For years, Napo Pharmaceuticals Inc. has been blaming its troubles on Salix Pharmaceuticals Ltd., a business partner that allegedly never delivered on a promise to promote a potentially lucrative Napo drug. On Tuesday, a state court jury in Manhattan told Napo to pin the blame elsewhere, handing a big win to Salix and its lawyers at Covington & Burling.
According to a Salix press release, jurors returned a verdict that the company didn’t breach a promise to use reasonable efforts to commercialize the Napo drug Fulyzaq (crofelemer), which is used to treat HIV-related diarrhea. Napo, which was represented by a Boies, Schiller & Flexner team led by William Ohlemeyer, put damages at about $260 million in damages in an expert report.
Napo, a tiny drug developer in San Francisco, sought Salix’s help to bring Fulyzaq to market. Under the terms of a 2008 partnership agreement, Salix agreed to help obtain regulatory approval for the drug. Salix also agreed to assist in the manufacturing of the drug and to promote it to doctors. The drug didn’t receive FDA approval until late 2012. An analyst estimated in February 2013 that the drug could hit $200 million in annual sales, and perhaps more if it’s approved for other uses.
Napo filed the suit in 2011, alleging that Salix stopped promoting Fulyzaq for the anticompetitive purpose of protecting one of its own drugs. “Napo is suing to recover substantial damages and terminate the license agreement so that it can work to assure that this drug attaints its full potential to help patients,” Boies Schiller’s Ohlemeyer said in a November press release hyping the trial.
After two days of deliberation, jurors sided entirely with Salix on Tuesday. “We were able to persuade the jury that Salix abided by the contract,” said Covington partner Anthony Herman, who represented Salix along with Benjamin Razi. “There was a failure of proof by Napo.”
Note: This article has been updated to correct a typo in comments attributed to Anthony Herman. We regret the error.