Merck, Bristol-Myers agree to settle Keytruda patent suit

[BENGALURU] Merck & Co said it agreed to enter into a settlement and license agreement with Bristol-Myers Squibb Co and Ono Pharmaceutical Co Ltd to resolve all global patent-infringement litigation related to its cancer drug, Keytruda.

Merck will make an initial payment of US$625 million to Bristol and Japan's Ono. The company will also pay a 6.5 per cent royalty rate on Keytruda sales from Jan 2017 to Dec 2023, and a 2.5 per cent rate for the subsequent three years.

Bristol will get 75 per cent of the royalties and Ono will get the rest.

Bristol and Ono, which co-developed the first PD-1 antibody called Opdivo, filed the suit against Merck in Sept 2014, alleging that its sale of Keytruda, also a PD-1 antibody, infringed their patents in markets including the United States, parts of Europe, Australia and Japan.

Merck said the US$625 million payment will be recorded in the company's fourth-quarter and full-year 2016 results.

The settlement comes a day after Bristol-Myers said it wouldn't seek faster approval for a combination of its two immunotherapy drugs as an initial treatment for lung cancer, further solidifying Merck's leading position in the burgeoning immuno-oncolgy field.

Bristol's shares closed down 11 per cent on Friday, but rose marginally in extended trading after the settlement agreement.

Merck's shares, which closed up 3.6 per cent, were unchanged after the bell.

REUTERS