Court of Appeal dismisses Cosette’s appeal on all grounds
On 14 October 2026, the Supreme Court of New South Wales, Court of Appeal dismissed the appeal brought by Cosette on all grounds and awarded Mayne Pharma Group Limited (ASX: MYX) its costs of the appeal. The Cosette Court of Appeal judgment relates to the proposed transaction between Mayne Pharma and Cosette.
The appeal was the subject of a notice filed with the court, referred to in Mayne Pharma’s 15 January 2026 announcement. It challenged the decision of the Supreme Court of New South Wales delivered on 15 October 2025. Cosette is ultimately owned by Hamilton Lane and Avista Capital.
The Court of Appeal affirmed the findings made by Justice Black. For shareholders, this removes a layer of legal uncertainty around the first instance outcome.
Professor Bruce Robinson, Mayne Pharma Board Chair
“We are delighted that the Court of Appeal has upheld the decision of the Supreme Court at first instance and rejected Cosette’s attempts to assert it had any right to terminate the deal…”
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What the Court rejected
Material Adverse Change and misleading conduct claims
Cosette’s appeal sought to overturn parts of the first instance decision. These included the decision that no Mayne Material Adverse Change had occurred, and that Mayne Pharma did not engage in misleading and deceptive conduct regarding its FY25 EBITDA financial performance.
The Court of Appeal rejected every argument advanced by Cosette in support of its appeal.
Cosette elected to affirm the deal
The Court also held that, by Cosette’s conduct at the first Court hearing in connection with the proposed Scheme, Cosette elected to affirm the scheme implementation deed. In doing so, it forewent any alleged right to terminate.
The key findings can be summarised as follows:
- No Mayne Material Adverse Change had occurred.
- Mayne Pharma did not engage in misleading and deceptive conduct regarding its FY25 EBITDA financial performance.
- Cosette elected to affirm the scheme implementation deed.
Understanding the legal terms behind the ruling
A Material Adverse Change clause is a term in a deal agreement that can allow a party to walk away if a serious negative event affects the other party. A scheme implementation deed is the agreement setting out how a proposed Scheme between two parties is to proceed.
“Special leave to appeal” is permission from the High Court to bring an appeal. It is not automatic.
The findings matter because Cosette’s alleged right to terminate depended on these issues. The Court of Appeal’s conclusions that no Mayne Material Adverse Change occurred and that Cosette affirmed the deed are relevant to Mayne Pharma’s position in the ongoing dispute.
Costs recovered and what comes next
As disclosed on 22 May 2026, Cosette paid approximately $14.4 million to Mayne Pharma in connection with its costs of the proceeding below. The appeal decision has no effect on that payment. Costs of the appeal have been awarded to Mayne Pharma but remain to be determined.
Cosette paid approximately $14.4 million on 5 June 2026 under a Supreme Court of NSW cost order, a sum covering legal costs, the costs of the costs application and interest.
Cosette has until 11 November 2026 to consider whether it will seek special leave to appeal the decision to the High Court.
| Item | Status | Detail |
|---|---|---|
| Costs of first proceeding | Paid | Approximately $14.4 million |
| Costs of appeal | Awarded | To be determined |
| High Court special leave window | Open | Until 11 November 2026 |
Mayne Pharma will continue to pursue its claims for damages, on behalf of itself and Mayne Pharma shareholders, against:
- Cosette
- Cosette Pharmaceuticals Holdings, Inc
- Its controllers, Mr David Burghstahler and Avista Capital
The announcement does not disclose a damages amount.
Professor Robinson said Mayne Pharma “remains committed to continuing to maximise shareholder value and remains focussed on continuing to strengthen the business…”
Mayne Pharma is an ASX-listed specialty pharmaceutical company that is a leader in dermatology and women’s health in the United States. It also provides contract development and manufacturing services to clients worldwide.
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