Gilead Sciences Loses Patent Battle Against Merck

The California jury has favored Merck over Gilead on the patent battle.

Gilead Sciences lost the legal patent battle against the rival Merck & Co., who — as ruled by California jury on Tuesday — now has a right to share a chunk of the Gilead’s blockbuster hepatitis C drugs sales. The patent battle started in 2013 at San Jose Federal Court in which Gilead accused Merck for making an inappropriate demand of royalty payments on Sovaldi — chemically dubbed as sofosbuvir.

The financial impacts of the decision remained undisclosed. The Californian jury ought to still think about the damages for past sales it will award to Kenilworth, New Jersey based pharmaceuticals developers, and its patents’ co-owner, Ionis Pharmaceuticals. Subsequently, the judge has to set the limit on probable royalty payments on the upcoming sales.

Gilead shared its disappointment in an emailed statement expressing that the biotech giant was saddened by the jurors’ verdict and that there still remain a number of undecided issues which the jury and the judge has to look. On the contrary, Merck & Co, quiet delighted by the decision said that it “believes the jury’s verdict accurately reflects the evidence in this case,” according to the Wall Street Journal.

Earlier this month, Gilead Sciences sued Merck when the latter asked it to pay the royalty for using its licensed compound sofosbuvir as an active compound in its flagship hepatitis C drug. The request for royalty payment came a short time before the Food and Drug Administration (FDA) approved the drug for the HCV treatment.

Against Merck’s claim, the biotech titan defended itself by saying that the compound in question was actually the invention of Pharmasset Inc. and was under the works as early as 2001 — tentatively a year before Merck got its patents registered in 2002 –when the biotech organization acquired the company in the same year.

Ever since the effective but exorbitant priced hepatitis C drugs got approval by the FDA, it came under the axe of multiple legal battles as the companies give a shot in grabbing some share of the humungous revenues generated by the businesses through the drugs. Last year, out of a global haul of $19.1 billion, the combined U.S. sales of two drugs totaled $12.5 billion.

Merck expressed in a court document that in 2002, it had filed applications relating to the patents that cover the use of certain compounds in order to circumvent the life threatening infection of hepatitis C. In 2013, the company extended a proposal to Gilead to use its license in exchange of the 10% royalty payment on the sales of products containing the patent compound sofosbuvir. The $132 billion biotech behemoth reacted by suing Merck and declaring the royal of 10% as “prohibitive demand.”

Last month, in a court document, Gilead argued that Merck’s original applications of patents were not exhaustive to deal with Gilead’s drugs. It said that patents original application had been altered and certain claims were added to them after the scientists from Pharmasset Inc. — acquired by Gilead for around $11 billion — published their research regarding patent applications.

The jury has ruled the decision in favor of Merck. The judge and the jury have to decide whether Merck will be entitled to royalty payments amounting to $2 billion for the last year’s sales — which is in line with Merck’s demands of 10% royalty.

After the decision, Gilead’s stock fell down by 2.85% to $91.05 during after-hours trading while Merck stock gained a modest momentum and went up by 2.15% to $54.18.