July 6 to July 13, 2007, in Boston, Massachusetts: Arbitration Anhörung
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PART II — OTHER INFORMATION
ITEM 1. Legal Proceedings
Arbitration with GPC Biotech
On December 12, 2006, we filed a Demand for Arbitration with the American Arbitration Association against GPC Biotech AG (“GPC Biotech”) to address our exclusion from participating in sublicense fee income received by GPC Biotech, and to other non-monetary violations of our Co-Development and License Agreement, dated September 30, 2002, for satraplatin (the “License Agreement”).
In our March 29, 2007 Consolidated and Amended Demand for Arbitration and Answer to GPC Biotech’s Statement of Counterclaim (the “Amended Demand”), we allege that GPC Biotech’s material defaults of the License Agreement include (a) refusing, since December 2005, to pay us our share of $59.3 million in sublicense fee payments to be received by GPC Biotech from its European sublicensee, Pharmion GmbH; (b) refusing to negotiate in good faith over a co-promotion arrangement for the sale and marketing of satraplatin in the U.S.; (c) failing to acknowledge our license in GPC Biotech’s publicity materials, investor communications, and other literature; (d) failing on numerous occasions to provide notice to and to seek our advance input regarding proposed satraplatin-related public communications; (e) failing to use commercially reasonable endeavors to obtain regulatory approvals in Japan; (f) failing to timely provide us with copies of all FDA submissions and correspondence; and (g) other actions taken in disregard of GPC Biotech’s obligations. As a result, in the Amended Demand, we seek, inter alia, an award (1) declaring that we may terminate the License Agreement; (2) ordering GPC Biotech to pay us damages in an amount no less than $11.86 million, plus interest; (3) ordering GPC Biotech to provide us with a full accounting of all supply purchases and other transactions giving rise to obligations to make payments to us; and (4) damages, interest, double or treble damages, and attorneys’ fees and costs.
GPC Biotech filed an Answer to our Amended Demand, denying the allegations therein. Additionally, as part of its initial Answer to our original Demand, GPC Biotech filed a Statement of Counterclaim. In its Statement of Counterclaim, GPC Biotech alleges that it did not materially breach the License Agreement and that our notice of default, attempted termination, and filing of the Arbitration were made in bad faith and constitute a material breach of the License Agreement. Accordingly, GPC Biotech seeks, inter alia, (1) a declaration that it has not defaulted and is not in default of any material obligation under the License Agreement; (2) a declaration that our alleged “bad-faith misconduct” discharges GPC Biotech of any duty to further negotiate a co-promotion agreement for satraplatin in the United States; (3) a perpetual, paid-up, royalty-free worldwide license to satraplatin; (4) damages, double or treble damages, and attorneys’ fees and costs. In our initial and amended Answer to GPC Biotech’s Statement of Counterclaim, we denied the material allegations of the Counterclaim and have alleged that the “Counterclaim is baseless and should be denied in its entirety.”
A three member arbitration panel has been selected and has met. We are currently in fact discovery. The arbitration hearing has been set for July 6 to July 13, 2007, in Boston, Massachusetts.
No assurance can be given as to whether we will prevail with respect to this arbitration.
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