Merck may have to pay Ono and BMS royalties on Keytruda sales

A legal decision handed down in the UK yesterday could mean that Merck & Co will have to pay royalties to Ono and Bristol-Myers Squibb (BMS) on sales of its PD-1 inhibitor Keytruda.

Ono and exclusive licensee BMS were the first win approval for a PD-1 inhibitor after getting a green light in Japan for melanoma and lung cancer therapy Opdivo (nivolumab), which is competing head-to-head with Keytruda (pembrolizumab) in the marketplace.

Last year, Ono and BMS took that rivalry to the courts and filed a lawsuit alleging that Keytruda infringes an Ono patent covering the use of antibodies which bind to the PD-1 receptor. Merck was first to market in the US with Keytruda, which has helped it stay a little ahead of BMS and Ono in terms of booked sales.

In addition to the UK action, a lawsuit has also been filed in the US that is not due to be heard until the latter half of 2016, and another is filed in Australia, although these could become moot if the parties were to agree on a settlement.

At stake is a market predicted to be worth several billions of dollars a year, as PD-1 inhibitors are expected to be the cornerstone of a new generation of cancer immunotherapies that switch off cellular mechanisms that hide tumours from detection by the immune system.

Law firm Pinsent Masons said that, given the lifesaving nature of Keytruda, Ono and BMS have previously indicated that if Merck were found to be infringing patent 'they would not seek an injunction in the UK, provided an appropriate royalty is agreed or awarded by the court for future infringement'.

The judge in the case said the fact that even though Ono had adopted this stance, it did not mean the merits of the patent should be judged differently, according to the law firm. It also raises the possibility that other companies developing PD-1 inhibitors might also fall foul of the patent.

Pinsent Masons notes that Merck had accepted that "if the patent was found valid, its product falls within the ambit of the relevant claims ... and will now have to negotiate a royalty with Ono/BMS to continue to sell Keytruda in the UK."

Previously, analysts have suggested that if damages are awarded for wilful patent infringement, they could be as much as $5 billion or more over the life of the patents.