Bristol-Myers socks Merck's brand-new Keytruda with PD-1 patent suit

Bristol-Myers Squibb ($BMY) is doing its best to rain on Merck & Co.'s ($MRK) immunotherapy parade. No sooner had Merck won FDA approval for its brand-new cancer drug Keytruda (pembrolizumab) than Bristol-Myers and its partner Ono Pharmaceutical slapped it with a patent-infringement lawsuit.

If the Delaware federal court buys Bristol-Myers' argument, that could spell trouble for not only Merck, but other rivals developing a new generation of cancer immonotherapies known as PD-1 blockers. It's the hottest field in oncology these days, with AstraZeneca and Roche ($RHHBY) among those racing to get their therapies to market.

The U.S. patent in question--granted to Ono May 20 and licensed to Bristol-Myers--covers the use of anti-PD-1 antibodies to treat cancer. According to the lawsuit, Merck was not first to the PD-1 game. Bristol-Myers and Ono claim that Merck started developing Keytruda after they'd already made progress with their own Opdivo (nivolumab), approved earlier this year in Japan, but not yet in the U.S.

"Merck is threatening to exploit that invention with a later-developed anti-PD-1 antibody," the lawsuit claims.

The lawsuit asks for damages, but more importantly, asks the court to declare that Merck infringes that PD-1 patent. Such a decision would bolster Bristol-Myers and Ono's argument that they are owed royalties on sales of rival PD-1 drugs. The companies are fighting a similar battle in Europe, The Wall Street Journal notes, and analysts at Credit Suisse have said that the two companies could eventually reap significant royalties from their suite of PD-1 patents.

Merck, for its part, has acknowledged that Ono won the method patent, but also says that it's invalid. After the lawsuit was filed at the end of last week, the company said the complaint won't interfere with its launch of Keytruda, now approved to treat melanoma in the U.S. Priced at $12,500 per month--or about $150,000 per year--the drug is obviously expensive, but with impressive results in clinical trials, it's expected to be adopted quickly. Analysts see it hitting $1.8 billion by 2017.

Bristol-Myers priced Opdivo at $143,000 in Japan last week, and it, too, is expected to soar to blockbuster status. The company says it plans to file for FDA approval in melanoma by the end of this quarter, with a decision targeted for mid-2015.

- get the lawsuit filed by Bristol-Myers and Ono (PDF)
- read the WSJ story (sub. req.)

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