REUTERS - Glenmark Pharmaceuticals said on Tuesday it has sought an arbitration in the U.S. as Napo Pharmaceuticals has no basis for terminating a collaboration agreement with it to develop and market an HIV-associated diarrhoea drug.
Napo Pharma had terminated the pact on November 10, according to a press release posted the U.S.-based firm's website.
The move is a fresh hurdle to Glenmark's ambitious plans to exclusively market the drug, Crofelemer, in 140 countries.
Reacting to the news, shares of Glenmark declined more than 6 percent in early trade in a volatile Mumbai market. At 11:31 a.m. (0601 GMT), the stock was down 5.2 percent at 291 rupees.
Glenmark, along with U.S.-based partners Napo and Salix Pharmaceuticals has developed Crofelemer, the first ever drug developed by an Indian firm.
According to the licensing agreement, Glenmark holds the exclusive rights to distribute Crofelemer in 140 countries while Salix would sell it in regulated markets such as North America, Japan and Europe.
Napo Pharma was the initial developer of the molecule who licensed it out to Glenmark and Salix.
Glenmark, in a press release on Tuesday, vehemently denied Napo had any basis to terminate the agreement and that it was seeking a declaration from an arbitration panel that Napo's claims of breach were unfounded.
The Mumbai-based firm, in August, had filed for arbitration claims against Napo Pharma to prevent the latter from distributing Crofelemer in Glenmark's territories through relief agencies.
"We believe that the licensing fees and other payments received by Glenmark need not be paid back in case the development process for Crofelemer is terminated," Nomura said in a note.
Glenmark in July received $15 million from Salix Pharma towards upgrading the manufacturing facility for Crofelemer and is expected to get $6.6 million in five equal instalment.
(Reporting by Kaustubh Kulkarni and Manoj Dharra in MUMBAI; Editing by Rajesh Pandathil)
