K-V Pharmaceutical obtains court approval of Gedeon Richter settlement

By Caroline Salls

Pittsburgh, Aug. 15 - K-V Pharmaceutical Co. received court approval of a settlement with Gedeon Richter plc and Gedeon Richter USA that resolves issues related to pre-bankruptcy agreements, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

K-V Pharmaceutical and Gedeon Richter are party to numerous pre-bankruptcy agreements, including manufacturing and supply agreement and a definitive business transfer agreement.

In addition, K-V and Gedeon Richter each have intellectual property and other rights related to Evamist, an estradiol transdermal spray.

As a result of a sale of generic products and entry into a consent decree, K-V said it no longer has the ability to manufacture its Gynazole or Clindesse products in accordance with the Gedeon agreements.

Installment payment dispute

According to the motion, Gedeon Richter is required to pay K-V $7 million in two installments under the definitive agreement.

The company said Gedeon made the first $3.5 million payment, with the second installment payment required to be paid within one year of Gedeon's receipt of regulatory approval related to the manufacture of Clindesse.

Gedeon Richter was required to seek regulatory authority for the manufacture of Clindesse in parallel with obtaining the same approval for Gynazole, but in no event later than 12 months after seeking the approval in connection with Gynazole.

Although Gedeon obtained regulatory approval to manufacture Gynazole, it has not sought approval for Clindesse nor has it made the second installment payment, K-V said.

K-V claims Gedeon Richter failed to comply with its obligation to seek regulatory authority approval for Clindesse, which would have triggered its obligation to make the installment payment within one year, and that Gedeon remains responsible for making the payment.

Meanwhile, Gedeon Richter claims that it is not responsible for making the installment payment or to seek regulatory authority to manufacture Clindesse as a result of alleged breaches of the definitive agreement by K-V.

Settlement terms

Under the settlement, the Gynazole and Clindesse agreements will be terminated, subject to specified conditions.

Also, Gedeon will pay $2.3 million to K-V to resolve the installment payment dispute.

The parties also agreed to discuss the supply of Evamist to K-V from Gedeon Richter.

K-V Pharmaceutical, a St. Louis specialty pharmaceutical company, filed for bankruptcy on Aug. 4, 2012. Its Chapter 11 case number is 12-13346.

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