PDL BioPharma wants arbitration in royalty dispute
PDL BioPharma wants to take Genentech to arbitration, saying company is underpaying royalties
INCLINE VILLAGE, Nev. (AP) -- PDL BioPharma Inc. said Tuesday it wants take Roche's Genentech business to arbitration over a royalty payment dispute.
PDL said Genentech has underpaid royalties since at least 2007, and it wants to have Genentech's books and records inspected to determine if payments were accurate. It said Genentech is not cooperating with those efforts. The company filed a notice with the American Arbitration Association in New Jersey.
Genentech said it believes PDL's claims are without merit, and said it plans to defend itself vigorously.
PDL helped develop several drugs marketed by Genentech, a unit of the Swiss pharmaceutical company Roche AG. Those drugs include the cancer treatments Avastin, Herceptin and Kadcyla, and the eye drug Lucentis.
The companies have been arguing about royalties since mid-2010, when Genentech told PDL that it does not believe the drugs infringe on patents held by PDL in Europe. PDL had recently tried to get the patents extended into 2014, and it wants Genentech to continue paying royalties on sales in Europe. Genentech wants to pay royalties only on U.S. sales. In 2012 PDL said 85 percent of its revenue came from royalties from Genentech.
PDL also said Tuesday that it expects to report about $143 million in royalty revenue in the second quarter. That's more than 13 percent higher than a year ago.
The company's royalty payments are based on product sales in the prior quarter, and PDL said sales of all its royalty-bearing products improved in the first quarter. It said Avastin and Lucentis sales rose 8 percent and Herceptin sales improved 7 percent, while sales of Tysabri, a multiple sclerosis drug sold by Biogen Idec Inc., increased 12 percent.
The company gets almost all of its revenue from royalty payments. Analysts, on average expect PDL to report $144.4 million in total revenue in the second quarter, according to FactSet.
The revenue estimate excludes payments PDL makes to Novartis AG.
Shares of PDL BioPharma lost 3 cents to $7.90 on Tuesday. The stock was unchanged in aftermarket trading.
