German Federal Court of Justice upholds AOP’s license rights in Ropeginterferon and PEC’s liability for damages

AOP Orphan Pharmaceuticals announced that on Monday February 14, 2022 the German Federal Court of Justice decided on PEC’s challenge of the award in the dispute between AOP Orphan Pharmaceuticals GmbH and PharmaEssentia Corporation.

The company said that this decision confirmed that PharmaEssentia’s attempts to deprive AOP of its license rights in Ropeginterferon alpha-2b have failed. It upholds the award finding the License Agreement valid and PharmaEssentia liable for certain damages and dismissing all PharmaEssentia’s claims against AOP. However, it finds procedural flaws with respect to product supply and damage quantification, impacting the damages awarded. AOP will continue BESREMi sales and claim all damages.

AOP Orphan Pharmaceuticals reminded in its press release that since 2017 PharmaEssentia had repeatedly attempted to terminate the agreement with AOP concerning BESREMi (Ropeginterferon alfa-2b). In October 2020, after two and a half years of arbitral proceedings, the ICC Arbitral Tribunal issued its award in the matter. The award states that PharmaEssentia’s multiple attempts to terminate the agreement were unjustified, and that AOP is entitled to damages of over EUR 143 million for project delays caused by PharmaEssentia. The award also dismissed all of PharmaEssentia’s counterclaims against AOP.

In December 2020, PharmaEssentia filed an application with the Frankfurt Higher Regional Court to set aside this award, arguing that the award violated public order and PharmaEssentia’s right to be heard. In March 2021, the Frankfurt Higher Regional Court dismissed this application and declared the award enforceable.

In March 2021, PharmaEssentia filed an appeal against this court decision with the German Federal Court of Justice, requesting again that the award be set aside. On February 14, 2022, the German Federal Court of Justice decided that the Frankfurt Higher Regional Court correctly upheld the award with respect to the validity of the agreements and the dismissal of PEC’s counterclaims.

However, it found procedural flaws with respect to product supply and damage quantification. The decision has no implication regarding the merits of AOP’s claims against PEC and will only result in protracted further proceedings, the company said.

“We are satisfied that the German Supreme Court confirmed the validity of our development and commercialization license. We are of course disappointed that the Court found flaws in the reasoning regarding damages. But we have no doubt that we will ultimately also recover these confirmed damages in further proceedings. We will take all necessary steps in due course to have this ultimately confirmed by an enforceable arbitral award. Having said that, we will continue supplying BESREMi® to patients in Europe, the Middle East and territories where AOP is the holder of the developing and commercialization license rights” explains Dr. Rudolf Widmann, Founder and Board Member, AOP Health Group.