A California judge has ruled that Biogen owes Roche $124 million in royalties for its use of intellectual property developed more than 40 years ago by the Swiss company’s subsidiary Genentech that covered a process to manufacture monoclonal antibodies.
Genentech filed a breach of contract lawsuit in 2023, claiming Biogen did not pay adequate royalties on sales of blockbuster multiple sclerosis and Crohn’s disease drug Tysabri.
Genentech claimed that Biogen owed royalties on vials of Tysabri that were produced before the patents expired in December 2018 but were sold after the date, some as late as in 2022.
Last week, California Federal Judge Yvonne Gonzalez Rogers sided with Genentech, ordering Biogen to pay $88 million in royalties. Three days later, she tacked on an additional $36 million in interest payments, bringing the award to $124 million.
Rogers’ ruling came after she declared a mistrial in the case in July, when jurors were deadlocked on whether the licensing deal Biogen and Genentech struck in 2004 explicitly covered products that were manufactured before the patent expirations and sold afterward.
Rogers eventually sided with Genentech, agreeing that it's “custom and practice” that these type of payments—which are referred to as “tail royalties”—are typically made in the biopharma industry.
A spokesperson from Biogen said that the company does not comment on pending litigation.
The high-profile patents in question are named for scientist Shmuel Cabilly, Ph.D. The technology he developed allowed Genentech to erect a toll booth of sorts that generated royalty payments of an estimated $1 billion annually before their patents expired. The most lucrative payments from the Cabilly patents came from AbbVie’s sales of megablockbuster Humira.
Genentech’s agreement with Biogen called for a 4.5% royalty on sales of licensed products in the U.S. and a 3.5% royalty elsewhere. Biogen reported sales of Tysabri at $1.7 billion last year.
According to Genentech, when Biogen halted royalty payments, the biotech giant had more than 397,000 vials of Tysabri in inventory that were manufactured under the expiring patent.
“Because the process for manufacturing antibodies is complex, and the consequences of a stockout potentially catastrophic, it is customary for biopharmaceutical firms that make and sell therapeutic antibodies to stockpile at least several calendar quarters worth of product, and often more than that,” lawyers for Genentech wrote in the company's original complaint.