Global Patent Infringement Settlement: GSK's ViiV Healthcare Settles Lawsuit with Gilead Sciences

Strategic Insights -

GlaxoSmithKline's ViiV Healthcare, a global specialist HIV company, has reached a settlement with Gilead Sciences in a patent infringement case over the antiretroviral medication dolutegravir. The dispute centered on Gilead's Biktarvy, a triple combination HIV medicine containing bictegravir, which was allegedly infringing on ViiV Healthcare's patents relating to dolutegravir. The settlement agreement, which will be discontinued in multiple jurisdictions, grants Gilead a worldwide license to certain ViiV Healthcare patents and a covenant not to enforce patents against Gilead for future claims of infringement.

Key Takeaways:

  • The settlement involves a global patent infringement case between ViiV Healthcare, GSK, Shionogi, and Gilead Sciences over the antiretroviral medication dolutegravir.
  • ViiV Healthcare alleged that Gilead's Biktarvy infringed on their patents, while Gilead claimed that their product did not infringe on ViiV Healthcare's patents.
  • As part of the settlement, Gilead will pay an upfront payment of $1.25 billion to ViiV Healthcare, which is expected in the 1st quarter of 2022.
  • Gilead will also pay a 3% royalty on future US sales of Biktarvy, amounting to approximately $6.09 billion in 2020, from February 1, 2022, to October 5, 2027.
  • The royalties will be paid to ViiV Healthcare, with the distribution of the upfront payment and royalty income being proportional to the ordinary shareholding in ViiV Healthcare (GSK 78.3%, Pfizer 11.7%, Shionogi 10%, net of the contingent consideration liability (CCL) to Shionogi and applicable tax).
  • The settlement and future royalty income will increase the fair value of the CCL to Shionogi and the Pfizer put option, which will be reflected in GSK's 2021 full-year and fourth-quarter results.

Statistics:

  • Upfront payment: $1.25 billion
  • Future royalty income (approximate): $6.09 billion in 2020
  • Royalty rate: 3% of US sales
  • Patent expiration: US Patent No 8,129,385, October 5, 2027
  • Regulatory pediatric exclusivity: Awarded if granted, extending the period of exclusivity from October 5, 2027, to April 5, 2028
  • Shareholding distribution (proportional to ordinary shareholding in ViiV Healthcare):

+ GSK: 78.3%

+ Pfizer: 11.7%

+ Shionogi: 10%

Sources:

  • GlaxoSmithKline, website: http://www.gsk.com/, Copyright GlaxoSmithKline plc 2022