Allergan Sued for $600 Million Over Botox

SANTA MONICA (CN) - Allergan, which sells Botox as a treatment for migraine headaches, owes $600 million or more to the patent holder, the company, Miotox, claims in court.

Beverly Hills-based Miotox sued Allergan and its subsidiary Allergan Botox Limited on Wednesday in Superior Court, claiming breach of contract and breach of faith.

According to the lawsuit, in 1992, Dr. William Binder developed a new way to treat migraines, by administering Botox - botulinum toxin A - to the face, neck and back.

Binder then formed Miotech, and later Miotox, to promote his invention and find a supplier for Botox.

Miotox and Allergan subsequently entered into an option agreement granting Allergan the right to acquire an exclusive license to make and sell any product containing Botox for the treatment of migraine headaches, according to the complaint.

When Miotox received a patent for its migraine treatment, Allergan exercised its option and the companies entered into a licensing agreement under which Miotox was to be paid royalties anytime Botox was administered for treatment of migraine headaches, the complaint states.

The intent of the agreement "is clearly to segregate migraine headache treatment from non-migraine headache treatment; it does not consider any other factors, such as the scope of FDA approval or whether treatment is administered according to any specific patent claim. As long as Botox is used to treat any type of migraine headache by any method of administration, Miotox is entitled to a royalty - it's as simple as that," Miotox says in the lawsuit.

Botox was approved by the Food and Drug Administration for the treatment of migraine headaches in 2010, and Binder continued to develop new migraine therapies, filing several patent applications in 2012. Miotox notified Allergan that their licensing agreement should be updated to include the additional patents and applications, the complaint states.

"If Miotox could obtain new patents for the treatment of migraine headaches using Botox, those new patents would extend beyond the period covered by the original '468 patent. This creates new barriers for other companies to enter the market, allowing Allergan additional years of exclusivity on sales of Botox therapy for migraine headaches," the complaint states.

However, when the original patent expired on May 9, 2014, Allergan argued that Miotox was entitled to royalties only for Botox used in the precise manner described in an unexpired Miotox patent, according to the complaint.

"Instead of embracing the new patents that will provide prolonged exclusivity, Allergan instead 'reinterpreted' the license agreement, claiming that Miotox is now only entitled to a royalty when Botox is administered in the exact manner described in one of those new patents," Miotox says.

Allergan stopped paying Miotox any royalties on U.S. sales. Combined with Allergen's refusal to pay patent fees, the loss of royalties could cause more than $600 million in damages to Miotox, the company says.

Miotox seeks royalties on all of Allergan's sales of Botox for treatment of migraine headaches, out-of-pocket costs for maintaining patents, and special damages.

It is represented by Mark Petersen with Farella Braun + Martel LLP.

Allergan did not immediately respond to a request for comment.

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