Bionpharma Inc. v. CoreRx, Inc.

582 F.Supp.3d 167

BIONPHARMA INC., Plaintiff,

v.CORERX, INC., Defendant.

21-cv-10656 (JGK)

United States District Court, S.D. New York.

Signed January 27, 2022

Marisa A. Marinelli, Charles Alan Weiss, Holland & Knight LLP, New York, NY, for Plaintiff.

Jacqueline M. Weyand, Buchanan Ingersoll & Rooney PC, New York, NY, Peter Stephen Russ, Buchanan Ingersoll & Rooney PC, Pittsburgh, PA, for Defendant.

OPINION AND ORDER

JOHN G. KOELTL, District Judge:

The plaintiff, Bionpharma Inc. ("Bionpharma"), brought this action against the defendant, CoreRx, Inc. ("CoreRx"), for breach of contract and declaratory judgment. The plaintiff now moves for a preliminary injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure, seeking to compel the defendant to supply the plaintiff with enalapril maleate oral solution in accordance with the parties’ Master Manufacturing Supply Agreement. ECF No. 8. Specifically, the plaintiff seeks to compel the defendant to fulfil the remainder of an order that was previously due in December 2021 and to fulfil an additional order that was placed on December 3, 2021 — the total of which constitutes approximately 18,000 bottles of enalapril maleate oral solution.

For the reasons that follow, the plaintiff's motion for a preliminary injunction is granted.

I.

The following constitutes the Court's findings of fact and conclusions of law.

"Bionpharma is a generic pharmaceutical company, founded in 2014 to develop and commercialize affordable, quality generic drugs." Krishnan Decl. ¶ 4, ECF No. 10.¹ "Bionpharma's business model is to partner with pharmaceutical manufacturers." Id. Under the terms of these partnerships, the pharmaceutical manufacturers manufacture the drugs, while Bionpharma bears responsibility for sourcing active ingredients, obtaining regulatory approval of the product from the Federal Drug Administration ("FDA"), and selling and distributing the drug product under the Bionpharma label. Id.

"CoreRx is a pharmaceutical Contract Development Manufacturing Organization." Damani Decl. ¶ 5, ECF No. 33. "On behalf of its pharmaceutical customers, CoreRx develops and manufactures clinical trial and commercial drug products." Id.

Bionpharma and CoreRx began doing business together in around 2017. Id. ¶ 10. At some point during their relationship, Bionpharma engaged CoreRx to conduct research and development for a new enalapril maleate oral solution product (the "Product") that Bionpharma would market as a generic version of the branded drug "Epaned," a product then-owned by Silvergate Pharmaceuticals ("Silvergate"). Krishnan Decl. ¶ 5. Epaned is now owned by Azurity Pharmaceuticals ("Azurity"), CoreRx's sister company. Id.; Marinelli Decl. ¶ 4, ECF No. 11.

In August 2018, Bionpharma submitted an Abbreviated New Drug Application ("ANDA") to the FDA, seeking regulatory approval to market the resulting Product. Krishnan Decl. ¶ 5. In December 2018, Silvergate sued Bionpharma in the United States District Court for the District of Delaware, alleging patent infringement on the basis of Bionpharma's submission. Id. ¶ 7; see also Compl. ¶ 11, ECF No. 1. Silvergate or Azurity brought additional patent infringement lawsuits against Bionpharma in June 2019 and September 2020. Krishnan Decl. ¶ 9. Thus far, none of these lawsuits have been successful, but on April 29, 2021, Judge Stark held that Bionpharma's Product did not violate Epaned's patents. See Silvergate Pharms., Inc. v. Bionpharma Inc., No. 18-cv-1962, 2021 WL 1751148 (D. Del. Apr. 29, 2021).

As this flurry of patent litigation was ongoing, Bionpharma engaged CoreRx to manufacture Bionpharma's Product for commercial sale. Krishnan Decl. ¶ 6. On or around November 24, 2020, Bionpharma and CoreRx executed a Master Manufacturing Supply Agreement (the "Agreement") concerning Bionpharma's Product. Id.; see also Krishnan Decl. Ex. F, ECF No. 10-1 ("Agreement"). As relevant here, the Agreement provides that "CoreRx shall Manufacture and supply to [Bionpharma], and [Bionpharma] shall purchase from CoreRx, Product that is ordered by [Bionpharma]." Agreement § 5.1. Section 5.4 of the Agreement clarifies that CoreRx must "accept all Firm Orders for a particular calendar month" with few exceptions, and section 5.5 notes that only Bionpharma can cancel or defer orders. The parties further agreed in section 5.11, entitled "Supply Interruption," that, "[i]f CoreRx is unable to supply any Product ordered by [Bionpharma] ..., then CoreRx shall use Commercially Reasonable Efforts to remedy the problem or secure an alternative source of supply within a reasonable time."

The Agreement left open the price that Bionpharma would pay CoreRx for manufacturing the Product (the "Transfer Price"). Id. § 6.2. However, the parties agreed that the price would "be established by mutual agreement of the Parties on an annual basis one (1) month prior to the commencement of [Bionpharma's] next fiscal year." Id. Once established, that agreed-upon price would "remain in effect for the applicable fiscal year." Id.

As part of the Agreement, Bionpharma also promised to indemnify "CoreRx, its Affiliates and its and their respective officers, directors, employees, and agents, and their respective successors and permitted assigns" for any intellectual property ("IP") infringement claims that might be brought against CoreRx for manufacturing Bionpharma's Product. Id. § 13.1. The parties also limited liability, so that "in no event [would] either party ... be liable to the other party ... for any punitive, indirect or consequential damages or indirect or consequential losses of any kind, nature or description whatsoever (including economic losses or lost profits)." Id. § 13.5 (original capitalization omitted).

The Agreement was to be "in full force and effect for a period of five (5) years from the commercialization of the last Product." Id. § 14.1. Finally, in the event of a dispute, the parties agreed that they would:

initially attempt in good faith to resolve any significant controversy, claim, allegation of breach or dispute arising out of or relating to this Agreement (hereinafter collectively referred to as a "Dispute") through negotiations between senior executives of [Bionpharma] and CoreRx. If the Dispute is not resolved within thirty (30) calendar days (or such other period of time mutually agreed upon by the Parties) of notice of the Dispute, then the Parties agree to submit the Dispute to non-binding mediation in an attempt to resolve the Dispute. Unless otherwise mutually agreed by the Parties, only if the Dispute is not resolved through negotiations or non-binding mediation as set forth herein, may a Party resort to litigation.

Id. § 16.7.

On August 17, 2021, after having won the above-mentioned lawsuit against Silvergate in the District of Delaware, Bionpharma commercially launched its Product. Krishnan Decl. ¶ 8. Children suffering from cardiac conditions — specifically, hypertension — became Bionpharma's main customers. Id. ¶ 35.

But Azurity's lawsuits did not end with Judge Stark's holding. In June 2021 and October 2021, Azurity brought additional patent infringement suits against Bionpharma based on Bionpharma's Product. Id. ¶ 9. In one of those cases, Azurity sought an injunction to force Bionpharma to withdraw its Product from the market and to cease selling any new Product, but that injunction was denied. Azurity Pharms., Inc. v. Bionpharma Inc., No. 21-cv-1286, ECF No. 87 (D. Del. filed June 22, 2021). In October 2021, Azurity also brought patent infringement lawsuits against CoreRx, accusing CoreRx of infringing the same patents Azurity asserted against Bionpharma on account of CoreRx's manufacturing of Bionpharma's Product. See Azurity Pharms., Inc. v. CoreRx, Inc., 21-cv-1522 (D. Del. filed Oct. 27, 2021); Azurity Pharms., Inc. v. CoreRx, Inc., 8:21-cv-2515 (M.D. Fla. filed Oct. 26, 2021). "Upon becoming aware of Azurity's lawsuits against CoreRx, Bionpharma immediately offered to indemnify CoreRx under the Agreement." Krishnan Decl. ¶ 11. Bionpharma also offered to help pay for separate counsel that CoreRx wanted to retain in addition to counsel provided by Bionpharma, even though this was not required under the Agreement. Id. Both of Azurity's actions against CoreRx have since been voluntarily dismissed. Azurity, 21-cv-1522, ECF No. 6 (D. Del.); Azurity, 8:21-cv-2515, ECF No. 16 (M.D. Fla.); see also id. ECF No. 45 (Report and Recommendation by Magistrate Judge recommending that the district court deny Azurity's motion to reopen the case to correct the notice of dismissal).

On November 19, 2021, CoreRx sent Bionpharma a letter discussing pricing for products manufactured by CoreRx for Bionpharma and "demanded to more than double the price" for the Product. Krishnan Decl. ¶ 13; see Krishan Decl. Ex. I, ECF No. 14-2 (sealed). Bionpharma responded that the Transfer Price should remain the same. Krishnan Decl. ¶ 14; see also Krishnan Decl. Ex. J, ECF No. 10-5 & ECF No. 14-3.

On November 30, nine days after it unsuccessfully requested a price increase, CoreRx sent a facsimile message to Bionpharma stating that, "as of December 1, 2021, CoreRx will be unable to supply enalapril maleate for [Bionpharma's] Epaned product. In accordance with section 5.11 of the [Agreement] that addresses Supply Interruptions, CoreRx will work with [Bionpharma] to secure an alternative source of supply for this product." Krishnan Decl. Ex. K, ECF No. 10-6. On December 1, Bionpharma responded that CoreRx had not provided the reason for its purported inability to supply the Product under section 5.11 and advised CoreRx that CoreRx was in breach of the Agreement. Krishnan Decl. ¶ 18; Krishnan Decl. Ex. L, ECF No. 10-7. Bionpharma therefore invoked the alternative dispute resolution procedures provided in section 16.7 of the Agreement and demanded an "immediate meeting between senior executives." Id. On December 3, 2021, Bionpharma submitted another order with CoreRx for the Product....