Cosette Pharmaceuticals, Inc v Mayne Pharma Group Ltd

2025/00433802

CORPORATIONS – the respondent (MPG) is an Australian public company listed on the Australian Securities Exchange – its business is focused on pharmaceuticals and it has significant business presence in the United States and Australia – the first appellant (Cosette) and the second appellant (Cosette Sub) are wholly-owned subsidiaries of Cosette Pharmaceuticals Holdings, Inc (which is jointly owned and controlled by Avista Capital Holdings LP and Hamilton Lane Advisors LLC) – by a Scheme Implementation Deed dated 20 February 2025 (SID), Cosette and MPG agreed to the terms and mechanism of a proposed scheme of arrangement which provided for the acquisition of all of MPG’s ordinary shares by Cosette Sub – under the SID, Cosette would be entitled to termination if MPG’s maintainable earnings before accounting for interest, taxes, depreciation and amortisation (Maintainable EBITDA) over the 2025 financial year declined by at least $10.76 million – on 17 May 2025, Cosette issued to MPG a notice of a material adverse change under cll 3.5(c) and 3.7(a) of the SID and, on 4 June 2025, Cosette sent to MPG a notice of termination purportedly based upon the material change identified in the notice – MPG sought declarations that the notice of a material adverse change was not validly issued and that Cosette did not validly terminate the SID by its termination notice – by its Cross-Summons filed on 13 June 2025, Cosette sought a declaration that it validly terminated the SID and sought an order that MPG pay it a break fee pursuant to the SID and further relief – in seeking to establish its contractual right to terminate the SID by reason of a decline in MPG’s Maintainable EBITDA, Cosette relied on various events and circumstances relating to MPG’s sales performance (the Q3 FY25 Sales Performance Matters) – Cosette also brought a misleading or deceptive conduct claim against MPG on the basis that MPG deceptively represented to Cosette that it expected that MPG’s underlying EBITDA for the 2025 financial year would be $69.8 million (the FY25 EBITDA Representation) – the primary judge held that the Q3 FY25 Sales Performance Matters did not constitute a material change entitling Cosette to terminate the SID – the primary judge further held that the position taken by the appellants at the first court hearing in respect of the proposed scheme on 15 May 2025 amounted to an election to continue the arrangements contemplated by the SID – the primary judge found that MPG did not make the FY25 EBITDA Representation and Cosette’s claim for misleading or deceptive conduct therefore failed – whether the primary judge erred in failing to find that MPG engaged in misleading or deceptive conduct – whether the primary judge erred in finding that the Q3 FY25 Sales Performance Matters did not constitute a material change entitling Cosette to terminate the SID – whether the primary judge erred in finding that Cosette affirmed the SID.

In the matter of Mayne Pharma Group Limited [2025] NSWSC 1204