Matthew Parker KC successfully defends claim under a royalty payment agreement

Matthew Parker KC has achieved another success, this time acting for Cycle Pharmaceuticals Ltd, the supplier of a drug known as Nityr® which is used in the treatment of hereditary tyrosinemia type 1 (HT-1). Cycle is party to an agreement under which it pays royalties based on its “relevant revenues”, which in turn comprise its “gross income” on sales of the drug, less certain specified deductions.

In a judgment handed down on 6 March 2023, Miss Julia Dias KC, sitting as a Deputy Judge, held that, on the proper construction of the agreement, Cycle is entitled to deduct the substantial rebates paid to pharmacy benefit managers in the United States for the purposes of calculating its gross income: Eteboxagu AB v Cycle Pharmaceuticals Ltd [2023] EWHC 462 (Comm). The Claimant had contended that such rebates were to be disregarded and that Cycle had underpaid royalties of around US$1.5m to date and on a continuing basis under the agreement.

The Deputy Judge also dismissed a claim that Cycle was estopped from contending that this was the proper construction of the agreement and dismissed a further claim that a distributor, Cardinal, and a speciality pharmacy, Diplomat, who were both involved in the supply of Nityr® in the United States, were Cycle’s “distribution partners” for the purposes of the royalty payment agreement.

Matthew was instructed by Oliver Glynn-Jones and Grace Boos of Goodwin Procter (UK) LLP.

Shortly before judgment was handed down, it was announced that Miss Dias KC has been appointed as a Justice of the High Court, with effect from 20 March 2023. 3VB congratulates Miss Dias KC on her appointment and wishes her well in her new role.