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Covington Secures Jury Verdict for Salix Pharmaceuticals

February 25, 2014

WASHINGTON, DC, February 25, 2014 —Covington & Burling secured a defense verdict for Salix Pharmaceuticals today after a jury rejected all of Napo Pharmaceuticals’ breach of contract claims related to Fulyzaq (Crofelemer).

Following a two-week trial before New York Supreme Court Justice O. Peter Sherwood, a jury rejected all of Napo’s claims against Salix, including failure to use commercially reasonable efforts to market and sell Crofelemer. Crofelemer, which is now being marketed by Salix under the brand name Fulyzaq, is an antidiarrheal medication used to treat noninfectious diarrhea in patients with HIV/AIDS on antiretroviral therapy.

“We are gratified that the jury recognized Salix's substantial efforts and investments to get this drug approved and on the market. Napo's damages claim and its effort to wrest back control of the drug from Salix were utterly without merit,” said Covington partners Tony Herman and Benjamin Razi, who led Salix's trial team.

In December 2008, Salix licensed the rights to Crofelemer from Napo, agreeing to use commercially reasonable efforts to attempt to secure FDA approval of Crofelemer and, if approved, to bring the drug to market. On December 31, 2012, the FDA approved Crofelemer.

In May 2011, Napo sued Salix in New York Supreme Court claiming that the company had breached the parties’ agreement by failing to use commercially reasonable efforts. Napo sought more than $260 million in damages and the right to terminate the parties’ agreement and take back from Salix the rights to the drug. In pretrial rulings, the court granted summary judgment to Salix on Napo’s claims relating to alleged failures by Salix to devote sufficient effort and resources to the ultimately successful process of seeking FDA approval.

In addition to Mr. Herman and Mr. Razi, the Covington team included partner Christian Pistilli and associates Christopher Yeung, Sarah MacDonald, Chinue Turner Richardson, Tobias Tobler, Jaclyn Resly-Martinez, David Bender, Kimberly McNish and Jason Levy.

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