SINGAPORE: The worldwide assets of Singapore-based biotech firm KBP Biosciences and its founder Huang Zhenhua have been frozen amid a lawsuit filed by Novo Nordisk.
In a ruling by Singapore’s International Commercial Court last Friday (Feb 14) and made public on Tuesday, the Danish drugmaker is seeking up to US$830 million in damages from KBP.
Novo Nordisk alleges it was misled when it bought a new drug to treat hypertension and kidney disease from KBP in a deal for up to US$1.3 billion in 2023.
In June 2024, the pharmaceutical giant announced a loss of around US$800 million in relation to the drug following adverse clinical trial results.
Originally from Shandong, China before becoming a Singaporean, Dr Huang has been described in various media reports as a "serial entrepreneur".
According to KBP's website, he has been involved in drug research and development for over 20 years, and obtained his PhD from Shenyang Pharmaceutical University.
He founded Xuanzhu Biopharm in 2002 and sold the company to Sihuan Pharmaceutical Holdings in 2012. He was also an executive director and shareholder of Sihuan, before its delisting from the Singapore Exchange (SGX) in 2009. It relisted in Hong Kong in 2010.
Dr Huang founded KBP in 2011 in Shandong, with Judge Philip Jeyaretnam noting in his ruling that he owns a 40 per cent stake in the company, which is currently incorporated in Singapore.
KBP also lists an office at International Plaza along Anson Road as its global headquarters, and has operations in China and the United States.
According to KBP's website, the company is involved in R&D with a focus on solutions for hypertension, heart and kidney disease, and infectious diseases.
Among the assets frozen is a Sennett Estate house owned by Huang Zhenhua worth US$7 million at the time of purchase. (Photo: Google Maps)
In its lawsuit against KBP, Novo Nordisk claimed it was misled into believing that KBP and Dr Huang had developed a "new and effective" drug, called ocedurenone, to treat hypertension and kidney disease, which it then acquired.
Novo Nordisk called the October 2023 deal as being "closely aligned with our strategic focus on expanding from our core in diabetes into other serious chronic diseases, including through novel drug modalities".
The New York Stock Exchange-listed company's key products include diabetes and weight-loss treatments Ozempic and Wegovy.
In his ruling, Judge Jeyaretnam said he was "satisfied that Novo has shown that it has a good arguable case against KBP for fraud under New York law, which governs the dispute".
He said that KBP "knowingly failed" to disclose material information. This includes interim analyses of phase two clinical trial results showing the drug's inefficacy, as well as information concerning quality and compliance issues at a single test site that produced "anomalous positive results".
"Likewise, Dr Huang arguably knew and participated in these misrepresentations," the judge added. "There is a good arguable case that when Dr Huang executed the asset purchase agreement, he did so conscious of the unfavourable data."
Judge Jeyaretnam also said he was satisfied that there was a "real risk" of dissipation or the deliberate transfer or sale of assets.
According to an expert analysis filed by Novo Nordisk, it identified transfers totalling US$339.1 million from KBP to its holding company around the time of closing, as well as a declaration of US$578.5 million in dividends.
The judge noted there is "no clear commercial rationale" for these actions, with Novo Nordisk submitting that the steps taken show an intention on Dr Huang’s part to remove assets from reach in anticipation of a claim by the company.
In granting the freezing order, the court said it was appropriate as KBP and Dr Huang have "significant assets" in Singapore. KBP has a DBS fixed deposit bank account that held US$218 million as of Dec 31, 2023, while Dr Huang's house in Sennett Estate was worth US$7 million at the time of purchase.
The court added that Novo Nordisk will now launch arbitration proceedings against KBP in New York.
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In a ruling by Singapore’s International Commercial Court last Friday (Feb 14) and made public on Tuesday, the Danish drugmaker is seeking up to US$830 million in damages from KBP.
Novo Nordisk alleges it was misled when it bought a new drug to treat hypertension and kidney disease from KBP in a deal for up to US$1.3 billion in 2023.
In June 2024, the pharmaceutical giant announced a loss of around US$800 million in relation to the drug following adverse clinical trial results.
"SERIAL ENTREPRENEUR"
Originally from Shandong, China before becoming a Singaporean, Dr Huang has been described in various media reports as a "serial entrepreneur".
According to KBP's website, he has been involved in drug research and development for over 20 years, and obtained his PhD from Shenyang Pharmaceutical University.
He founded Xuanzhu Biopharm in 2002 and sold the company to Sihuan Pharmaceutical Holdings in 2012. He was also an executive director and shareholder of Sihuan, before its delisting from the Singapore Exchange (SGX) in 2009. It relisted in Hong Kong in 2010.
Dr Huang founded KBP in 2011 in Shandong, with Judge Philip Jeyaretnam noting in his ruling that he owns a 40 per cent stake in the company, which is currently incorporated in Singapore.
KBP also lists an office at International Plaza along Anson Road as its global headquarters, and has operations in China and the United States.
According to KBP's website, the company is involved in R&D with a focus on solutions for hypertension, heart and kidney disease, and infectious diseases.
Among the assets frozen is a Sennett Estate house owned by Huang Zhenhua worth US$7 million at the time of purchase. (Photo: Google Maps)
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THE CASE
In its lawsuit against KBP, Novo Nordisk claimed it was misled into believing that KBP and Dr Huang had developed a "new and effective" drug, called ocedurenone, to treat hypertension and kidney disease, which it then acquired.
Novo Nordisk called the October 2023 deal as being "closely aligned with our strategic focus on expanding from our core in diabetes into other serious chronic diseases, including through novel drug modalities".
The New York Stock Exchange-listed company's key products include diabetes and weight-loss treatments Ozempic and Wegovy.
In his ruling, Judge Jeyaretnam said he was "satisfied that Novo has shown that it has a good arguable case against KBP for fraud under New York law, which governs the dispute".
He said that KBP "knowingly failed" to disclose material information. This includes interim analyses of phase two clinical trial results showing the drug's inefficacy, as well as information concerning quality and compliance issues at a single test site that produced "anomalous positive results".
"Likewise, Dr Huang arguably knew and participated in these misrepresentations," the judge added. "There is a good arguable case that when Dr Huang executed the asset purchase agreement, he did so conscious of the unfavourable data."
Judge Jeyaretnam also said he was satisfied that there was a "real risk" of dissipation or the deliberate transfer or sale of assets.
According to an expert analysis filed by Novo Nordisk, it identified transfers totalling US$339.1 million from KBP to its holding company around the time of closing, as well as a declaration of US$578.5 million in dividends.
The judge noted there is "no clear commercial rationale" for these actions, with Novo Nordisk submitting that the steps taken show an intention on Dr Huang’s part to remove assets from reach in anticipation of a claim by the company.
In granting the freezing order, the court said it was appropriate as KBP and Dr Huang have "significant assets" in Singapore. KBP has a DBS fixed deposit bank account that held US$218 million as of Dec 31, 2023, while Dr Huang's house in Sennett Estate was worth US$7 million at the time of purchase.
The court added that Novo Nordisk will now launch arbitration proceedings against KBP in New York.
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