Opinion ID: 2743434
Heading Depth: 3
Heading Rank: 2

Heading: Pexiganan

Text: Pexiganan was a topical cream for the treatment of diabetic foot infections. MacroChem Corp. (“MacroChem”) licensed the right to develop Pexiganan from Genaera in 2007. Under the terms of the license, Genaera would receive 8 payments totaling $7 million upon the achievement of certain development milestones, up to $35 million for reaching certain sales milestones, and 10% of sales as royalties. The complaint alleges that at some point in 2008, “MacroChem abruptly reversed course on Pexiganan,” App. at 86a, spending only $45,110 on development of Pexiganan that year. Defendant Access Pharmaceuticals acquired MacroChem in 2009, and ceased development of Pexiganan. The complaint alleges that Genaera had a right under its agreement with MacroChem to demand the return of Pexiganan if MacroChem ceased development, but the D&O defendants, in breach of their fiduciary duties, failed to exercise that right. Pexiganan was ultimately returned to Genaera Liquidating Trust in December 2009, after Genaera’s dissolution. The complaint implies that demanding the return of Pexiganan earlier and continuing its development could have staved off the need to dissolve Genaera. The complaint further alleges that the liquidating trustee ultimately sold Pexiganan in an improper, self-dealing transaction. Specifically, certain insiders from MacroChem founded a new company, Dipexium, which bid on Pexiganan in liquidation. The liquidating trustee set a short deadline for bidding, announcing the availability of Pexiganan on January 11, 2010, and setting a deadline of February 12, 2010, for bids. The complaint alleges that this short deadline favored the MacroChem insiders associated with Dipexium because they were already familiar with Pexiganan. Meanwhile, outside bidders had to await receipt of a “confidential information package,” review it, and perform pharmacological, regulatory, and valuation analyses, all in just one month before submitting their bids. Although Pexiganan’s sales potential for Genaera was allegedly 9 estimated to exceed $100 million, Dipexium ultimately acquired the rights to Pexiganan for a “minor purchase price” and free of any royalty and milestone payment obligations. The complaint does not contain the exact date of the sale. And, Schmidt contends that the earliest he could have known of Pexiganan’s sale price was 2011, when Argyce publicly issued unaudited financial statements for the year ended December 31, 2010, which, according to the complaint, evidences that Pexiganan was sold for approximately $252,000. The complaint alleges that about ninety days after buying the rights to Pexiganan, Dipexium raised $1.07 million in funding to develop the asset, and raised another $1.4 million ninety days after that.