Basilea awarded USD 130 million by arbitral tribunal

Basel, Switzerland, November 29, 2010 - Basilea Pharmaceutica Ltd. (SIX:BSLN) announced today that the tribunal has found Johnson & Johnson in breach of its License Agreement with Basilea. The tribunal awarded Basilea approximately USD 130 million as compensation for lost payments related to ceftobiprole, including milestones, other damages and interest.

The tribunal at the Netherlands Arbitration Institute has found Johnson & Johnson, Johnson & Johnson Pharmaceutical Research and Development, L.L.C. and Cilag GmbH International [collectively Johnson & Johnson] in breach of its License Agreement with Basilea, which caused the rejection of ceftobiprole, a novel anti-MRSA broad-spectrum antibiotic, by health authorities.

The tribunal awarded an amount of approximately USD 130 million, including lost milestones, other damages and interest. The award is immediately enforceable.

"This award in our favor has validated our grounds for arbitration," said Dr. Anthony Man, CEO of Basilea. "Ceftobiprole is a very innovative drug. It has activity against a wide range of bacteria, including MRSA and many Gram-negative pathogens, that no other single antibiotic can currently provide. Patients are dying from serious resistant bacterial infections in hospitals. This is a very unfortunate situation in which patients have not been able to access this potentially life-saving drug. We are pleased that we will gain full control of the development and commercialization of ceftobiprole. We are now focusing on completing the return of ceftobiprole to Basilea at the latest by February 2011 so that we can move forward with its future development and make this important drug available again to patients as soon as possible."

About ceftobiprole

Ceftobiprole is an anti-MRSA broad-spectrum cephalosporin antibiotic exhibiting activity against a wide spectrum of Gram-positive bacteria, including the 'superbug' methicillin-resistant Staphylococcus aureus (MRSA) and penicillin-resistant Streptococcus pneumoniae as well as many clinically important Gram-negative bacteria, including Pseudomonas spp. Ceftobiprole's key features may allow physicians to use it as the first treatment when MRSA is proven or suspected. The rights for ceftobiprole are being transferred back to Basilea from Cilag GmbH International, a Johnson & Johnson company.

Background information

In February 2010, the European Committee for Medicinal Products for Human Use (CHMP) stated to the sponsor Janssen-Cilag International NV, a Johnson & Johnson company, that inspections showed that the phase III studies supporting the Marketing Authorization Application (MAA) had not been conducted in compliance with Good Clinical Practice (GCP) in some sites. The CHMP indicated that, although the study results suggested that the medicine was beneficial to patients, it was concerned about how reliable the results were. The Committee therefore recommended that, in light of the uncertainty surrounding the results, ceftobiprole should not be granted marketing authorization.

In December 2009, the FDA issued to the sponsor Johnson & Johnson Pharmaceutical Research and Development, L.L.C. (Johnson & Johnson PRD) a Complete Response Letter on ceftobiprole for the treatment of complicated skin and skin structure infections (cSSSI), indicating that the Agency cannot approve the NDA in its present form. In order to address the deficiencies, the FDA recommended that two new, adequate, and well-controlled studies to evaluate the safety and efficacy of ceftobiprole for the treatment of cSSSI should be conducted.

In August 2009, the FDA issued to Johnson & Johnson PRD a Warning Letter on its role as a sponsor of clinical trials. The Agency noted that under the terms of the agreement between Basilea and Cilag GmbH International, a Johnson & Johnson company, all rights and responsibilities for ceftobiprole clinical trials were transferred to Johnson & Johnson PRD and the FDA concluded that Johnson & Johnson PRD did not adhere to the applicable statutory requirements or FDA regulations governing the conduct of clinical investigations. The FDA found numerous objectionable conditions during its investigation into Johnson & Johnson PRD's role as a sponsor of the two phase III trials of ceftobiprole for the treatment of cSSSI.

Due to the deficiencies identified by the FDA in Johnson & Johnson PRD's conduct of the clinical investigations and Basilea's claimed breaches of the License Agreement, Basilea submitted a Request for Arbitration under the License Agreement for ceftobiprole in February 2009. Basilea's claims under arbitration included that Johnson & Johnson PRD breached the License Agreement by, among other things, causing the delay in the approval of ceftobiprole in the U.S. and EU.

In 2008, the FDA issued an Approvable Letter and a Complete Response Letter to the sponsor Johnson & Johnson PRD. In the same year the CHMP made a recommendation for approval in Europe, which was subsequently suspended.

In 2007, Marketing Authorization Applications were submitted by Johnson & Johnson PRD and Janssen-Cilag in the U.S., Europe and other countries.

In February 2005, Basilea granted Cilag GmbH International an exclusive worldwide license to develop, manufacture and commercialize ceftobiprole.

Conference call

Basilea Pharmaceutica Ltd. invites you to participate in a conference call on Monday, November 29, 4 p.m. (CET), during which the company will discuss today's press release.

Dial-in numbers are:

+41 (0) 91 610 56 00
(Europe and ROW)

+1 (1) 866 291 4166
(USA)

+44 (0) 203 059 5862
(UK)
 

A playback will be available 1 hour after the conference call until Wednesday, December 1, 6 p.m. (CET). Participants requesting a digital playback may dial:

+41 (0) 91 612 4330
(Europe)

+1 (1) 866 416 2558
(USA)

+44 (0) 207 108 6233
(UK)
 

and will be asked to enter the ID 15440 followed by the # sign.

About Basilea

Basilea Pharmaceutica Ltd. is headquartered in Basel, Switzerland, and listed on the SIX Swiss Exchange (SIX:BSLN). Its fully integrated research and development operations are currently focused on antibiotics, antifungals and oncology drugs, as well as on the development of dermatology drugs, targeting the medical challenge of resistance and non-response to current treatment options in the hospital and specialty care setting.

Basilea is currently marketing Toctino® (alitretinoin), the only approved treatment for severe chronic hand eczema unresponsive to potent topical corticosteroids, in Denmark, France, Germany, Switzerland and the United Kingdom and has appointed distributors for Toctino® in other selected European markets, Canada and Mexico. Furthermore, a phase III clinical program on alitretinoin for the treatment of severe chronic hand eczema is ongoing in the U.S. The company has entered into a global partnership with Astellas Pharma Inc. for its phase III compound isavuconazole, a potential best-in-class azole antifungal, for the treatment of life-threatening invasive fungal infections. Full rights to ceftobiprole for the treatment of potentially life-threatening resistant bacterial infections, are being transferred from Cilag GmbH International, a Johnson & Johnson company, back to Basilea.

Disclaimer

This communication expressly or implicitly contains certain forward-looking statements concerning Basilea Pharmaceutica Ltd. and its business. Such statements involve certain known and unknown risks, uncertainties and other factors, which could cause the actual results, financial condition, performance or achievements of Basilea Pharmaceutica Ltd. to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Basilea Pharmaceutica Ltd. is providing this communication as of this date and does not undertake to update any forward-looking statements contained herein as a result of new information, future events or otherwise.

For further information, please contact:

Media Relations
Investor Relations

Adesh Kaul
Head Public Relations &
Corporate Communications
+41 61 606 1460
media_relations@basilea.com

Barbara Zink, Ph.D., MBA
Head Corporate Development

+41 61 606 1233
investor_relations@basilea.com


 

Posted: November 2010


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