Tiny Forward Pharma Rockets on $1.25 Billion Cash Deal With Biogen

January 17, 2017
By Mark Terry, BioSpace.com Breaking News Staff

Cambridge, Mass. – Biogen announced today that it had signed a settlement and license deal with Danish company Forward Pharma  with a $1.25 billion cash payment.

The licensing agreement gives Biogen an irrevocable license to Forward’s intellectual property. In addition, Biogen will pay Forward royalties on net sales of Biogen products for multiple sclerosis (MS) that are covered by a Forward patent and that have dimethyl fumarate (DMF) as an active pharmaceutical ingredient.

What makes this a little bit confusing, is the company’s statement says, “The settlement and license agreement does not resolve the issues pending in the ongoing Interference Proceeding in the U.S. or the Opposition Proceeding in the EU. Biogen and Forward Pharma intend to permit the Patent Trial and Appeal Board (PTAB), the U.S. Court of Appeals for the Federal Circuit, the European Patent Office, and the Technical Board of Appeal and the Enlarged Board of Appeal, make a final determination in the proceedings before them.”

Oral arguments for a patent trial began in late November 2016. The two companies are dueling over Biogen’s multiple sclerosis drug Tecfidera.

Both companies are evaluating 480-milligram daily doses of dimethyl fumarate (DMF) for MS. Forward apparently filed its patent first, but Tecfidera was approved in 2013. The U.S. Patent and Trademark Office indicated in 2015 that it would look at the two patents.

In a November 2016 research report, RBC analyst Michael Yee wrote, “This decision basically comes down in part to whether a judge believes and agrees Biogen diligenced (sic) and worked on Tecfidera and 480-mg every day (including animal studies and other work) since before Forward filed.”

If Forward won the patent cases, it would receive royalties on all sales of all of Biogen’s drugs for MS that are covered by the patents. In the fourth quarter of 2016, Tecfidera alone brought in about $1.03 billion.

“We are very pleased to have reached this settlement with Forward Pharma,” said Michel Vounatsos, Biogen’s chief executive officer, in a statement. “We believe this agreement will clarify and strengthen our intellectual property for Tecfidera, the leading oral therapy for multiple sclerosis.”

The deal required approval by Forward’s shareholders, which required approval of two-thirds of Forward’s voting share capital. Apparently 77 percent did vote in favor of the license agreement.

Once the License Agreement is executed, Biogen will pay a non-refundable cash package of $1.25 billion. This will not affect Biogen’s 2016 Non-GAAP financial report. If specific requirements are met, Biogen will also pay Forward future royalties on net sales of its MS drugs covered by Forward’s patent and that have DMF as an ingredient.

What portion of royalties, and in which countries they will be applicable, is pending the outcomes of several of the patent cases.

Biogen dropped slightly to $284.50 at the news.

Forward Pharma , however, exploded, jumping from $19 on Friday, January 13 to a current prices of $27.55 today.