Bristol-Myers Squibb (BMS) and its partner, Ono Pharmaceutical Company, headquartered in Osaka, Japan, have signed a global patent license agreement with Merck & Co. to settle all patent-infringement litigation related to Merck’s Keytruda (pembrolizumab), an anti-programmed death (PD)-1 antibody for treating cancer.

The agreement will result in the dismissal with prejudice of all patent litigation between the companies pertaining to Keytruda. BMS and Ono, who discovered and developed the PD-1 antibody Opdivo (nivolumab), had asserted in litigation that Merck’s sale of Keytruda infringed the companies’ patents relating to the use of PD-1 antibodies to treat cancer in the US, Europe (UK, Netherlands, France, Germany, Ireland, Spain, and Switzerland), Australia, and Japan.

Under the settlement and license agreement, Merck will make a one-time payment of $625 million to BMS and Ono and provide royalties on the worldwide sales of Keytruda in exchange for a non-exclusive license to market Keytruda in any market in which it is approved. Merck is also obligated to pay ongoing royalties on global sales of Keytruda as follows: 6.5% of net sales occurring from January 1, 2017 through and including December 31, 2023; and 2.5% of net sales occurring January 1, 2024 through and including December 31, 2026. The companies have also granted certain rights to each other under their respective patent portfolios pertaining to PD-1. The royalties will be shared between BMS and Ono in a 75%:25% allocation, respectively. The parties have also agreed to dismiss all claims in the relevant legal proceedings.

Merk’s Keytruda is a PD-1 inhibitor indicated for treating melanoma, lung cancer, and head and neck cancer. Keytruda also recently received a positive opinion from the European Medicines Agency’s Committee for Medicinal Products for Human Use recommending approval for the first-line treatment of metastatic non-small cell lung cancer (NSCLC) in adults whose tumors have high PD-L1 expression with no epidermal growth factor receptor (EGFR) or anaplastic lymphoma kinase (ALK)-positive tumor mutations. In addition, the US Food and Drug Administration accepted Merck’s supplemental biologics application in January 2017 seeking approval for Keytruda in combination with chemotherapy (pemetrexed plus carboplatin) for the first-line treatment of metastatic or advanced non-squamous NSCLC regardless of PD-L1 expression and with no EGFR or ALK genomic tumor aberrations.

Keytruda, which had 2015 sales of $566 million, has been projected by some analysts to be a potential blockbuster drug.

BMS’ Opdivo is another PD-1 inhibitor that has regulatory approval in 60 countries including the US, Japan, and in the European Union, according to BMS. In the US, Opdivo is indicated for treating BRAF V600 mutation-positive unresectable or metastatic melanoma, wild-type unresectable or metastatic melanoma, unresectable or metastatic melanoma in combination with Yervoy (ipilimumab), metastic NSCLC, advanced renal cell carcinoma, classical Hodgkin lymphoma, and recurrent or metastatic squamous cell carcinoma of the head and neck. The drug had 2015 sales of $942 million and has been pegged by some analysts as having blockbuster potential.

Source: Bristol-Myers Squibb and Merck & Co.