J&J's next-gen Darzalex sparks drug delivery royalties battle

court decision
J&J says Genmab owes part of the royalties paid to Halozyme for the drugmakers' subcutaneous multiple myeloma treatment Darzalex Faspro. (Getty Images)

Johnson & Johnson scaled back its Darzalex royalty payments to Genmab in the second quarter, just as its new subcutaneous formulation was hitting the market. Genmab owed a portion of those royalties to drug delivery specialist Halozyme for its subQ technology, J&J argued.

But Genmab didn't agree—and now it's taking the dispute into arbitration.

Genmab, creator of Darzalex's original formulation, will take J&J and its Janssen unit to arbitration to determine whether the company must help cover Janssen's royalty payments to Halozyme, which developed the enzyme technology used in subcutaneous Darzalex Faspro

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Last quarter, Janssen dialed back its Darzalex royalty payments to Genmab by what it claims is Genmab's share of royalties to Halozyme—money that Genmab feels it's entitled to keep. Halozyme collects "mid-single-digit" royalties on the Faspro formulation, Genmab said in a press release.

"Genmab intends to vigorously protect its rights under the agreement," the Danish biotech said. 

The royalty fight comes as J&J posts big growth for Darzalex, which has taken the blood cancer market by storm and posted almost $3 billion in 2019 sales, up 48% year over year. The drug's next stage of growth is hitched to Darzalex Faspro, a more patient-friendly option that could siphon off sales from the older IV formulation—and, thanks to follow-up clinical trials, rack up new indications on its own.

RELATED: Johnson & Johnson's Darzalex, Amgen's Kyprolis join forces with new myeloma combo approval

Also under consideration for the arbitration court is whether Janssen will continue to pay royalties once Genmab's Darzalex patents lapse in the late 2020s and early 2030s. Janssen's Darzalex patents, plus the Faspro patent it's currently gunning for, would expire in 2035. 

Most analysts assume Genmab will receive Darzalex royalties into 2035, when the Janssen patents are set to expire, Reuters reported—but if the arbitration court rules against Genmab on the duration of those royalties, the company's market value could plunge by a quarter, the news outlet wrote, citing analysts at Jefferies. 

For the moment, the legal kerfuffle won't affect the drugmakers' overall Darzalex collaboration or their work on Darzalex's successor, HexaBody-CD38, a next generation CD38 antibody in development to tackle multiple myeloma and diffuse large B-cell lymphoma.

RELATED: GlaxoSmithKline jumps into myeloma with 'homemade' anti-BCMA drug Blenrep

Meanwhile, as competition to intravenous Darzalex mounts from the likes of Sanofi and its rival CD38-inhibitor Sarclisa, J&J has hustled to rack up more indications for Faspro and convert existing Darzalex patients to the subcutaneous option. 

In a phase 3 data reveal from June, a combination of Faspro plus the chemo drug cyclophosphamide, Takeda’s Velcade and the steroid dexamethasone cleared disease from the blood in 53% of patients newly diagnosed with the blood disease light chain amyloidosis. If J&J were to score that nod, it would make Darzalex Faspro the first FDA-approved therapy for the disease. 

And in August, J&J published data showing Faspro plus Celgene's Pomalyst and dexamethasone triumphed over a Pomalyst-dexamethasone pairing at staving off cancer in relapsed or refractory multiple myeloma patients who had failed on two prior treatments—teeing up the drug for another potential label boost.

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