On January 20, 2017 Merck (NYSE:MRK), known as MSD outside the United States and Canada), and certain of its affiliates, reported it agreed to enter into a settlement and license agreement with Bristol-Myers Squibb Company and Ono Pharmaceutical Co., Ltd., resolving the worldwide patent infringement litigation related to the use of an anti-PD-1 antibody for the treatment of cancer, such as KEYTRUDA (pembrolizumab) (Press release, Merck & Co, JAN 20, 2017, View Source [SID1234517483]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

Under the settlement and license agreement, the company will make a one-time payment of $625 million to Bristol-Myers Squibb and provide royalties on the worldwide sales of KEYTRUDA for a non-exclusive license to market KEYTRUDA in any market in which it is approved. For global net sales of KEYTRUDA, the company will pay Bristol-Myers Squibb royalties as follows:

6.5 percent of net sales occurring from Jan. 1, 2017 through and including Dec. 31, 2023; and
2.5 percent of net sales occurring Jan. 1, 2024 through and including Dec. 31, 2026.
The parties also agreed to dismiss all claims in the relevant legal proceedings.

"Today’s announcement eliminates uncertainty and enables us to continue to focus on KEYTRUDA, our immuno-oncology medicine, which is already helping thousands of patients around the world and becoming a foundation for the treatment of cancer through our industry-leading clinical development program," said Kenneth C. Frazier, chairman and chief executive officer, Merck.

The $625 million payment will be recorded in the company’s fourth-quarter and full-year 2016 results. This expense will be excluded from Merck’s non-GAAP results.