Kaye Scholer Client AstraZeneca Wins Affirmance from Second Circuit in Commercial Litigation Verus Pharmaceuticals, Inc. v. AstraZeneca AB

June 24, 2011

On June 24, the U.S. Court of Appeals for the Second Circuit issued a summary order in Verus Pharmaceuticals, Inc. v. AstraZeneca AB affirming the district court’s grant of client AstraZeneca’s motion to dismiss all nine claims against it and its wholly owned subsidiary Tika Läkemedel AB. The plaintiff, Verus Pharmaceuticals, a specialty pharmaceutical company, sought $1.28 billion in damages for fraud and breach of contract against AstraZeneca based on AstraZeneca’s alleged failure to perform under a trio of agreements pursuant to which Verus sold an experimental pediatric asthma treatment to Tika and retained the option to repurchase that treatment if, after a period of development, AstraZeneca decided not to take the drug to market.

Verus alleged that those agreements required AstraZeneca to reach certain developmental milestones before they had to decide whether to repurchase the assets. The Second Circuit disagreed, instead accepting AstraZeneca’s argument that it satisfied its contractual obligations by using “diligent efforts” in discontinuing development after it uncovered safety issues with the treatment in preclinical studies. The Second Circuit issued its written decision less than two days after it heard oral argument.

Aaron Rubinstein (Partner, New York Office) argued the case before the Second Circuit, and Aaron, Phillip A. Geraci (Partner, New York Office), Michael S. Bullerman and Aaron F. Miner (Associates, New York Office) wrote the successful appellate opposition brief and the dismissal briefs before the district court. The Second Circuit’s decision is available at 2011 WL 2516368; the district court’s decision is available at 2010 WL 3238965.


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