Biogen is paying Danish firm Forward Pharma $1.25 billion to settle a patent infringement lawsuit filed over the company’s multiple sclerosis pill dimethyl fumarate (Tecfidera).
The settlement announced Tuesday with Forward (NASDAQ: FWP) could also put Cambridge, MA-based Biogen (NASDAQ: BIIB) on the hook for future royalties on sales of dimethyl fumarate. But the deal puts to bed some lingering questions about Biogen’s intellectual property, granting the company an irrevocable license to all IP owned by Forward Pharma.
Biogen’s stock price dipped less than 1 percent on the news to $285.78. But shares in Copenhagen, Denmark-based Forward soared more than 62 percent to $29.60.
In a research note, RBC Capital Markets analyst Michael Yee characterized the agreement as “a nearly best case scenario for both companies.” The settlement removes the litigation hanging over Biogen while extending the patent expiration date on dimethyl fumurate, he wrote. The drug’s patent protection was to expire by 2022. Under the agreement, patent protection extends to between 2026 and 2028. Meanwhile, Forward gets a big cash payment now and potential royalties later, Yee wrote.
Biogen is known for its MS franchise, and dimethyl fumarate became the latest addition to it when the drug was approved in 2013 for adults with relapsed forms of the disease. The drug is based on early research from Fumapharm, a Switzerland-based company that Biogen acquired in 2006. It’s become a critical drug for Biogen, and a big seller: In the third quarter of 2016, the most recent sales figures available, the drug accounted for more than $1 billion in revenue—40 percent of the company’s $2.5 billion in third quarter sales.
The roots for the patent dispute trace back to Aditech Pharma, a Swedish company that, like Fumapharm, had been researching dimethyl fumurate. Forward formed in 2005 and licensed Aditech’s patents five years later, according to a regulatory filing. In 2014, Forward sued Biogen, claiming that the Cambridge biotech’s drug infringed on its patent in Germany. That litigation was later expanded to include allegations of patent infringement for Forward Pharma’s patent in all of Europe.
The settlement between Biogen and Forward does not resolve an ongoing patent interference dispute in the U.S., or a separate patent opposition suit in Europe, but it does set a financial framework addressing the matter after patent bodies rule. The cases cover the rights to the 480 mg per day dose of dimethyl fumarate. Biogen will be responsible for paying royalties if patent authorities grant rights to that dose to the Danish company. If Biogen wins those disputes, it won’t have to pay royalties. A decision on the U.S. patent interference case is expected in March.
Regardless of how patent authorities rule in the pending cases, Biogen’s cash payment to Forward is non-refundable. The settlement is still subject to approval from Forward shareholders.