Merck will pay royalties on global Keytruda sales of 6.5% between 2017 and the end of 2023 and 2.5% between 2024 and 2026,
The royalties will be split between Bristol-Myers and Ono in a 75/25 percent allocation, respectively.
Merck said the $625m payment would be recorded in its fourth-quarter and full-year 2016 results, but excluded from its non-GAAP results.
Merck chairman and CEO Kenneth Frazier said: “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.”
Bristol-Myers Squibb and Ono discovered and developed the programmed death-1 (PD-1) antibody Opdivo (nivolumab) to harness the body’s own immune system to help restore anti-tumor immune response.
The companies accused that Merck’s sale of Keytruda infringed their patents regarding the use of PD-1 antibodies for the treatment of cancer in the US, Europe, Australia, and Japan.
Bristol-Myers Squibb CEO Giovanni Caforio said: “Bristol-Myers Squibb and Ono’s 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, a key mechanism in Immuno-Oncology that has proven to have transformational impact in cancer care.”
Image: Keytruda (pembrolizumab) Injection 100 mg. Photo: courtesy of Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc.