Patent invalidation restores the Daiichi status quo
With the US Patent and Trademark Office invalidating Seagen’s ‘039 patent – one part of a long-running dispute against Daiichi Sankyo over antibody-drug conjugates – the status quo has been restored. The ruling is in line with the more important arbitration process that Daiichi won last year; relevance of the ‘039 patent is limited by the fact that it expires this year, while the arbitration concerned IP claiming coverage into the late 2030s. The dispute arose because the two companies had collaborated on ADCs in 2008. After this deal ended a few years later Daiichi continued work, leading to deals with AstraZeneca worth a combined $2.4bn and with Merck & Co ($5.5bn). Seagen is now owned by Pfizer, and the Daiichi dispute lay at the heart of its takeout price: when Daiichi won arbitration proceedings some analysts took $5.5bn off Seagen’s valuation, and a separate potential acquirer walked away, according to SEC filings. Invalidation of ‘039 overturns a 2022 jury verdict; though this awarded just $41.8m to Seagen, a subsequent 8% retrospective royalty on Enhertu sales to 2024 of some $8bn would have stung Daiichi, but will now no longer have to be paid.
Summary of the Daiichi Sankyo/Seagen ADC dispute
| 2008 | Daiichi Sankyo and Seagen collaborate on ADC development |
|---|---|
| 2015 | Deal ends, but Daiichi continues work on ADCs, leading to development of Enhertu, patritumab deruxtecan, datopotamab deruxtecan & others. |
| Mar 2019 | AstraZeneca pays Daiichi $1.4bn for rights to Enhertu |
| Jul 2020 | AstraZeneca pays Daiichi $1bn for rights to datopotamab deruxtecan |
| Apr 2022 | Texas jury finds wilful infringement by Daiichi Sankyo of ‘039 patent, deciding that linker used in Enhertu was merely an “improvement” on Seagen-owned technology; one-off $41.8m award. |
| Aug 2022 | Arbitrator rules in favour of Daiichi Sankyo over patents claiming coverage into late 2030s |
| Mar 2023 | Pfizer announces $43bn acquisition of Seagen |
| Oct 2023 | Texas court awards retrospective 8% royalty on Enhertu sales to Nov 2024, based on ‘039 patent; royalty could amount to a $640m payment |
| Oct 2023 | Merck & Co pays Daiichi $5.5bn for rights to various ADCs including patritumab deruxtecan |
| Nov 2023 | Arbitration ruling results in $46m award for Daiichi |
| Jan 2024 | USPTO invalidates ‘039 patent, overturning the earlier Texas court rulings |
Note: subject to appeals. Source: company statements.
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