment & Securities.
“According to our estimate, Jeuveau’s sales in global markets will generate Evolus and Daewoong operating profit of at least $500 million over the next 10 years.”
BY SONG KYOUNG-SON [firstname.lastname@example.org]