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Tables turn as USITC's initial determination favors Medytox

Medytox headquarters in Gangnam-gu, Seoul (Yonhap)
Medytox headquarters in Gangnam-gu, Seoul (Yonhap)
Medytox shares made a dramatic turnaround Tuesday, following the US International Trade Commission’s initial determination advising a 10-year sales ban on Daewoong Pharmaceutical’s Jeuveau.

The South Korean company and its US partner Allergan had filed a complaint against Daewoong and its partner Evolus at the USITC in 2019 contesting that the latter’s botulinum toxin Jeuveau that hit shelves in the US was a product of industrial poaching.

Medytox shares Tuesday shot up to the daily growth ceiling of 30 percent immediately after the market open and stayed there throughout the day up to the closing hour. Daewoong shares closed down 17 percent from a day before, despite the fact that it has a diverse portfolio of drugs other than BTX.

This is a turn of events for Medytox after the license for its signature BTX product Meditoxin was revoked by authorities in mid-June.

The USITC’s full text of the ruling is yet to be made public, however, the decision appears to uphold Allergan’s argument that Jeuveau undermines the BTX industry in the US, while eroding its investments. Allergan has been pushing its novel product that it is jointly developing with Medytox.

Medytox and Allergan forged a partnership in 2013 to develop and jointly commercialize the former’s botulinum liquid neurotoxin product. Clinical phase 3 trials, the final-stage human test of a drug before it gets commercialized, is underway in the US.

This botulinum liquid neurotoxin is made using the same C. Botulinum bacterium and certain manufacturing trade secrets that Medytox and Allergan contend have been misappropriated by Daewoong Pharmaceutical.

Daewoong contends that the USITC is only an administrative organization with no real judicial authority. It questioned the investigational capabilities of the USITC, citing “lack of staff assigned to the case” and a “hasty” investigation.

The company said the suggestion to ban sales is nonbinding and has no real effect until the final determination scheduled for Nov. 6.

Not only will Daewoong attempt to upend the initial determination, it announced that it acquired a $40 million convertible bond from its partner Evolus, to grant the partner ample funding to carry out aggressive marketing in the US.

Jeuveau was launched in the US market in May 2019. It earned an accumulated 40 billion won ($33.6 million) there in eight months after its release.

Medytox believes that it’s unlikely the verdict will flip, as decision reversals by the USITC are rare.

This news is a saving rope for Medytox, which is getting hammered with a series of bad business operations following COVID-19 and a license revocation of a drug.

In the first half of 2020, shares of Medytox were on a seemingly unredeemable dive. Its shares traded on the 300,000 won line in March, but slid to 200,000 won at the peak of the COVID-19 crisis and dropped further after the Ministry of Food and Drug Safety revoked the license of its cash cow product, Meditoxin. 

The local Drug Ministry pulled Meditoxin from shelves on June 18, citing use of unauthorized substances in vials of the drug manufactured between 2012 and 2015. There were no safety complaints from patients during the period, however.

Botulinum toxin, or BTX, is a bacterium that is used to correct undesirably developed muscles for aesthetic purposes and is used to make wrinkle-removing aesthetic injection, most commonly referred to as Botox after Allergan’s 2002 hit product. A raw form of BTX can be found in rusty cans, soil and in laboratories.

Medytox, claiming that Daewoong stole its trade secrets through an ex-researcher, has been legally pressing Daewoong to reveal the source of its BTX in Korea since 2016. The USITC’s initial determination will give Medytox a solid footing in the Korean courts, the company said.

A week before the USITC’s announcement, Medytox’s CEO Jung Hyun-ho purchased 1,450 company shares at 137,606 won each.

By Lim Jeong-yeo (kaylalim@heraldcorp.com)

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