An intangible-asset impairment dispute.
- 01$620mImpairment at issue
- 023Expert reports filed
- 036 daysEvidentiary hearing
- 04LCIAArbitral institution
Our team was appointed by claimant’s counsel in a dispute with a former licensing partner over the impairment of a late-stage drug candidate—a matter turning on probability-adjusted valuation and what the partner knew when the write-down was recorded.
The question
After a trial setback, the partner wrote down the licensed asset and invoked a contractual adjustment that reduced payments to our client. The tribunal had to decide whether the impairment reflected a genuine decline in value or an overly pessimistic reading of the clinical data.
Our approach
We built a risk-adjusted net present value model using industry success rates for each clinical phase, then updated it only for information available at each reporting date. This separated the effect of genuine clinical news from changes in assumptions that the data did not support.
The evidence
Our analysis showed that the partner’s write-down applied a probability of success well below published benchmarks for comparable programmes. Contemporaneous board papers used higher assumptions for internal planning, a gap the tribunal explored in detail with both experts during concurrent evidence.
The outcome
The tribunal found that the impairment overstated the decline in value and that the contractual adjustment had not been validly triggered. Payments were reinstated in full, and the partner later renegotiated the licence on revised terms.
An impairment is a judgement made at a moment in time, and it should be tested against what was known then.