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Merck Gilead Patent Trial
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Gilead Spars With Merck Over Hepatitis C $1,000-Pill Royalties
Mar 7, 2016 | Bloomberg
By Kartikay Mehrotra
Gilead Sciences Inc., which pioneered a cure for hepatitis C, is trying to fend off a demand by Merck & Co. for more than $3 billion in a patent dispute over the liver disease treatment. -
Week Ahead in Intellectual Property: Mar. 7, 2016
Mar 7, 2016 | Reuters Westlaw
Here are some upcoming events of interest to the intellectual property community. All times local. 9 a.m. - A trial is scheduled in federal court in San Jose, California before U.S. District Judge Beth Labson Freeman in a declaratory judgment action filed by Gilead Sciences Inc, claiming two patents co-owned by Merck & Co and Ionis Pharmaceuticals, Inc are invalid, and therefore, that Gilead is not liable for infringement stemming from the sale and use of its Solvaldi and Harvoni treatments for Hepatitis C. -
Gilead Vs. Merck: What To Know
Mar 7, 2016 | Benzinga
By Javier Hasse
Gilead Sciences, Inc. (GILD 2.55%) and Merck & Co., Inc. (MRK 0.82%) on Monday stepped into court again, trying to settle a dispute regarding the validity of the latter's '499 and '712 patents, which Gilead’s Hepatitis C treatments Sovaldi/Harvoni were found to infringe. -
Slugfest Over Hep C Drug Gets Its Day in Court
Mar 7, 2016 | Courthouse News Service
By Matthew Renda
The patent battle between two titans of the pharmaceutical industry vying for proprietary interest in a revolutionary hepatitis C drug therapy kicked off with opening statements on Monday.
Coverage
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Gilead Spars With Merck Over Hepatitis C $1,000-Pill Royalties
Mar 7, 2016 | Bloomberg
By Kartikay Mehrotra
Gilead Sciences Inc., which pioneered a cure for hepatitis C, is trying to fend off a demand by Merck & Co. for more than $3 billion in a patent dispute over the liver disease treatment.
A compound in Gilead’s blockbuster drugs Sovaldi and Harvoni was found by a judge last month to have infringed Merck’s patents. Now, a jury must decide whether those patents are still valid, and if so, how much Gilead owes Merck in royalties.
Gilead plans to show jurors that scientists were working on the foundation for its medicine at least as early as 2001, a year before Merck got the patent rights that it’s seeking to enforce in the case, Juanita Brooks, a lawyer for the world’s largest biotechnology firm, said Monday during opening arguments at a trial in federal court in San Jose, California. She said Gilead owes the success of its drug not to Merck but to laboratory research done 15 years ago by Pharmasset Inc., which Gilead acquired in 2011 for $11 billion.
“It’s clear whose invention this is,” Brooks told the jury. “It’s clear this is Pharmasset’s invention and Gilead’s acquisition. So why are we here?”
Merck’s lawyer countered that the key invention at issue derived from work by his Kenilworth, New Jersey-based client “before it was ever even a figment of the imagination at Pharmasset.” Merck alleges that immediately after the company published its patent in 2002, Pharmasset used it to develop what would later become the compound sofosbuvir.
‘Not True’
“Gilead wants you to think Merck’s patents are based on Pharmasset’s inventions, but that’s just not true,” attorney Bruce Genderson said in his opening statement. “They were based on Merck’s own work over years.”
Sofosbuvir generated about $19 billion revenue in 2015 for Gilead, which dominates the market with its cure for hepatitis C, with list prices in the U.S. from $84,000 for a 12-week course to $94,500 before discounts.
While Gilead’s profit has risen almost sevenfold in the last three years, the Foster City, California-based company expects a flattening of its hepatitis C drug sales in the U.S. this year as competition intensifies among drugmakers.
In the trial, Gilead is fighting a royalty demand for 10 percent of the $31.7 billion it’s made from sofosbuvir. Even if it loses, Bloomberg Intelligence analyst Asthika Goonewardene said, the company should be able to weather a penalty of that size.
“Sure, investors won’t be thrilled, but that’s assuming Gilead rolls over and plays and dead and gives Merck 10 percent -- that’s highly unlikely,” he said. “A $3 billion charge will be uncomfortable, but no one is worried they can’t keep the lights on at night.”
Merck is not seeking a court-ordered ban on sales of Gilead products that allegedly infringe its patents, Genderson said in court.
‘Prohibitive’ Royalty
The fight in federal court in San Jose started in 2013 when Gilead sued its rival after being being asked to pay what it called a “prohibitive” royalty on sofosbuvir. Gilead said in its complaint that it saw the request, coming on the eve of regulatory approval for sofosbuvir, as a “threat” by Merck to bring infringement claims over two of its patents registered in 2002.
Merck’s own liver disease treatments Victrelis and PegIntron last year generated $200 million in global sales, tumbling almost 63 percent in a year. The company said the fall was a contributor to Merck’s 6.5 percent drop in sales in 2015. In 2012, the year before sofosbuvir hit the market, Merck’s two hepatitis C drugs combined to generate about $1.2 billion in sales, according to data compiled by Bloomberg.
In 2015, activist groups raised concerns that patents covering expensive hepatitis C treatments have restricted access to more affordable generic drugs in countries including China and India. The Indian patent office began hearings in February to determine whether the sofosbuvir patent will be valid in a market where millions of people suffer from liver disease while some 700 million live on less than $2 a day. Gilead has licensed 11 manufacturers in India to make generic forms of the pill, which are going for as little as $4.29 a pill.
The case is Gilead Sciences Inc. v. Merck & Co., 13-cv-04057, U.S. District Court, Northern District of California (San Jose).
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Week Ahead in Intellectual Property: Mar. 7, 2016
Mar 7, 2016 | Reuters Westlaw
Here are some upcoming events of interest to the intellectual property community. All times local.
Monday, March 7
9 a.m. - A trial is scheduled in federal court in San Jose, California before U.S. District Judge Beth Labson Freeman in a declaratory judgment action filed by Gilead Sciences Inc, claiming two patents co-owned by Merck & Co and Ionis Pharmaceuticals, Inc are invalid, and therefore, that Gilead is not liable for infringement stemming from the sale and use of its Solvaldi and Harvoni treatments for Hepatitis C. The court had previously ruled on summary judgment that Gilead's treatments infringe the patents. The trial will proceed in two phases, to determine whether the patents are invalid, and if not, how much Gilead owes in damages. The case is Gilead Sciences, Inc v. Merck & Co, Inc et al, in the U.S. District Court for the California Northern District, No. 13-cv-4057. For Gilead: Douglas McCann and John Farrell of Fish & Richardson. For the defendants: Stephen Rabinowitz of Hughes Hubbard & Reed and Bruce Genderson of Williams & Connolly.
To read the full story on WestlawNext Practitioner Insights, click here: bit.ly/1QFxFXH (behind paywall)
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Gilead Vs. Merck: What To Know
Mar 7, 2016 | Benzinga
By Javier Hasse
Gilead Sciences, Inc. (GILD 2.55%) and Merck & Co., Inc. (MRK 0.82%) on Monday stepped into court again, trying to settle a dispute regarding the validity of the latter's '499 and '712 patents, which Gilead’s Hepatitis C treatments Sovaldi/Harvoni were found to infringe.
Analysts at Jefferies realized an extensive review of hearing documents and transcripts from court proceedings, and shared a few key issues to pay attention to and “potential impact of an adverse ruling” for Gilead. The analysts see a reasonable possibility of Merck prevailing, however, they forecast impact for Gilead would be "relatively modest."
Key Details
During the first phase of the trial, Gilead will argue why Merck's claims are invalid. Most of these arguments revolve around questioning if Merck actually invented the subject-matter of its patents or if Merck got this information from confidential interactions with Pharmasset before Gilead bought it.
If Merck prevailed "with fact-based validity, and the case proceeds to damages," focusing on both companies' damages analyses will be central prior to the bench trial, in which a judge will determine if such damages are actually awarded, Jefferies' report explained.
Potential Impact
The analysts then looked into the potential impact of the legal proceedings for Gilead. In the worst-case scenario envisioned by Jefferies, Merck received 10 percent royalties on Sovaldi/Harvoni U.S. sales. "This would retroactively cover total U.S. net revenues amounting to about $2.3B in monetary relief, and a similar ongoing royalty on all future U.S. sales, impacting our DCF valuation for GILD by $3.20 (3.2%)," the analysts said. However, a more realistic scenario includes a low single-digit ongoing royalty (for example, 3.5 percent). About $800 million in damages lowers DCF by $1.50 (1.5 percent), instead of 3.2 percent.
Jefferies rates Gilead a Hold with a $100 price target.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.
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Slugfest Over Hep C Drug Gets Its Day in Court
Mar 7, 2016 | Courthouse News Service
By Matthew Renda
The patent battle between two titans of the pharmaceutical industry vying for proprietary interest in a revolutionary hepatitis C drug therapy kicked off with opening statements on Monday.
Gilead Sciences sued its competitor Merck & Co. in 2013, in quest of a ruling that it did not infringe Merck patents when it brought the drugs Solvaldi and Harvoni to market in recent years.
The medicine underlying these pharmaceutical brands is sofosbuvir, a chemical compound called a nucleotide that prevents the hepatitis C virus from replicating in the human liver.
Hepatitis C can end in death as the virus attacks cells in the liver, eventually causing scarring or cirrhosis, liver cancer or liver failure. Previous treatments have proven only partially effective, with cure rates hovering at 50 percent, and also take several months accompanied by significant side effects.
Sofosbuvir provides a higher cure rate more quickly while producing far less adverse side effects.
At issue between the two companies are two patents taken out by Merck, one dubbed the '499 patent issued in 2006 and the second called the '712 patent issued in 2013.
Merck claims these patents represent it staking a claim over a certain class of nucleotides that could potentially prove effective at treating hepatitis C due to their fundamental composition.
"That class of compounds had never been found before," Merck attorney Bruce Genderson said. "Merck found them and claimed them in a patent application."
Merck further contends that Gilead's supposed breakthrough actually came from this class of compounds and owes Merck a royalty for using its discovery.
Gilead contends the asserted patents do not include the particular breakthrough that eventually became sofosbuvir. Instead, they say the discovery was made by a scientist working for Pharmasset, a small company Gilead acquired for $11 billion in 2011 for the express purpose of bringing the medicine to market.
Gilead's lawyers argued that Merck never truly thought Pharmasset was infringing its intellectually property, since Merck had attempted to buy the small company itself.
"Why would you try and buy something you believe you already own?" Juanita Brooks, attorney for Gilead, asked the jury.
Instead, Brooks argued Merck is trying to retroactively claim Gilead's invention as its own.
Interestingly, Gilead brought the original suit asking the courts to settle the patents at issue. Merck then filed a counterclaim, asking for damages for what it claims is an infringement of its intellectual property.
In Gilead's 2013 complaint, the company claims it proactively filed suit because Merck requested Gilead take out licenses on the two patents in the case at a 10 percent royalty.
"A 10 percent royalty on products containing sofosbuvir is a prohibitive demand," the complaint says. "On information and belief, Merck understands that its license demand is prohibitive and instead is meant to threaten Gilead, on the eve of approval of sofosbuvir, with the prospect of an infringement suit and a substantial claim for damages."
Merck said it was forced to counterclaim for royalties because of the lawsuit and the company's request for royalties was and remains reasonable.
"Merck will vigorously defend its intellectual property rights at trial," Merck representative Lainie Keller said in a statement emailed to Courthouse News on Monday afternoon. "The compounds and methods at issue in this case facilitated significant advances in the treatment of individuals with hepatitis C and were appropriately granted patent protection. Achieving these advancements required many years of research and significant investment by Merck and its partners."
Gilead continues to assert Merck's patents are irrelevant to their particular drug.
"We strongly believe that Merck's patents on sofosbuvir are invalid and we will continue to take measures to protect sofosbuvir's intellectual property," Michelle Rest, director of public affairs for Gilead Sciences, said in a statement emailed to Courthouse News on Monday afternoon.
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