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QLT Announces Court Response To Motion To Dismiss And Removal Of Case To Federal Court

QLT Inc. (QLT), a biopharmaceutical company, announced that on May 21, 2009, the District Court of Massachusetts (“District Court”) issued an oral ruling on QLT’s Motion to Dismiss all the claims filed by the General Hospital Corporation, doing business as Massachusetts General Hospital (“MGH”) in its lawsuit against QLT.

In the oral decision, the District Court dismissed all of the claims filed by MGH except that made under Massachusetts General Law chapter 93A, a consumer protection law which makes “unfair or deceptive acts or practices in the conduct of any trade or commerce” unlawful. QLT’s Motion to Dismiss was filed with the District Court on March 17, 2009. We expect that the District Court will formally enter its ruling on the court’s docket in the near future.

In the oral decision, the District Court also dismissed MGH’s motion to remand the case back to the Superior Court of the Commonwealth of Massachusetts (“Massachusetts State Court”), where MGH had originally filed its complaint.

The decision of the District Court means that MGH can continue its lawsuit against QLT in the District Court only on the claim made under Massachusetts General Law chapter 93A. Under the direction of the District Court, QLT and MGH will now begin to schedule discovery on this claim.

MGH filed its lawsuit against QLT on February 12, 2009, in the Massachusetts State Court. In its complaint, MGH asserted claims for breach of contract, breach of the implied covenant of good faith and fair dealing, violation of Massachusetts Chapter 93A Sections 2 and 11, unjust enrichment, and for a declaratory judgment.

In essence, MGH alleged that, in 1998, it entered into a written agreement with QLT that (a) called for QLT to pay MGH a royalty of 0.5% on sales of Visudyne® in the United States and Canada, and (b) included a “most favored nations” clause that required QLT to increase that royalty rate if QLT entered into a license agreement with Massachusetts Eye and Ear Infirmary (“MEEI”) for certain patent rights at a higher rate. As previously announced, MEEI was recently awarded a 3.01% royalty rate, on worldwide sales of Visudyne, in a highly contested legal action against QLT involving claims for unjust enrichment. MGH alleged that the “most favored nations” clause was triggered by the judgment on this jury verdict. QLT disagreed, and moved to dismiss all of MGH’s claims, with prejudice. QLT intends to vigorously contest the claim remaining in this lawsuit.