You need to know about this obscure Delaware court case

The Delaware Supreme Court recently heard arguments for an appeal of a court case on shareholder lawsuits that could have significant implications for biotech companies. Here’s what you need to know.

The background: Companies have seen an increase in overlapping shareholder lawsuits under the Securities Act of 1933 in multiple state courts—what’s called “forum shopping” to try to get a more favorable result. This drives up costs due to the cost of defending these lawsuits as well as the cost of D&O (directors and officers) insurance, which helps mitigate litigation costs. 

So, companies decided to do something about it. Companies like Stitch Fix, Roku, and Blue Apron included a “federal forum selection provision” in their charters, meaning shareholders could only sue them in federal court—one case, one judge, one set of rules—instead of duplicating the lawsuit in numerous states. 

But shareholders challenged these provisions. In Sciabacucchi v. Salzberg, the lower court in Delaware struck down the federal forum selection provisions, holding Delaware state law does not permit them.  

Last week, the companies appealed in the Delaware Supreme Court. If the lower court’s ruling is upheld, companies will be back to defending lawsuits in multiple states—meaning costs for litigation and D&O insurance will continue to rise. The court is expected to make a decision within 90 days. 

Why it matters: As costs of litigation and D&O insurance rise, they divert essential capital from the labs of small biotechs—and thus, from new cures. Companies need to determine where investor money is best spent—and we know that’s on research, not duplicative lawsuits. 

Read more about why this issue is important to innovation and cures.

More Health Care News: 

Bloomberg: China agrees to tweaks on drug patents as part of trade deal
“Under terms of the deal, patent disputes over potential generic drugs could be resolved before a copycat medicine enters the market in China, and brand companies would be able to seek an order to block any sales until the conflicts are resolved.”

Forbes: U.S. prices for healthcare services far outpace peer nations
“On the campaign trail and in debates Democratic presidential candidates have focused nearly all their attention on prescription drugs…But, a much larger driver of high healthcare costs is the hospital sector.”

The Hill: Republican FTC commissioner says she supports Medicare negotiating drug prices
Christine Wilson “expressed support for Medicare negotiating drug prices, an idea typically more supported by Democrats.”

We’ve talked a lot about the role of biotech in providing solutions to problems caused by climate change and BIO’s commitment to counter misconceptions about technology like genome editing. This short piece from CNN explains why CRISPR isn’t something negative or scary—but cool research conducted by thoughtful scientists to make crops more resilient and feed the world.

About the scientist: Joyce Van Eck researches crop improvement at Cornell University’s Boyce Thompson Institute, where she’s focusing on how to make the groundcherry, which is difficult to grow, a viable crop for farmers to grow and humans to eat. (She has more cool videos here.)

How she’s doing it: By using CRISPR, which she calls a “precise method to change a plant’s inner workings to help improve that plant” by changing “undesirable characteristics."

And it goes beyond just tasty fruits: There’s also work being done to remove the allergens from peanuts, as one example—something with potential to save lives. 

What they’re saying: “Mutations are an important part of crop improvement and help plants adapt to new situations,” says Van Eck. “I never thought I’d see something like CRISPR during my career.” 

Why it matters: We need solutions to sustain our food supply, jobs, and innovation, and biotech shows tremendous promise—but not if it’s over-regulated. Changing the misconceptions about what, exactly, CRISPR means—and ensuring policymakers and consumers understand the science—will play a big role in fulfilling that promise. 

Dig in:
Innovature: Five Breakfast Foods of the Future