Faron Pharmaceuticals Oy LON:FARN) told investors it has filed a request for arbitration with the Stockholm Chamber of Commerce to seek damages related to a dispute over a terminated manufacturing agreement with  Rentschler Biopharma.

In October, Faron revealed it had received a contract termination notice from German producer Rentschler Biopharma, which was providing active pharmaceutical ingredient manufacturing.

It came due to a need for a “significant” upgrade to the manufacturing process, required for approval from European and US authorities so that it can produce the drug.

Faron, at that time, said the termination had no impact on the ongoing clinical advice process, as it focuses on a clinical study structure for Traumakine, which is used to treat acute respiratory distress.

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Today, it added that following a  detailed investigation into the circumstances around manufacturing arrangements it has now concluded that it considers the letter in which Rentschler states it terminates the agreement is without merit and in breach of the underlying agreement between the parties.

“Faron also considers Rentschler to have otherwise breached the agreement,” the company said in a statement.

“As a remedy, the Company has filed a request for arbitration with the Arbitration Institute of the Stockholm Chamber of Commerce seeking damages.”

Additionally, Faron noted that it has entered into a litigation funding agreement, for non-recourse finance, that is expected to cover both the Company’s legal expenses and the adverse party costs. The agreement will see a portion of any damages in the event that the process is successful.