By: Michelle D. Cruz
Introduction
Collaboration arrangements for emerging technologies have been rapidly increasing, especially among companies developing COVID-19 diagnostics, vaccines, and therapeutics.[1] AnaptysBio, Inc. (“AnaptysBio”) is a clinical-stage biotechnology company focused on delivering innovative therapeutics for autoimmune and inflammatory diseases.[2] This current dispute stems from a March 2014 Collaboration and Exclusive License Agreement (the “Collaboration Agreement”) entered into by AnaptysBio and Tesaro, Inc. (“Tesaro”), a wholly-owned subsidiary of GlaxoSmithKline LLC (“GSK”).[3] Tesaro is a commercial-stage, oncology-focused biopharmaceutical company acquired by GSK in January 2019.[4] Dostarlimab’s development stemmed from the collaboration between AnaptysBio and Tesaro, and is a “Product” under the Collaboration Agreement.[5]
This case, now pending before the Delaware Court of Chancery, is the second time AnaptysBio has sued Tesaro and GSK for breach of the same agreement.[6] The first dispute, brought in August 2020, ended in a hurried settlement worth $60 million upfront and additional protections resulting from an amendment to the Collaboration Agreement.[7] Tesaro allegedly breached its obligation again “the moment the ink dried on the prior settlement,” thus sparking this new (yet similar) suit.[8] This Agreement is governed by Delaware law and has been amended five times.[9]
The Collaboration and Exclusive Agreement
The Collaboration Agreement between AnaptysBio and Tesaro served to allow the parties to collaborate to develop life-saving medicines, including cancer treatments like PD-1s.[10] Specifically, the Collaboration Agreement gave Tesaro rights to develop and commercialize AnaptysBio’s PD-1 antagonist (“PD-1”), dostarlimab, now sold under the trademarked brand name Jemperli, an immunotherapy designed to work with the body to help fight cancer.[11] The Collaboration Agreement contained an exclusivity provision that forbade Tesaro from researching or developing treatments that might compete with AnaptysBio’s.[12] An amendment to this Agreement noted that this provision does not apply to Tesaro’s parents and affiliates, but to prevent Tesaro from trying to avoid its duties by working through its parent, GSK, prohibiting Tesaro from “assign[ing], licens[ing], or otherwise transfer[ing] its intellectual property rights granted by AnaptysBio in respect of the Products . . . to GSK or any GSK Affiliates.”[13]
Further, the Collaboration Agreement contained a diligence provision that required Tesaro to “use Commercially Reasonable Efforts to . . . commercialize Products (dostarlimab) and attempt to obtain the optimum commercial return for each Product in all major markets throughout the world.”[14] The purpose of the diligence provision was to help ensure that AnaptysBio was appropriately compensated for discovering dostarlimab and licensing it to Tesaro.[15] The Collaboration Agreement imposed extensive disclosure obligations, central to the parties’ bargain, requiring Tesaro to keep AnaptysBio informed of clinical and commercial advancement activities. [16] Tesaro was also responsible for prosecuting dostarlimab-related patents, which in turn related to whether it has acted in a commercially reasonable manner to obtain dostarlimab’s optimum commercial return.[17] Failure to disclose planned or current clinical trials would result in reversion of rights to dostarlimab to AnaptysBio, breach of diligence duties would result in reversion of rights to the development program to AnaptysBio, and for other material breaches, the non-breaching party has the right to terminate the entire agreement.[18]
Alleged Breach and Claims
AnaptysBio alleges that Tesaro has breached its obligation to use commercially reasonable efforts to obtain the optimum commercial return for dostarlimab by directly or indirectly participating in clinical trials involving prohibited, competing drugs.[19] Further, Tesaro allegedly allowed its parent, GSK, to conduct trials that favor GSK and harmed dostarlimab’s optimum commercial return.[20] AnaptysBio alleged that Tesaro’s participation in and active concealment of a clinical trial that involved dostarlimab and competitor PD-1s that was ongoing at the time the settlement occurred constituted a breach of the Collaboration Agreement.[21] AnaptysBio is seeking it be awarded a declaration that Tesaro materially breached the Collaboration Agreement, the breaches are incurable, and as a result of the breaches being incurable, reversion of rights to dostarlimab.[22]
Commercially Reasonable Efforts
Under Delaware law, plaintiffs bear the burden of proving that it is more likely than not that a defendant has breached a commercially reasonable efforts clause by not exercising commercially reasonable efforts.[23] The Delaware Court of Chancery has interpreted “best efforts” obligations on par with “commercially reasonable efforts,” therefore imparting the same meaning.[24] The Court has interpreted “best efforts” to require “a party to do essentially everything in its power to fulfill its obligation[.]”[25] When assessing whether a party has breached an efforts clause, the Court of Chancery has looked to whether the party subject to the clause (i) had reasonable grounds to take the action it did and (ii) sought to address problems with its counter party.[26]
Predictive Analysis
The “optimum commercial return” language as provided in the Collaboration Agreement appears to add an additional layer to the “commercially reasonable efforts” standard, defining not just the level of effort required, but the actual goal for which those efforts must achieve. While this phrase had no direct history in Delaware courts, the Court of Chancery will likely interpret this as a goal of the commercially reasonable efforts obligation instead of an independent, heightened standard. This language imposed an obligation on Tesaro to pursue the best achievable outcome for dostarlimab. The issue for the Court will likely then be whether a pharmaceutical company in the same or similar situation, seeking the best achievable commercial outcome, would have designed clinical trials that generate data benefiting competitors or declined to pursue opportunity in the first place.[27] AnaptysBio’s real-world competitors like Merck only investigating one treatment in their study or Bristol Myers Squibb only selling their product to prevent its use with competing PD-1s,[28] would resolve this issue in AnaptysBio’s favor. Given the Delaware Court of Chancery’s recent willingness to find a company fell short of their obligation to use commercially reasonable efforts to achieve several milestones in the development of a product,[29] the Court will likely use the same holistic assessment of Tesaro’s alleged breaches to reach their conclusion.
The Delaware Court of Chancery’s 2024 decision in Shareholder Representative Services LLC v. Alexion Pharmaceuticals, Inc. provides a close comparison to AnaptysBio’s commercially reasonable efforts issue. In Shareholder Representative Services, the Court used a holistic assessment and considered the Merger Agreement at issue in its entirety for context.[30] Here, the Court stated that commercially reasonable efforts clauses “define the level of effort the party must deploy to attempt to achieve the outcome,” making it an outward-facing provision, imposing an objective standard, meaning the party’s “subjective intent or state of mind” does not determine whether it complied with its obligations.[31] After considering the asserted breaches, the Court reached its decision based on a “hypothetical company similarly situated,” and concluded that Alexion fell short of its obligation to use commercially reasonable efforts to the program because its decision to “deprioritize” and ultimately terminate further developments of the drug was an “idiosyncratic corporate initiative.”[32] This is comparable to AnaptysBio’s case because AnaptysBio alleges that Tesaro’s clinical trial strategy was motivated by GSK’s commitment to prioritize its billion-dollar ADC portfolio and that GSK enabled, encouraged, or induced Tesaro’s breach of the Collaboration Agreement.[33] If the Court agrees with AnaptysBio’s characterization and finds that Tesaro deprioritized its obligation to use commercially reasonable efforts, then Shareholder Representative Services supports finding of a breach. Unlike in Shareholder Representative Services, where the Court relied on a hypothetical company, AnaptysBio has mentioned real-world comparisons which could give it a stronger case at trial.[34]
Conclusion
AnaptysBio, Inc. v. Tesaro, Inc. presents the Delaware Court of Chancery with an opportunity to resolve how commercially reasonable efforts and “optimum commercial return” clauses operate when a parent company has competing interests. However the Court will rule, its decision will carry important implications. If the Court decides to treat the “optimum commercial return” as a goal of the commercially reasonable efforts standard, then licensees will retain some discretion in how they pursue this obligation, as it would be subject to the outward-facing basis of what a similarly situated company would do.[35] On the other hand, if the Court instead treats this as an independent, heightened obligation, it would likely strengthen licensors’ bargaining positions in subsequent collaboration agreements. Regardless, this highlights to both companies and practitioners the importance of including clauses that address what happens to a licensee’s obligations if or when they are acquired.
About the Author
Michelle Cruz is a second-year law student at Widener University Delaware Law School and serves as a Staff Editor for Volume 51 of the Delaware Journal of Corporate Law. She graduated from William Paterson University with a B.A. in Legal Studies with minors in Political Science and English Writing. She also received her Paralegal Certificate from Montclair State University. Her academic and professional interests include general corporate law, mergers and acquisitions, and tax, stemming from her previous experience as a corporate Paralegal Assistant at Davies Ward Phillips & Vineberg LLP. For the 2026-2027 academic year, she will serve as the Lead Bluebook Editor for Volume 52 of the Delaware Journal of Corporate Law.
[1] Sarah A. Hibbard & Jeffrey D. Morton, Collaboration Agreements: Critical Issues and Common Pitfalls, BioProcess Int’l (Oct. 28, 2021), https://www.bioprocessintl.com/intellectual-property/collaboration-agreements-critical-issues-and-common-pitfalls.
[2] Overview, AnaptysBio, https://www.anaptysbio.com/about/ (last visited Apr. 12, 2026).
[3] Verified Complaint at 1–2, AnaptysBio, Inc. v. Tesaro, Inc., C.A. No. 2025-1355-KSJM (Nov. 26, 2025).
[4] GSK Reaches Agreement To Acquire TESARO, An Oncology Focused Biopharmaceutical Company, GSK (Dec. 3, 2018), https://www.gsk.com/en-gb/media/press-releases/gsk-reaches-agreement-to-acquire-tesaro-an-oncology-focused-biopharmaceutical-company/; GSK Completes Acquisition Of TESARO, An Oncology Focused Biopharmaceutical Company, GSK (Jan. 22, 2019), https://www.gsk.com/en-gb/media/press-releases/gsk-completes-acquisition-of-tesaro-an-oncology-focused-biopharmaceutical-company/.
[5] Verified Complaint, supra note 2, at 14.
[6] Id. at 3.
[7] Id.
[8] Id. at 4.
[9] Verified Complaint, supra note 2, at 8.
[10] Id.
[11] Id. at 2; See also Jemperli, https://jemperli.com/advanced-recurrent-endometrial-cancer/how-jemperli-works/?cc=ps_16HSXHLR873011291&mtrc=500409&mcm=500409&gclsrc=aw.ds&gad_source=1&gad_campaignid=19329388060&gbraid=0AAAAApJj9K2e9J2DEmJqCjrau_LOwy4tM&gclid=CjwKCAjwhe3OBhABEiwA6392zGXeqX_BEunmaW_BEBF8XSZuZhg44KP7l4lDprnblYaMN-1wYi9afRoCu4AQAvD_BwE (last visited Apr. 12, 2026).
[12] Verified Complaint, supra note 2, at 9.
[13] Id. at 10.
[14] Id. at 2, 11.
[15] Id. at 11.
[16] Verified Complaint, supra note 2, at 13.
[17] Id. at 11.
[18] Id. at 13–14.
[19] Id. at 34
[20] Verified Complaint, supra note 2, at 35.
[21] Id. at 4, 22, 33.
[22] Id. at 37.
[23] Himawan v. Cephalon, Inc., 2024 WL 1885560, at *8 (Del. Ch. Apr. 30, 2024).
[24] Menn v. ConMed Corp., 2022 WL 2387802, at *35 (Del. Ch. June 30, 2022).
[25] Id.
[26] Id.
[27] See S’holder Representative Servs. LLC v. Alexion Pharms., Inc., 2024 WL 4052343, at *46 (Del. Ch. Sep. 5, 2024); See also Reb D. Wheeler, Delaware Law Alert: Efforts Standards in Life-Sciences Earnout Provisions, Mayer Brown: Insights (Oct. 29, 2024), https://www.mayerbrown.com/en/insights/publications/2024/10/delaware-law-alert-efforts-standards-in-life-sciences-earnout-provisions.
[28] Verified Complaint, supra note 2, at 29–30.
[29] S’holder Representative Servs. LLC, 2024 WL 4052343, at *46, *48; Wheeler, supra note 27.
[30] S’holder Representative Servs. LLC, 2024 WL 4052343, at *30.
[31] Id. at *36.
[32] Id. at *36, *39, *46.
[33] Verfied Complaint, supra note 2, at 4–5, 42.
[34] Id. at 29–30.
[35] S’holder Representative Servs. LLC, 2024 WL 4052343, at *36.
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