Merck & Co., Inc. (NYSE:MRK) has agreed to share a portion of Keytruda sales with Bristol-Myers Squibb Co (NYSE:BMY) and Ono Pharmaceutical Co., Ltd. (Japan) (OTCMKTS:OPHLY), who had claimed that the drug infringed on their patent.
Keytruda is an anti-PD-1 therapy containing PD-1 antibodies for treating cancer. Bristol-Myers and Ono Pharmaceutical disputed Merck’s use of PD-1 antibodies in Keytruda.
Merck to make $625 million in initial payment
After a period of push and pull between Bristol-Myers and Ono on one side and Merck on the other, the companies said they have reached an agreement to settle the patent dispute. As part of the settlement, Bristol-Myers and Ono will withdraw all the claims they brought up against Merck relating to Keytruda. As for its part, Merck has agreed to pay $625 million to Bristol-Myers and Ono as an initial payment. Additionally, Merck will surrender 6.5% of Keytruda’s global sales to Bristol-Myers and Ono beginning January 2017 until December 2023. The deal further states that Merck will surrender 2.5% of Keytruda’s global sales from January 2024 until December 2026.
Bristol-Myers and Ono will share the payment from Merck at the rate of 75% for BMY and 25% for Ono.
Merck is working to expand the label of Keytruda in combination with chemotherapy as a first-line treatment for metastatic non-small cell lung cancer (NSCLC). The FDA has accepted Merck’s request for Keytruda’s label expansion application and granted it priority review status. The regulator is expected to make a final decision on the application by May 10, 2017.
Merck appears to be on track to beat Bristol-Myers to market for a first-line lung cancer drug. Bristol-Myers is seeking approval of a combination therapy featuring two of its immuno-oncology drugs Opdivo and Yervoy as first-line treatment for lung cancer. However, after data reviews, Bristol-Myers decided against pressing for accelerated approval of the combined therapy in the U.S.
Merck shares have gained more than 20% over the last 12 months, but retreated 1.2% to $61.81 in the last session.