On September 22, 2020 Genmab A/S (Nasdaq: GMAB) reported that it has commenced binding arbitration of two matters arising under its license agreement with Janssen Biotech, Inc. (Janssen) relating to daratumumab (Press release, Genmab, SEP 22, 2020, View Source [SID1234565478]). Under the license agreement, Genmab is, among other things, entitled to royalties from Janssen on sales of daratumumab (marketed as DARZALEX for intravenous administration and, in the United States, as DARZALEX FASPRO for subcutaneous administration).

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The arbitration first is to settle whether Genmab is required to share in Janssen’s royalty payments to Halozyme Therapeutics, Inc. for the Halozyme enzyme technology used in the subcutaneous formulation of daratumumab. The royalties Janssen pays to Halozyme represent a mid-single digit percentage rate of subcutaneous daratumumab sales. Janssen has started reducing its royalty payments to Genmab by what it claims to be Genmab’s share of Janssen’s royalty payments to Halozyme for the second quarter of 2020.

The arbitration is also to settle whether Janssen’s obligation to pay royalties on sales of licensed product extends, in each applicable country, until the expiration or invalidation of the last-to-expire relevant Genmab-owned patent or the last-to-expire relevant Janssen-owned patent covering the product, as further defined and described in the license agreement. The relevant Genmab-owned issued U.S., European and Japanese patents will expire in the late 2020s and early 2030s. The relevant Janssen-owned issued patents and patent applications (if granted) covering the subcutaneous formulation of daratumumab would expire in the mid-2030s.

Under the agreement, the arbitration will be conducted in New York pursuant to the rules of the CPR Institute for Dispute Resolution for Non-Administered Arbitration before a panel of three arbitrators. While Genmab intends to vigorously protect its rights under the agreement, the outcome of any arbitration proceeding, as well as its duration, is inherently uncertain. The arbitration will be confidential, subject to the parties’ disclosure obligations under applicable law. Other than pursuant to these obligations, Genmab does not intend to comment or provide additional information regarding the arbitration until an order on the merits or other material order is issued in the arbitration or the arbitration is otherwise concluded. While the arbitration is pending, Genmab’s collaborations with Janssen on daratumumab and HexaBody-CD38 will continue.

Based on currently available information, Genmab does not expect these matters to materially affect its 2020 financial guidance.