PDL Settles MedImmune Dispute
PDL BioPharma Inc.(NASDAQ:PDLI) recently resolved all legal disputes with MedImmune, a subsidiary of AstraZeneca (NYSE:AZN), for $92.5 million including payments related to royalties on sales of MedImmune’s product Synagis (a respiratory virus treatment) and PDL’s patents. This dispute has been ongoing since December 2008.
Under the definitive settlement agreement, PDL paid MedImmune $65 million and will pay another $27.5 million by February 10, 2012. MedImmune has not paid any royalties to PDL since September 2009 on Synagis sales. It is not liable to pay any further royalties to PDL, either on past or future sales. MedImmune will not challenge the Queen et al. patents henceforth or assist any other parties in doing so.
In December 2008, MedImmune notified PDL that it is seeking a declaratory judgment that Synagis does not infringe on PDL’s Queen et al. patents and therefore MedImmune does not owe royalties to PDL. In June 2010, PDL terminated its license agreement with MedImmune for Synagis and began legal proceedings against it. MedImmune was the original manufacturer of Synagis and PDL used to receive royalties on certain sales of the product.
In January 2011, PDL had announced that a US district court found its patent suit against MedImmune invalid. A US district court issued a summary judgment on some key issues in the MedImmune-Synagis patent dispute. The judge ruled that PDL’s sole patent claim in the US against MedImmune is invalid. It also ruled that MedImmune did not breach its license agreement with PDL by non-payment of royalties on ex-US sales of Synagis by ex-distributor Abbott Labs (NYSE:ABT).
We believe that the settlement with MedImmune removes a major overhang for PDL. Despite the unfavorable judgment, the saving grace is that the company does not have to repay the full royalty amount of $280 million received from MedImmune between1998 and 2009.