Forward Pharma’s drawn-out judicial battle with US-based drug group Biogen has reached its climax Tuesday, as the biotech says it has reached a settlement and license agreement with Biogen.

The deal sees Biogen paying a cash fee of USD 1.25 billion, but additional funds could be set to come Forward’s way in the future.

“Forward may be eligible to receive royalties of 10 percent of net sales of Tecfidera beginning in 2021, and of 20 percent of net sales beginning in 2029, depending on the outcome of certain existing litigation and the receipt of regulatory approvals,” the biotech writes in a press release.

The dispute between the two companies pertains to the active substance in Forward Pharma's candidate drug FP187, dimethyl fumarate (DMF), which is also the basis of Biogen's billion-dollar grossing multiple sclerosis drug Tecfidera.

Provides clarity

The patent case has been defining for the biotech, which carried out an IPO in the US in 2014 with a view to securing funds for the legal proceedings. It managed to raise USD 220.5 million and it listed the Biogen case as the main motivator for the IPO in the prospectus.

"We are excited to enter into this agreement with Biogen and believe it is in the best interests of Forward shareholders. This agreement limits our downside risk should we not be successful in either the US or European proceedings and it provides clarity as to our royalty stream should we be successful in either or both of those proceedings. We continue to believe in the strength of Forward’s positions in the pending proceedings and this settlement allows those cases to continue to move forward to final decisions while delivering Forward an immediate cash payment of USD 1.25 billion,” says Florian Schönharting, Chairman of the Board of Directors of Forward, according to a press release.

Royalties depend on patent case

The agreement does not, however, resolve a pending case with the Patent Trial and Appeal Board at the USPTO and a similar case in the EU.

The companies will let both patent offices "make final determinations in the proceedings before them", Forward says, adding that "the non-refundable fee of USD 1.25 billion to be paid by Biogen is not conditional on the outcome of either proceeding."

Should Forward obtain patent rights in the US, Biogen will be obligated to pay Forward royalties here. In that case, a royalty of 10 percent will be payable from January 1, 2021 to December 31, 2028 and a royalty of 20 percent will be payable from January 1, 2029 until the earlier of "the expiration, unenforceability or invalidation" of Biogen's US patents. A similar deal is in place for other countries.

Share skyrockets

Analysts have pegged the sale of Tecfidera to have reached almost USD 4 billion in 2016, and consensus puts it on course to reach USD 4.62 billion in 2020.

The news of the settlement agreement have sent Forward's shares up by roughly 70 percent, while the Biogen share is down more than 1 percent shortly after opening of the market Tuesday.

“We are very pleased to have reached this settlement with Forward Pharma. We believe this agreement will clarify and strengthen our intellectual property for Tecfidera, the leading oral therapy for multiple sclerosis,” says Michel Vounatsos, Chief Executive Officer of Biogen, in a separate release from the US-based group.

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 Forward Pharma kicks off US patent war 

 ”Forward Pharma has been overlooked” 

 Forward Pharma begins patent war in Germany 

 Here is the value of Forward Pharma’s claim 

 Danish company to wage war on drug giant 

- translated by Martin Havtorn Petersen

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