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FILED: NEW YORK COUNTY CLERK 05/28/2024 10:27 PM INDEX NO. 653200/2022
NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 05/28/2024
EXHIBIT 65
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK: COMMERCIAL DIVISION
Index No. 653200/2022
RedHill Biopharma Ltd.,
Plaintiff, DEFENDANT KUKBO CO.,
LTD.’S ANSWER TO
v. PLAINTIFF’S COMPLAINT
AND COUNTERCLAIM
Kukbo Co., Ltd.,
Defendant.
Defendant Kukbo Co., Ltd. (“Defendant” or “Kukbo”), by and through undersigned
counsel, as and for its Answer to Plaintiff RedHill Biopharma Ltd.’s (“Plaintiff” or “RedHill,”
collectively with Defendant, the “Parties”) Complaint dated September 2, 2022 (the
“Complaint”), states as follows:
ANSWER TO ALLEGATIONS IN THE COMPLAINT’S INTRODUCTION 1
1. Defendant denies the allegations contained in paragraph 1 of the Introduction to
the Complaint.
2. Defendant denies the allegations contained in paragraph 2 of the Introduction to
the Complaint.
3. Defendant lacks knowledge or information sufficient to form a belief about the
truth of the allegations contained in paragraph 3 of the Introduction to the Complaint.
4. Defendant denies the allegations contained in paragraph 4 of the Introduction to
the Complaint, except admits that it is a corporation organized under the laws of the Republic of
Korea with its principal place of business in the Republic of Korea.
1
The Complaint begins with an introductory section with 8 numbered paragraphs covering the Nature of the
Proceedings, the Parties, and Jurisdiction, Venue, and Governing law (the “Introduction”). After the Introduction,
the paragraph numbering restarts at 1 and ends at paragraph 56. For clarity, paragraphs 1 through 56 following the
Introduction will be referred to as the Complaint.
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5. Defendant admits the allegations contained in paragraph 5 of the Introduction to
the Complaint for jurisdictional purposes only. The remainder of the allegations are denied.
6. Defendant admits the allegations contained in paragraph 6 of the Introduction to
the Complaint for jurisdictional purposes only. The remainder of the allegations are denied.
7. Defendant admits the allegations contained in paragraph 7 of the Introduction to
the Complaint for venue purposes only. The remainder of the allegations are denied.
8. Defendant admits the allegations contained in paragraph 8 of the Introduction to
the Complaint.
ANSWER TO ALLEGATIONS IN THE COMPLAINT’S FACTUAL BACKGROUND
9. Defendant lacks knowledge or information sufficient to form a belief about the
truth of the allegations contained in paragraph 1 of the Complaint.
10. Defendant denies the allegations contained in paragraph 2 of the Complaint
except as to what is quoted from Exhibit D to the Complaint.
11. Defendant denies the allegations contained in paragraph 3 of the Complaint
except what is stated in the email attached as Exhibit D to the Complaint.
12. Defendant denies the allegations contained in paragraph 4 of the Complaint
except as to the fact that the Parties negotiated and executed a Subscription Agreement and an
Exclusive License Agreement.
13. Defendant denies the allegations contained in paragraph 5 of the Complaint
except what is stated in the Subscription Agreement attached as Exhibit A to the Complaint.
14. Defendant denies the allegations contained in paragraph 6 of the Complaint
except what is stated in the Subscription Agreement attached as Exhibit A to the Complaint.
15. Defendant denies the allegations contained in paragraph 7 of the Complaint
except what is stated in the Exclusive License Agreement attached as Exhibit B to the
Complaint.
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16. Defendant denies the allegations contained in paragraph 8 of the Complaint
except what is stated in the Exclusive License Agreement attached as Exhibit B to the
Complaint.
17. Defendant denies the allegations contained in paragraph 9 of the Complaint
except what is stated in the Exclusive License Agreement attached as Exhibit B to the
Complaint.
18. Defendant denies the allegations contained in paragraph 10 of the Complaint
except what is stated in the Exclusive License Agreement attached as Exhibit B to the
Complaint.
19. Defendant denies the allegations contained in paragraph 11 of the Complaint
except what is stated in the Exclusive License Agreement attached as Exhibit B to the
Complaint.
20. Defendant lacks knowledge or information sufficient to form a belief about the
truth of the allegations contained in paragraph 12 of the Complaint.
21. Defendant lacks knowledge or information sufficient to form a belief about the
truth of the allegations contained in paragraph 13 of the Complaint.
22. Defendant denies the allegations contained in paragraph 14 of the Complaint.
23. Defendant denies the allegations contained in paragraph 15 of the Complaint.
24. Defendant denies the allegations contained in paragraph 16 of the Complaint
except what is stated in the referenced email.
25. Defendant denies the allegations contained in paragraph 17 of the Complaint
except what is stated in the referenced email.
26. Defendant denies the allegations contained in paragraph 18 of the Complaint
except what is stated in the letter attached as Exhibit E to the Complaint.
27. Defendant denies the allegations contained in paragraph 19 of the Complaint
except what is stated in the letter attached as Exhibit E to the Complaint.
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28. Defendant denies the allegations contained in paragraph 20 of the Complaint.
29. Defendant lacks knowledge or information sufficient to form a belief about the
truth of the allegations contained in paragraph 21 of the Complaint.
30. Defendant denies the allegations contained in paragraph 22 of the Complaint
except what is stated in the Letter Agreement attached as Exhibit C to the Complaint.
31. Defendant denies the allegations contained in paragraph 23 of the Complaint
except what is stated in the Letter Agreement attached as Exhibit C to the Complaint.
32. Defendant denies the allegations contained in paragraph 24 of the Complaint
except what is stated in the referenced email attached as Exhibit F to the Complaint.
33. Defendant denies the allegations contained in paragraph 25 of the Complaint
except what is stated in the referenced email.
34. Defendant denies the allegations contained in paragraph 26 of the Complaint.
35. Defendant denies the allegations contained in paragraph 27 of the Complaint
except what is stated in Exhibit G to the Complaint.
36. Defendant denies the allegations contained in paragraph 28 of the Complaint
except what is stated in the referenced email attached as Exhibit H to the Complaint.
37. Defendant denies the allegations contained in paragraph 29 of the Complaint
except what is stated in Exhibit I to the Complaint.
38. Defendant denies the allegations contained in paragraph 30 of the Complaint.
39. Defendant denies the allegations contained in paragraph 31 of the Complaint
except what is stated in the Demand Letter attached as Exhibit J to the Complaint.
40. Defendant denies the allegations contained in paragraph 32 of the Complaint.
ANSWER TO PLAINTIFF’S COUNTS I THROUGH III AND PRAYER FOR RELIEF
41. Defendant repeats its answers above to the allegations in all prior paragraphs of
the Complaint as if fully set forth herein in response to paragraph 33 of the Complaint.
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42. Defendant denies the allegations contained in paragraph 34 of the Complaint.
43. Defendant denies the allegations contained in paragraph 35 of the Complaint.
44. Defendant denies the allegations contained in paragraph 36 of the Complaint
except what is stated in the Subscription Agreement.
45. Defendant denies the allegations contained in paragraph 37 of the Complaint
except what is stated in the Letter Agreement.
46. Defendant denies the allegations contained in paragraph 38 of the Complaint.
47. Defendant denies the allegations contained in paragraph 39 of the Complaint.
48. Defendant denies the allegations contained in paragraph 40 of the Complaint.
49. Defendant repeats its answers above to the allegations in all prior paragraphs of
the Complaint as if fully set forth herein in response to paragraph 41 of the Complaint.
50. Defendant denies the allegations contained in paragraph 42 of the Complaint.
51. Defendant denies the allegations contained in paragraph 43 of the Complaint.
52. Defendant denies the allegations contained in paragraph 44 of the Complaint
except what is stated in the Exclusive License Agreement.
53. Defendant denies the allegations contained in paragraph 45 of the Complaint
except what is stated in the Letter Agreement.
54. Defendant denies the allegations contained in paragraph 46 of the Complaint.
55. Defendant denies the allegations contained in paragraph 47 of the Complaint.
56. Defendant denies the allegations contained in paragraph 48 of the Complaint.
57. Defendant repeats its answers above to the allegations in all prior paragraphs of
the Complaint as if fully set forth herein in response to paragraph 49 of the Complaint.
58. Defendant denies the allegations contained in paragraph 50 of the Complaint.
59. Defendant denies the allegations contained in paragraph 51 of the Complaint.
60. Defendant denies the allegations contained in paragraph 52 of the Complaint.
61. Defendant denies the allegations contained in paragraph 53 of the Complaint.
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62. Defendant denies the allegations contained in paragraph 54 of the Complaint
except what is stated in the Subscription, Exclusive License and Letter Agreements.
63. Defendant denies the allegations contained in paragraph 55 of the Complaint.
64. Defendant denies the allegations contained in paragraph 56 of the Complaint.
65. Defendant denies that Plaintiff is entitled to any of the relief that it seeks, and
respectfully requests the relief sought in Defendant’s Prayer for Relief, below.
66. Defendant denies all allegations in the Complaint that it has not specifically
admitted above, except to the extent that Defendant has denied having knowledge or information
sufficient to form a belief about the truth of the allegations.
FACTUAL BACKGROUND TO DEFENDANT’S AFFIRMATIVE DEFENSES AND
COUNTERCLAIMS
67. Kukbo is a company incorporated in the Republic of Korea with its principal
place of business located at 8F, Kukbo Building, 42, Gwangnam-ro, Suyeong-gu, Busan 48304,
Republic of Korea. Kukbo has been a publicly listed company on the Korea Stock Exchange
since 1989. Kukbo’s primary business is international logistics, cargo transport, and warehouse
and storage services.
68. In the aftermath of the COVID-19 outbreak, there was an explosive demand for
personal protective equipment and Kukbo engaged in the business of distributing facial masks
nationwide. In 2021, Kukbo launched a new business in healthcare, mainly focused on
distributing COVID-19 related products. The primary goal of Kukbo’s new business was to be
among the first to supply COVID-19 treatment to healthcare providers in Korea, and its
immediate objective was to secure an exclusive distribution arrangement for an effective drug for
the Coronavirus.
69. It was in this context that Kukbo was introduced to RedHill through a Korean
broker, Nexpedia Co. Holdings Ltd. (“Nexpedia”). According to RedHill’s website, Opaganib is
“a first-in-class new chemical entity with anti-inflammatory, anti-cancer and antiviral activity,
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under development for multiple indications.” 2 Opaganib is “expected to be effective against
emerging viral variants, having already demonstrated strong inhibition against variants of
concern, including Delta” and “RedHill is pursuing the development program for Opaganib and
is in ongoing discussions with multiple regulatory agencies regarding potential pathways to
approval.” 3 Also in RedHill’s pipeline is a drug called RHB-107 which is allegedly “a first-in-
class orally-administered potent inhibitor of serine proteases targeting multiple indications,
including COVID-19, cancer, inflammatory lung diseases and gastrointestinal diseases.” 4
The Subscription Agreement
70. Kukbo and RedHill began communicating directly with one another around
September 2021. Their respective contact points were Director Ken Choi of Kukbo and Chief
Corporate & Business Development Officer Adi Frish of RedHill. They communicated mainly
through emails and conference calls. Kukbo wished to obtain an exclusive distribution license
for Opaganib for South Korea. RedHill was willing to provide an exclusive license to Kukbo but
required Kukbo to make a sizeable investment in Redhill as a precondition for the license.
71. On or around October 13, 2021, RedHill’s Chief Executive Officer Dror Ben-
Asher, Chief Business Officer Guy Goldberg, and Chief Financial Officer Micha Ben
participated in a conference call with Nexpedia and Kukbo. During the call, RedHill’s CEO
proposed that Kukbo invest $10 million in return for the right to license not only Opaganib but
also two other drugs in RedHill’s pipeline. The investment requirement was a disconcerting
condition for Kukbo as it was new to the healthcare industry and had never invested in a foreign
company before. The amount also presented a concern. $10 million is equivalent to
approximately 10% of Kukbo’s total assets. Moreover, according to RedHill’s Corporate
Presentation dated September 13, 2021, Opaganib failed to “achiev[e] statistical significance” at
the end of Phase 2/3 trials.
2
https://www.redhillbio.com/our-programs/pipeline/ (Opaganib), last accessed on December 14, 2022.
3
https://www.redhillbio.com/our-programs/pipeline/ (COVID-19), last accessed on December 14, 2022.
4 https://www.redhillbio.com/our-programs/pipeline/ (RHB-107), last accessed on December 14, 2022.
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72. However, the Corporate Presentation also painted a rosy outlook for Opaganib,
representing, “despite not meeting [the] primary endpoint, analysis of the study efficacy
endpoints showed trends in favor.” RedHill also represented that the emergency use
authorization (“EUA”) for Opaganib was ongoing with positive feedback from the regulatory
authorities of the US, the European Union (“EU”), and the United Kingdom (“UK”).
73. Based on these statements Kukbo decided to invest in RedHill in order to obtain
exclusive licensing rights to Opaganib. On October 25, 2021, the Parties entered into a
Subscription Agreement whereby Kukbo would purchase $10 million worth of RedHill’s
American Depository Shares (“ADS”) in return for a right of first offer for the licensing of one
or more of RHB-107, Opaganib or Talicia® in one or more of South Korea, Japan, Indonesia,
Vietnam, Thailand, and/or Malaysia.
74. Under the Subscription Agreement, Kukbo was to invest in two tranches. At the
First Closing which was shortly after contract execution, Kukbo was to purchase 827,586 ADS
for $5 million priced at $6.04 per ADS. The Second Closing was conditioned on the Parties
executing a license agreement no later than the 6 month anniversary of the Subscription
Agreement. At the Second Closing, Kukbo was to purchase another $5 million worth of
RedHill’s ADS at the 30 preceding trading days’ average price plus 20%.
RedHill’s Subsequent Public Offering
75. Less than one month after executing the Subscription Agreement, RedHill issued
a press release on November 18, 2021 announcing an underwritten public offering of ADS.
Kukbo was not informed of the public offering prior to the press release. Nor did RedHill
disclose to Kukbo during the negotiations of the Subscription Agreement that RedHill was
planning a public offering immediately afterwards.
76. Even on November 17, 2021 when Kukbo’s Vice President James K. Ahn and
Ken Choi were on a conference call with RedHill’s Chief Operating Officer Gilead Raday and
others to discuss licensing and the falling ADS price, RedHill did not inform Kukbo of the
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imminent public offering. RedHill explained that the ADS price, which had plummeted to $4.06
as of November 17, 2021, was not due to any clinical trial results. RedHill further explained that
additional studies may be required, but that Germany and Romania were “tapping” because
COVID-19 cases were on the rise. RedHill assured Kukbo that the ADS price will soon shoot
up once Opaganib and RHB-107 are approved as COVID-19 treatment.
77. On November 19, 2021, RedHill announced a public offering of 4.7 million ADS
for $15.5 million at roughly $3.30 per share. RedHill subsequently filed a prospectus
supplement with the Securities and Exchange Commission (“SEC”) and issued a press release
announcing the closing of the public offering on November 23, 2021. RedHill’s ADS price
continued to plunge to $2.72 as of November 23, 2021.
78. Executives of RedHill and Kukbo held another conference call on November 23,
2021. During this meeting, RedHill explained that the offering of new shares at approximately
50% of the price paid by Kukbo was due to RedHill’s dire financial situation, and repeatedly
represented that bio companies such as itself would easily bounce back by 6 to 7%. RedHill
also represented that it expected to obtain Opaganib’s emergency use authorization in Russia.
The Exclusive License Agreement
79. In order for Kukbo to distribute Opaganib in South Korea, the drug must first be
approved by the Korean Ministry of Food and Drug Safety (“MFDS”). Kukbo planned to rely
on foreign regulatory approvals to support its application to the MFDS and engaged a contract
research organization (“CRO”) to assist with the Korean approval process. RedHill has at all
times been aware of Kukbo’s plan and understood that Korea’s MFDS would not approve
Opaganib unless it is approved in either the US, UK, or EU.
80. On or around November 29, 2021, Kukbo informed RedHill that “the schedule
with US FDA is quite critical on Korea FDA” and asked when the US FDA’s approval was
expected. Kukbo also requested “the status by each country, the possibility to EUA, their
feedback and schedule estimation.”
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81. According to RedHill’s Third Quarter Financial Results and Operational
Highlights presentation dated November 30, 2021, the Phase 2/3 data was submitted to several
regulatory authorities and that based on a post hoc analysis, Opaganib showed “apparent benefit
in survival of moderately severe hospitalized COVID-19 patients” and showed “promising
signals of activity and safety.” RedHill allegedly conducted a post hoc analysis of the Phase 2/3
clinical data which provided “a high degree of confidence that the apparent benefit is not a
statistical artifact, and that opaganib may be safe and effective.” RedHill also represented that
for a subpopulation of patients in the Phase 2/3 trial, Opaganib reduced mortality rates and need
for supplemental oxygen, and showed benefits across key-secondary endpoints. RedHill
indicated that it nevertheless planned an additional study of moderately severe hospitalized
patients but did not disclose that such further study was necessary for regulatory approval.
82. Then unbeknownst to Kukbo, RedHill filed a Form 6-K with the SEC on
December 1, 2021 which contained a Condensed Consolidated Interim Financial Information
(Unaudited) as of September 30, 2021. According to the filing, “There [was] no assurance that
the Company’s business will generate sustainable positive cash flows to fund its business.”
However, according to RedHill’s third quarter commercial highlights, it was nearing
“commercial operational breakeven on a quarterly basis by end of 2021.” 5 RedHill also boasted
“second consecutive quarter of record net revenues” with lower operating expenses and
decreasing operating and net losses. Despite such positive financial disclosure, RedHill’s ADS
price was continuing to plummet. RedHill claimed that it was due to an overall decline of the
small biotech market and “was not unique to RedHill.” However, while the BioTech Index was
improving, RedHill’s ADS continue to drop to just $.20 per share as of December 13, 2022.
83. On or around December 6, 2021, RedHill informed Kukbo that it was “expecting
preliminary feedback from the U.S. FDA in Jan 2022.” RedHill also provided a Third Quarter
5
Presentation from RedHill’s Third Quarter 2021 Financial Results and Operational Highlights Webcast on
November 30, 2021 accessible at https://www.redhillbio.com/investors/events-and-presentations/event-
details/2021/Third-Quarter-2021-Financial-Results--Operational-Highlights-Webcast/default.aspx.
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Earnings Presentation indicating approvals were being pursued in the UK, Russia, Brazil, Israel,
Switzerland, India, and South Africa. In particular, RedHill represented that the European
Medicine Agency (“EMA”) “indicated rapid procedure timelines with preliminary feedback
expected by year end” and for the US FDA, “preliminary feedback [was] expected Jan. 2022.”
84. On or around December 22, 2021, Kukbo delivered to RedHill a list of documents
requested by Kukbo’s CRO for the Korean approval process, LSK Global PS (“LSK”). RedHill
reportedly uploaded the requested documents to the data room on or around December 31, 2021,
but LSK found them to be insufficient to apply for Korean MFDS’ approval. LSK urged, “if
there is any issue with approval or approval of FDA, EMA and other, please share it as soon as
possible.”
85. On or around January 5, 2022, RedHill stated, “EMA provided preliminary
written responses requiring a pivotal study which will pre-specify the target population of
‘moderately severe COVID-19’ patients. We plan to continue communication with EMA and
provide further responses. This in parallel to the extended out-reach to additional regulatory
agencies, including FDA, MHRA, SwissMedic, Russia, Colombia, Brazil and India.”
86. LSK emailed RedHill on or around January 5, 2022 seeking further information
needed for regulatory approval in Korea. LSK was particularly interested in how the common
technical document (“CTD”) was prepared for the new drug application (“NDA”) for Opaganib
as a COVID-19 treatment. LSK inquired of RedHill about Opaganib’s efficacy, usage and
dosage, precautions for use, clinical data, CTD preparation status for NDA, and manufacturer.
Importantly, LSK asked “I understood that it has not yet been approved for use in any country.
Do you have a due date to receive it?”
87. On or around January 12, 2022, RedHill, LSK and Kukbo held a conference call
during which RedHill gave an update on the regulatory status of Opaganib as follows: (1)
Colombia was likely to be the first country to issue emergency use approval, (2) RedHill
submitted additional data to the EMA and was awaiting feedback, (3) RedHill would receive
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investigational new drug (“IND”) approval from the US FDA by January 17, 2022, and (4)
RedHill expected the IND approval in the United Kingdom by the end of January. LSK stressed
during the call that the EMA and FDA approval were the top priority and repeated its
information request of January 5, 2022.
88. Kukbo reminded RedHill again on or around February 7, 2022 that COVID-19
cases were rising in Korea and that RedHill needed to “utilize this chance and try to grab… the
promotion opportunity” for Opaganib. However, when Kukbo reviewed the data room on or
around February 16, 2022, it discovered that all regulatory authorities were requiring a
confirmatory study due to lack of data.
89. Relying on RedHill’s expectations regarding Opaganib’s approval, Kukbo
proceeded to executing the Exclusive License Agreement on or around March 14, 2022. Under
the agreement, RedHill agreed to provide an exclusive license to Kukbo to import and
commercialize Opaganib as a treatment for COVID-19 and infections caused by any variants of
SARS-COV-2 within South Korea. The Parties agreed to discuss in good faith expanding the
license to Japan, Indonesia, Vietnam, Thailand, and Malaysia as well as expanding the field of
Opaganib’s use to cancer and other conditions.
90. Under the Exclusive License Agreement, Kukbo was to pay a non-refundable up-
front payment of $1.5 million within 15 days, another non-refundable payment of $1 million
once Opaganib is approved in the US or Europe, and another $1 million once Opaganib is
approved in South Korea. RedHill’s obligation was to provide all available documentation in its
control that is necessary for regulatory approval in South Korea. RedHill was also required to
participate in a joint commercialization committee with Kukbo.
91. The Parties simultaneously executed an amendment to the Subscription
Agreement revising the expiration of Kukbo’s right of first offer to October 31, 2022 instead of
the six month anniversary of the agreement.
RedHill’s Failure to Provide a Marketable Product
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92. Soon after signing the Exclusive License Agreement, Kukbo discovered that
RedHill was in fact having serious difficulties obtaining regulatory approval for Opaganib in
every country. In became clear that Kukbo would not be able to obtain the Korean government’s
approval under the circumstances. Thus, on or around March 25, 2022, Kukbo asked for
RedHill’s confirmation on its plans for additional pivotal or confirmatory studies of Opaganib.
Kukbo urged RedHill to “share the information [sic] where and when the additional clinical trial
takes place” and “for including S. Korea for your pivotal study as an official licensee.”
93. On or around March 31, 2022, RedHill represented, “R&D team is working
intensively to support opaganib path. We are preparing the plans for the next study as we speak
and pursuing regulatory path in several territories.” RedHill also represented that it was
“working on securing the necessary resources for the next study and are expecting responses
from large grant applications for study funding” and “waiting to hear from the UK COVID-19
Therapeutics Advisory Panel (UK-CTAP) about the interest they recently expressed in including
opaganib in their RECOVERY platform study.”
94. When Kukbo again confronted RedHill regarding its failure to obtain approval in
any country and declining share value, which had dropped to around $2.00 as of April 2022,
RedHill merely stated, “much like our share price was $11…and now $2 it can be back at $11 in
a heartbeat and then grow to $20 or $50 and beyond.” Yet, the stock price continued to drop even
lower.
95. When Kukbo repeatedly asked to be updated on the status of the additional
pivotal study for Opaganib, RedHill represented on or around May 3, 2022 that Russia’s
Marketing Authorization Application was “under ongoing review,” the EUA in Colombia was
also “under review,” and that the UK’s COVID-19 Therapeutics Advisory Panel (“CTAP”) had
“provided initial positive feedback about their review of Opaganib as a potential additional arm
to be included in their RECOVERY+ platform study.”
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12/16/2022 10:27
03:40 PM
PM INDEX NO.
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653200/2022
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NYSCEF DOC. NO.
NO. 290
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12/16/2022
96. Shortly thereafter, Kukbo learned that the MAA in Russia had actually failed on
or around April 22, 2022 and that Opaganib was not selected for inclusion in the UK platform
study as of May 4, 2022. When Kukbo made an official inquiry on or around May 24, 2022
RedHill responded that it was continuing with the confirmatory pivotal study required for
regulatory approval and “was still exploring potential participation in platform studies and also
collaboration with private or public entities.” Upon information and belief, such additional study
has not even begun.
97. On or around May 26, 2022, Kukbo informed RedHill that given Opaganib’s
failure to obtain approval and missing the critical window of opportunity for commercializing
Opaganib in Korea and the crippling losses Kukbo suffered from investing in RedHill’s ADS,
Kukbo could not justify advancing any further payments to RedHill.
98. As RedHill threatened to sue Kukbo for $6.5 million allegedly due under the
agreements, Kukbo signed a letter prepared by RedHill acknowledging it would pay the upfront
license fee of $1.5 million by June 30, 2022 and the second investment of $5 million by July 31,
2022.
99. However, even after Kukbo signed the acknowledgement letter, RedHill did not
take any step towards obtaining approvals for Opaganib. Upon information and belief, RedHill
did not even initiate the confirmatory study required in every country it tried to obtain regulatory
approval. In fact, immediately after the Parties signed the acknowledgement letter, RedHill’s
stock price dropped further to approximately $.64 per ADS.
100. On or around July 22, 2022, Kukbo informed RedHill that in order to justify the
upfront license fee and second investment, Kukbo required (i) RedHill’s plan and timeline for
the additional phase-3 clinical trial, (ii) its plan and timeline for the development of Opaganib as
prostate cancer treatment, and (iii) its plan and timeline for the development of Opaganib as
treatment for cholangiocarcinoma. RedHill did not provide such information but proceeded to
filing this lawsuit.
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FILED: NEW
FILED: NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 05/28/2024
12/16/2022 10:27
03:40 PM
PM INDEX NO.
INDEX NO. 653200/2022
653200/2022
NYSCEF DOC.
NYSCEF DOC. NO.
NO. 290
20 RECEIVED NYSCEF:
RECEIVED NYSCEF: 05/28/2024
12/16/2022
101. Before Kukbo was duly served with the Summons and Complaint through the
Seoul Central District Court on November 21, 2022, RedHill issued a press release on November
7, 2022 stating, “Litigation agai
Preview
FILED: NEW YORK COUNTY CLERK 05/28/2024 10:27 PM INDEX NO. 653200/2022 NYSCEF DOC. NO. 290 RECEIVED NYSCEF: 05/28/2024 EXHIBIT 65 FILED: NEW FILED: NEW YORK YORK COUNTY COUNTY CLERK CLERK 05/28/2024 12/16/2022 10:27 03:40 PM PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 290 20 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 12/16/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL DIVISION Index No. 653200/2022 RedHill Biopharma Ltd., Plaintiff, DEFENDANT KUKBO CO., LTD.’S ANSWER TO v. PLAINTIFF’S COMPLAINT AND COUNTERCLAIM Kukbo Co., Ltd., Defendant. Defendant Kukbo Co., Ltd. (“Defendant” or “Kukbo”), by and through undersigned counsel, as and for its Answer to Plaintiff RedHill Biopharma Ltd.’s (“Plaintiff” or “RedHill,” collectively with Defendant, the “Parties”) Complaint dated September 2, 2022 (the “Complaint”), states as follows: ANSWER TO ALLEGATIONS IN THE COMPLAINT’S INTRODUCTION 1 1. Defendant denies the allegations contained in paragraph 1 of the Introduction to the Complaint. 2. Defendant denies the allegations contained in paragraph 2 of the Introduction to the Complaint. 3. Defendant lacks knowledge or information sufficient to form a belief about the truth of the allegations contained in paragraph 3 of the Introduction to the Complaint. 4. Defendant denies the allegations contained in paragraph 4 of the Introduction to the Complaint, except admits that it is a corporation organized under the laws of the Republic of Korea with its principal place of business in the Republic of Korea. 1 The Complaint begins with an introductory section with 8 numbered paragraphs covering the Nature of the Proceedings, the Parties, and Jurisdiction, Venue, and Governing law (the “Introduction”). After the Introduction, the paragraph numbering restarts at 1 and ends at paragraph 56. For clarity, paragraphs 1 through 56 following the Introduction will be referred to as the Complaint. 1 of 27 FILED: NEW FILED: NEW YORK YORK COUNTY COUNTY CLERK CLERK 05/28/2024 12/16/2022 10:27 03:40 PM PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 290 20 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 12/16/2022 5. Defendant admits the allegations contained in paragraph 5 of the Introduction to the Complaint for jurisdictional purposes only. The remainder of the allegations are denied. 6. Defendant admits the allegations contained in paragraph 6 of the Introduction to the Complaint for jurisdictional purposes only. The remainder of the allegations are denied. 7. Defendant admits the allegations contained in paragraph 7 of the Introduction to the Complaint for venue purposes only. The remainder of the allegations are denied. 8. Defendant admits the allegations contained in paragraph 8 of the Introduction to the Complaint. ANSWER TO ALLEGATIONS IN THE COMPLAINT’S FACTUAL BACKGROUND 9. Defendant lacks knowledge or information sufficient to form a belief about the truth of the allegations contained in paragraph 1 of the Complaint. 10. Defendant denies the allegations contained in paragraph 2 of the Complaint except as to what is quoted from Exhibit D to the Complaint. 11. Defendant denies the allegations contained in paragraph 3 of the Complaint except what is stated in the email attached as Exhibit D to the Complaint. 12. Defendant denies the allegations contained in paragraph 4 of the Complaint except as to the fact that the Parties negotiated and executed a Subscription Agreement and an Exclusive License Agreement. 13. Defendant denies the allegations contained in paragraph 5 of the Complaint except what is stated in the Subscription Agreement attached as Exhibit A to the Complaint. 14. Defendant denies the allegations contained in paragraph 6 of the Complaint except what is stated in the Subscription Agreement attached as Exhibit A to the Complaint. 15. Defendant denies the allegations contained in paragraph 7 of the Complaint except what is stated in the Exclusive License Agreement attached as Exhibit B to the Complaint. 2 2 of 27 FILED: NEW FILED: NEW YORK YORK COUNTY COUNTY CLERK CLERK 05/28/2024 12/16/2022 10:27 03:40 PM PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 290 20 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 12/16/2022 16. Defendant denies the allegations contained in paragraph 8 of the Complaint except what is stated in the Exclusive License Agreement attached as Exhibit B to the Complaint. 17. Defendant denies the allegations contained in paragraph 9 of the Complaint except what is stated in the Exclusive License Agreement attached as Exhibit B to the Complaint. 18. Defendant denies the allegations contained in paragraph 10 of the Complaint except what is stated in the Exclusive License Agreement attached as Exhibit B to the Complaint. 19. Defendant denies the allegations contained in paragraph 11 of the Complaint except what is stated in the Exclusive License Agreement attached as Exhibit B to the Complaint. 20. Defendant lacks knowledge or information sufficient to form a belief about the truth of the allegations contained in paragraph 12 of the Complaint. 21. Defendant lacks knowledge or information sufficient to form a belief about the truth of the allegations contained in paragraph 13 of the Complaint. 22. Defendant denies the allegations contained in paragraph 14 of the Complaint. 23. Defendant denies the allegations contained in paragraph 15 of the Complaint. 24. Defendant denies the allegations contained in paragraph 16 of the Complaint except what is stated in the referenced email. 25. Defendant denies the allegations contained in paragraph 17 of the Complaint except what is stated in the referenced email. 26. Defendant denies the allegations contained in paragraph 18 of the Complaint except what is stated in the letter attached as Exhibit E to the Complaint. 27. Defendant denies the allegations contained in paragraph 19 of the Complaint except what is stated in the letter attached as Exhibit E to the Complaint. 3 3 of 27 FILED: NEW FILED: NEW YORK YORK COUNTY COUNTY CLERK CLERK 05/28/2024 12/16/2022 10:27 03:40 PM PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 290 20 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 12/16/2022 28. Defendant denies the allegations contained in paragraph 20 of the Complaint. 29. Defendant lacks knowledge or information sufficient to form a belief about the truth of the allegations contained in paragraph 21 of the Complaint. 30. Defendant denies the allegations contained in paragraph 22 of the Complaint except what is stated in the Letter Agreement attached as Exhibit C to the Complaint. 31. Defendant denies the allegations contained in paragraph 23 of the Complaint except what is stated in the Letter Agreement attached as Exhibit C to the Complaint. 32. Defendant denies the allegations contained in paragraph 24 of the Complaint except what is stated in the referenced email attached as Exhibit F to the Complaint. 33. Defendant denies the allegations contained in paragraph 25 of the Complaint except what is stated in the referenced email. 34. Defendant denies the allegations contained in paragraph 26 of the Complaint. 35. Defendant denies the allegations contained in paragraph 27 of the Complaint except what is stated in Exhibit G to the Complaint. 36. Defendant denies the allegations contained in paragraph 28 of the Complaint except what is stated in the referenced email attached as Exhibit H to the Complaint. 37. Defendant denies the allegations contained in paragraph 29 of the Complaint except what is stated in Exhibit I to the Complaint. 38. Defendant denies the allegations contained in paragraph 30 of the Complaint. 39. Defendant denies the allegations contained in paragraph 31 of the Complaint except what is stated in the Demand Letter attached as Exhibit J to the Complaint. 40. Defendant denies the allegations contained in paragraph 32 of the Complaint. ANSWER TO PLAINTIFF’S COUNTS I THROUGH III AND PRAYER FOR RELIEF 41. Defendant repeats its answers above to the allegations in all prior paragraphs of the Complaint as if fully set forth herein in response to paragraph 33 of the Complaint. 4 4 of 27 FILED: NEW FILED: NEW YORK YORK COUNTY COUNTY CLERK CLERK 05/28/2024 12/16/2022 10:27 03:40 PM PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 290 20 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 12/16/2022 42. Defendant denies the allegations contained in paragraph 34 of the Complaint. 43. Defendant denies the allegations contained in paragraph 35 of the Complaint. 44. Defendant denies the allegations contained in paragraph 36 of the Complaint except what is stated in the Subscription Agreement. 45. Defendant denies the allegations contained in paragraph 37 of the Complaint except what is stated in the Letter Agreement. 46. Defendant denies the allegations contained in paragraph 38 of the Complaint. 47. Defendant denies the allegations contained in paragraph 39 of the Complaint. 48. Defendant denies the allegations contained in paragraph 40 of the Complaint. 49. Defendant repeats its answers above to the allegations in all prior paragraphs of the Complaint as if fully set forth herein in response to paragraph 41 of the Complaint. 50. Defendant denies the allegations contained in paragraph 42 of the Complaint. 51. Defendant denies the allegations contained in paragraph 43 of the Complaint. 52. Defendant denies the allegations contained in paragraph 44 of the Complaint except what is stated in the Exclusive License Agreement. 53. Defendant denies the allegations contained in paragraph 45 of the Complaint except what is stated in the Letter Agreement. 54. Defendant denies the allegations contained in paragraph 46 of the Complaint. 55. Defendant denies the allegations contained in paragraph 47 of the Complaint. 56. Defendant denies the allegations contained in paragraph 48 of the Complaint. 57. Defendant repeats its answers above to the allegations in all prior paragraphs of the Complaint as if fully set forth herein in response to paragraph 49 of the Complaint. 58. Defendant denies the allegations contained in paragraph 50 of the Complaint. 59. Defendant denies the allegations contained in paragraph 51 of the Complaint. 60. Defendant denies the allegations contained in paragraph 52 of the Complaint. 61. Defendant denies the allegations contained in paragraph 53 of the Complaint. 5 5 of 27 FILED: NEW FILED: NEW YORK YORK COUNTY COUNTY CLERK CLERK 05/28/2024 12/16/2022 10:27 03:40 PM PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 290 20 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 12/16/2022 62. Defendant denies the allegations contained in paragraph 54 of the Complaint except what is stated in the Subscription, Exclusive License and Letter Agreements. 63. Defendant denies the allegations contained in paragraph 55 of the Complaint. 64. Defendant denies the allegations contained in paragraph 56 of the Complaint. 65. Defendant denies that Plaintiff is entitled to any of the relief that it seeks, and respectfully requests the relief sought in Defendant’s Prayer for Relief, below. 66. Defendant denies all allegations in the Complaint that it has not specifically admitted above, except to the extent that Defendant has denied having knowledge or information sufficient to form a belief about the truth of the allegations. FACTUAL BACKGROUND TO DEFENDANT’S AFFIRMATIVE DEFENSES AND COUNTERCLAIMS 67. Kukbo is a company incorporated in the Republic of Korea with its principal place of business located at 8F, Kukbo Building, 42, Gwangnam-ro, Suyeong-gu, Busan 48304, Republic of Korea. Kukbo has been a publicly listed company on the Korea Stock Exchange since 1989. Kukbo’s primary business is international logistics, cargo transport, and warehouse and storage services. 68. In the aftermath of the COVID-19 outbreak, there was an explosive demand for personal protective equipment and Kukbo engaged in the business of distributing facial masks nationwide. In 2021, Kukbo launched a new business in healthcare, mainly focused on distributing COVID-19 related products. The primary goal of Kukbo’s new business was to be among the first to supply COVID-19 treatment to healthcare providers in Korea, and its immediate objective was to secure an exclusive distribution arrangement for an effective drug for the Coronavirus. 69. It was in this context that Kukbo was introduced to RedHill through a Korean broker, Nexpedia Co. Holdings Ltd. (“Nexpedia”). According to RedHill’s website, Opaganib is “a first-in-class new chemical entity with anti-inflammatory, anti-cancer and antiviral activity, 6 6 of 27 FILED: NEW FILED: NEW YORK YORK COUNTY COUNTY CLERK CLERK 05/28/2024 12/16/2022 10:27 03:40 PM PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 290 20 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 12/16/2022 under development for multiple indications.” 2 Opaganib is “expected to be effective against emerging viral variants, having already demonstrated strong inhibition against variants of concern, including Delta” and “RedHill is pursuing the development program for Opaganib and is in ongoing discussions with multiple regulatory agencies regarding potential pathways to approval.” 3 Also in RedHill’s pipeline is a drug called RHB-107 which is allegedly “a first-in- class orally-administered potent inhibitor of serine proteases targeting multiple indications, including COVID-19, cancer, inflammatory lung diseases and gastrointestinal diseases.” 4 The Subscription Agreement 70. Kukbo and RedHill began communicating directly with one another around September 2021. Their respective contact points were Director Ken Choi of Kukbo and Chief Corporate & Business Development Officer Adi Frish of RedHill. They communicated mainly through emails and conference calls. Kukbo wished to obtain an exclusive distribution license for Opaganib for South Korea. RedHill was willing to provide an exclusive license to Kukbo but required Kukbo to make a sizeable investment in Redhill as a precondition for the license. 71. On or around October 13, 2021, RedHill’s Chief Executive Officer Dror Ben- Asher, Chief Business Officer Guy Goldberg, and Chief Financial Officer Micha Ben participated in a conference call with Nexpedia and Kukbo. During the call, RedHill’s CEO proposed that Kukbo invest $10 million in return for the right to license not only Opaganib but also two other drugs in RedHill’s pipeline. The investment requirement was a disconcerting condition for Kukbo as it was new to the healthcare industry and had never invested in a foreign company before. The amount also presented a concern. $10 million is equivalent to approximately 10% of Kukbo’s total assets. Moreover, according to RedHill’s Corporate Presentation dated September 13, 2021, Opaganib failed to “achiev[e] statistical significance” at the end of Phase 2/3 trials. 2 https://www.redhillbio.com/our-programs/pipeline/ (Opaganib), last accessed on December 14, 2022. 3 https://www.redhillbio.com/our-programs/pipeline/ (COVID-19), last accessed on December 14, 2022. 4 https://www.redhillbio.com/our-programs/pipeline/ (RHB-107), last accessed on December 14, 2022. 7 7 of 27 FILED: NEW FILED: NEW YORK YORK COUNTY COUNTY CLERK CLERK 05/28/2024 12/16/2022 10:27 03:40 PM PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 290 20 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 12/16/2022 72. However, the Corporate Presentation also painted a rosy outlook for Opaganib, representing, “despite not meeting [the] primary endpoint, analysis of the study efficacy endpoints showed trends in favor.” RedHill also represented that the emergency use authorization (“EUA”) for Opaganib was ongoing with positive feedback from the regulatory authorities of the US, the European Union (“EU”), and the United Kingdom (“UK”). 73. Based on these statements Kukbo decided to invest in RedHill in order to obtain exclusive licensing rights to Opaganib. On October 25, 2021, the Parties entered into a Subscription Agreement whereby Kukbo would purchase $10 million worth of RedHill’s American Depository Shares (“ADS”) in return for a right of first offer for the licensing of one or more of RHB-107, Opaganib or Talicia® in one or more of South Korea, Japan, Indonesia, Vietnam, Thailand, and/or Malaysia. 74. Under the Subscription Agreement, Kukbo was to invest in two tranches. At the First Closing which was shortly after contract execution, Kukbo was to purchase 827,586 ADS for $5 million priced at $6.04 per ADS. The Second Closing was conditioned on the Parties executing a license agreement no later than the 6 month anniversary of the Subscription Agreement. At the Second Closing, Kukbo was to purchase another $5 million worth of RedHill’s ADS at the 30 preceding trading days’ average price plus 20%. RedHill’s Subsequent Public Offering 75. Less than one month after executing the Subscription Agreement, RedHill issued a press release on November 18, 2021 announcing an underwritten public offering of ADS. Kukbo was not informed of the public offering prior to the press release. Nor did RedHill disclose to Kukbo during the negotiations of the Subscription Agreement that RedHill was planning a public offering immediately afterwards. 76. Even on November 17, 2021 when Kukbo’s Vice President James K. Ahn and Ken Choi were on a conference call with RedHill’s Chief Operating Officer Gilead Raday and others to discuss licensing and the falling ADS price, RedHill did not inform Kukbo of the 8 8 of 27 FILED: NEW FILED: NEW YORK YORK COUNTY COUNTY CLERK CLERK 05/28/2024 12/16/2022 10:27 03:40 PM PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 290 20 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 12/16/2022 imminent public offering. RedHill explained that the ADS price, which had plummeted to $4.06 as of November 17, 2021, was not due to any clinical trial results. RedHill further explained that additional studies may be required, but that Germany and Romania were “tapping” because COVID-19 cases were on the rise. RedHill assured Kukbo that the ADS price will soon shoot up once Opaganib and RHB-107 are approved as COVID-19 treatment. 77. On November 19, 2021, RedHill announced a public offering of 4.7 million ADS for $15.5 million at roughly $3.30 per share. RedHill subsequently filed a prospectus supplement with the Securities and Exchange Commission (“SEC”) and issued a press release announcing the closing of the public offering on November 23, 2021. RedHill’s ADS price continued to plunge to $2.72 as of November 23, 2021. 78. Executives of RedHill and Kukbo held another conference call on November 23, 2021. During this meeting, RedHill explained that the offering of new shares at approximately 50% of the price paid by Kukbo was due to RedHill’s dire financial situation, and repeatedly represented that bio companies such as itself would easily bounce back by 6 to 7%. RedHill also represented that it expected to obtain Opaganib’s emergency use authorization in Russia. The Exclusive License Agreement 79. In order for Kukbo to distribute Opaganib in South Korea, the drug must first be approved by the Korean Ministry of Food and Drug Safety (“MFDS”). Kukbo planned to rely on foreign regulatory approvals to support its application to the MFDS and engaged a contract research organization (“CRO”) to assist with the Korean approval process. RedHill has at all times been aware of Kukbo’s plan and understood that Korea’s MFDS would not approve Opaganib unless it is approved in either the US, UK, or EU. 80. On or around November 29, 2021, Kukbo informed RedHill that “the schedule with US FDA is quite critical on Korea FDA” and asked when the US FDA’s approval was expected. Kukbo also requested “the status by each country, the possibility to EUA, their feedback and schedule estimation.” 9 9 of 27 FILED: NEW FILED: NEW YORK YORK COUNTY COUNTY CLERK CLERK 05/28/2024 12/16/2022 10:27 03:40 PM PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 290 20 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 12/16/2022 81. According to RedHill’s Third Quarter Financial Results and Operational Highlights presentation dated November 30, 2021, the Phase 2/3 data was submitted to several regulatory authorities and that based on a post hoc analysis, Opaganib showed “apparent benefit in survival of moderately severe hospitalized COVID-19 patients” and showed “promising signals of activity and safety.” RedHill allegedly conducted a post hoc analysis of the Phase 2/3 clinical data which provided “a high degree of confidence that the apparent benefit is not a statistical artifact, and that opaganib may be safe and effective.” RedHill also represented that for a subpopulation of patients in the Phase 2/3 trial, Opaganib reduced mortality rates and need for supplemental oxygen, and showed benefits across key-secondary endpoints. RedHill indicated that it nevertheless planned an additional study of moderately severe hospitalized patients but did not disclose that such further study was necessary for regulatory approval. 82. Then unbeknownst to Kukbo, RedHill filed a Form 6-K with the SEC on December 1, 2021 which contained a Condensed Consolidated Interim Financial Information (Unaudited) as of September 30, 2021. According to the filing, “There [was] no assurance that the Company’s business will generate sustainable positive cash flows to fund its business.” However, according to RedHill’s third quarter commercial highlights, it was nearing “commercial operational breakeven on a quarterly basis by end of 2021.” 5 RedHill also boasted “second consecutive quarter of record net revenues” with lower operating expenses and decreasing operating and net losses. Despite such positive financial disclosure, RedHill’s ADS price was continuing to plummet. RedHill claimed that it was due to an overall decline of the small biotech market and “was not unique to RedHill.” However, while the BioTech Index was improving, RedHill’s ADS continue to drop to just $.20 per share as of December 13, 2022. 83. On or around December 6, 2021, RedHill informed Kukbo that it was “expecting preliminary feedback from the U.S. FDA in Jan 2022.” RedHill also provided a Third Quarter 5 Presentation from RedHill’s Third Quarter 2021 Financial Results and Operational Highlights Webcast on November 30, 2021 accessible at https://www.redhillbio.com/investors/events-and-presentations/event- details/2021/Third-Quarter-2021-Financial-Results--Operational-Highlights-Webcast/default.aspx. 10 10 of 27 FILED: NEW FILED: NEW YORK YORK COUNTY COUNTY CLERK CLERK 05/28/2024 12/16/2022 10:27 03:40 PM PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 290 20 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 12/16/2022 Earnings Presentation indicating approvals were being pursued in the UK, Russia, Brazil, Israel, Switzerland, India, and South Africa. In particular, RedHill represented that the European Medicine Agency (“EMA”) “indicated rapid procedure timelines with preliminary feedback expected by year end” and for the US FDA, “preliminary feedback [was] expected Jan. 2022.” 84. On or around December 22, 2021, Kukbo delivered to RedHill a list of documents requested by Kukbo’s CRO for the Korean approval process, LSK Global PS (“LSK”). RedHill reportedly uploaded the requested documents to the data room on or around December 31, 2021, but LSK found them to be insufficient to apply for Korean MFDS’ approval. LSK urged, “if there is any issue with approval or approval of FDA, EMA and other, please share it as soon as possible.” 85. On or around January 5, 2022, RedHill stated, “EMA provided preliminary written responses requiring a pivotal study which will pre-specify the target population of ‘moderately severe COVID-19’ patients. We plan to continue communication with EMA and provide further responses. This in parallel to the extended out-reach to additional regulatory agencies, including FDA, MHRA, SwissMedic, Russia, Colombia, Brazil and India.” 86. LSK emailed RedHill on or around January 5, 2022 seeking further information needed for regulatory approval in Korea. LSK was particularly interested in how the common technical document (“CTD”) was prepared for the new drug application (“NDA”) for Opaganib as a COVID-19 treatment. LSK inquired of RedHill about Opaganib’s efficacy, usage and dosage, precautions for use, clinical data, CTD preparation status for NDA, and manufacturer. Importantly, LSK asked “I understood that it has not yet been approved for use in any country. Do you have a due date to receive it?” 87. On or around January 12, 2022, RedHill, LSK and Kukbo held a conference call during which RedHill gave an update on the regulatory status of Opaganib as follows: (1) Colombia was likely to be the first country to issue emergency use approval, (2) RedHill submitted additional data to the EMA and was awaiting feedback, (3) RedHill would receive 11 11 of 27 FILED: NEW FILED: NEW YORK YORK COUNTY COUNTY CLERK CLERK 05/28/2024 12/16/2022 10:27 03:40 PM PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 290 20 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 12/16/2022 investigational new drug (“IND”) approval from the US FDA by January 17, 2022, and (4) RedHill expected the IND approval in the United Kingdom by the end of January. LSK stressed during the call that the EMA and FDA approval were the top priority and repeated its information request of January 5, 2022. 88. Kukbo reminded RedHill again on or around February 7, 2022 that COVID-19 cases were rising in Korea and that RedHill needed to “utilize this chance and try to grab… the promotion opportunity” for Opaganib. However, when Kukbo reviewed the data room on or around February 16, 2022, it discovered that all regulatory authorities were requiring a confirmatory study due to lack of data. 89. Relying on RedHill’s expectations regarding Opaganib’s approval, Kukbo proceeded to executing the Exclusive License Agreement on or around March 14, 2022. Under the agreement, RedHill agreed to provide an exclusive license to Kukbo to import and commercialize Opaganib as a treatment for COVID-19 and infections caused by any variants of SARS-COV-2 within South Korea. The Parties agreed to discuss in good faith expanding the license to Japan, Indonesia, Vietnam, Thailand, and Malaysia as well as expanding the field of Opaganib’s use to cancer and other conditions. 90. Under the Exclusive License Agreement, Kukbo was to pay a non-refundable up- front payment of $1.5 million within 15 days, another non-refundable payment of $1 million once Opaganib is approved in the US or Europe, and another $1 million once Opaganib is approved in South Korea. RedHill’s obligation was to provide all available documentation in its control that is necessary for regulatory approval in South Korea. RedHill was also required to participate in a joint commercialization committee with Kukbo. 91. The Parties simultaneously executed an amendment to the Subscription Agreement revising the expiration of Kukbo’s right of first offer to October 31, 2022 instead of the six month anniversary of the agreement. RedHill’s Failure to Provide a Marketable Product 12 12 of 27 FILED: NEW FILED: NEW YORK YORK COUNTY COUNTY CLERK CLERK 05/28/2024 12/16/2022 10:27 03:40 PM PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 290 20 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 12/16/2022 92. Soon after signing the Exclusive License Agreement, Kukbo discovered that RedHill was in fact having serious difficulties obtaining regulatory approval for Opaganib in every country. In became clear that Kukbo would not be able to obtain the Korean government’s approval under the circumstances. Thus, on or around March 25, 2022, Kukbo asked for RedHill’s confirmation on its plans for additional pivotal or confirmatory studies of Opaganib. Kukbo urged RedHill to “share the information [sic] where and when the additional clinical trial takes place” and “for including S. Korea for your pivotal study as an official licensee.” 93. On or around March 31, 2022, RedHill represented, “R&D team is working intensively to support opaganib path. We are preparing the plans for the next study as we speak and pursuing regulatory path in several territories.” RedHill also represented that it was “working on securing the necessary resources for the next study and are expecting responses from large grant applications for study funding” and “waiting to hear from the UK COVID-19 Therapeutics Advisory Panel (UK-CTAP) about the interest they recently expressed in including opaganib in their RECOVERY platform study.” 94. When Kukbo again confronted RedHill regarding its failure to obtain approval in any country and declining share value, which had dropped to around $2.00 as of April 2022, RedHill merely stated, “much like our share price was $11…and now $2 it can be back at $11 in a heartbeat and then grow to $20 or $50 and beyond.” Yet, the stock price continued to drop even lower. 95. When Kukbo repeatedly asked to be updated on the status of the additional pivotal study for Opaganib, RedHill represented on or around May 3, 2022 that Russia’s Marketing Authorization Application was “under ongoing review,” the EUA in Colombia was also “under review,” and that the UK’s COVID-19 Therapeutics Advisory Panel (“CTAP”) had “provided initial positive feedback about their review of Opaganib as a potential additional arm to be included in their RECOVERY+ platform study.” 13 13 of 27 FILED: NEW FILED: NEW YORK YORK COUNTY COUNTY CLERK CLERK 05/28/2024 12/16/2022 10:27 03:40 PM PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 290 20 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 12/16/2022 96. Shortly thereafter, Kukbo learned that the MAA in Russia had actually failed on or around April 22, 2022 and that Opaganib was not selected for inclusion in the UK platform study as of May 4, 2022. When Kukbo made an official inquiry on or around May 24, 2022 RedHill responded that it was continuing with the confirmatory pivotal study required for regulatory approval and “was still exploring potential participation in platform studies and also collaboration with private or public entities.” Upon information and belief, such additional study has not even begun. 97. On or around May 26, 2022, Kukbo informed RedHill that given Opaganib’s failure to obtain approval and missing the critical window of opportunity for commercializing Opaganib in Korea and the crippling losses Kukbo suffered from investing in RedHill’s ADS, Kukbo could not justify advancing any further payments to RedHill. 98. As RedHill threatened to sue Kukbo for $6.5 million allegedly due under the agreements, Kukbo signed a letter prepared by RedHill acknowledging it would pay the upfront license fee of $1.5 million by June 30, 2022 and the second investment of $5 million by July 31, 2022. 99. However, even after Kukbo signed the acknowledgement letter, RedHill did not take any step towards obtaining approvals for Opaganib. Upon information and belief, RedHill did not even initiate the confirmatory study required in every country it tried to obtain regulatory approval. In fact, immediately after the Parties signed the acknowledgement letter, RedHill’s stock price dropped further to approximately $.64 per ADS. 100. On or around July 22, 2022, Kukbo informed RedHill that in order to justify the upfront license fee and second investment, Kukbo required (i) RedHill’s plan and timeline for the additional phase-3 clinical trial, (ii) its plan and timeline for the development of Opaganib as prostate cancer treatment, and (iii) its plan and timeline for the development of Opaganib as treatment for cholangiocarcinoma. RedHill did not provide such information but proceeded to filing this lawsuit. 14 14 of 27 FILED: NEW FILED: NEW YORK YORK COUNTY COUNTY CLERK CLERK 05/28/2024 12/16/2022 10:27 03:40 PM PM INDEX NO. INDEX NO. 653200/2022 653200/2022 NYSCEF DOC. NYSCEF DOC. NO. NO. 290 20 RECEIVED NYSCEF: RECEIVED NYSCEF: 05/28/2024 12/16/2022 101. Before Kukbo was duly served with the Summons and Complaint through the Seoul Central District Court on November 21, 2022, RedHill issued a press release on November 7, 2022 stating, “Litigation agai