Savant Neglected Diseases, LLC v. Humanigen, Inc.
C.A. No. 2019-0417-PRW
Del. Ch.Jul 9, 2021Background
- Savant and Humanigen contracted under a Master Development and Commercialization Agreement (MDC) for development and FDA approval of benznidazole; Chemo Research later obtained FDA approval using misappropriated Savant data.
- Humanigen assigned its MDC rights (including litigation rights) to Madison Joint Venture LLC, owned 70% by Nomis Bay and 30% by Humanigen.
- Multiple suits and counterclaims arose in Superior Court and Court of Chancery; the courts consolidated the disputes for summary judgment motions.
- Key disputed claims include (a) fraudulent transfer of benznidazole-related assets, (b) breach of contract (including milestone/warrant obligations and cooperation clauses), and (c) fraudulent inducement based on pre-contract representations and the Data License/Dr. Estani issue.
- The Court previously dismissed Humanigen from certain Superior Court counts for lack of standing but retained consolidated claims; several cross-motions for summary judgment were then filed by Savant, H&M (Humanigen & Madison), and Nomis Bay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Declaratory judgment re: right to New Jersey recovery (Count II) | Savant: case ripe; Court can allocate proceeds now based on contract and alleged breaches | H&M/Madison: allocation is premature because New Jersey suit outcome and any recovery are speculative | Dismissed as unripe; H&M SJ on this claim moot/dismissed |
| Fraudulent transfer against Humanigen (Count IV) | Savant: Humanigen insolvent when it transferred MDC assets to Madison; badges of fraud exist | H&M: no actual intent to defraud; factual indicators of solvency | SJ denied — material factual disputes (insolvency/intent) require trial |
| Fraudulent transfer against Nomis Bay (Count IV) | Savant: Nomis was intended beneficiary (70% of proceeds) and thus liable | Nomis: liability requires transferor or transferee status; it neither transferred nor received the assets | SJ granted for Nomis — not shown to be beneficiary under three-factor test |
| Breach of Warrant / failure-to-perform (Count VI) | Savant: Humanigen abandoned performance; prevention doctrine bars H&M defense | H&M: MDC conditions, risk allocation, and condition precedent (NDA filing milestone) excuse performance; prevention doctrine inapplicable | SJ granted for H&M on Count VI — condition precedent not satisfied; Savant's prevention doctrine argument fails |
| Fraudulent inducement re: asset representations (Count VI/other) | H&M: Savant made false statements about asset status/adequacy and induced the MDC; integration clause bars fraud? | Savant: MDC is "as is/entire agreement" and H&M failed due diligence; anti-reliance/integration bars extra-contractual fraud | SJ denied for Savant — standard integration clause insufficient to bar extra-contractual fraud; scienter and reliance are factual issues |
| Breach of cooperation (MDC §10.1) | H&M: Savant refused document requests and failed to cooperate in investigating misappropriation | Savant: no duty to cooperate re: Acquired Assets under §7.12; limited obligations | SJ denied for Savant — Savant failed to carry its initial burden re §10.1; factual dispute remains |
Key Cases Cited
- Rollins Int’l, Inc. v. Int’l Hydronics Corp., 303 A.2d 660 (Del. 1973) (ripeness and limits on declaratory relief)
- Exelon Generation Acquisitions, LLC v. Deere & Co., 176 A.3d 1262 (Del. 2017) (contract interpretation rules; ordinary meaning controls)
- Kronenberg v. Katz, 872 A.2d 568 (Del. Ch. 2004) (anti-reliance language must be clear and unambiguous to bar extra-contractual fraud)
- Great Lakes Chemical Corp. v. Pharmacia Corp., 788 A.2d 544 (Del. Ch. 2001) (valid, explicit contractual disclaimers can preclude fraud claims)
- Stephenson v. Capano Dev., Inc., 462 A.2d 1069 (Del. 1983) (elements of fraud/fraudulent inducement)