Roche’s Genentech filed a lawsuit against Biogen in federal court, alleging that Biogen owes extra patent royalties on sales of its wildly successful Tysabri treatment for multiple sclerosis and Crohn’s disease.
When Genentech created a method for producing antibodies forty years ago, several biopharma companies waited in line to license the technology. The invention, known as the “Cabilly patents” is named after scientist Shmuel Cabilly, and enabled Genentech and its parent firm Roche to construct a quasi-toll booth that produced approximately $1 billion in royalty payments per year.
The validity of these patents expired in 2018, but Roche is still attempting to recover the remaining royalties it believes are still pending. According to Genentech’s lawsuit, even though Tysabri was sold years after it was manufactured using Genentech’s patents, Biogen is still obligated to pay royalties.
Roche said that Biogen had not paid royalties on its Tysabri since the end of 2018 in a breach of contract lawsuit filed in federal court in the Northern District of California and wanted a jury trial. When Tysabri was introduced in 2004, Biogen began to pay fees. According to court records, the agreement called for Biogen to pay a mid- to low-single-digit percentage on Tysabri sales in the United States and a “reduced royalty” on sales of the medication elsewhere in the globe. Payments were made every three months.
Yet according to Roche, Biogen produced Tysabri and kept stockpiles of it, according to the standard practice taking place in the industry. Notwithstanding the fact that Tysabri sales occurred after 2018, according to Roche, it is still owed royalties on the drug that was accumulated before Cabilly’s expiration.
Roche stated in their complaint:
“Because the process for manufacturing antibodies is complex, and the consequences of a stockout potentially catastrophic, it is customary for biopharmaceutical firms that make and sell therapeutic antibodies to stockpile at least several calendar quarters worth of product, and often more than that.”
Tysabri, which produced more than $2 billion in revenue each of the previous two years, is one of Biogen’s most successful medications. During the four-year period from 2019 to 2022, the sales of the medication were $7.9 billion. The case raises concerns about other businesses that were in a similar licensing agreement with Roche and may have ceased paying royalties after completing sales in 2018. Genentech issued a statement in which it claimed that the company is not commenting on the case as they are confident in the enforcement of the Cabilly patents, even though the litigation is still in process. Biogen did not comment on the case.
Business between Roche and Biogen has not been affected by the dispute. A late-stage bispecific antibody called glofitamab is being researched for use against blood malignancies such as B-cell non-lymphoma, and Hodgkin’s. Almost three months ago, Roche and Biogen reached an agreement for royalties on its possible commercialization.
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