Medytox-Daewoong Pharmaceutical Reach 'Tripartite Agreement' in US Botox Dispute... Domestic Litigation Risk Remains

Medytox Reaches Tripartite Agreement with Allergan and Evolus
US Disputes Resolved Except for Daewoong Pharmaceutical
Focus on Domestic Civil and Criminal Lawsuits

[Image source=Yonhap News]

[Asia Economy Reporter Kim Ji-hee] The dispute in the United States between Medytox and Daewoong Pharmaceutical over the botulinum toxin (Botox) strain has been settled for now. However, the spark of the 'Botox war' is not completely extinguished. On the 19th, Medytox and its partner Allergan (now AbbVie), along with Daewoong Pharmaceutical's partner Evolus, reached a tripartite agreement, returning the situation in the U.S. to the state before the International Trade Commission (ITC) lawsuit was filed. However, domestic litigation is still ongoing.

Industry analysis suggests that both companies have gained practical benefits from this agreement. Medytox agreed to grant the sales and distribution rights of Nabota in the U.S. in exchange for a settlement payment and royalties based on U.S. sales from Evolus. This allows Medytox to address its deteriorated cash flow through the settlement and royalties. Medytox and Allergan will receive a total settlement of $35 million (approximately 38 billion KRW) in installments over two years. Daewoong Pharmaceutical also views this positively as it resolves business risks in the U.S.

However, since Daewoong Pharmaceutical was excluded from the agreement, the final resolution of the Botox dispute, which has lasted six years, appears to have shifted to the domestic arena. On the 22nd, Daewoong Pharmaceutical CEO Jeon Seung-ho said in a phone interview with Asia Economy, "(This agreement) is significant in that business risks in developed countries have been completely resolved, enabling full-scale global business," but added, "Evolus agreed to suspend business for the remaining 19 months due to the economic damage of stopping operations, but the contract clearly states that this agreement is unrelated to intellectual property infringement or other issues." He continued, "Daewoong Pharmaceutical plans to focus on domestic litigation to resolve misunderstandings and legal disputes and prove its innocence."

Medytox also stated, "The evidence adopted in the ITC's final ruling has already been submitted as materials to domestic courts," and expressed expectations that "the domestic lawsuit, which has been stagnant since 2017, will gain momentum." Medytox anticipates that if it wins the lawsuit against Daewoong Pharmaceutical, it will receive damages, the return of strains and related technologies, and the disposal of Nabota production.

Additionally, Medytox announced on the same day that it acquired 16.7% of Evolus shares through this agreement, becoming the second-largest shareholder. Medytox acquired 6,762,652 shares of Evolus common stock worth approximately 53.5 billion KRW at $68 per share (about 75,000 KRW). With Medytox becoming Evolus's second-largest shareholder, concerns have been raised that Daewoong Pharmaceutical may face difficulties maintaining a stable partnership. After the ITC preliminary ruling last year, Daewoong Pharmaceutical acquired convertible bonds worth $40 million from Evolus. Since these bonds can be converted into shares at $13 per share, both companies would hold Evolus shares upon conversion.

Regarding this, CEO Jeon explained, "Although Medytox may gain economic benefits from acquiring shares, it cannot influence management. Daewoong Pharmaceutical holds product supply rights, and there is a contract between Evolus and Daewoong Pharmaceutical, so neither party can engage in actions harmful to the other, and the partnership remains intact."

This content was produced with the assistance of AI translation services.