Memorandum

Arbitration panel drops Adocia’s second round of claims against Lilly for BC Lispro licensing termination – August 23, 2019

Lilly potential $1.8 billion payout to Adocia unfulfilled; Tribune also dismisses Lilly’s $188 million counterclaim

Both Lilly and Adocia announced yesterday the dismissal of the second set of claims made by Adocia against Lilly, as well as Lilly’s smaller counterclaim, regarding the terminated licensing agreement for BioChaperone Lispro (BC Lispro). Adocia stood to win ~$1.8 billion from the proceedings, not including pre- and post-judgement interest, on the grounds of misappropriation and misuse of confidential information and discoveries. Meanwhile, Lilly had filed for $188 million, including pre-judgement interest, asserting that Adocia had concealed discoveries and confidential information.

Mr. Gérard Soula, Chairman and CEO of Adocia, noted that the company is “extremely surprised and disappointed by the Tribunal’s decision” but assured that the company remains in a “stable financial position” to continue the development of Adocia’s diabetes-related pipeline products, as well as collaborations with partner Tonghua Dongbao (including BC Lispro) in China. The combo insulin/pramlintide has a great deal of interest in it, particularly given the relatively low percentage of patients “at goal” who are on insulin.

Meanwhile, Lilly’s Senior Vice President and General Counsel Mr. Michael J. Harrington, commented that the company is “pleased with the panel’s decision” and “looks forward to putting the matter behind us.”

  • During the first round of arbitrations in August 2018, Adocia was awarded $11.6 million in damages from Lilly for a disputed contractual milestone payment. The ongoing conflict began in January 2017 when Lilly decided to terminate its licensing agreement, originally signed in December 2014, for the ultra-rapid insulin in favor of its own internally-developed, next-generation mealtime insulin candidate LY900014, which has now been submitted to both the EU and Japan (US submission slated for 2019). This was similar to its decision in November 2011 to end a partnership with Amylin when it developed its own GLP-1. Lilly highlighted resource allocation as the rationale behind the decisions (it had also partnered Boehringer Ingelheim less than a year earlier). 

  • As a reminder, Adocia plans to file for phase 3 initiation of BC Lispro in the US, EU, and Japan in 1Q20. As we understand it, the company still plans to partner BC Lispro in regions outside of China, but it remains to be seen whether this partnership will come before or after phase 3 initiation. BC Lispro remains one of the most promising candidates in the rapid-acting insulin landscape and already boasts data from a head-to-head PK/PD trial with Fiasp demonstrating a faster offset.

  • Adocia ended 2Q19 with ~$23 million in cash and cash equivalents. The $23 million in cash for Adocia does not include the payment from Lilly, which will be ~$11.5 million plus interest. As we understand it, Adocia also has a French tax credit for R&D of ~$7 million. Management also reported $9.2 million in debt, with a net increase of $1.1 million from December 31, 2018.

 

--by Rhea Teng, Martin Kurian, Terry Vance, and Kelly Close