Merck demand triggers expanding patent war with Gilead over sofosbuvir

UPDATED: Merck demand triggers expanding patent war with Gilead over sofosbuvir

August 31, 2013 | By John Carroll

Gilead is rolling out its big legal guns to defend its control of the experimental hepatitis C drug sofosbuvir, one of the most valuable therapies in the industry's late-stage pipeline.

On Friday the company fired over Merck's bow, filing suit in the Northern District of California after Merck contacted the company a few weeks ago to stake a claim to 10% of the revenue generated by sofosbuvir. Merck ($MRK) wants Gilead ($GILD) to sublicense two of its hep C-related patents, according to the lawsuit. The pharma giant sells Victrelis (boceprevir), its recently approved hep C drug, which is likely to be swept away as sofosbuvir and companion therapies make it to the market, offering a treatment less likely to trigger side effects and quicker to quell the virus.

In a letter filed with the lawsuit, Merck's Pamela Demain, the executive director of corporate licensing, explained on Aug. 5 that Merck was seeking the 10% royalty based on the two patents: '499 and '712. And she set an August 31 deadline for a response, drawing a line in the legal sand.

Merck's terms: "Gilead shall pay Merck a 10% royalty on the Net Sales of Licensed Product … by Gilead, its distributors or sublicensees, including sales of Licensed Product that is co-packaged with one or more other pharmaceutical products, from the first sale of sofosbuvir until the expiration of the last to expire patent within the Licensed Patent Rights."

And that's just one of several legal fights brewing as an FDA marketing decision on sofosbuvir looms in early December.

In its first-half financial report, Gilead also notes that Roche is claiming control of sofosbuvir based on a 9-year-old, $168 million partnership it struck with Pharmasset, which Gilead bought for a whopping $11 billion in order to seize full ownership of sofosbuvir while it was still in midstage development. According to the SEC filing, Roche ($RHHBY) believes that its 2004 deal to develop a nucleoside polymerase treatment with Pharmasset gives it an exclusive license on sofosbuvir, which Roche claims is a "prodrug (or precursor) of PSI-6130."

Gilead says the arbitration demand filed by Roche is without merit, noting that the deal ended about two years after it began--long before it acquired the company.

The Roche move follows an effort by Idenix ($IDIX) in 2012 to establish that it was the first to invent sofosbuvir. "Our patent covers metabolites of sofosbuvir and RG7128. Idenix is attempting to claim a class of compounds, including these metabolites, in its pending patent application," notes Gilead.

The growing flank attack on the sofosbuvir patent highlights the increasingly complex relationships among pharma companies as they become more likely to partner with academics and biotechs to broaden their pipelines. Big Phase III programs often attract litigation, like Medivation's ($MDVN) claim on Aragon's cancer therapy, ARN-509, since acquired by J&J ($JNJ). And sometimes they win, as we saw when Onyx ($ONXX) successfully laid claim to a 20% royalty of Stivarga from Bayer after bristling over its similarities to their partnered drug Nexavar.

Gilead will spare no expense in this fight. Analysts believe that sofosbuvir is an almost certain blockbuster, with peak sales estimates hovering around $4 billion to $5 billion. It's the leader in a pack of programs which are in the process of rewriting the standard of care for hepatitis C as AbbVie ($ABBV), Bristol-Myers Squibb ($BMY), J&J and other rivals hustle to catch up. And the prospect of gaining even a slice of that action is worth a considerable sum in legal costs to any company that thinks it has an actionable claim.

A spokesperson for Merck told FierceBiotech Saturday that the company has "nothing to add at this time."

Related Articles:
Gilead's sofosbuvir cures some of the toughest hepatitis C cases
Shunned Gilead/Bristol-Myers hep C combo may be too good for docs to ignore
Gilead races to FDA after hep C blockbuster hopeful scores 4th win in PhIII

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Gilead Sues Merck Saying New Drug Won’t Infringe Patents

Gilead Sciences Inc. (GILD), the world’s largest maker of HIV medicines, sued Merck & Co. (MRK) seeking a court order that the experimental hepatitis C drug sofosbuvir won’t infringe patents.

Merck, which sold $502 million of its Victrelis hepatitis C drug last year, contacted Gilead this month requesting it license two patents Merck says are related to sofosbuvir, Gilead’s attorneys said a complaint filed today in federal court in San Francisco.

Merck, based in Whitehouse Station, New Jersey, asked Gilead to pay a 10 percent royalty on the net sales of the medicine until the patents expire, a request “meant to threaten Gilead” on the eve of U.S. regulatory approval of sofosbuvir, according to the complaint. Gilead seeks a judge’s declarations that the patents aren’t enforceable or infringed so it won’t have to license them to sell the medicine.

Gilead, based in Foster City California, said June 7 that sofosbuvir will receive a priority marketing review by U.S. regulators with a target review date of Dec. 8.

Hepatitis C attacks the liver and can lead to liver cancer. The virus affects about 150 million people worldwide and the market for new pills such as sofosbuvir is estimated at $20 billion.

Lainie Keller, a Merck spokeswoman, didn’t immediately respond to an e-mail after regular business hours seeking comment on the lawsuit.

The case is Gilead Sciences v. Merck, 13-04057, U.S. District Court, Northern District of California (San Francisco).

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

http://www.bloomberg.com/news/2013-08-31/gilead-sues-merck-saying-new-drug-won-t-infringe-patents.html