Anika Therapeutics Entering Arbitration Over Branding Issues
Last Friday, Anika Therapeutics filed an annual report with the Securities and Exchange Commission stating that it had begun arbitration in the London Court of International Arbitration. The dispute centers around losses that were encountered after Anika Therapeutics was forced to pull its MeroGel injectable—an ear, nose and throat anti-adhesion product for surgery—off the shelves. The reason the company was forced to pull the product, which had been manufactured by Medtronic, was due to improper labeling and branding.
Anika S.r.l partnered with Medtronic to distribute the surgical product worldwide; however, after learning of the mislabeling, both companies determined that they would no longer sell the product. “The problem was never disclosed to us during the due diligence,” said Dr. Charles Sherwood, CEO of Anika. “We feel it’s Fidia’s Pharmaceuticals’ (Anika S.r.l) responsibility to handle the expenses of taking it off the market and putting it back on the market.”
In Anika Therapeutics’ report to the Securities and Exchange Commission, the company wrote: “Fidia has informed us that it does not believe that it has liability for this matter, and has made claims against us for refusing to release the Anika shares that were put into escrow in connection with the S.r.l. acquisition.”
Even though the product was pulled from the market due to branding issues, Anika continued to work on it to make it a reliable product for end-users. In fact, the improved product was the company’s focus in 2012, which means that the company spent time and effort working on the product, despite the fact that it was pulled from the market. They now manufacture the product in Anika’s own facility in Bedford instead of in Italy, where it was initially manufactured, which gives the company more control over how the product is labeled.
“We think we have a fairly strong position and feel we should move forward because we don’t feel this is our responsibility,” says Sherwood. It is anyone’s guess how the arbitration process will pan out, although Sherwood claims that win or lose, the decision will not have a significant impact on Anika’s business.