Aurora Cannabis is being taken to court by CTT Pharma, a Canadian developer of drug-delivery technologies that alleges the marijuana giant is making a bad faith effort to avoid paying what it owes under a licensing agreement.
A statement of claim filed Aug. 26 in the Ontario Superior Court of Justice names Aurora Cannabis and its subsidiary CanniMed Therapeutics as defendants.
According to the statement of claim, Ontario-based CTT Pharma entered a 15-year licensing agreement with CanniMed in early 2017 to make and sell sublingual cannabis products using CTT’s patented rapid-onset Oral Dissolvable Thin Film technology.
CanniMed paid CTT a US$40,000 fee upon execution of the agreement, but CTT says a further payment worth US$935,000 upon Health Canada approval of the products went unpaid, along with patent maintenance fees worth more than CA$150,000.
On top of that, CTT alleges that Aurora owes unpaid royalties on sales made under the licensing agreement and failed to open its books to show CTT its relevant sales.
Finally, CTT claims it is owed compensation for the loss of future royalties it expected to earn over the course of the 15-year licensing deal, amounting to US$39.5 million.
According to the statement of claim, former Aurora CEO Terry Booth was a personal friend of the CEO of CTT’s parent company, CTT Pharmaceutical Holdings.
After Booth left Aurora in February 2020, CTT said it checked in with Aurora to inquire about its expected payments.
Aurora management then “advised that there was no agreement between the parties at all,” CTT alleges.
CTT claims that is not the case and the agreement was never terminated.
The company alleges that Aurora is “knowingly attempting to put off their obligation to pay under the agreement to another quarter – and another fiscal year if possible – as a general corporate strategy to stop all cash payments to all parties and to consolidate its core business.”
The statement of claim continues: “Simply put, the genesis for this action is that Aurora is attempting to make its own financial difficulties – and its share price on the open markets – (CTT’s) problem.”
A spokeswoman for Aurora Cannabis wrote in an emailed statement that the company “believes it has conducted itself in accordance with all relevant agreements, and refutes these claims.”
“The company intends to pursue a full defense against these suits,” the spokeswoman noted.
CTT Pharma announced the legal action Aug. 27.
At the same time, CTT said it had appointed former Aurora executive Shane Morris to its advisory board.
Morris departed Aurora in June when the company laid off hundreds of workers as part of a corporate transformation plan.
Solomon Israel can be reached at [email protected]