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Gilead must pay just $200m for hep C patents, says jury

Merck & Co awarded a 4% royalty rate on sales of Sovaldi and Harvoni
Gilead Sciences

Merck & Co may have won its hepatitis C patent dispute with Gilead Sciences, but subsequent court decisions have not gone its way.

Merck had been pushing for a 10% royalty rate on the $20.7bn Gilead had made from sales of two sofosbuvir-based drugs - Sovaldi and Harvoni - between 2013 and 2015, after a court agreed last week that the two drugs infringed two patents held by Merck and partner Ionis Pharma.

The jury in the case was unswayed by Merck's arguments, however, and opted instead to award the company a 4% royalty rate on sales of just $5bn. That equated to Gilead's revenues less a figure of $15bn representing its investment in the hepatitis C programme, which included its $11m acquisition of sofosbuvir developer Pharmasset.

A separate hearing to set a royalty rate from the start of this year is due to take place in the coming weeks, while Gilead has indicated it will contest the patent infringement ruling via the Court of Appeals for the Federal Circuit (CAFC).

"Since Merck made no contribution and assumed none of the risk in the discovery and development of sofosbuvir, we do not believe Merck is entitled to any amount of damages", said Gilead in a statement. "We continue to believe the Merck patents are invalid", it added.

Sovaldi and Harvoni brought in $12.5bn last year although sales momentum is expected to check in 2016 and beyond in light of additional competition from other directly-acting hepatitis C virus (HCV) therapies, including Merck's Zepatier (elbasvir and grazoprevir) which recently reached the market.

Merck said it was pleased that the jury had recognised the validity of its patents, claiming the "compounds and methods at issue in this case facilitated significant advances in the treatment of patients with HCV infection".

The patents - Nos. 7,105,499 and 8,481,712 - cover discoveries that required "many years of research and significant investment by Merck and its partners", it added.

Leerink Partners analyst Geoffrey Porges said in a research note that the decision on royalties places Gilead in a strong position should the two companies decide to settle.

Article by
Phil Taylor

29th March 2016

From: Sales

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