A Texas federal jury has found that Daiichi Sankyo’s breast cancer blockbuster Enhertu infringes a patent held by Seagen and has awarded $41.8 million in royalty revenue from the Japan-based company.
While the jury also found that the infringement of patent No. 10,808,039 was willful, there was no punitive damage awarded. The jury needed just two hours to come to its decision after the sides presented their cases over four days.
In addition, Seagen has requested royalties from sales of Enhertu in the United States until expiration of the patent in November 2024. That case will be arbitrated later this year.
“Daiichi Sankyo disagrees with the jury verdict" and will "explore options" for the case moving forward, Naoto Tsukaguchi, Daiichi’s general counsel, said in a statement.
Separately, a board at the United States Patent and Trademark Office has agreed to start a review of Seagen's '039 patent. Tsukaguchi said Daiichi is "pleased" with that development.
While Enhertu is Daiichi Sankyo’s most important antibody-drug conjugate anti-cancer drug, the financial hit is mild for the company, according to analysts at Jefferies, who point out that the $41.8 million royalty payment represents 7.5% of Enhertu’s total sales of $558 million in the U.S. in 2020 and 2021.
In addition, if it is determined that royalties are to be paid at a rate of 7.5% going forward, Jefferies says Daiichi can comfortably absorb that hit as well. Enhertu’s sales are expected to reach $5.7 billion by 2030. Daiichi shares marketing rights on the drug with AstraZeneca.
“We believe that the impact of the jury’s decision and Seagen’s request will be minimal on Daiichi’s profit,” Naoya Miura of Jefferies wrote in a note to investors.
As for Seagen, while the company received a favorable ruling, analysts at Berenberg Capital Markets warn that the legal proceedings are far from over as an appeal is likely
“Our review of the filings suggests that Seagen has a decent chance of prevailing, we believe the value of a positive outcome is only worth $2 (per share),” Berenberg wrote in its note to clients. “We advise investors to move on and focus on the main part of Seagen’s story—commercial execution of its potential multiple-billion product Padcev and clinical development of its mid-stage pipeline.”
In a separate matter involving the companies, Seagen is challenging Daiichi's ownership of certain technologies used by the company in developing trastuzumab deruxtecan and other drug candidates, Seagen said in its release.
In the ongoing arbitration, Seagen says that the linker and other ADC technology used in the compounds are improvements on Seagen’s pioneering efforts in the area. A decision in the arbitration case is expected by mid-2022.