Celgene, Boston Children's play tug-of-war over Revlimid royalties

In recent years, drugmakers down on their R&D luck have increasingly turned to academia for help. It's no accident that Cambridge, MA, has attracted one Big Pharma hub after another, or that AstraZeneca ($AZN) will move to Cambridge, U.K., from London. They hope the mix of top university scientists and drugmaker research facilities will deliver better drug prospects than company labs could alone.

But as the Wall Street Journal reports, those pharma-academic partnerships have their pitfalls--and how to share the cash is one of the biggest. Case in point: Boston Children's Hospital's lawsuit against Celgene ($CELG), which makes several lucrative cancer treatments.

Last March, Celgene stopped making royalty payments to Children's, which says it helped discover thalidomide's ability to fight the disease. That discovery, in turn, helped lead to Revlimid, Celgene's multibillion-dollar treatment for multiple myeloma. Children's says it is owed continued royalties not only on Revlimid but also on Pomalyst, Celgene's next-gen treatment for the same disease.

At issue in the case is the length of the royalty deal: The original expired last February, but the contract allowed for a three-year extension if Revlimid's patents were extended. The drug did get a patent extension, but Celgene says it's not the sort of extension that would qualify for the extended royalties.

Children's is looking for unspecified damages, though it says it is owed $3 million in unpaid royalties for one quarter of last year alone, the WSJ reports. The total could be significant for the hospital, if naught but a small fraction of Revlimid's projected 2014 sales of $4 billion.

As the WSJ points out, the Children's-Celgene fight isn't the only royalty battle between pharma and academic researchers. Last year, Pfizer ($PFE) agreed to pay Brigham Young University $450 million to settle allegations that it didn't pay royalties it owed on the pain drug Celebrex. Now, New York University is looking for a piece of the sales of Xalkori, the company's targeted lung cancer drug; Pfizer says NYU's claims "have no merit," the WSJ reports.

- read the WSJ coverage (sub. req.)

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