Bristol-Myers Squibb and Ono Pharmaceutical on Friday announced that they have reached an agreement with Merck & Co. to settle patent-infringement litigation regarding the latter's PD-1 antibody Keytruda (pembrolizumab). Under the agreement, Merck will make an upfront payment of $625 million plus sales royalties of 6.5 percent from January 2017 through December 2023 and 2.5 percent from January 2024 through December 2026. Bristol-Myers Squibb CEO Giovanni Caforio stated "[our] agreement with Merck protects our scientific discoveries and validates the strong intellectual property rights we secured as the early innovators in the science of PD-1." 

In the lawsuit, which was filed in 2014, Bristol-Myers Squibb and Ono contended Merck's sale of Keytruda infringed their patents related to the use of PD-1 antibodies in the treatment of cancer in the US, certain EU countries, Australia and Japan. The companies added that the settlement will result in the dismissal of all patent litigation filed against Merck. 

As part of the settlement, the drugmakers awarded certain rights to each other under their respective patent portfolios concerning PD-1. The royalties received from Merck will be split between Bristol-Myers Squibb and Ono on a 75 percent/25 percent basis. 

Opdivo was launched in Japan in September 2014, becoming the first PD-1 inhibitor available anywhere globally. The therapy was later authorised for use in the US, EU and Canada. 

Meanwhile, Keytruda became the first PD-1 inhibitor authorised in the US in 2014 following its approval for the treatment of advanced or unresectable melanoma. The drug was subsequently approved in Canada in June 2015, while the therapy was cleared by European regulators the following month. Opdivo and Keytruda have since been approved for a number of tumour types.