A US appeals court has reversed a 2023 decision that ordered Daiichi Sankyo to pay royalties on sales of its antibody-drug conjugate (ADC) Enhertu to Seagen, now part of Pfizer.
The latest twist in the patent litigation between the two companies means that Daiichi Sankyo will no longer have to pay an 8% royalty rate on sales of Enhertu (trastuzumab deruxtecan), the AstraZeneca-partnered anti-HER2 ADC, which is used to treat various forms of breast, gastric and lung cancer, as well as HER2-positive solid tumours.
Enhertu brought in sales of $3.58 billion in the first nine months of the year, and analysts have suggested it could bring in more than $5 billion-a-year at its peak, fuelled in part by a move earlier on in treatment. AZ paid $1.35 billion upfront to license Enhertu in 2019 in a deal that could be worth up to $6.9 billion.
The long-running case has focused on a Seagen patent – No. 10,808,039 – which covers auristatin compounds coupled to an antibody via a linker.
An initial judgment by a Texas district court on 1st April 2022 held that Seagen was in line for almost $42 million in damages based on past royalties that should have been paid on Enhertu sales in the US prior to that date.
Then, in October 2023, the court decided that Daiichi Sankyo should also pay royalties on Enhertu sales until 4th November 2024, when the ‘039 patent expires, although a request by Seagen to increase the royalty rate was denied. That judgment came in just a few weeks before Pfizer completed a $43 billion takeover of Seagen.
Daiichi Sankyo launched appeals against both of those judgments, but the momentum changed dramatically last year, when the US Patent and Trademark Office (USPTO) delivered a final decision that invalidated the ‘039 patent, undermining Seagen’s position.
The federal appeals court has now reversed the 2022 verdict upholding the ‘039 patent, thereby vacating the Texas court’s related infringement judgment and damages award. And in a separate decision, the higher court also dismissed as moot Seagen’s appeal of the USPTO decision.
“We are pleased that the infringement judgment and damages award have been nullified,” commented Naoto Tsukaguchi, Daiichi Sankyo’s general counsel.
Pfizer said it was disappointed by the appeals court decision and is considering its position.
