The head office and logo of Valeant Pharmaceutical are pictured in Montreal in this file photo.Ryan Remiorz/The Canadian Press
Valeant Pharmaceuticals International Inc. has been ordered to pay US$100-million to Anacor Pharmaceuticals Inc. in an arbitration award, the companies announced Friday.
The award, once finalized, will resolve a breach of contract dispute arising out of services provided by Dow Pharmaceutical Sciences Inc. prior to its acquisition by Valeant.
Valeant (TSX:VRX) says the one-time payment covers damages plus costs and fees to Anacor (Nasdaq:ANAC)
It says the arbitrator did not grant an injunction or ongoing royalty, meaning it would not prevent the launch of its Jublia topical antifungal solution set for next year. Regulators had delayed its approval due to concerns about the container closure apparatus, says an industry analyst.
Anacor had sought an award of at least $215-million plus injunctive relief after it launched the arbitration proceedings last October. It claimed Valeant breached a 2004 master services agreement between Anacor and Dow related to "certain development services provided by Dow" to develop the product for the treatment of onychomycosis, a fungal infection of the nail.
"Anacor's assertions included breach of contract, breach of implied covenant of good faith and fair dealing, misappropriation of trade secrets and unfair competition," it stated in a news release.
Douglas Miehm of RBC Capital Markets described the adverse ruling as "negligible" for Valeant.
He estimates the total award equates to about 30 to 40 cents per share.
The interim award will become final within 10 days if no unresolved issues are presented. Valeant also has up to three months to appeal the decision through the California courts. The company couldn't be immediately reached for comment.
On the Toronto Stock Exchange, Valeant's shares lost 55 cents at C$114.82 in Friday morning trading.