PBL Solutions alleges NZX-listed AFT Pharmaceuticals stole a drug they were jointly developing. Delays in issuing a court ruling means arguments over the drug’s potential profitability are now affected by a rival’s likely entry into the EU market, confirmed after last year’s High Court hearing.
Called ‘pascomer,’ the drug in dispute treats facial deformities caused by a rare genetic defect. Pascomer is claimed to be part of an orphan drug programme under development by AFT Orphan Pharmaceutical Ltd, a company owned by AFT and PBL. Pascomer is yet to receive regulatory approval for sales in the profitable US and EU markets. PBL is suing to recover its claimed entitlement to a share of the income stream likely to flow from Pascomer sales.
PBL alleges that AFT stole pascomer from their joint venture and that AFT is now developing and commercialising pascomer for its own benefit. AFT denies any theft and says in any event the present value of pascomer is nil. PBL values pascomer at between US$53 million and US$67 million; a variance explained by the time it takes to get regulatory approvals and the risk of a rival being first to market.
In 2022, battle was joined in the High Court with hearings concluded early December. Much of the evidence turned on the statistical possibility of pascomer ever getting regulatory approval or of ever being first.
In February 2023, a rival product cleared the first hurdle for EU regulatory approval. AFT was immediately back in court. No judgment had yet been issued subsequent to the December court hearing. AFT wanted further evidence admitted, requiring the trial judge to take into account that a rival was very likely to beat pascomer into the EU market. If accepted, this evidence would put a huge dent into any market valuation of pascomer.
Justice Fitzgerald refused to hear further evidence. The prospect of a rival beating pascomer to market was canvassed at trial, she said. Experts took this contingency into account when giving their valuations as to the present value of pascomer at date of the trial.
Justice Fitzgerald has yet to hand down her rulings on PBL’s 2022 claim. Should Justice Fitzgerald rule that AFT did steal pascomer, she has to ignore the fact that at least one contingency affecting future value which was canvassed at trial has come to fruition.
PBL Solutions Ltd v. AFT Pharmaceuticals Ltd – High Court (21.04.23)
23.054