Novo Nordisk Sues KBP Biosciences for $830M in Alleged Fraud Over Kidney Drug Deal
Novo Nordisk, the Danish pharmaceutical giant, has initiated legal proceedings against Singapore-based KBP Biosciences, seeking $830 million in damages over an alleged fraud involving a hypertension and kidney disease drug. The lawsuit, filed in New York, comes after Novo Nordisk's acquisition of the drug ocedurenone in a deal worth up to $1.3 billion in October 2023.
Failed Clinical Trials and Fraud Allegations
Ocedurenone, initially touted for its "best-in-class potential" by Novo Nordisk's Head of Development Martin Holst Lange, was removed from the company's pipeline in November 2024 following a failed Phase III trial in chronic kidney disease. The failure resulted in an $800 million impairment charge for Novo Nordisk.
In its lawsuit, Novo Nordisk alleges that KBP Biosciences and its founder, Dr. Zhenhua Huang, knowingly withheld crucial information during the sale process. According to a ruling by the Singapore International Commercial Court, KBP failed to disclose material information, including:
- Phase II data showing ocedurenone's ineffectiveness
- Quality and compliance issues at a test site that produced false positive results
The judge stated, "Dr. Huang arguably knew and participated in these misrepresentations," noting his position as founder, executive chairman, and 40% shareholder of KBP Biosciences.
Asset Freeze and Financial Implications
In a preemptive move, Novo Nordisk successfully appealed to the Singaporean court to freeze the assets of Dr. Huang. This action was taken after KBP transferred $339.1 million to its holding company and declared $578.5 million in dividends, which the court viewed as potentially intended to remove assets from Novo Nordisk's reach.
The $830 million in damages sought by Novo Nordisk roughly equates to the amount already paid through the terms of the original deal. This legal action underscores the significant financial stakes in pharmaceutical acquisitions and the importance of due diligence in industry transactions.
Industry Impact and Future Outlook
The case highlights the risks associated with high-value pharmaceutical deals and the potential consequences of alleged fraudulent practices in drug development. Novo Nordisk had hoped that ocedurenone, a nonsteroidal mineralocorticoid receptor antagonist (nsMRA), would compete with Bayer's approved nsMRA, Kerendia, in the lucrative kidney disease market.
As the litigation unfolds, the pharmaceutical industry will be closely watching for potential repercussions on future collaborations and acquisition strategies. The outcome of this case may influence how companies approach due diligence and risk assessment in future drug development partnerships.
References
- Novo Seeks $830M in Fraud Case Against Singaporean Biotech Over Kidney Drug
Back in 2023, Novo Nordisk committed up to $1.3 billion for a hypertension and kidney disease drug from KBP Biosciences. Now, the pharma giant claims to have been misled by the biotech’s founder—and a judge seems to agree.
- Novo Nordisk to sue KBP Biosciences over alleged fraudulent claims on kidney disease drug
After its potential kidney disease drug went down in flames late last year, Novo Nordisk is pinning the blame on alleged fraudulent claims by the drug’s original maker. The Danish pharma giant plans to seek $830 million in damages from Singapore-based KBP Biosciences and KBP’s founder and executive chairman, Zhenhua Huang, Ph.D.
Explore Further
What are the key terms of the original $1.3 billion deal between Novo Nordisk and KBP Biosciences for the acquisition of ocedurenone?
How does the efficacy and safety data of ocedurenone compare to those of Bayer's Kerendia in the kidney disease treatment market?
What competitive advantages did ocedurenone initially have that led Novo Nordisk to pursue this acquisition?
Are there other pharmaceutical companies currently involved in legal disputes over similar BD transactions in the hypertension and kidney disease sector?
What are the profiles of KBP Biosciences and Dr. Zhenhua Huang that might have influenced the outcome of this deal?