In Shareholder Representative Services (SRS) vs. Gilead Sciences et al., an opinion issued on March 15, 2017, the Chancery Court of the State of Delaware found that the term “indication” means “disease” for purposes of a $50M contingent milestone payment in a merger agreement between buyer Gilead Sciences, Inc. (“Gilead”) and Calistoga Pharmaceuticals, Inc. (“Calistoga”). As a result, the regulatory approval that Gilead obtained for treating chronic lymphocytic leukemia (“CLL”) patients with a particular biomarker did not trigger the $50M contingent milestone payment because such regulatory approval was for a “subpopulation of people suffering from a disease” and was not a “disease-level [regulatory] approval”.

Background -

On February 21, 2011, Gilead and Calistoga executed an Agreement and Plan of Merger (“Merger Agreement”) pursuant to which Gilead acquired Calistoga. Plaintiff Shareholder Representative Services LLC (“SRS”) was appointed as the agent for the former securityholders of Calistoga. The Merger Agreement contained a $50M contingent milestone payment that would become due after the earliest to occur of the following...