Australian biotechnology company Phosphagenics has commenced legal action against Mylan Laboratories, a wholly-owned subsidiary of Mylan Incorporated, by filing notices of arbitration at the Singapore International Arbitration Center.

Phosphagenics and Agila Specialties entered into a Master Research Agreement in 2011 and a Licensing Agreement in 2012 to develop and ultimately commercialize a formulation combining Phosphagenics’ proprietary TPM technology with the injectable antibiotic daptomycin, which is indicated for the treatment of complicated skin and skin structure infections, and staphylococcus aureus bloodstream infections.

In 2013 Mylan acquired Agila. A lead TPM/Daptomycin formulation is in the final stages of development by Mylan and, based on a patent filed by Agila, is expected to have commercial advantages over the existing formulation of daptomycin. Daptomycin currently is marketed by Merck under the brand name Cubicin, and is expected to have generic competition in the U.S in June 2016.

The arbitration notices assert that Mylan is liable for breaches of several provisions under the two relevant agreements, fraudulent or negligent misrepresentations, breaches of confidence and/or unjust enrichment in relation to intellectual property and commercial licensing terms, amongst others. The dispute has been referred to arbitration in Singapore, in accordance with the relevant agreements. The substantive hearing is expected to take place in late 2016. Meanwhile, the Licensing Agreement continues in full force and effect pending the Arbitrator's decision.

Phosphagenics already has planned for the legal costs associated with the arbitration proceedings in its 2016 budget. There is no assurance in respect of the outcome of the arbitration proceedings and Phosphagenics will, in accordance with its continuous disclosure obligations, notify the market of any material events as and when they occur.