Exelogen Inc v The University of Birmingham

In a loss-of-opportunity claim, the claimant must establish a real or substantial chance, rather than a merely speculative possibility. The chance must also have been lost as a result of the defendant’s breach. Where the alleged opportunity depended on obtaining substantial funding and negotiating a licence, the court must assess realistically whether those events had a sufficient prospect of occurring. If the substantiality or causation requirements fail, valuation does not arise. Any valuation undertaken despite that conclusion is obiter. Unjust enrichment will generally be unavailable where a valid contract governs the parties’ relationship, absent an express or implied term entitling the claimant to reasonable remuneration.

Exelogen claimed damages for the University’s admitted breach of an agreement giving Exelogen an exclusive option period in which to notify the University of its desire to negotiate an exclusive licence concerning pharmaceutical rights relating to Exenatide.

Claims for breach of confidence, unjust enrichment, procurement of breach of contract and unlawful means conspiracy were abandoned. The trial therefore concerned whether the admitted breach caused recoverable loss and, if so, how that loss should be quantified. The central issues were whether Exelogen had lost a real or substantial opportunity to obtain the licence and bring the treatment to market, whether the breach caused that loss, and the value of the lost opportunity.

1. Disposition. The claim was dismissed. The claimant failed to establish that the admitted breach deprived it of anything more than a speculative chance of obtaining a licence. If that conclusion had been wrong, damages would have been assessed at US$771,000.
2. Unjust enrichment. The abandoned claim had no realistic prospect of success. There was a valid subsisting contract, no express term requiring payment for the services relied on, and no basis for implying such a term. The claimant also failed to show enrichment at its expense. The judge applied Benedetti v Sawiris [2013] UKSC 50, Marks and Spencer Plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72 and Ali v Petroleum Company of Trinidad and Tobago [2017] UKPC 2.
3. Loss of opportunity. Applying Allied Maples v Simmons and Simmons [1995] 1 WLR 1602, and the approach reaffirmed in Gregg v Scott [2005] UKHL 2 and Perry v Raleys Solicitors [2019] UKSC 5, the claimant had to prove a real or substantial chance. The evidence showed no realistic prospect of raising the required finance, attracting an investor, completing the clinical trials or satisfying the University’s licensing requirements. The alleged chance was therefore speculative.
4. Causation and valuation. Since the claimant had no more than a speculative prospect of obtaining the necessary funding and licence, the breach had not caused the alleged loss. The valuation exercise was expressly unnecessary and obiter. Nevertheless, the judge considered that damages should ordinarily be assessed at the date of breach, using risk-adjusted present-value analysis, allowing for development costs and appropriate deductions, but not dilution of the claimant’s shareholders’ interests.