Brickell loses up to $25M in funding due to ongoing lawsuit

BOULDER — A North Carolina venture firm has cut ties with Brickell Biotech Inc. (Nasdaq: BBI) over the latter’s ongoing federal lawsuit, putting its final clinical trial for a flagship drug in jeopardy.

In filings with the U.S. Securities and Exchange Commission Monday, the Boulder pharmaceutical company said it reached a settlement with NovaQuest Co-Investment Fund X LP to pay back $5.6 million in earlier financing at a 9 percent interest rate.

While Brickell disagreed that NovaQuest had the right to unilaterally terminate the agreement, the company decided to cancel the agreement to avoid a potentially lengthy legal battle, according to the filing.

NovaQuest originally made a commitment of up to $25 million in financing to Vical Inc., a San Diego oncology company. Brickell inherited that funding after closing a reverse merger with Vical in September.

In previous disclosures, Brickell said losing NovaQuest’s funding would impact its Phase III clinical trials for Sofpironium Bromide, an anti-underarm sweating gel and its proposed flagship drug.

Brickell was sued in late October by Miami-based Bodor Laboratories Inc., which alleged that Brickell had violated several terms of its sublicensing deal and tried to copyright Bodor’s intellectual property as its own. The two companies entered arbitration a week later.

Brickell later posted a $4.8 million loss in its first quarter after its debut on the market. The company currently doesn’t have products on the market, and its cash flow comes directly from collaboration deals and from NovaQuest’s payments.

Brickell’s stock closed Monday at $2.16 per share, a 3-cent increase over its starting price. The announcement was made after the end of trading.