AstraZeneca owes $192M in royalties from massive Merck deal, selumetinib licensor Array argues

AstraZeneca and Merck made waves last year with an immuno-oncology tie-up worth up to $8.5 billion, with $1.6 billion up front. But Array BioPharma, an AstraZeneca partner since 2003, says the London drug giant has refused to pay royalties on selumetinib, a drug it invented and licensed to AZ and one that was part of the Merck agreement.

Under a 2003 licensing deal, Array says it’s owed 12% of the proceeds AZ receives when it sublicenses selumetinib to other companies. In this case, the Colorado biotech is arguing AstraZeneca breached its contract and must pay $192 million based off the $1.6 billion upfront payment from Merck.

An AstraZeneca representative said the company “believes it followed all legal and contractual requirements related to the 2003 collaboration and license agreement between AstraZeneca AB and Array, and will defend its position as part of the legal process.”

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Merck and AstraZeneca’s deal wasn’t entirely around the MEK inhibitor selumetinib. It focused on a range of potential combos—selumetinib included—plus Lynparza and checkpoint inhibitors Imfinzi and Keytruda.

Array filed the lawsuit in New York State Supreme Court last year; AstraZeneca this week submitted a notice that the case has been removed to New York federal court.

In its lawsuit, Array BioPharma further argued that AstraZeneca had no right to sublicense the drug to treat plexiform neurofibromas in patients with neurofibromatosis type 1, which the Merck agreement includes.

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The use is “not within the scope of the license or sublicense rights granted by Array to AstraZeneca,” according to the biotech. The suit says AstraZeneca is “free to seek Array’s agreement to a license for use of selumetinib” in the patient population, but that the drugmaker hasn’t yet done so.

AstraZeneca initially had big hopes for the cancer drug, but it has failed a series of late stage trials in uveal melanoma and KRAS-positive lung cancer. In a reprieve, the candidate picked up the FDA’s orphan drug designation in late-stage differentiated thyroid cancer.