Merck Gilead Patent Trial 3/23/16

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1. Transcript of John Milligan CNBC Interview

   Mar 23, 2016 | CNBC

   Watch clip here: http://app.criticalmention.com/app/#clip/view/21815822?token=9e440b25-dea1-4fb6-8bb3-3377fb240c2e
2. Gilead's CEO: We are appealing the case

   Mar 23, 2016 | CNBC

   By Denise Garcia
   
   
   A California jury's decision on Tuesday may result in Gilead Sciences losing billions of dollars, as claims from pharmaceutical company Merck that the California-based company's blockbuster drug's active ingredients infringed its patents were found valid in the court.
3. Merck Wins Patent Battle Over Hepatitis C Drugs

   Mar 23, 2016 | The Recorder

   By Scott Graham
   
   
4. Jury Finds for Merck in Hep C Drug Patent Fight

   Mar 23, 2016 | Court House News Service

   By Mathew Renda
   
   
   SAN JOSE, Calif. (CN) - In a showdown between pharmaceutical heavyweights, a federal jury found Tuesday that Merck's patents for a lucrative hepatitis C drug developed by rival company Gilead Sciences are valid.
5. Merck wins first round in $3B-plus hep C royalty fight with Gilead

   Mar 23, 2016 | FiercePharma

   By Tracy Staton
   
   
   Merck & Co. ($MRK) scored a hepatitis C patent win against Gilead Sciences ($GILD) Tuesday. And if the jury verdict stands, Merck could collect big royalties on Gilead's megablockbuster hep C drugs Sovaldi and Harvoni.
6. Gilead, Biogen Troubles Remind Investors Why Strong Drug Patents are Vital

   Mar 23, 2016 | MSN Money

   By Adam Feuerstein
   
   
   Ask most people to identify the lifeblood of the biotech industry, and they'd probably point to scientists conducting carefully calibrated experiments in a laboratory. That's only partially true. If your goal is for the biotech industry to be successful and profitable, those scientists need a phalanx of lawyers writing, filing and defending patent applications.
7. Politico’s Prescription Pulse

   Mar 23, 2016 | Politico

   By Dan Diamond
   
   
   Today’s Prescription Pulse, Politico’s weekly round-up of pharmaceutical policy news, mentioned the verdict. The relevant portion of the round-up is pasted below.
8. Gilead May Have to Pay Rival Merck Billions in Royalties

   Mar 23, 2016 | Fortune

   By Sy Mukherjee
   
   
   New Jersey-based Merck MRK 0.30% drew first blood in a key patent scuffle against fellow U.S. drug giant Gilead GILD -3.75% on Tuesday when a jury ruled that two of its hepatitis C drug patents are valid. The decision, which Gilead will appeal, could force the company to pay Merck and its partner Ionis Pharmaceuticals billions in royalties for U.S. sales of Gilead’s hep C mega-blockbusters Sovaldi and Harvoni.
9. Merck (MRK) Stock Closed Higher After Winning Gilead Patents Dispute

   Mar 23, 2016 | The Street

   By Rachel Graf
   
   
   NEW YORK (TheStreet) -- Merck (MRK - Get Report) stock gained by 0.09% to $53.08 in Wednesday's trading session, after a jury unanimously ruled in its favor in an going patent dispute related to Gilead's Sovaldi and Harvoni hepatitis C medications.
10. Why Gilead’s Loss is Merck’s Gain

    Mar 23, 2016 | Barron's

    By Ben Levisohn
    
    
    Citigroup’s Andrew Baum and Peter Verdult contend that Merck (MRK) could see $2 per share of upside following its victory in a hepatitis-C patent dispute with Gilead Sciences (GILD). Still, Baum and Verdult prefer Bristol-Myers Squibb (BMY) and Eli Lilly (LLY) over Merck. They explain why:
11. The Surprising Winner in Merck's Patent War With Gilead Sciences

    Mar 23, 2016 | The Motley Fool

    By Todd Campbell
    
    
    Merck & Co.'s (NYSE:MRK) recently launched Zepatier is challenging Gilead Sciences' (NASDAQ:GILD) dominance in the hepatitis C marketplace, but an equally important challenge by Merck is occurring in California courts.
12. Merck's patent suit could land them billions of dollars from Gilead

    Mar 23, 2016 | Lawyer Herald

    The jury has upheld the validity of Merck's patent on two of its high-profile drugs against hepatitis C. The company is now seeking more than $2 billion in damages from rival drug maker Gilead.
13. Wall Street rally fizzles out as oil, materials fall

    Mar 23, 2016 | The Star Online

    New York: Wall Street closed lower on Wednesday as oil and materials share prices dropped while investors remained cautious a day after deadly bombing attacks in Belgium.

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1. Transcript of John Milligan CNBC Interview

   Mar 23, 2016 | CNBC

   
   

    Reporter: Dr. Milligan thank you so for joining us.

   Milligan: Thank you for having us here, in fact, thank you for coming here to see us.

   Reporter: Oh it’s our pleasure. And I just want to start with the news of this week obviously, the news yesterday with the Merck patent case. You know that surprised a lot of people with the outcome in Merck’s favor. And they’re looking for a ten-percent royalty. What’s you expectation as to the outcome of that?

   Milligan: Well, first of all I can’t comment on the trial because it still is ongoing as the damages phase is now in session. So all I can tell you is that we still think that the Merck patents are invalid and we continue to believe that we have a strong case for that. And we do plan to appeal the case at the end of the day.

   Reporter: Got it, and I want to talk about the Hepatitis C franchise, I mean obviously it’s been the biggest driver of your business recently, um and have to ask you about just the pricing controversy. This has obviously been something that has gained a lot of attention from congress from the Massachusetts Attorney General focusing on you guys. Were you surprised that the price of this drug and the combination drug was such a controversy?

   Milligan: Well, first of all we priced it in alignment with the current standard of care at the time so that to us felt like a very natural thing to do. Even though the drug was clearly going to have a greater benefit to a great number of people. And subsequent to that, um the system has worked actually quite well. We have provided additional rebates, discounts into various segments of the market. Competition has further driven down the prices. And we are in this unfortunate situation where there is a headline with a very high price and behind the scenes threes in fact quite low prices. If you look at for example the VA, we have been working closely with the VA system to provide a better benefit for our veterans. The price is well below half, well below half, of what the list price is and we think it is a very good price for the VA and for other parts of the system. The other thing that is surprising is that there has been this emphasis on price without a talk about the value or benefit that we bring. And we seem to forget that this is a very short course of therapy, 12 weeks for most patients, 8 for some, and the fact that these patients are cured and they don’t have to go on life-long treatment. So it’s a very different kind of thing to think about and it’s also very difficult for the system to comprehend, the fact that it is a cure that can affect so many people.

   Reporter: And I want to ask you about, just the argument that people make is that yes it is cheaper than previous therapies, but a lot more people want it because it is such a great drug. So that’s the argument people make, is how do you cure all of those people, how do you cure everybody in the system? Knowing what’s happened would you have done anything differently or is this how it should have played out?

   Milligan: No I don’t think we would have, in fact, if you think about the problem right now it’s really the capacity of the system in identifying new patients. We did have [inaudible] of patients that worked their way through last year, in fact last year about 240,000 Americans were treated with either Sovaldi or Harvoni, far more than ever before. In fact, 100,000 more than the previous year which was the largest number of patients ever treated. So there is pretty good access to treat that many people. If you think about the capacity of the system, that is, how many Hepatologists can treat in a year, it’s not much more than that, we were really utilizing a great capacity of the doctors in the system which is now what I think to be the rate limiting step. For the future it is identifying the patients the big barrier to treating everybody, will be identifying everybody and getting them into treatment, and that of course will take many many years. But I think the system worked in that we have seemed to have got the most severely ill patients through early, so they can get cured and get on with their lives.

   Reporter: A lot more to ask you on that, but I have to pivot into the biggest question from investors and that’s what is the next driver of growth from you guys, and everybody thinks you have to buy something in order to grow, do you agree?

   Milligan: There is actually a wide range of opinions. There is nothing more fascinating than being in an investor dinner with two groups pairing off against each other about ‘we don’t have to do anything because our pipeline is so rich’, and we do have a very good pipeline, or ‘we should do something now to increase growth in the shorter term’. Sometimes I don’t even have to talk at those meetings, it’s quite interesting. Look, we are a company that needs to innovate, biotech needs to innovate, our products come on for a while, then the patents go away, and then the products disappear from our topline and bottom line, so we constantly need to innovate. And we have been successful with both internal innovation and with buying companies in the past to augment that innovation. And it’s a strategy that we are going to continue to go along. We are going to continue to work on the three areas where I think we have good strength, particularly our NASH franchise, we are continuing to help people with liver disease, NASH is a very important and growing problem in the United States and around the globe. We think we have several drugs that could potentially treat or reverse the symptoms of that. We are building a franchise of inflammatory diseases, we brought in a product called Filgotnib just last year, which I think can really jump start that program. And of course we have been working in oncology, and we seek to bring in more products and more programs to augment what we are doing internally in those areas. So do I think we need a big transaction to solve our problems? I don’t think we need that, I do reserve the right to change my mind in the future and perhaps there would be things that make sense, because you have to be open minded as a CO and as a company about the things that would benefit the company the most and the patients the most.

   Reporter: A lot more questions for you and we hope you will come back and join us again

    

    

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2. Gilead's CEO: We are appealing the case

   Mar 23, 2016 | CNBC

   By Denise Garcia

   A California jury's decision on Tuesday may result in Gilead Scienceslosing billions of dollars, as claims from pharmaceutical company Merckthat the California-based company's blockbuster drug's active ingredients infringed its patents were found valid in the court.

   Gilead's new CEO told CNBC, however, that this isn't the end of the dispute. "We still think the Merck patents are invalid and we continue to believe that we have a strong case for that, and we do plan to appeal the case at the end of the day," John Milligan told CNBC on Wednesday.

   While the drugmaker's Hepatitis C franchise has driven Gilead's business upward, it's drug-pricing practices have received backlash recently since combination drug Harvoni costs $1,125 per pill before discounts, and a 12-week regimen costs $94,000.

   Drug-pricing disputes aren't all that rare these days. Pharma bad boy Martin Shkreli's raising the price of antiparasitic drug Daraprim from $13.50 per pill to $750 per pill, garnered a lot of attention and public concern, recently. 
   ‹Merck Hep C patents found valid in GileaddisputeChina reveals deadly vaccine sales ring›

   Milligan told "Closing Bell" that the company "priced [the drug] in alignment with the current standard of care at the time … even though the drug was clearly going to have a greater benefit to a greater number of people." He noted that "the system" has worked well with rebates and discounts, and emerging competition has pushed prices down. 
   

   "We are in this unfortunate situation where there's a headline of a very high price and behind the scene there's in fact quite low prices," the CEO told "Closing Bell," adding that the biotechnology company is working with Veterans Affairs to provide veterans lower cost medicine at "well below half" the listed price.

   The executive considers that the benefits of the blockbuster drug outweigh the price controversy.

   "We seem to forget that this is a very short course of therapy; 12 weeks for most patients — eight for some — and the fact that these patients are cured and they don't have to go on lifelong treatment," Milligan said.

   The Gilead stock closed down about 4 percent Wednesday, and year to date it's declined 11 percent; in the past five years, however, the company's stock has risen over 300 percent.Cramer: Valeant fuss a ‘travesty’

   While some consider that Gilead's catalyst for growth would be an acquisition, the CEO said that the biotech industry thrives through innovation.

   "We are a company that needs to innovate … our products come on for a while, then the patents go away and then the products essentially disappear from our top line and our bottom line, so we constantly need to innovate," Milligan said, before adding that he reserves the right to change his mind.

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3. Merck Wins Patent Battle Over Hepatitis C Drugs

   Mar 23, 2016 | The Recorder

   By Scott Graham

   Gilead Sciences Inc.’s once impermeable defense of its hepatitis C medications has been cracked.

    Merck & Co. Inc. won a jury verdict of validity Tuesday on two patents covering the key ingredient in the blockbuster drugs Sovaldi and Harvoni. Gilead isn’t contesting infringement, and the trial proceeded to a damages phase Tuesday afternoon before U.S. District Judge Beth Labson Freeman of the Northern District of California.

    “Merck believes the jury’s verdict accurately reflects the evidence in this case,” the company said in an e-mailed statement. Williams & Connolly partner Bruce Genderson led Merck’s trial team with help from Hughes Hubbard & Reed.

   New Jersey-based Merck and co-plaintiff Ionis Pharmaceuticals Inc. are looking for a 10 percent cut on Gilead’s sales of sofosbuvir, which have rung up more than $20 billion in sales since Sovaldi launched in December 2013. Harvoni is a combination of sofosbuvir and another anti-viral drug that Gilead began marketing in 2014.

   “Although we are disappointed by the jury’s verdict today, there are a number of remaining issues to be decided by the jury and the judge,” a Gilead spokeswoman said in a statement. “Therefore, it is premature to comment any further.”

   Fish & Richardson partner Juanita Brooks has led Gilead’s team along with partner Jonathan Singer. The six-member jury deliberated 3 1/2 days before returning its verdict.

    Foster City-based Gilead acquired sofosbuvir as part of its 2011 acquisition of New Jersey’s Pharmasset Inc. Following the 2013 launch of Sovaldi, Gilead successfully beat back a claim by Roche Holding A.G. that it held rights via an earlier collaboration agreement with Pharmasset. Gilead also knocked out a European patent infringement claim by Idenix Pharmaceuticals Inc., which is now owned by Merck.

    Faced with Merck’s litigation threat, Gilead sued for declaratory judgment in 2013 that Merck’s 7,105,499 and 8,481,712 patents were invalid for indefiniteness and/or derivation from Pharmasset’s own prior research.

    Merck launched competing hepatitis C treatment Zepatier in January. It has stated in filings that Gilead filed its suit without countering Merck’s 10 percent royalty proposal. Merck is expected to seek more than $2 billion in damages for past infringement plus a 10 percent running royalty on sales of sofosbuvir through the life of Merck’s patents, which is about 2022. Merck’s damages expert is pointing to a 10 percent deal it struck with Roche in 2011 for one of the same patents as “an amazingly comparable license agreement,” according to filings in the case.

    Gilead is seeking to argue that a 2011 internal Merck presentation actually set the value of that license at only $73 million over the life of the patent. The company also wants to argue that when Pharmasset rejected Merck’s acquisition bid, Merck considered releasing its claims to sofosbuvir for $346 million.

    Merck has argued that Gilead is trying to inject new damages theories into the case at the eleventh hour.

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4. Jury Finds for Merck in Hep C Drug Patent Fight

   Mar 23, 2016 | Court House News Service

   By Mathew Renda

   SAN JOSE, Calif. (CN) - In a showdown between pharmaceutical heavyweights, a federal jury found Tuesday that Merck's patents for a lucrative hepatitis C drug developed by rival company Gilead Sciences are valid.

    Tuesday's verdict could entitle Merck to collect a portion of the $1 billion Gilead generates in sales for the lifesaving hepatitis C drug sofosbuvir, which Gilead markets under the brand names Solvaldi and Harvoni. The jury will also consider awarding damages.

    "Merck believes the jury's verdict accurately reflects the evidence in this case," the company said in a statement emailed to Courthouse News Service.
   

    The jury validated Merck's claim that Gilead developed sofosbuvir, a nucleotide that prevents the hepatitis C virus from replicating in the human liver, using patents Merck took out in the early 2000s.

    "Although we are disappointed with the jury's verdict today, there are a number of remaining issues to be decided by the jury and the judge," Gilead spokeswoman Michele Rest said in an emailed statement. "Therefore, it is premature to comment any further."

    Sofosbuvir has proven enormously effective in treating hepatitis C, with a 97 percent cure rate. Sovaldi and Harvoni collectively generated about $19 billion in sales for Gilead in 2015, according to multiple published reports.

    Merck asserted its scientists made significant advancements in the search for a cure for hepatitis C, a virus that attacks liver cells that eventually causes scarring or cirrhosis, liver cancer or liver failure.

    Specifically, Merck scientists found a certain class of compounds that proved effective in blocking the virus from replicating itself in liver cells, causing the virus to die. Merck claims Gilead used the discovery to further its own research, according to court documents.

    For its part, Gilead says the scientific breakthrough that led to the development of sofobivur was made by biomedical researchers at Pharmasset, a small company Gilead acquired for $11 billion in 2011 for the express purpose of bringing the medicine to market.

    Ultimately, the jury disagreed.

    "Strong patent protection is essential to innovation," Gallagher said. "Given that it guarantees a firm a period of return on investment, patent protection provides the research-based pharmaceutical and biotechnology industries with an incentive to invest in research and development."

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5. Merck wins first round in $3B-plus hep C royalty fight with Gilead

   Mar 23, 2016 | FiercePharma

   By Tracy Staton

   Merck & Co. ($MRK) scored a hepatitis C patent win against Gilead Sciences ($GILD) Tuesday. And if the jury verdict stands, Merck could collect big royalties on Gilead's megablockbuster hep C drugs Sovaldi and Harvoni.

    It would be a coup for Merck, which recently won FDA approval for its own hep C contender, Zepatier--which, as a third-to-market product, has sales expectations much more modest than Sovaldi and Harvoni's.

    The jury will next weigh in on damages Merck and its partner Ionis should collect from Gilead. As Merck noted in a Tuesday statement, the companies haven't asked that Sovaldi and Harvoni be taken off the market, but "for due compensation for the use of our intellectual property rights." The company initially requested 10% royalties from Gilead.

    Gilead says it will appeal, which stands to extend the legal battle for several more years. Leerink Partners analyst Geoffrey Porges says Gilead will ask for a bench trial, thinking that a panel of judges--who'd be better versed in patent questions than a jury--would view Merck's patent claims differently.

    Bernstein analyst Tim Anderson pointed out that pharma patent fights often lead to royalty deals, and such payments are often booked as part of ongoing operations. If Merck were to win 5% royalties on the two meds, its earnings per share could get a lift of about 4% over five years, he said in a Tuesday investor note.

    If Gilead's meds hit consensus sales forecasts--which amount to $17 billion this year, declining to $9.9 billion in 2020--a 5% royalty stream would start at $863 million this year and end the decade at about $500 million, he estimated. Total for the period: More than $3 billion. Analysts figure that a single-digit royalty percentage is more likely than Merck's requested 10%.

    Gilead sued in 2013 after receiving Merck's royalty demand, asking the court to declare two patents invalid: No.7,105,499 and No. 8,481,712. Merck said the jury verdict reflected the evidence and validated the company's "many years of research and significant investment" by it and its partners, including Ionis Pharmaceuticals.

    "Strong patent protection is essential to innovation," the company said in a statement. "Given that it guarantees a firm period of return on investment, patent protection provides the research-based pharmaceutical and biotechnology industries with an incentive to invest in research and development."

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6. Gilead, Biogen Troubles Remind Investors Why Strong Drug Patents are Vital

   Mar 23, 2016 | MSN Money

   By Adam Feuerstein

   Ask most people to identify the lifeblood of the biotech industry, and they'd probably point to scientists conducting carefully calibrated experiments in a laboratory. That's only partially true. If your goal is for the biotech industry to be successful and profitable, those scientists need a phalanx of lawyers writing, filing and defending patent applications.

    Scientists might invent drugs, but lawyers filing patents to protect those drugs from competition turn those drugs into billion-dollar revenue generators.

    A flurry of patent infringement lawsuits and decisions in recent days, affecting some of the biotech sector's largest companies, underscore this point.

    On Tuesday, a federal jury upheld the validity of two patents owned by Merck in a lawsuit against Gilead Sciences over highly profitable hepatitis C drugs. Next, the jury will decide damages. Gilead could ultimately be forced to pay billions of dollars to Merck in damages and royalties on future sales, although an appeal is inevitable.

    Also Tuesday, hedge fund investor Kyle Bass scored a victory against Biogen when the U.S. Patent and Trademark Office granted Bass' request to conduct a trial to review the validity of a patent protecting the company's most important multiple sclerosis pill Tecfidera. It could be a year before the trial outcome is known, but Tecfidera sales were $2.9 billion in the U.S. last year ($3.6 billion worldwide), so a Biogen loss could cut significantly into the drug's growth.

    Last week, Amgenscored a legal victory overRegeneron Pharmaceuticals in a lawsuit over patents protecting Repatha, the company's newly launched cholesterol-lowering drug. The jury decision in Amgen's favor puts Regeneron's competing product Praluent at risk of being pulled off the market. At a minimum, Regeneron will be forced to pay sales royalties to Amgen.

    Need one more? Editas Medicine , a newly public biotech startup, is embroiled in an ongoing, multi-party lawsuit over ownership to important patents covering the gene editing technology known as Crispr.

    Biotech drug-patent conflicts are typically settled early, usually with discreet licensing deals, which is why all this courtroom drama is so notable. It's also a reminder to healthcare investors that the risk-factor sections devoted to intellectual property in SEC filings are just as important as paragraphs devoted to clinical trial data and regulatory strategies.

    For now, none of these patent conflicts are fully resolved, which leaves the adversely affected companies in some limbo.

    Gilead could be forced to pay Merck more than $2 billion in damages and a royalty of 10% on the sale of its hepatitis C drug Sovaldi and Harvoni going forward. The latter penalty is the real stinger, considering the two hepatitis C drugs combined for $19 billion in sales last year and will continue to generate billions of dollars of sales into the future. [Ionys Pharmaceuticals gets a portion of any damages granted to Merck.]

    A Gilead appeal of Tuesday's decision could drag on for years, so analysts believe a settlement agreeable to both sides is likely. If Gilead and Merck split the difference and agree on a 5% royalty, the cash obligation for prior damages and the net present value of all future royalties amount to a combined hit on Gilead earnings of $1.18 per share, according to Leerink biotech analyst Geoff Porges. He calls this financial hit to Gilead "modest."

    Still, losing to Merck in the Sovaldi/Harvoni patent case comes at an inopportune time for Gilead. New prescriptions written for hepatitis C drugs have been on the rise over the past two weeks, a promising sign that insurance companies were easing access restrictions and allowing more patients to be treated.

    Gilead's stock price has enjoyed an almost 15% bounce since early February, in part due to the encouraging uptick in hepatitis C drug prescriptions. The prospect of having to fork over some of that revenue with Merck could become a new reason for investors to worry about Gilead's future growth trajectory.

    Shares of Gilead are down 2.6% to $91.25 in early Wednesday trading.

    For Biogen, the risk of losing to Bass is the revocation of a U.S. patent protecting Tecfidera through 2028. Without that patent, a generic version of Tecfidera could enter the U.S. market four years earlier than expected. Biogen is also facing legal challenges to Tecfidera patents in Europe. Together, these patent challenges could have a negative 16-17% impact to Biogen's discounted cash flow, says Jefferies analyst Brian Abrahams.

    Biogen has been trying to stabilize Tecfidera sales while it waits for important clinical trial readouts on risky but potentially blockbuster drugs in its pipeline, most notably the Alzheimer's disease drug aducanumab.

    Shares of Biogen closed Tuesday at $259.42.

    

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7. Politico’s Prescription Pulse

   Mar 23, 2016 | Politico

   By Dan Diamond

   Merck scored a legal victory over Gilead in a fight over Hepatitis C drug patents, the Wall Street Journal reports. http://on.wsj.com/1MBeKeX

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8. Gilead May Have to Pay Rival Merck Billions in Royalties

   Mar 23, 2016 | Fortune

   By Sy Mukherjee

   New Jersey-based Merck  MRK 0.30%  drew first blood in a key patent scuffle against fellow U.S. drug giant Gilead  GILD -3.75%  on Tuesday when a jury ruled that two of its hepatitis C drug patents are valid. The decision, which Gilead will appeal, could force the company to pay Merck and its partner Ionis Pharmaceuticals billions in royalties for U.S. sales of Gilead’s hep C mega-blockbusters Sovaldi and Harvoni.

    The case centers on a pair of Merck and Ionis patents on compounds which are similar to the main active ingredient in Sovaldi and Harvoni. Merck has argued that it should be entitled to 10% in royalties from U.S. sales of the two drugs, which cure hepatitis C in the vast majority of patients and have dominated the market.

    Global Sovaldi and Harvoni sales totaled $12.4 billion in 2014 and $19.1 billion in 2015, including $12.5 billion in U.S. sales last year.

    “Merck believes the jury’s verdict accurately reflects the evidence in this case,” said the company in a statement. The jury still has to rule on the amount of damages it believes Merck is owed from previous Sovaldi/Harvoni sales while a judge will ultimately decide the royalty percentage Merck should receive going forward.

    While it’s unlikely that Merck will ultimately win the 10% royalty it says it deserves, even a 5% royalty award could entitle the company to billions in past and future compensation.

    That would also help Merck shore up revenues for its own hepatitis C franchise. The FDA approved the company’s next-gen hep C therapy Zepatier in January—but that drug was third-to-market behind Sovaldi and AbbVie’s  ABBV -1.91%  Viekira Pak, putting it at a distinct disadvantage.

    Fortune has reached out to Gilead for comment and will update this post if they respond.

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9. Merck (MRK) Stock Closed Higher After Winning Gilead Patents Dispute

   Mar 23, 2016 | The Street

   By Rachel Graf

   NEW YORK (TheStreet) -- Merck (MRK - Get Report) stock gained by 0.09% to $53.08 in Wednesday's trading session, after a jury unanimously ruled in its favor in an going patent dispute related to Gilead's Sovaldi and Harvoni hepatitis C medications.

    The jury then remained in the courtroom to hear evidence regarding how much Gilead owes the company, as Merck seeks a 10% royalty on Gilead's nearly $21 billion in U.S. sales for 2014 and 2015, Reuters reports.

    Merck also has asked for a 10% royalty going forward on the two hepatitis C drugs, which generated $19.2 billion in global sales last year.

    This initial win could translate into $2 per share upside for Merck, Citigroup wrote in a note, Barron's reports.

    However, damages will probably not be paid until the expected appeals process ends, which could take a considerable amount of time given the "more technical nature of the court processes," the firm continued.

    Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of B.

    Merck's strengths such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and good cash flow from operations outweigh the fact that the company has had lackluster performance in the stock itself.

    You can view the full analysis from the report here: MRK

    

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10. Why Gilead’s Loss is Merck’s Gain

    Mar 23, 2016 | Barron's

    By Ben Levisohn

    Citigroup’s Andrew Baum and Peter Verdult contend that Merck (MRK) could see $2 per share of upside following its victory in a hepatitis-C patent dispute with Gilead Sciences (GILD). Still, Baum and Verdult prefer Bristol-Myers Squibb (BMY) and Eli Lilly (LLY) over Merck. They explain why:

        Yesterday evening the NDCA Jury ruled in favour of Merck and Ionis (IONS) for the ongoing patent dispute related to     Gilead’s sofosbuvir-based      HCV drugs including Sovaldi and Harvoni. The Jury upheld all claims from MRK’s ‘499     and ‘712 patents. Today, the Jury will initiate the hearing        about the damages to be paid to Merck by Gilead as     compensation for its Past and future infringement. We should get clarity on damages in the      coming days,     however we expect Gilead will seek to appeal the decisions. We note the ‘499 and ‘712 patents potentially would be     valid until 2023 and 2030, respectively…

        The initial win for Merck from the ongoing HCV patent litigation could translate into $2 per share upside for Merck.     Our US biotech analyst believes a 5% royalties payaway to Merck on future and past Sovaldi sales would translate to     an impact of ~$3/sh for Gilead. This would equate to $4.2bn impact to Merck’s NPV or c.$2 per share. We expect no     damages will be paid until after the appeals process, which would take considerable time        given more technical     nature of the court processes. We continue to prefer BUY rated Roche, AstraZeneca (AZN) and Novo Nordisk among     the EU   names. We prefer BUY rated Bristol-Myers Squibb and Eli Lilly among the US majors.

    Shares of Merck have gained 0.5% to $$53.28 at 12:49 p.m. today, while Gilead Sciences has fallen 3.2% to $$90.76, Bristol-Myers Squibb has dipped 0.2% to $62.66, Eli Lilly has dropped 0.8% to $71.32, and AstraZeneca is off 0.2% at $28.11. Ionis Pharmaceuticals has declined 0.4% to $$41.60.

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11. The Surprising Winner in Merck's Patent War With Gilead Sciences

    Mar 23, 2016 | The Motley Fool

    By Todd Campbell

    Merck & Co.'s (NYSE:MRK) recently launched Zepatier is challenging Gilead Sciences' (NASDAQ:GILD) dominance in the hepatitis C marketplace, but an equally important challenge by Merck is occurring in California courts.

     This week, a California District Court jury determined Gilead Sciences' blockbuster hep C drugs Sovaldi and Harvoni infringe on two Merck patents, and that decision could lead to billions of dollars in payments to Merck.

     However, Merck isn't the only company that would come out ahead if the courts tell Gilead Sciences to fork over a truckload of cash. Ionis Pharmaceuticals (NASDAQ:IONS) would land a windfall, too. That's because Ionis Pharmaceuticals, formerly Isis Pharmaceuticals, co-owns the patents Gilead Sciences is said to have violated.

     How much are we talking about?

     According to Ionis Pharmaceuticals, its deal with Merck means it will receive 20% of whatever is awarded to Merck by the court, minus whatever legal expenses were incurred by Merck during the lawsuit.

     Ionis Pharmaceuticals is also entitled to 20% of any future royalties Gilead Sciences must pay on future sales of Sovaldi and Harvoni.

     Since Sovaldi and Harvoni are multi-billion per year blockbusters, the amount of money that could be paid to Merck and Ionis Pharmaceuticals is substantial. Industry watchers estimate that royalties could amount to 10% of past and future sales.

     Gilead Sciences brought in $12.4 billion in sales from its two hepatitis C drugs in 2014, and it hauled in another $19.1 billion in sales from them in 2015, so Gilead Sciences could end up paying Merck $3.16 billion for its sales so far. Legal fees in court cases like this can run into the millions of dollars, but even so, that still suggests Ionis Pharmaceuticals could end up getting a lump sum check for somewhere in the neighborhood of $600 million.

     Importantly, Sovaldi and Harvoni's current sales pace suggests that Ionis Pharmaceuticals could also receive an ongoing royalty stream of about $380 million per year.

     Moving the needle

     Multibillion-dollar payments to Merck would be great news for investors, but Merck's size means Gilead Sciences payments won't have nearly as big of an impact on it as they do on the much smaller Ionis Pharmaceuticals.

     Despite researching therapies since the 1990s that exploit the body's gene messaging system, Ionis Pharmaceuticals' revenue still comes mostly from upfront licensing and clinical-stage milestone payments from drugmakers like Merck.

     Those upfront and milestone payments resulted in Ionis Pharmaceuticals reporting total revenue of $284 million last year and $203 million in 2014.

     That's a solid amount of revenue, but Ionis Pharmaceuticals' research pipeline is packed with expensive mid- and late-stage studies that are causing expenses to soar and losses to mount. Last year, Ionis Pharmaceuticals spent $323 million on R&D, $37 million on general and administrative expenses, and lost a total of $88.3 million.

     Since Gilead Sciences' royalty payments could conceivably more than cover Ionis Pharmaceuticls operating expenses, propelling the company into the black, this could be a game-changing win for the company's investors.

     Looking ahead

     However, Gilead Sciences isn't going to just roll over and pay Merck royalties, and no one knows what the court may decide Gilead Sciences owes Merck and Ionis Pharmaceuticals.

     Yes, there's a chance Gilead Sciences management settles with Merck, but a more likely scenario is for management to file an appeal in hopes of getting a different verdict.

     Obviously, no one knows how all of this will shake out, but I think this week's news tilts the balance in Merck's favor, and if that's true, Ionis Pharmaceuticals shares are more attractive now than they were a week ago.

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12. Merck's patent suit could land them billions of dollars from Gilead

    Mar 23, 2016 | Lawyer Herald

    The jury has upheld the validity of Merck's patent on two of its high-profile drugs against hepatitis C. The company is now seeking more than $2 billion in damages from rival drug maker Gilead.

     The San Jose California court is now hearing the evidence regarding the amount of money Gilead must pay Merck. Its attorney, Bruce Genderson, said that they are looking to get a 10 percent cut on Gilead's sales, which reached nearly $21 billion in the United States from the year 2014 to 2015. According to TWST, Ionis, Merck's partner, will receive 20 percent of the damages that will be paid to Merck and will also receive 20 percent of all future payments that will be made.

     Aside from the sales in the U.S., Merck is also asking for a 10 percent royalty with regards to Gilead's blockbuster hepatitis C drug, Sovaldi and Harvoni, which also generated $19.2 billion on sales worldwide. Gilead's shares in the market fell $1.92 to $91.80 after the verdict was announced, while Merck's share rose 57 cents.

     On the other hand, Gilead's spokeswoman, Michele Rest, said that they were disappointed with the jury's verdict. No words yet on whether they will file a potential appeal. Merck on the other hand was satisfied and said that the verdict reflects the actual evidence that was presented, as per Reuters.

     The trial started last March 7 as pharmaceutical companies are in an arms race to create a drug that will cure hepatitis C and almost any other liver diseases which have a very big market worldwide. As reported by PR News Wire, Merck collaborated with Ionis to create a modified nucleosides that benefit patients with hepatitis in 1998.

     Merck then contacted Gilead in 2013 saying that the active ingredient of Gilead's drug, Sofosbuvir, is a replica of their patent. Gilead said to the U.S. District Court of Northern California that the patents that Merck have doesn't really clarify the specific disease that it cures and added that Merck has nothing to do with the discovery of Sofosbuvir. U.S District Judge Beth Labson Freeman ruled that Gilead did actually copied Merck's trademark in last month's hearing.

     

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13. Wall Street rally fizzles out as oil, materials fall

    Mar 23, 2016 | The Star Online

    New York: Wall Street closed lower on Wednesday as oil and materials share prices dropped while investors remained cautious a day after deadly bombing attacks in Belgium.
    
    The benchmark S&P 500 index fell back into negative territory for the year after closing positive on Friday for the first time in 2016.
    
    US stocks' fading five-week rally was further diminished by comments over the past two days by Federal Reserve officials, who expressed views that suggested an appetite for more US interest rate hikes than investors had anticipated.
    
    The possibility of more than the two expected rate hikes through December has sent the dollar higher, pushing down commodity prices.
    
    "That's basically what's leaning on the market today," said Peter Cardillo, chief market economist at First Standard Financial in New York. "It's all about commodities."
    
    Gold and metals prices fell as the dollar strengthened.
    
    US oil prices CLc1 LCOc1 also were also damaged after data showing a rise in US stockpiles last week rekindled worries about a global glut.
    
    Eight of the 10 major S&P sectors were lower, led by a 2.1% fall in the energy sector. Chevron and ConocoPhillips were among the biggest decliners. Utilities rose 0.7% and was the best performing sector.
    
    The Dow Jones industrial average closed down 79.98 points, or 0.45%, to 17,502.59, the S&P 500 lost 13.09 points, or 0.64%, to 2,036.71 and the Nasdaq Composite fell 52.80 points, or 1.1%, to 4,768.86.
    
    Adding to the downturn, investors were deterred by the shortened trading week ahead of the Good Friday holiday and uncertainty tied to Tuesday's bombings in Brussels, Cardillo said.
    
    Earnings weakness has been another concern for investors, with first-quarter S&P 500 earnings forecast to fall 6.9% from a year ago, according to Thomson Reuters data.
    
    Nike shares were down 3.8% at US$62.44 after the world's largest footwear maker reported quarterly revenue below estimates.
    
    Gilead Sciences was down 3.9% at US$90.08 while Merck was up 0.09%. A federal jury upheld the validity of two Merck patents in a high-profile dispute over Gilead's blockbuster cure for hepatitis C.
    
    Gilead was the biggest drag on the S&P 500 and the Nasdaq.
    
    Vertex Pharmaceuticals fell 7.6% to US$80.15 after Goldman Sachs cuts its price target on the stock.
    
    Yum Brands was up 2% at US$80.55 after the Wall Street Journal reported that the fast-food chain's owner was in talks with KKR about a possible sale of a 19.9% stake in its China business.
    
    Volume was lighter than in recent sessions. About 6.8 billion shares changed hands on US exchanges, compared with the 8.1 billion daily average for the past 20 trading days.
    
    Declining issues outnumbered advancing ones on the NYSE by 2,257 to 771, for a 2.93-to-1 ratio on the downside; on the Nasdaq, 2,221 issues fell and 579 advanced for a 3.84-to-1 ratio favoring decliners.
    
    The S&P 500 posted 17 new 52-week highs and no new lows; the Nasdaq recorded 21 new highs and 40 new lows. - Reuters
    

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