(Alliance News) - Faron Pharmaceuticals Oy on Monday said it has filed a request for arbitration, seeking damages from Rentschler Biopharma SE, which has breached a Traumakine drug substance manufacturing agreement between the two companies.
Traumakine is being developed by Faron as a treatment for acute respiratory distress syndrome.
An AIM-listed clinical stage biopharmaceutical company, Faron announced in its half-year results on September 23 that the process being used to make Traumakine's active ingredient would need "significant upgrading" for Faron to ever obtain a biologics license application in the US or marketing authorisation application in the EU.
Back in October, Rentschler had terminated the agreement to manufacture the active ingredient in Traumakine. At the time, Faron said it understood Rentschler's decision to terminate the agreement related to the need for upgraded manufacturing to make Traumakine's active ingredient.
On Monday, Faron said it has carried out a detailed investigation into the circumstances around the manufacturing arrangements and concluded that the termination of the agreement was without merit and breaches the underlying agreement between the parties. Faron said it also considers Rentschler to have otherwise breached the agreement.
"As a remedy, the company has filed a request for arbitration with the Arbitration Institute of the Stockholm Chamber of Commerce seeking damages," Faron said in its statement Monday.
To pay for the proceedings, Faron said it has entered into a litigation funding agreement with an undisclosed third-party recovery services provider offering non-recourse financing which is expected to cover both legal expenses and the adverse party costs.
Faron shares were trading 2.2% lower in London on Monday morning at 267.00 pence each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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Faron Pharma (FARN)