MSI Methylation Sciences, Inc. (MSI) Update on Recent BC Supreme Court Order for Quark Venture Inc. (Quark) to Pay MSI $20 million USD
VANCOUVER, B.C., April 15, 2019 (GLOBE NEWSWIRE) -- On March 27th, 2019, the British Columbia Supreme Court issued a judgement granting MSI leave to enforce its $20M USD Arbitration Award (plus interest and costs) against Quark. The Court dismissed Quark’s petition for leave to appeal the Arbitration Award. The text of the 20 page judgement is available on the Courts of British Columbia Website. https://www.courts.gov.bc.ca/jdb-txt/sc/19/04/2019BCSC0440.htm
In a January 2016 press release, MSI announced the results of its first Phase 2 clinical trial designed to evaluate the efficacy and safety of MSI-195 relative to placebo added to ongoing antidepressant therapy, in patients suffering from Major Depressive Disorder. As MSI announced at the time, MSI-195 did not demonstrate efficacy over placebo for the primary endpoint, however post-hoc exploratory analysis identified a number of key factors associated with beneficial treatment differences. Additionally, MSI-195 was well tolerated. A research report describing the study and post-hoc analysis was presented at the June 2016 American Society of Clinical Psychopharmacology scientific conference.
In September 2016 MSI and Quark jointly announced a $30 million USD investment to continue clinical development of MSI-195 for the treatment of depression. After making an initial payment of $1 million USD under the investment agreement, in November 2016 Quark declined to make any further payments.
After being unable to resolve the matter with Quark, MSI initiated a binding arbitration proceeding. The arbitrator, on June 21, 2018 in a 45-page ruling, found in favour of MSI, determining that Quark had breached the parties’ investment agreement and making an award in MSI’s favour of $20 million USD. The arbitrator also dismissed Quark’s counterclaim and in so doing concluded that “MSI did not make misrepresentations to Quark as Quark has alleged”. MSI was not required to issue any shares to Quark as a result of the ruling. The arbitrator subsequently ordered that Quark pay interest to MSI as well.
Since the $20 million USD award was issued, Quark has not paid to MSI any portion of the amount ordered to be paid. In late July MSI petitioned the British Columbia Supreme Court for leave to enforce the award. Quark, for its part, initiated a petition on August 20, 2018 to seek leave to appeal the award on the basis of alleged errors of law related to the assessment of damages, and to have the award set aside on procedural grounds. On March 27, 2019, those petitions were resolved with MSI’s petition for leave to enforce granted, and Quark’s petition, for leave to appeal and to have the award set aside, dismissed. On April 10th and 11th, 2019, Quark filed notices of appeal to the B.C. Court of Appeal from the B.C. Supreme Court’s decisions on those petitions. MSI will ask the Court of Appeal to dismiss the appeals with costs to MSI.
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