A resolution to Alkermes’ dispute with Johnson & Johnson may have just loomed into view. Months after J&J’s Janssen moved to partially terminate its license pact with Alkermes, the companies have begun arbitration in a bid to reach an agreement.
The dispute centers on the use, or otherwise, of Alkermes’ NanoCrystal technology in a set of J&J drugs such as Invega Sustenna and Cabenuva. Alkermes developed the technology to support the delivery of poorly soluble compounds. By formulating and stabilizing drugs into nanometer-sized particles, Alkermes enables their incorporation into a range of oral, inhaled and injectable formulations.
In the case of its work with J&J, Alkermes thinks the technology is used to enable the line of long-acting Invega injectables for the treatment of schizophrenia. Alkermes received $192 million in royalty revenues related to the products last year, meaning J&J accounted for almost one-third of its revenues.
The problem? J&J thinks the products don’t use the NanoCrystal technology covered by the license agreement, leading it to file to partially terminate the agreement in November. The partial termination took effect in February. Alkermes strongly disagrees with J&J’s position and has vowed to use all options at its disposal to fight the termination.
Alkermes’ pushback against the termination has now resulted in the start of arbitration between the two companies. It remains unclear whether Alkermes and J&J can find enough common ground to agree on a route forward, with the former warning that the duration and outcome of the proceedings are “inherently uncertain.”
In the meantime, Alkermes is cut off from a major source of revenue. The termination only affected the royalties from the long-acting Invega products in the U.S., but Alkermes chose to assume no royalties in any markets from May onward. The loss of the income led Alkermes to predict its sales will fall slightly this year.