The war of nerves between Daewoong Pharmaceuticals and Medytox over the origin of their botulinum toxin (BTX) strain in the U.S. may have come to an end as the court dismissed Daewoong without prejudice.

Medytox had filed a suit against Daewoong and the latter’s U.S. partner Evolus for allegedly stealing the company’s botulinum toxin (BTX) strain to produce Nabota, an anti-wrinkle BTX treatment, in June last year.

During that time, the U.S. court ordered the companies first to settle the dispute in Korea, while the putting the case on hold saying that the matter will be discussed on April 13. Afterward, Medytox filed several complaints, including the prohibition of trade secret infringement, with the Seoul District Court last year.

Despite the previous minute order, the court dismissed Daewoong without prejudice on the grounds of forum non conveniens last Saturday. The court did not, however, dismiss the Medytox’s case against Evolus and added that the matter stays pending the resolution of proceedings in Korea.

After the court’s ruling, both companies immediately released statements claiming that the court decision favored them.

“Before the hearing, Daewoong and Evolus had requested the court to dismiss the case with prejudice for all the defendants,” Medytox said in a statement. “However, the court has rejected their request with a ‘dismiss without prejudice’ order for Daewoong and a stay order for Evolus.”

The term dismissed with prejudice means that the case matter can never come back to court, while dismissed without prejudice means that the plaintiff may bring the case back to court.

“As the court dismissed the case without prejudice, the company plan to refile the case after the lawsuit in Korea receives a ruling,” a company official said. "The decision of the U.S. court regarding Daewoong is only with regards to the jurisdiction of the case and the decision to maintain the lawsuit against Evolus shows that the court plans to review the matter after a thorough trial.”

The company also urged Daewoong to participate in a forum regarding the acquisition of the BTX strains owned by Daewoong with the related parties, experts, and regulators.

In response to Medytox’s statement, Daewoong argued that the case was over.

“The court has entered an order dismissing the case without prejudice as to the Daewoong defendants,” Daewoong said rephrasing their law firm’s comments. “This is a good result for Daewoong because it formally ends the case in California unless Medytox files an appeal.”

Daewoong’s law firm stressed that although Medytox has the right to refile the case, it is unlikely to do so.

“The dismissal is “without prejudice,” which means that Medytox could at some time in the future theoretically refile its trade secret case against Daewoong in the U.S.,” the law firm said. “In reality, however, the California court has made clear that the case against Daewoong must move forward in Korea and therefore it is unlikely that Medytox would be allowed to refile the same trade secret complaint in California.”

Daewoong claimed that Medytox’s suit against them would also soon fall apart.

Regardless of the case, however, Daewoong still has some problems in their efforts to enter the U.S. BTX market.

During Evlous’ initial public offering (IPO), the company stated that the litigation, although unpredictable, may not be favorable the company.

“If the Medytox litigation has a negative outcome for us, Alphaeon or Daewoong, it could result in us losing access to DWP-450, Nabota, and the manufacturing process and require us to negotiate a new license with Medytox for continued access to DWP-450,” the company said in its IPO form.

The U.S. Food and Drug Administration (FDA) has also raised issues with the company's claims regarding Nabota's superior quality last year. The FDA pointed out 10 problems with Daewoong Pharmaceutical’s Nabota plant, in a due diligence report last Monday.

According to the report, the factory’s aseptic processing areas are deficient regarding the system for monitoring environmental conditions. The U.S. agency also noted that the facility needs separate or defined areas or such control systems for the firm’s operation necessary to prevent contamination or mix-up during aseptic processing.

Daewoong said the company had dealt with these issues and expected to receive the FDA’s inspection result in May.

corea022@docdocdoc.co.kr

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