Phosphagenics Limited (ASX: POH) is a Melbourne-based biotechnology company focused on the development, sale and licensing of pharmaceutical and nutraceutical products.
The company has via a recent ASX release stated that a full and final settlement of all claims associated with the arbitration is now negotiated between all the parties, i.e., POH, Mylan, and Strides. This has now concluded the arbitration process. Following this news, the stock price of the company climbed up 300% on December 19, 2018.
On 6 January 2016, the company had announced that it had started an arbitration process against Mylan, through the filing of notices of arbitration at the Singapore International Arbitration Centre. On 12 November 2018, the Board of the company had announced that the Tribunal reached to a conclusion that the company was unsuccessful in all of its claims and that the Board must, therefore, take into account the regular adverse costs order. The company had spent approximately $5.6 Mn on arbitration and legal fees to that date. Since the date of this announcement, the parties have been preparing submissions on costs and subsequently negotiating the various settlement options.
In addition to the settlement agreement between the company and Mylan, the company has also agreed to an additional agreement with Strides. This is the same company from which Mylan had originally acquired the rights to TPM daptomycin as part of the acquisition of Agila. Hence, it was required for the company to reach a settlement with both companies.
The company and Mylan have now agreed to forego all the claims including arbitration costs. Also, it has been agreed to terminate the original MRA and Licensing Agreement.
Dr. Ross Murdoch, the company’s Chief Executive Officer said that the board was very disappointed with the result of the arbitration. However, the management has worked hard since then to reach an agreement that eliminates the chances for a substantial unfavourable order. Hence, the company is now very pleased to have a struck a deal which is supported by all the parties. This deal would avoid any substantial cash payments and would also provide a clear opportunity for further deals.
Dr. Greg Collier, the company’s Chairman added that the stated settlement is very significant for the company’s shareholders. He believes that the elimination of the chances for a substantial adverse costs order removes a significant concern for shareholders. It also eliminates the overhang on the company’s stock. This reached settlement coupled with the success which the company had over the past 12-24 months to strengthen the company’s fundamentals shall be taken as a positive going forth.
The company currently has a circa A$ 2.10 Mn cash at bank. This amount along with the budgeted revenue is sufficient enough to fulfill the net working capital requirements for the next twelve months.
Meanwhile, the share price of the company has fallen by 85.29 percent in the past six months as on 7 December 2018. POH’s shares traded at $0.008 with a market capitalization of circa $12.62 Million as on 19 December 2018 (AEST 04:00 PM).
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