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Contracts Keyed to Dawson
Ixchel Pharma, LLC v. Biogen, Inc.
Citation:
9 Cal. 5th 1130 (2020)Facts
Ixchel Pharma, LLC is a biotechnology company that develops drugs to treat mitochondrial disease. Since 2012, it had been developing a drug containing dimethyl fumarate (DMF) to treat Friedreich’s ataxia, a neurodegenerative disorder. In 2016, Ixchel entered into a Collaboration Agreement with Forward Pharma, another biotechnology company that develops drugs containing DMF. Under this agreement, Ixchel assigned certain patent rights to Forward, and Forward agreed to work with Ixchel to develop a new drug containing DMF to treat Friedreich’s ataxia. The agreement allowed Forward to terminate “at any time” with 60 days’ notice. Meanwhile, Forward was negotiating with Biogen to settle a patent dispute related to the use of DMF for treating multiple sclerosis. Biogen’s drug Tecfidera, which contains DMF, could potentially face competition from Ixchel’s drug. Forward and Biogen entered into a settlement agreement in which Biogen paid Forward $1.25 billion. Section 2.13 of this agreement required Forward to terminate any existing contracts with Ixchel and prohibited Forward from entering into new agreements with Ixchel or any other entity related to developing pharmaceutical products with DMF. Forward subsequently terminated its agreement with Ixchel, causing Ixchel to lose its ability to develop its Friedreich’s ataxia treatment.
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