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AstraZeneca is sued by Array BioPharma over cancer drug royalties

Reuters

NEW YORK (Reuters) - Array BioPharma Inc (ARRY.O) on Thursday sued AstraZeneca AB (AZN.L), accusing the pharmaceutical company of refusing to pay required royalties for a cancer drug after entering into an $8.5 billion (5.96 billion pounds) collaboration with Merck & Co (MRK.N).

In a complaint filed in the New York State Supreme Court in Manhattan, Array is seeking at least $192 million from AstraZeneca for the alleged breach of a 2003 licensing agreement related to the drug, known as selumetinib.

AstraZeneca did not immediately respond to a request for comment.

According to the complaint, selumetinib is a compound discovered by Boulder, Colorado-based Array that inhibits activity of an enzyme involved in cell growth and metabolism.

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Array said the 2003 agreement allowed AstraZeneca to use selumetinib in research to fight cancer, and provided for a 12-percent royalty on sums that AstraZeneca might receive from sub-licensees such as Merck.

But according to the complaint, AstraZeneca said it intends to pay that royalty on what Array called an "absurdly small" fraction of an expected $1.6 billion upfront payment from Merck. The $192 million sought represents 12 percent of that payment.

Both companies agreed to have disputes under the agreement decided by New York courts, the complaint said.

Array's revenue totalled $150.9 million in the year ended June 30, 2017, a regulatory filing shows.

Last July, AstraZeneca agreed to collaborate with Merck to study cancer drug combinations using its drug Lynparza, which regulators have approved to treat ovarian cancer and which could have other uses when combined with immunotherapy.

Merck agreed to pay AstraZeneca up to $8.5 billion in exchange for half of future Lynparza sales.

AstraZeneca has said it plans to report full-year results on Friday.

The case is Array BioPharma Inc v AstraZeneca AB, New York State Supreme Court, New York County, No. 650517/2018.

(Reporting by Jonathan Stempel; Editing by Sandra Maler)