Case 1:22-cv-00915-VM Document 1 Filed 02/02/22 Page 1 of 11
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`CUMBERLAND PHARMACEUTICALS
`INC.,
`
`
`Plaintiff,
`
`
`
`-against-
`
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`MELINTA THERAPEUTICS, LLC and
`TARGANTA THERAPEUTICS
`CORPORATION,
`
`
`Defendants.
`
`Case No.
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`
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`
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`COMPLAINT
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`Plaintiff Cumberland Pharmaceuticals Inc. (“Cumberland”), by its undersigned counsel, as
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`and for its Complaint against defendant Melinta Therapeutics, LLC (“Melinta”) and Targanta
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`Therapeutics Corporation (“Targanta”), alleges as follows:
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`NATURE OF THE ACTION
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`1.
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`This is an action for breach of contract, specifically, an Agreement by which
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`defendant Targanta was granted a license to develop certain pharmaceutical products subject to
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`the grantor’s patents and assistance with the use of a cyclodextrin in those pharmaceutical products
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`in exchange for certain fixed payments in addition to royalties on net sales of said products. The
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`grantor’s rights were assigned to plaintiff Cumberland, and defendant Melinta acquired Targanta
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`as its wholly owned subsidiary. Thereafter, Melinta successfully incorporated a cyclodextrin into
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`a product, and filed for and obtained FDA approval of a product pursuant to the Agreement, but
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`failed and refused to pay Cumberland $1 million of fixed payments due. Cumberland seeks
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`recovery of the $1 million of payments due and unpaid under the Agreement.
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`Case 1:22-cv-00915-VM Document 1 Filed 02/02/22 Page 2 of 11
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`THE PARTIES
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`2.
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`Plaintiff Cumberland was at relevant times and is a Tennessee corporation with its
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`principal offices located in Nashville, Tennessee.
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`3.
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`Upon information and belief, prior to around November 1, 2020 Melinta was a
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`Delaware corporation known as Melinta Therapeutics, Inc., and since then has been and currently
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`is a Delaware limited liability company known as Melinta Therapeutics, LLC, with its principal
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`business offices located in Morristown, New Jersey. Upon further information and belief:
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`a.
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`Melinta’s members are Deerfield Private Design Fund III, L.P. (“Deerfield
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`Fund III”), a Delaware limited partnership, and Deerfield Private Design Fund IV, L.P.
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`(“Deerfield Fund VI”), a Delaware limited partnership, both of which have their principal
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`offices in New York, New York.
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`b.
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`Deerfield Fund III’s general partner is Deerfield Management III, L.P., the
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`general partner of which is J.E. Flynn Capital III, LLC, the sole member of which is James
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`E. Flynn, who is domiciled in New York.
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`c.
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`Deerfield Fund IV’s general partner is Deerfield Management IV, L.P., the
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`general partner of which is J.E. Flynn Capital IV, LLC, the sole member of which is James
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`E. Flynn, who is domiciled in New York.
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`4.
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`Plaintiff has been unable to determine from publicly available information the
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`identities of Deerfield Fund III’s and Deerfield Fund IV’s limited partners, but has found no
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`indication that any such limited partner is domiciled in or otherwise deemed a citizen of Tennessee,
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`and on that basis alleges upon information and belief that no partner of Deerfield Fund III or
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`Deerfield Fund IV is a citizen of Tennessee.
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`5.
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`Upon information and belief, defendant Targanta was at relevant times and is a
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`Delaware corporation with its principal offices located in Morristown, New Jersey. Since around
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`November 2018, Targanta has been a wholly owned subsidiary of Melinta.
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`JURISDICTION AND VENUE
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`6.
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` This Court has diversity jurisdiction over the subject matter of this action pursuant
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`to 28 U.S.C. § 1332, because this action is between a citizen of the State of Tennessee and citizens
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`of other States, and the amount in controversy exceeds $75,000.
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`7.
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`This Court has personal jurisdiction over each of defendants and venue is proper in
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`this Court because each of defendants assented to the jurisdiction and venue of this Court as a party
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`to the Agreement under and in relation to which this action arises, Article IV of which states as
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`follows:
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`
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`The parties hereto shall attempt to settle any dispute arising out of or relating
`to this Agreement in an amicable way. In the event that such attempts should
`fail, then the parties can take such actions as are available at law under the
`laws of the State of New York, United States of America, with venue for
`any such dispute being New York City, New York.
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`FACTUAL BACKGROUND
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`The Agreement
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`8.
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`At all relevant times, non-party Theravance Biopharma Ireland Limited
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`(“Theravance Ireland”) owned and/or controlled, either directly and/or indirectly through
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`subsidiary and/or affiliated entities, certain duly registered patents and/or patent applications in
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`connection with the use of a cyclodextrin in pharmaceutical applications (referred to herein
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`collectively as the “Patents”).
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`9.
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`On or around December 19, 2016, Theravance Ireland entered into an Agreement
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`with Targanta (the “Agreement”), pursuant to which it granted Targanta an exclusive, world-wide
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`license to develop and commercialize certain products under the Patents and assistance in using a
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`cyclodextrin in pharmaceutical applications, in exchange for Targanta’s payment of certain
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`specified, fixed payments in addition to royalties on net sales of licensed products.
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`10.
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`On or around November 28, 2017, Targanta’s parent company, The Medicines
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`Company (“TMC”), as seller, entered into a Purchase and Sale Agreement with Melinta’s
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`predecessor, Melinta Therapeutics, Inc., as buyer, whereby Melinta Therapeutics, Inc. acquired
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`Targanta and all of Targanta’s rights and obligations under the Agreement.
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`11.
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`On or around November 1, 2018, Theravance Ireland and its affiliate Theravance
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`Biopharma USA, Inc. (referred to herein collectively with Theravance Ireland as “Theravance”),
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`as seller, entered into an Asset Purchase Agreement with Cumberland, as buyer, whereby
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`Cumberland acquired Theravance’s and its subsidiaries’ assets including, among other things,
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`rights and interests regarding the Patents and under various “Business Contracts” to which
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`Theravance and/or any of its subsidiaries were party, and assumed the post-closing liabilities under
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`such Business Contracts.
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`12.
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`In particular, Melinta acquired Targanta and all of its rights and obligations under
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`the Agreement and expressly assumed Targanta’s post-closing liabilities under the Agreement.
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`13.
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`On or around January 7, 2019, a Notice of Recordation of Assignment of the Patents
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`to Cumberland was filed in the United States Patent and Trademark Office.
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`14.
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`By written notice dated December 17, 2018, Theravance informed Targanta that
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`effective as of November 12, 2018, Theravance “hereby assigns, transfers, conveys, delivers and
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`delegates to Cumberland all of its rights, title, interests and obligations under the [License]
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`Agreement along with any amendments, exhibits, attachments, statements of work, purchase
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`orders, quotations and other collateral documents
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`thereunder (collectively, ‘Collateral
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`Agreements’).”
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`15.
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`Upon information and belief, on or around November 1, 2020 Melinta
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`Therapeutics, Inc. converted itself from a Delaware corporation to a Delaware limited liability
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`company and became Melinta Therapeutics, LLC (“Melinta”, a defendant herein).
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`The Grants
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`16.
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`As set forth in the Recitals of the Agreement, “Targanta intend[ed] to use a
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`cyclodextrin in the development and commercialization of injectable oritavancin for the treatment
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`of gram positive bacteria in humans.”
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`17.
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`As set forth in Section 1.1 of the Agreement, Targanta was granted
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`an exclusive, royalty bearing, worldwide license to make or have made, use,
`sell or have sold, and import, or more generally to develop and
`commercialize product(s) under the Patents in the Field and in the Territory.
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`18.
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`The Patent registrations and applications which are the subject of the Agreement
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`are set forth in Exhibit I to the Agreement.
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`19.
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`As set forth in Section 17.2 of the Agreement, the term “Field” is defined as
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`“injectable oritivancin for the treatment of gram positive bacteria in humans”, and as set forth in
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`Section 17.7 of the Agreement, the term “Territory” means “the world.”
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`20.
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`As set forth in Section 17.5 of the Agreement, the term “Product” is defined as “a
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`composition comprising a cyclodextrin and oritavancin or pharmaceutically acceptable salt thereof
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`which infringes a Valid Claim of a Patent.”
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`21.
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`As set forth in Section 17.8 of the Agreement, the term “Valid Claim” is defined as
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`a claim in a Patent which has not lapsed or become abandoned and which
`claim has not been declared invalid or that has not been finally rejected by
`a court of competent jurisdiction or a patent authority such as, e.g., the
`European Patent Office or which has not been admitted to be invalid or
`unenforceable through reissue or disclaimer.
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`22.
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`Further, under Section 1.3 of the Agreement, “Targanta is entitled to grant
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`sublicenses within the Field in the Territory” subject to the terms set forth therein.
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`23.
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`As set forth in Section 5.2 of the Agreement, Targanta was also granted assistance
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`from Theravance “whenever the regulatory authorities in any county of the Territory have
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`questions in relation to a cyclodextrin and the use thereof in pharmaceutical applications.”
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`Targanta’s Payment Obligations
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`24.
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`As set forth in Sections 2.1 and 2.2 of the Agreement, in partial consideration of
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`the rights and license granted to it, Targanta agreed “to pay a royalty of three percent (3%) on all
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`Net Sales for the license under the Parents”, subject to the following:
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`Targanta's obligation to pay patent royalties hereunder will remain in effect
`on a country-by-country basis until expiration of the last Patent in the
`subject country having a Valid Claim covering the Product. The patent
`royalties shall cease on a country by country basis upon expiration of the
`Patent in the subject country. No patent royalties shall be due for sales in
`any country not having a Patent with a Valid Claim covering the Product.
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`25.
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`The definition and calculation of “Net Sales” are set forth in Sections 17.3 and 17.4
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`of the Agreement.
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`26.
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`As set forth in Section 2.3 of the Agreement, in additional consideration of the
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`rights and license granted to it, Targanta agreed to make certain one-time “Milestone Payments”,
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`as follows:
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`• A one-time US$500,000 payment shall be paid by either December 21,
`2016 if payment is made by check, or by December 30, 2016 if payment is
`made via wire;
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` •
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` A one-time US$500,000 payment shall be paid within thirty (30) days
`following the first filing by Targanta in the United States of an sNDA in
`relation to the Product; and
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` •
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` A one-time US$500,000 payment shall be paid within thirty (30) days
`following the approval of the first sNDA in relation to the Product.
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`27.
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`Under Section 17.6 of the Agreement, the term “sNDA” is defined as “a
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`supplemental New Drug Application (“NDA”) which is an application for approval of specific
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`changes to an already approved NDA.”
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`28.
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`As set forth in Article 3 of the License agreement, Targanta is obligated to pay
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`royalties and to submit preliminary and final sales reports, in relevant part, as follows:
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`3.1 Within twenty (20) calendar days following each calendar quarter,
`Targanta shall submit to Theravance a preliminary sales report
`showing its total sales of Product in the Territory in units and Net
`Sales value. Such preliminary sales report shall also include a
`preliminary royalty report containing a calculation of the royalty due
`and payable to Theravance. Within forty-five (45) calendar days
`following each calendar quarter, Targanta shall submit
`to
`Theravance a final royalty report.
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`3.2
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`
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`Together with such final royalty report, Targanta shall pay the
`royalty due and payable. All royalty payments to be made by
`Targanta to Theravance shall be converted into US Dollars at the
`average rate of exchange for the calendar quarter for which royalty
`payments are being remitted according to Targanta's normal
`procedures, as consistently applied by Targanta for its other
`products. …
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`Defendants’ Breaches of the Agreement
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`29.
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`Upon information and belief, Targanta paid the first one-time payment of $500,000
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`which was due by December 30, 2016 under Section 2.3 of the Agreement, but defendants have
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`made no further payments under Section 2.3 of the Agreement.
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`30.
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`On or about May 13, 2020, Melinta filed a new drug application (“NDA”) to the
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`United States Food and Drug Administration (“FDA”) for KIMYRSATM, described as “a new
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`formulation of oritavancin in a single-dose, 1200 mg/vial, for intravenous infusion over 1 hour for
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`the treatment of adult patients with acute bacterial skin and skin structure infections caused by
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`designated susceptible Gram-positive microorganisms.” As stated in the product label, KIMYRSA
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`contains a cyclodextrin.
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`31.
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`As such, KIMYRSA is a “Product” as defined in the Agreement and thereby subject
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`to the license granted therein.
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`32.
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`On or about March 12, 2021, the FDA issued its approval of KIMYRSA to Melinta,
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`subject to the conditions and requirements set forth in the FDA’s approval letter of that date.
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`33.
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`On April 29, 2021, Cumberland wrote to Melinta seeking payment of the two
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`Milestone Payments, totaling $1 million, which were triggered and due under Section 2.3 of the
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`Agreement as a result of Melinta’s NDA for KIMYRSA and the FDA’s subsequent approval.
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`34.
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`On May 21, 2021, Melinta denied that the Milestone Payments were due under the
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`Agreement, asserting that “the milestone triggers under the referenced agreement are explicitly
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`tied to the filing of and approval of an sNDA, not an NDA, which [was] the regulatory approval
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`pathway utilized by Melinta”; Melinta did not, however, deny that KIMYRSA is a “Product” as
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`defined in the Agreement.
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`35.
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`Just a few weeks later, on or about June 11, 2021, Melinta filed a supplemental new
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`drug application (sNDA) for KIMYRSA to the FDA, seeking to align the prescribing information
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`for KIMYRSA with the prescribing information for another Melinta drug, Orbactiv (oritavancin)
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`for injection.
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`36.
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`On or about July 23, 2021, the FDA issued its supplemental approval of Melinta’s
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`sNDA for KIMYRSA.
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`37.
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`By letter dated June 24, 2021, Cumberland, through counsel, notified Melinta that
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`it was in breach of the Agreement, and again demanded payment of the Milestone Payments
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`totaling $1 million due under Section 2.3 of the Agreement.
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`38.
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`By letter dated August 16, 2021, Melinta, through counsel, continued to deny its
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`obligation to pay the Milestone Payments due under the Agreement.
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`39.
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`In its counsel’s August 16, 2021 letter, notwithstanding Melinta’s previous position
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`that “the milestone triggers under the referenced agreement are explicitly tied to the filing of and
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`approval of an sNDA, not an NDA,” now that Melinta had actually filed and received FDA
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`approval for an sNDA for KIMYRSA, its counsel asserted that the sNDA still did not trigger its
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`obligation to pay the Milestone Payments under Section 2.3 of the Agreement.
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`40.
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`In its counsel’s August 16, 2021 letter, Melinta again acknowledged that
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`KIMYRSA is a “Product” subject to the Agreement, stated that Melinta expected to begin sales of
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`KIMYRSA during the third quarter of 2021, and represented that Melinta would meet its
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`obligations to pay royalties to Cumberland under Section 2.1 of the Agreement.
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`41.
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`Despite that representation, Melinta failed to provide to Cumberland the
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`preliminary sales report due within 20 days of the end of the third quarter of 2021 (i.e., by October
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`20, 2021) as required under Section 3.1 of the Agreement; Melinta also failed to provide to
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`Cumberland the final sales report and royalty payment due within 45 days of the end of the third
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`quarter of 2021 (i.e., by November 14, 2021) as required under Sections 3.1 and 3.2 of the
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`Agreement.
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`42.
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` By letter sent by email on November 15, 2021, Cumberland, through counsel,
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`demanded that Melinta provide the sales reports and royalty payment due under the Agreement.
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`43.
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`Later on that same date, November 15, 2021, Melinta sent Cumberland a sales
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`report for the third quarter of 2021 indicating total Net Sales of KIMYRSA and calculating the
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`corresponding three percent royalty together with Melinta’s royalty payment in the calculated
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`amount.
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`44.
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`To date, Melinta has not paid Cumberland the Milestone Payments totaling $1
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`million that are overdue under the Agreement.
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`COUNT I
`(Breach of Contract)
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`45.
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`Plaintiff Cumberland hereby incorporates the foregoing paragraphs 1 through 44 as
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`if fully set forth herein.
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`46.
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`The Agreement constitutes a valid, enforceable contract between plaintiff
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`Cumberland and defendant Targanta.
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`47.
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`Defendant Melinta has acquired Targanta and all of its rights and assumed all of
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`Targanta’s liabilities under the Agreement, and thus is equally liable with Targanta for any breach
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`of the Agreement.
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`48.
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`Plaintiff Cumberland has performed and continues to perform its material
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`obligations under the Agreement.
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`49.
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`As set forth above, defendants have materially breached the Agreement by failing
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`and refusing to pay Cumberland the two Milestone Payments due and owing thereunder.
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`50.
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`As result of defendants’ breach, plaintiff has been damaged in the amount of $1
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`million, and is entitled to recover same from defendants.
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`REQUEST FOR RELIEF
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`WHEREFORE, plaintiff Cumberland Pharmaceuticals, Inc. prays for judgment against
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`defendants Melinta Therapeutics, LLC and Targanta Therapeutics Corporation, as follows:
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`A. Damages in the amount of no less than $1,000,000;
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`B. Prejudgment interest under N.Y. C.P.L.R. § 5001;
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`C. Plaintiff’s costs as provided by law; and
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`D. Such other and further relief as the Court deems just and proper.
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`Case 1:22-cv-00915-VM Document 1 Filed 02/02/22 Page 11 of 11
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`Dated February 2, 2022 in New York, New York.
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`BARTON LLP
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`By: _________________________
`Marc Dedman (pro hac vice application to be filed)
`Randall L. Rasey
`Amith Arcot
`
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`711 Third Avenue, 14th Floor
`New York, New York 10017
`(212) 687-6262
`mdedman@bartonesq.com
`rrasey@bartonesq.com
`aarcot@bartonesq.com
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`Attorneys for Plaintiff Cumberland Pharmaceuticals,
`Inc.
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