Singapore's KPB Biosciences fails in bid to unfreeze assets in US$830 million Novo Nordisk legal battle

Business Times

3 days ago

[SINGAPORE] Locally headquartered biotech firm KPB Biosciences has failed to set aside a court order for its assets to be frozen, with the Singapore International Commercial Court (SICC) having dismissed its application on Tuesday (Aug 12).
The worldwide freezing order had been obtained by Danish drugmaker Novo Nordisk, which is claiming up to S$830 million in damages from KPB, over allegations that the Singapore-based biotech firm had misled it about a drug for hypertension and kidney disease.
Novo Nordisk had acquired the drug from KBP in late 2023 in a deal worth up to US$1.3 billion. But less than a year later, the pharmaceutical giant halted clinical trials because the treatment was proven to be ineffective.
Novo Nordisk, best known for Ozempic, the blockbuster diabetes drug, subsequently announced an impairment loss of around US$800 million.
In February, Judge Philip Jeyaretnam granted the worldwide freezing order in support of the suit, which is being arbitrated in New York. The judge determined there was a real risk that KBP would place its assets beyond Novo's legal reach.
Transfers of US$339.1 million from KBP to its holding company, as well as US$578.5 million paid out in dividends, indicate that its founder, Huang Zhenhua, had the intention of moving assets out of Novo's reach in anticipation of a claim, he said.
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The freeze encompasses KBP's Singapore-based assets, which include the company's DBS fixed deposit account containing US$218 million as of Dec 31, 2023, and Huang's Sennett Estate property, valued at US$7 million at purchase.
The case at hand
KPB had sought to set aside the freeze order on four main grounds: It argued that Novo lacked a strong legal case, and that there was no real risk of asset misuse; it further argued that Novo had failed to provide full and frank disclosure of the freeze order.
The company's lawyers also contended that the application did not satisfy the legal requirements under Section 12A of the International Arbitration Act 1994, which allows the Court to grant interim measures supporting international arbitration proceedings.
But in his judgement, Judge Jeyaratnam found that Novo had a good arguable case, as the evidence sufficiently established that both KBP and Huang had misled it on the efficacy of its kidney-disease drug.
He also ruled that the risk that KBP and Huang would move the assets out of Novo's reach was real.
The monies Huang received have remained in his personal bank accounts. But when viewed in the context of Novo's lawsuit against KBP, these funds were found to have passed through multiple intermediaries before reaching him.
The evidence thus suggested that Huang had expected Novo to file claims against KBP, but not against him personally.
As for whether Novo's application fulfilled Section 12A, the judge said the requirements were established as the emergency arbitrator could not grant the freezing order, which was sought without notifying the other party to prevent asset transfers.
For these and other reasons, the Court declined to set aside the freeze order.
Who is KBP's founder Huang Zhenhua?
The native of Shandong, China, now a Singaporean citizen, has been described in the media as a 'serial entrepreneur', with more than 20 years' experience in drug research and development.
After earning his PhD from Shenyang Pharmaceutical University, he founded Xuanzhu Biopharm in 2002. A decade later, he sold it to Sihuan Pharmaceutical Holdings.
He served as executive director and shareholder at Sihuan before it delisted from the SGX in 2009 and then relisted in Hong Kong the following year.
Huang established KBP in 2011 in Shandong. Court documents show he owns a 40 per cent stake in the company, now incorporated in Singapore, with its global headquarters in International Plaza on Anson Road, and its operations in China and the US.