Eteboxagu AB v Cycle Pharmaceuticals Ltd

Eteboxagu AB v Cycle Pharmaceuticals Ltd

On the true construction of the royalty agreement, rebates paid to PBMs are to be deducted before calculating 'gross income' for royalty purposes; neither Cardinal nor Diplomat are 'distribution partners' under the agreement; there is no estoppel by convention preventing Cycle from deducting rebates; Cycle is under an unqualified obligation to procure an auditor's certificate of Relevant Revenues, but the form and delivery of the certificate is a matter for Cycle to arrange with its auditors.

Parties
Claimant: ETEBOXAGU AB; Defendant: CYCLE PHARMACEUTICALS LTD
Jurisdiction
England and Wales
Judgment Date
06 March 2023
Procedural Posture
Commercial Contract Dispute / Judgment After Trial on Preliminary Issues
Outcome
Claim on principal issues dismissed; directions for further determination of quantum and interest if required
Legal Topics
Royalty Calculation, Contract Interpretation, Estoppel by Convention, Certification Obligations
Contract Law Commercial Law Royalty Calculation Contract Interpretation Estoppel by Convention Certification Obligations

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Parties

ETEBOXAGU AB

Claimant

CYCLE PHARMACEUTICALS LTD

Defendant

Procedural Posture

Commercial Contract Dispute / Judgment After Trial on Preliminary Issues

Legal Issues

  1. 1 Whether rebates paid to PBMs are deductible before calculating royalties under the Amended Agreement
  2. 2 Whether Cardinal or Diplomat are 'distribution partners' for royalty calculation purposes
  3. 3 Whether Cycle is estopped by convention from deducting rebates

Ratio Decidendi

On the true construction of the royalty agreement, rebates paid to PBMs are to be deducted before calculating 'gross income' for royalty purposes; neither Cardinal nor Diplomat are 'distribution partners' under the agreement; there is no estoppel by convention preventing Cycle from deducting rebates; Cycle is under an unqualified obligation to procure an auditor's certificate of Relevant Revenues, but the form and delivery of the certificate is a matter for Cycle to arrange with its auditors.

Court Disposition

Claim on principal issues dismissed; directions for further determination of quantum and interest if required

Orders

  • Rebates are deductible from 'gross income' for royalty calculation under the Amended Agreement
  • Neither Cardinal nor Diplomat are 'distribution partners' for the purposes of the agreement