Abbott (NYSE:ABT) has lost a bid to dismiss a lawsuit by former investors in Tendyne Holdings, who claim that the healthcare giant dragged its heels on obtaining a regulatory approval that would have triggered a $50 million milestone payment.
Abbott in September 2015 paid $225 million up front for the stake it didn’t already own in Roseville, Minn.-based Tendyne, which was developing a transcatheter mitral valve replacement (TMVR). The $50 million milestone provision was contingent on the device winning CE Mark approval in the European Union before Dec. 31, 2017, and that at least 70 patients were treated with the device.
A federal judge in Delaware previously dismissed the investors’ lawsuit for lack of detail on Abbott’s alleged actions in delaying the CE Mark approval. Yesterday, the judge denied Abbott’s motion to dismiss the investors’ more detailed amended complaint.
Specifically, the investors argued in the amended complaint that Abbott sought discussions about the CE Mark approval with only one notified body in the EU and decided to enroll 110 patients in a clinical trial of the device, more than the required number of 40 to 60 patients, “dramatically, and unnecessarily, expanding the scope of the Tendyne valve clinical trial following the merger.”
The investors provided more information to back up their claim that Abbott failed to provide them sufficient reports of the Tendyne valve’s progress toward their agreed-upon $50 million payout, including explanations for expanding the trial and details about spending toward achieving the CE Mark. Abbott argued that the investors never requested a meeting to discuss these factors and that their amended complaint “alleged inconsistent theories.”
“Even assuming Abbott is correct that the amended complaint sets forth inconsistent theories, that inconsistency would not warrant dismissal” under the Federal Rules of Civil Procedure, Judge Colm F. Connolly wrote in his order denying Abbott’s motion to dismiss.
Abbott did not immediately respond to a request for comment.