Just before the May 5 trial date set for Novartis and Incyte to finally hash out their Jakafi royalty dispute in court, the companies laid the case to rest with a settlement agreement.
Novartis and Incyte jointly agreed to ask that District Judge Gregory H. Woods adjourn the planned trial in favor of a final settlement agreement, court filings show.
With that, both sides have laid down their swords in the case, which is linked to a 2009 agreement between the two companies. In 2020, Novartis sued Incyte, claiming the Delaware-based drugmaker didn’t hold up its end of the bargain and owed millions in royalties.
The 2009 deal allowed Novartis to develop and commercialize a candidate that eventually became Incyte’s blockbuster JAK inhibitor Jakafi outside of the U.S. In return, Novartis offered to pay Incyte up to $1.1 billion in potential milestone payments.
To hear Novartis tell it, Incyte then, “taking advantage of its relationship with Novartis,” grew from a company with about $9 million in annual revenues to the billion-dollar drugmaker it is today. With this commercial momentum, Incyte then tried to “rewrite the parties’ bargain,” Novartis said in its 2020 complaint.
Under the partnering agreement, both companies agreed to pay each other royalties based on Jakafi sales in their respective markets. In May 2019, however, Incyte "unilaterally" moved to reduce its payments to Novartis by 50% through 2021, according to Novartis. The company further planned to stop paying royalties altogether after 2021, according to the complaint.
At the time of the complaint, Incyte allegedly owed Novartis $27.5 million, plus interest, in missed royalty payments, according to the Swiss pharma giant.
Incyte and Novartis did not immediately respond to Fierce Pharma’s request for comment.
Last year, Jakafi brought in $2.7 billion in sales for Incyte, plus $418 million in royalty revenues. Novartis, meanwhile, recorded $1.9 billion in full-year sales on the drug and did not report any royalties in its earnings release. Incyte now markets a topical version of Jakafi, too, branded as Opzelura, which is not included in the license agreement, Incyte noted in its own earnings report.
Jakafi is expected to lose its U.S. exclusivity in 2028, prompting Incyte to turn its focus to other revenue drivers. Last year, the company picked up the full commercial rights to anti-CD19 antibody Monjuvi from MorphoSys, its original partner on the drug. Novartis, meanwhile, shelled out $2.9 billion on buying MorphoSys’ other clinical assets.