On February 20, 2014, the Supreme Court of Canada authorized Theratechnologies to appeal a judgment rendered by the Court of Appeal of Québec (Theratechnologies inc. c. 121851 Canada inc. (PDF - available in French only)), upholding the Superior Court ruling authorizing the institution of an action under the secondary market liability regime of sections 225.2 et seq. of Quebec's Securities Act (the "SA").

This is the first appeal that the Supreme Court of Canada will hear regarding the application of the new secondary market liability regime adopted in all Canadian jurisdictions. In the wake of the countless judgments that have recently been rendered on the subject, including that of the Ontario Court of Appeal, this will be an opportunity for Canada's highest court to specify the criteria that apply to the authorization mechanisms set forth in section 225.4 SA (and the similar provisions in other jurisdictions) and to uniformize the implementation of this liability regime.

In this case, the applicant is alleging that Theratechnologies Inc. of having failed to disclose a material change in its activities, operations or capital in the context of the approval process of its flagship drug, tesamoreline, by the Food and Drugs Administration.

The issues that the Supreme Court of Canada will be ruling on include:

  • Whether the analysis of the evidence in the context of the authorization mechanism set forth in section 225.4 SA exceed the colour of right threshold;
  • What constitutes a material change that triggers a reporting issuer's continuous disclosure requirement; and
  • If the applicant has a reasonable chance of proving that there has been a material change in the activities, operations or capital of Theratechnologies triggering the latter's continuous disclosure requirement.

The Appeal's hearing date is tentatively set for December 1, 2014.