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Merck Gilead Patent Trial 3/23/16
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Gilead to Pay Merck $200 Million in Damages Over Hepatitis C Drug Patents
| Wall Street Journal
By Ron Winslow
A federal jury in California ordered Gilead Sciences Inc. to pay Merck & Co. and a partner $200 million for infringing two Merck patents in a case involving Gilead’s two blockbuster drugs for treating hepatitis C, Merck said Thursday. -
Gilead Must Pay Merck $200 Million for Hepatitis C Patents
Mar 24, 2016 | Bloomberg
By Pamela A Maclean & Kartikay Mehrotra
Gilead Sciences Inc. was ordered by a jury to pay Merck & Co. $200 million for patent infringement over a drug compound that cures hepatitis C -
Gilead ordered to pay Merck $200 million in hepatitis C drug patent dispute
Mar 24, 2016 | Reuters
By Rory Carroll & Andre Chung
A federal jury on Thursday ordered Gilead Sciences Inc to pay Merck & Co $200 million in damages for infringing two Merck patents related to a lucrative cure for hepatitis C. -
BREAKING: Gilead Hit With $200M Verdict In Merck Drug Patent Row
Mar 24, 2016 | Law360
By Y. Peter Kang
A California federal jury found on Thursday that Gilead Sciences must pay $200 million to rival Merck for infringing two patents covering a key ingredient used in Gilead’s blockbuster hepatitis C drugs, an award that fell short of the $2 billion Merck had been seeking. -
Jury Hands Merck $200 Million in Fight With Gilead
| The Recorder
By Scott Graham
Gilead Sciences Inc. will have to pay Merck & Co. Inc. $200 million for infringing Merck's patent on Gilead's blockbuster hepatitis C medications. -
Gilead has taken a lot of hits lately. Here’s what it really has to fear
Mar 24, 2016 | STAT News
By Rececca Robbins
The drug maker Gilead Sciences has been remarkably resilient under a barrage of political attacks and public protests about the high prices of its medications. In recent weeks, though, it has hit some bad bumps: Deaths of patients taking its lone cancer drug. New competition for its most lucrative product. And this week, a loss in a high-stakes patent battle that could cost it billions. -
Gilead Sciences: Does Merck Have ‘Unclean Hands’?
Mar 24, 2016 | Barron's
By Ben Levisohn
Citigroup’s Robyn Karnauskas and Mohit Bansal look at Gilead Sciences’ (GILD) claim that Merck (MRK) has “unclean hands,” and the impact it could have on their hepatitis-C dispute:
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Gilead to Pay Merck $200 Million in Damages Over Hepatitis C Drug Patents
| Wall Street Journal
By Ron Winslow
A federal jury in California ordered Gilead Sciences Inc. to pay Merck & Co. and a partner $200 million for infringing two Merck patents in a case involving Gilead’s two blockbuster drugs for treating hepatitis C, Merck said Thursday.
The award follows the jury’s decision on Tuesday upholding the validity of two patents held by Merck and its partner Ionis Pharmaceuticals Inc. that Merck says should entitle the companies to a portion of the sales of Gilead’s drugs Sovaldi and Harmoni.
Last year, Gilead recorded a combined $12.5 billion in U.S. sales from the two drugs, which notched a total of $19.1 billion in global sales.
“We are pleased that the jury recognized that patent protections are essential to the development of new medical treatments,” Merck said in a statement. “The compounds and methods at issue in this case facilitated significant advances in the treatment of patients with HCV infection, and achieving these advancements required many years of research and significant investment by Merck and its partners.”
Gilead said Merck didn’t contribute to the development of the drugs and “assumed none of the risk” in the discovery of sofosburvir, the key active ingredient in both medicines. “We do not believe Merck is entitled to any amount of damages,” Gilead said in a statement. “We continue to believe the Merck patents are invalid.”
If the judge upholds the jury’s verdict, Gilead said it would appeal.
The award covers sales of the two drugs up to Dec. 31, 2015. Merck said the court will hold a separate hearing to consider royalties Gilead would owe on sales beginning Jan. 1.
The case is being heard in U.S. District Court Northern District of California.
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Gilead Must Pay Merck $200 Million for Hepatitis C Patents
Mar 24, 2016 | Bloomberg
By Pamela A Maclean & Kartikay Mehrotra
Gilead Sciences Inc. was ordered by a jury to pay Merck & Co. $200 million for patent infringement over a drug compound that cures hepatitis C, a tenth of what Merck sought.
The verdict announced Thursday follows an earlier finding by the jury embracing Merck’s claims that its scientists were responsible for early breakthroughs that led to the development of the Sovaldi and Harvoni medicines which helped Gilead become the world’s largest biotechnology firm by market value.
After siding with Merck on all the patent claims, jurors rejected Merck’s bid for a 10 percent royalty on the $20.7 billion revenue that Gilead’s hepatitis C drugs generated from 2013 through 2015.
The award against Gilead comes amid projections that the Foster City, California-based company’s sales will flatten this year as competition for liver disease treatments intensifies among drugmakers. In the final phase of the trial in federal court in San Jose, California, U.S. District Judge Beth Labson will determine a royalty rate for future sales of Harvoni and Sovaldi.
U.S. Prices
Gilead’s drugs carry U.S. list prices from $84,000 for a 12-week course to $94,500 before discounts. The court fight started 2 1/2 years ago after Merck demanded a royalty, claiming that its laboratory back in 2001 laid the scientific foundation for the sofosbuvir compound to later be developed by Pharmasset Inc., before that company was acquired by Gilead in 2011.
Gilead said it will appeal if a judge upholds the damages verdict.
“Since Merck made no contribution and assumed none of the risk in the discovery and development of sofosbuvir, we do not believe Merck is entitled to any amount of damages,” Michele Rest, a Gilead spokeswoman, said in a statement. “We continue to believe the Merck patents are invalid.”
Doris Li, a spokeswoman for Merck, didn’t immediately respond to phone and e-mail messages seeking comment on the verdict.
Scientific Advances
At trial, Gilead and Merck each tried to show the other was claiming credit for scientific advances that wasn’t due. Over two weeks, a parade of doctors and scientists for Gilead, Pharmasset and Merck and its partner Ionis Pharmaceuticals Inc.
testified about their roles in the patent process.
In the damages phase, the jury settled on a 4 percent royalty for $5 billion in sales.
Juror Clark Holden of Salinas, California, said after the verdict the panel decided $5 billion was the appropriate basis for calculating a royalty after subtracting Gilead’s investment of $15 billion from its total U.S. revenue.
“Some jurors were at the high end and some wanted to give nothing,” he said in an interview. “We had to find a middle ground.”
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.
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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Gilead ordered to pay Merck $200 million in hepatitis C drug patent dispute
Mar 24, 2016 | Reuters
By Rory Carroll & Andre Chung
A federal jury on Thursday ordered Gilead Sciences Inc (GILD.O) to pay Merck & Co (MRK.N) $200 million in damages for infringing two Merck patents related to a lucrative cure for hepatitis C.
The damages award is far less than the $2 billion Merck had demanded. On Tuesday, the same jury in San Jose, California, upheld the validity of the patents, which lie at the heart of the dispute over Gilead's blockbuster drugs Sovaldi and Harvoni. Together the medicines had more than $20 billion in U.S. sales in 2014 and 2015.
Merck is trying to catch up to Gilead, which dominates the market on a new generation of hepatitis C drugs that can cure well over 90 percent of patients with the liver disease.
Merck, which in January won approval on its own hepatitis C drug, Zepatier, is also asking for a 10 percent royalty on Gilead's sales going forward. That issue will be argued in a separate non-jury trial before U.S. District Judge Beth Labson Freeman starting next week.
Gilead spokeswoman Michele Rest said the company does not believe Merck is entitled to any damages. "In the event the judge maintains the jury's verdict, we will appeal," she said.
In a statement, Merck said, "We are pleased that the jury recognized that patent protections are essential to the development of new medical treatments."
In after-hours trading, Merck shares were down 50 cents to $52.57. Gilead shares gained slightly.
Insurers, politicians and patient groups have denounced the list prices of the new drugs. Harvoni, at $1,125 per pill before discounts, costs $94,000 for a 12-week regimen.
Gilead obtained the active ingredient in its drugs, sofosbuvir, by acquiring Pharmasset, Inc in 2011. Merck said Pharmasset developed the chemical from a Merck patent that was filed in 2002. Gilead, meanwhile, said Merck's patents were derived from Pharmasset's work.
After Merck, based in Kenilworth, New Jersey, demanded royalties in 2013, Gilead and Merck sued each other in the U.S. District Court for the Northern District of California. Last month, Freeman ruled that Gilead's drugs infringe Merck's patents.
In calculating damages, jurors said they sought a middle ground. "We worked to get to something we could all agree so we weren’t hurting one side or the other," juror Cody Shump, a 20-year-old San Jose resident, told Reuters.
Merck's partner and co-owner of the patents, Ionis Pharmaceuticals Inc (IONS.O), will get 20 percent of the damages awarded Merck.
The case is Gilead Sciences, Inc v Merck & Co, Inc, in the U.S. District Court for the Northern District of California, No. 13-cv-4057.
(Reporting by Andrew Chung in New York and Rory Carroll in San Jose; Editing by Alexia Garamfalvi, Diane Craft and Leslie Adler)
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BREAKING: Gilead Hit With $200M Verdict In Merck Drug Patent Row
Mar 24, 2016 | Law360
By Y. Peter Kang
A California federal jury found on Thursday that Gilead Sciences must pay $200 million to rival Merck for infringing two patents covering a key ingredient used in Gilead’s blockbuster hepatitis C drugs, an award that fell short of the $2 billion Merck had been seeking.
Gilead originally sued Merck in 2013, seeking a ruling that it didn't infringe on two of Merck's patents or that the patents were invalid.
Following a two-week trial that began March 7, the jury on Tuesday unanimously found that all 10 claims of the two Merck & Co. Inc. patents covering the drug ingredient sofosbuvir were valid. Sofosbuvir is a critical configuration of atoms known as a nucleoside and is found in Gilead Sciences Inc.’s top-selling hepatitis C drugs Sovaldi and Harvoni, which logged combined sales of $19.1 billion last year.
In determining the damages, the jury based the $200 million award on a royalty rate of 4 percent on $5 billion in sales, compared with the 10 percent royalty on Gilead’s past sales of more than $20 billion sought by Merck.
A Gilead spokeswoman confirmed the jury verdict and said the company will appeal if the verdict is upheld by the judge.
“Since Merck made no contribution and assumed none of the risk in the discovery and development of sofosbuvir, we do not believe Merck is entitled to any amount of damages," the spokeswoman said. "We continue to believe the Merck patents are invalid. In the event the judge maintains the jury's verdict, we will appeal.”
A Merck spokeswoman said the company is satisfied with the result.
“We are pleased that the jury recognized that patent protections are essential to the development of new medical treatments,” the spokeswoman said.
Gilead, which originally sued in 2013, had sought a ruling that it didn’t infringe on two of Merck’s patents or alternatively that Merck’s patents were invalid.
In February, U.S. District Judge Beth Labson Freeman shot down Gilead’s motion for summary judgment of invalidity, saying Merck presented enough evidence to show that a person of ordinary skill could understand the usefulness of sofosbuvir and that there was ample data suggesting nucleoside analogs such as sofosbuvir could be used to treat the potentially lethal hepatitis C virus.
Judge Freeman also granted Merck’s separate motion for summary judgment of infringement, saying Gilead did not contest the motion. The judge noted that the finding of infringement wouldn’t make Gilead liable unless proven at the jury trial.
The same day the jury found Merck’s patents to be valid, Gilead told the court that Merck obtained the two patents deceitfully and with “unclean hands,” which should bar it from receiving any compensation from Gilead.
Merck co-developed the patents with Ionis Pharmaceuticals, which will receive 20 percent of the $200 million damages award.
The patents-in-suit are U.S. Patent Numbers 7,105,499 and 8,481,712.
Gilead is represented by Juanita R. Brooks, Jonathan E. Singer, Douglas E. McCann and Michael E. Florey of Fish & Richardson PC.
Merck is represented by Bruce Genderson, Jessamyn Berniker, Stanley E. Fisher, Sanjiv Laud and Jessica Palmer Ryen of Williams & Connolly LLP, Stephen S. Rabinowitz, David E. Lansky, Mitchell Epner and Patrice P. Jean of Hughes Hubbard & Reed LLP and Joshua H. Lerner and Laura E. Miller of Durie Tangri LLP.
The case is Gilead Sciences Inc. v. Merck & Co. Inc. et al., case number 5:13-cv-04057, in the U.S. District Court for the Northern District of California.
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Jury Hands Merck $200 Million in Fight With Gilead
| The Recorder
By Scott Graham
Gilead Sciences Inc. will have to pay Merck & Co. Inc. $200 million for infringing Merck's patent on Gilead's blockbuster hepatitis C medications.
While large in absolute terms, the award represents only a fraction of the damages Merck and collaboration partner Ionis Pharmaceuticals Inc. had sought to recover. Merck was asking for a 10 percent royalty on Gilead's Sovaldi and Harvoni medications, which had rung up sales of $20 billion as of Dec. 31.
Gilead had argued in court filings that Merck offered to license Pharmasset Inc., the developer of the active ingredient in the drugs, for $346 million in 2011, and had placed an internal value on the patents of $73 million. Gilead acquired Pharmasset that same year for $11 billion.
Thursday's jury award in Gilead Sciences v. Merck covers only the first two years of commercialization of sofosbuvir, and Merck's patents have several more years to run. U.S. District Judge Beth Labson Freeman will now be asked to set a royalty on future sales.
Gilead sued Merck for declaratory judgment of patent invalidity in 2013. Merck persuaded the jury earlier this week that it had in fact pioneered a predecessor to sofosbuvir in the early 2000s.
"We are pleased that the jury recognized that patent protections are essential to the development of new medical treatments," Merck said in an emailed statement. "The compounds and methods at issue in this case facilitated significant advances in the treatment of patients with HCV infection, and achieving these advancements required many years of research and significant investment by Merck and its partners."
A spokeswoman for Gilead Sciences said the company will appeal the verdict if it stands. "Since Merck made no contribution and assumed none of the risk in the discovery and development of sofosbuvir, we do not believe Merck is entitled to any amount of damages," she said in an emailed statement.
Gilead is still scheduled to present its equitable defenses to Freeman next week. Gilead will argue that Merck has "unclean hands" because its HCV patent prosecutor at the time, Philippe Durette, attended a 2004 licensing meeting with Pharmasset where Pharmasset disclosed the structure of the compound that would eventually become sofosbuvir.
The meeting was subject to a confidentiality agreement and intended only for Merck employees outside of the company's HCV program. Rather than keep details confidential, Durette rewrote Merck's patent claims to exclude Pharmasset from the market, Gilead charges. The company alleges that Durette changed his story from deposition, where he said he was "positive" that Pharmasset didn't disclose the compound to him at the 2004 meeting, to testifying at trial that after the meeting he recused himself from Merck's due diligence into Pharmasset.
Merck argues in response that Durette took no action at the U.S. Patent and Trademark Office until Pharmasset published the structure of the compound, known then as PSI-6130, in 2005. That ended Merck's confidentiality obligations, the company argues. In any event, the jury found that Merck's inventors possessed the subject matter of the patent claims in 2002, long before the Pharmasset meeting, Merck argues. That forecloses Gilead's unclean hands defense, it says.
Williams & Connolly partner Bruce Genderson is leading Merck's trial team with help from Hughes Hubbard and Reed. Fish & Richardson partner Juanita Brooks leads Gilead's trial team along with partner Jonathan Singer and others.
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Gilead has taken a lot of hits lately. Here’s what it really has to fear
Mar 24, 2016 | STAT News
By Rececca Robbins
The drug maker Gilead Sciences has been remarkably resilient under a barrage of political attacks and public protests about the high prices of its medications. In recent weeks, though, it has hit some bad bumps: Deaths of patients taking its lone cancer drug. New competition for its most lucrative product. And this week, a loss in a high-stakes patent battle that could cost it billions.
That turbulence has hit Gilead’s stock price. But its biggest financial challenge may well be more pedestrian: A declining flow of patients to take the company’s blockbuster hepatitis C drugs.
Sold as Sovaldi and Harvoni, the drugs have treated about 380,000 people in the United States and about 390,000 in other parts of the world since they first went on the market in late 2013 and late 2014, respectively, according to Gilead spokeswoman Cara Miller.
Last year alone, Sovaldi and Harvoni generated $19.1 billion in sales. That was nearly two thirds of total revenue for Gilead, a California company which also makes drugs to treat HIV, cardiovascular diseases, and other conditions.
That dependence on one class of products is a red flag for investors. “At some point we’ll just run out of patients,” said Brian Skorney, a senior research analyst who covers Gilead for the financial services firm Baird.
“The biggest question mark on Gilead from an investor’s standpoint isn’t the pricing issues but … how durably are we going to see hep C patients come through the system,” Skorney said.
To be sure, Gilead has only reached a tiny fraction of the tens of millions of people around the world who have hepatitis C. Miller said the company is “confident in the long-term sustainability” of global hepatitis markets. She also pointed to efforts by companies, governments, and patient groups to improve diagnosis rates and access to care.
But Gilead has already treated a not-insignificant chunk of the patients who can be easily reached — and who have the means, either on their own or through insurance, to pay for the drugs. (A full course of treatment with Harvoni goes for $94,500 and with Sovaldi, $84,000, though insurers often negotiate substantial discounts.)
Gilead often can’t charge as much for its hepatitis C drugs overseas; indeed, in many countries, it sells the medications for less than 10 percent of the sticker price in the US.
While the American market seems large, with more than 3.5 million people infected, there are few new cases of hep C these days. The remaining untreated patients are disproportionately poor, homeless, or incarcerated. And many of those who have lived with the disease for decades aren’t inclined to seek treatment, sometimes because they were scared off by the bad side effects of older generations of medicines, or because they aren’t experiencing troubling symptoms.
Newly installed chief executive John Milligan told CNBC reporter Meg Tirrell on Wednesday that looking forward, “the big barrier to treating everybody will be identifying them and getting them into treatment.”
Gilead has said it expects sales from Sovaldi and Harvoni to flatten this year. New US prescriptions of Harvoni, the newer and now much more heavily prescribed of the two medications, have tapered off since peaking last spring, though they recovered somewhat this month, according to weekly estimates from the research firm Symphony Health.
The challenge is especially acute because Sovaldi and Harvoni work so well. Many bestselling drugs which treat chronic diseases must be taken for years or even decades. But the Gilead products can cure hep C in a couple months, and the patient never needs to take them again.
To add to Gilead’s challenges, rival pharmaceutical company Merck got approval this year for its own hepatitis C drug, Zepatier, which competes with Harvoni — and which starts with a much lower sticker price, $54,600 per treatment.
And a federal jury in Northern California this week found that Merck’s scientists made some of the key discoveries that led to the development of Gilead’s big hepatitis C drugs. Merck has demanded $2 billion in damages plus royalties on the sale of Harvoni and Sovaldi. The jury will decide on penalties.
Leerink analyst Geoffrey Porges said in a note to investors that his firm expects the damage award to be “relatively modest.”
Another wild card for Gilead: The attorney general of Massachusetts in January threatened to sue the company over the high cost of the hep C drugs, saying that its pricing strategy may be an unfair trade practice.
Then there’s Gilead’s blood cancer drug, Zydelig, which is on the market but continues to be tested in clinical trials.
Last week Gilead shut down six of those trials over significant safety concerns, including patient deaths. The Food and Drug Administration issued a warning to health care professionals. Zydelig wasn’t a big revenue source for Gilead, but still, the setback — along with the departure of a key scientist — raises questions about whether the company can move into oncology, as it had planned in a bid to diversify.
Amid a broader slide in the biotech market, Gilead’s stock price has dropped 25 percent since its recent peak last June. Some investors are clamoring for the company to acquire new drugs, while others want Gilead to stand pat.
“There is nothing more fascinating than being in an investor dinner with two groups pairing off against each other …” Milligan said on CNBC on Wednesday. “Sometimes I don’t even have to talk in those meetings.”
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Gilead Sciences: Does Merck Have ‘Unclean Hands’?
Mar 24, 2016 | Barron's
By Ben Levisohn
Citigroup’s Robyn Karnauskas and Mohit Bansal look at Gilead Sciences’ (GILD) claim that Merck (MRK) has “unclean hands,” and the impact it could have on their hepatitis-C dispute:
We spoke to a patent expert about the Gilead/Merck patent case related to Sovaldi. The expert notes that this case is not very straight forward and the Jury verdict is only one of the many steps here. Given Gilead’s claim that Merck had “unclean hands” while obtaining information which helped writing of patents in question, this case could take ~2-3 years before reaching conclusion. However, the current Jury might award the damages in- line w/ what Merck is asking ($4/sh impact on Gilead DCF) but eventual payment may be lower, per expert. The Jury decision is due next week.
Per our expert, Gilead is claiming “Unclean hands” as they believe Merck used its prior access to Pharmasset to obtain information about the Sovaldi which helped them write the ‘499 and ‘712 patents. Speaking with expert, Gilead showed evidence to support this. Gilead is not claiming that they do not infringe the patent.
The expert says “unclean hands” is not part of the Jury trial and after this Jury verdict on damages, the Judge will likely hear the “unclean hands” part. Gilead may not have to pay anything if it could successfully prove “unclean hands”. However, our expert notes that “unclean hands” is a very difficult defense to put up….
Our expert notes that Gilead could appeal which could take 12-18 months post filing. The expert believes that Gilead has a strong defense (on the face of it) and common sense is in Gilead’s favor. Gilead could argue that despite having this patent Merck could not develop the drug and, therefore, these patents are not comprehensive.
Shares of Gilead Sciences have gained 1% to $90.97 at 9:48 a.m. today, while Merck has fallen 0.5% to $52.80.
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