Merck, Bristol-Myers agree to settle Keytruda patent suit

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By Gayathree Ganesan

<span class="articleLocation”>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 $625 million to
Bristol and Japan’s Ono. The company will also pay a 6.5 percent
royalty rate on Keytruda sales from January 2017 to December
2023, and a 2.5 percent rate for the subsequent three years.

Bristol will get 75 percent 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 September 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 $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 percent on Friday, but rose
marginally in extended trading after the settlement agreement.

Merck’s shares, which closed up 3.6 percent, were unchanged
after the bell.



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