A Medical Device Daily Staff Report

An arbitration panel has awarded Immtech Pharmaceuticals (Vernon Hills, Illinois) $1.9 million in a breach-of-contract dispute against Neurochem (Laval, Quebec). The decision was made by an arbitral tribunal of the International Chamber of Commerce Court of Arbitration (ICC).

The dispute concerned an agreement entered into between the companies in April 2002 under which Neurochem had the right to apply its anti-amyloid technology to test certain compounds to be provided by Immtech. The ICC denied the majority of Immtech's claims.

The tribunal held that Neurochem did not misappropriate any of Immtech's compounds, information or trade secrets and that Immtech was not entitled to any interest in, or assignment of, Neurochem's patent applications.

While the tribunal found that Neurochem had breached certain sections of the agreement, Immtech was awarded a total of $35,000 in damages, plus interest, in connection with a disputed milestone payment, and not the compensatory damages of up to $50 million or the punitive damages that Immtech had been claiming.

The tribunal denied Immtech's various other claims, including those based on fraud, negligence, breach of fiduciary relationship and unjust enrichment. It also denied Neurochem's counterclaims and awarded Immtech only a portion of the arbitration costs and of Immtech's related legal fees. In total the tribunal awarded Immtech about $1.9 million.

“We at Neurochem are clearly pleased with the award which denies the majority of Immtech's claims against Neurochem,” said Francesco Bellini, chairman, president and CEO of Neurochem.

Following an initial period of communications between the parties regarding the dispute, in August 2003, Immtech filed a lawsuit in the Federal District Court for the Southern District of New York against Neurochem alleging breach of contract, fraud, trade secret misappropriation and various other alleged torts for which Immtech sought preliminary and permanent injunctive relief, including a permanent assignment of the patent applications covering Neurochem's use of amidine compounds for the treatment and/or diagnosis of amyloid related disorders, and monetary damages.

In January 2004, Neurochem filed motions with the court to compel Immtech to arbitrate its disputes pursuant to the agreement.

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