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Anacor Pharmaceuticals Announces Settlement Agreement With Valeant Pharmaceuticals

Anacor Pharmaceuticals (NASDAQ:ANAC) today announced that it has entered into a settlement agreement with Valeant Pharmaceuticals International, Inc. (Valeant) related to all outstanding litigation, including its arbitration with Valeant, successor in interest to Dow Pharmaceutical Sciences, Inc. (DPS) and its ongoing dispute with Medicis Pharmaceutical Corporation (Medicis), which was acquired by Valeant in December 2012.

On October 17, 2013, Anacor announced that the arbitrator appointed to resolve its dispute with Valeant related to DPS issued an Interim Final Award in favor of Anacor, awarding Anacor $100 million in damages as well as all costs of the arbitration and reasonable attorney’s fees. On October 27, 2013, Anacor and Valeant agreed that Valeant would pay Anacor $142.5 million to settle all existing and future claims as well as the damages awarded in that arbitration as well as resolve its dispute with Medicis and all other disputes between Anacor, Valeant and DPS related to Anacor’s intellectual property, confidential information and contractual rights. Valeant has agreed to make payment to Anacor no later than November 8, 2013.

Background on the Arbitration with DPS

On October 24, 2012, Anacor provided notice to Valeant seeking to commence arbitration with JAMS of a breach of contract dispute under a master services agreement dated March 26, 2004 between Anacor and DPS. This agreement related to certain development services provided by DPS in connection with Anacor’s efforts to develop its topical antifungal product candidate for the treatment of onychomycosis. Anacor’s assertions included breach of contract, breach of implied covenant of good faith and fair dealing, misappropriation of trade secrets and unfair competition.

Background on Dispute with Medicis

On November 28, 2012, Anacor filed an arbitration demand with JAMS alleging breach of contract by Medicis under the February 9, 2011 research and development agreement between Medicis and Anacor seeking damages in the form of payment for the achievement of certain preclinical milestones under that agreement. On December 11, 2012, Medicis filed a complaint for breach of the Medicis Agreement and a motion for preliminary injunction in the Delaware Court of Chancery seeking to enjoin Anacor from prosecuting its claims through arbitration. On January 16, 2013, Anacor filed a motion requesting that the Delaware Court of Chancery dismiss the Medicis suit and send the dispute back to arbitration. On August 13, 2013, the Delaware Court of Chancery dismissed Anacor’s motion and ruled that it had jurisdiction over the dispute.

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