Federal Appeals Court Overturns $41 Million Patent Verdict Against Daiichi Sankyo's Enhertu ADC
Key Insights
The US Court of Appeals for the Federal Circuit reversed a 2023 decision requiring Daiichi Sankyo to pay 8% royalties on Enhertu sales to Seagen, now owned by Pfizer.
The appeals court invalidated Seagen's patent No. 10,808,039 covering auristatin (search) compounds coupled to antibodies via linkers, wiping out a $41 million jury award.
Enhertu generated $3.58 billion in sales during the first nine months of the year, with analysts projecting peak annual sales exceeding $5 billion.
The US Court of Appeals for the Federal Circuit delivered a decisive victory for Daiichi Sankyo on Tuesday, overturning a multi-million dollar patent infringement verdict that had required the Japanese pharmaceutical company to pay royalties on its blockbuster antibody-drug conjugate Enhertu to Seagen, now part of Pfizer.
The federal appeals court not only reversed the 2023 decision mandating an 8% royalty rate on Enhertu sales but also wiped out a $41 million jury award that had been granted to Seagen. The court expressed "suspicion" that Seagen had drafted its patent claims "specifically to encompass" Enhertu, the anti-HER2 (search) ADC jointly developed by Daiichi Sankyo and AstraZeneca.
Patent Invalidation Reverses Fortune
The long-running litigation centered on Seagen's patent No. 10,808,039, which covers auristatin (search) compounds coupled to an antibody via a linker. The patent, claiming priority to a 2004 application, encompassed almost four billion pentapeptides and 47 million species of tetrapeptides.
The case took a dramatic turn when the US Patent and Trademark Office delivered a final decision invalidating the '039 patent, fundamentally undermining Seagen's position. The federal appeals court subsequently reversed the 2022 verdict that had upheld the patent, thereby vacating the Texas court's related infringement judgment and damages award.
Financial Impact on Blockbuster ADC
The reversal eliminates significant financial obligations for Daiichi Sankyo regarding Enhertu (trastuzumab deruxtecan), which is used to treat various forms of breast, gastric, and lung cancer (search), as well as HER2-positive solid tumors (search). Enhertu generated sales of $3.58 billion in the first nine months of the year, with analysts projecting the drug could achieve more than $5 billion in annual sales at its peak.
AstraZeneca paid $1.35 billion upfront to license Enhertu in 2019 as part of a deal potentially worth up to $6.9 billion. The partnership has proven highly successful, with the drug's growth fueled in part by its move earlier in treatment sequences.
Legal Timeline and Corporate Changes
The initial judgment by a Texas district court on April 1, 2022, had held that Seagen was entitled to almost $42 million in damages based on past royalties that should have been paid on Enhertu sales in the US prior to that date. In October 2023, the court decided that Daiichi Sankyo should also pay royalties on Enhertu sales until November 4, 2024, when the '039 patent was set to expire, although Seagen's request to increase the royalty rate was denied.
The October 2023 judgment came just weeks before Pfizer completed its $43 billion takeover of Seagen, adding complexity to the legal proceedings.
Company Responses
"We are pleased that the infringement judgment and damages award have been nullified," commented Naoto Tsukaguchi, Daiichi Sankyo's general counsel, reflecting the company's satisfaction with the appeals court decision.
Pfizer expressed disappointment with the ruling and indicated it is considering its position regarding potential next steps in the legal process.