CAT pockets royalties
This month, Abbott Laboratories may well have to begin paying Cambridge Antibody Technology (CAT), of Cambridge, UK, the full royalty rate of over 5% on net sales of its rheumatoid arthritis drug Humira (adalimumab). CAT also expects back payments estimated at £12 ($22) million as Abbott only paid the discounted rate of 2% royalties, until now. On January 28, the Abbott Park, Illinois-based pharmaceutical firm was due to seek leave to appeal a judgment handed down in the High Court in London, on December 20. The court found that Abbott had violated their agreement by seeking to have CAT shoulder part of the costs of intellectual property (IP) licenses required for the production of Humira because, according to the judge, they were unrelated to the IP originally provided by CAT. The type of royalty offset clause that was at the heart of this dispute will, doubtless, continue to be a feature of licensing agreements, given the level of interdependency that exists among different firms' IP portfolios. But absolute clarity is required in drafting such agreements, according to Martyn Postle, director of Cambridge, UK-based consultancy Cambridge Healthcare and Biotech. Although the case underlines Abbott's reputation as a tough partner (Bioentrepreneur, 18 December 2003, doi:10.1038/bioent787), it is unlikely to prevent other small companies in need of big pharma backing from signing with them in future, says Sam Williams, a London-based analyst at investment bank Lehman Brothers. CS
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