Genentech Inc. and Protein Design Labs Inc. reached an agreement to resolve their dispute surrounding PDL's antibody humanization patents and three drugs made by Genentech.
At center stage is Genentech's exercise of licenses under the companies' cross-licensing deal for the asthma drug Xolair (omalizumab), the psoriasis drug Raptiva (efalizumab) and possibly Avastin (bevacizumab), a colorectal cancer candidate yet to be approved by the FDA.
The problem became an issue several months ago when Genentech, of South San Francisco, questioned the relevance of PDL patents to Xolair, which received FDA approval in June. Confidential conversations between the companies related to Xolair expanded to include Raptiva and Avastin. Without some resolution, PDL, of Fremont, Calif., stood to lose money on each of those drugs. (See BioWorld Today, June 23, 2003, and Aug. 18, 2003.)
But on Monday, Jim Goff, PDL's senior director of corporate communications, told BioWorld Today the companies finalized in early December a payment system that had been agreed upon in principle. (See BioWorld Today, Dec. 2, 2003.)
So, under the new plan, PDL in January will collect license exercise fees of $1 million each for Xolair and Raptiva. If Avastin wins FDA approval, PDL will receive a $1 million fee on it, as well.
In the first quarter of 2004, PDL will begin receiving royalty payments, including those related to 2003 sales of Xolair and Raptiva. (Raptiva was cleared for regulatory approval in October.) PDL has agreed to certain royalty reductions for significant levels of annual aggregate sales of Genentech products licensed under the original agreement signed in 1998. The revised royalty rate structure would apply reciprocally to any PDL products licensed under that agreement.
Neither company would discuss specific financial details and what PDL can expect in royalties.
Goff said the resolution is a relief.
"This uncertainty has sort of hung over PDL for several months," he said.
Meanwhile, Mark Krajnak, senior manager of corporate relations at Genentech, told BioWorld Today the company is pleased with the outcome.
"We're happy to reach this resolution because now we can focus on making life-saving medicines for our patients," he said.
Genentech expects FDA action on Avastin by the end of March. The biologics license application for Avastin, a proposed first-line treatment for metastatic colorectal cancer in combination with chemotherapy, has been granted priority review.
Genentech's stock (NYSE:DNA) Monday closed at $92.07, down 11 cents, while PDL's (NASDAQ:PDLI) closed at $16.99, down 34 cents.