PDL BioPharma to pay MedImmune $92.5 million to resolve patent disputes; Mylan debuts generic Vfend

PDL BioPharma (Nasdaq: PDLI) saw its shares drop 3.5% to $5.25 after the company said it had entered into a definitive settlement agreement with MedImmune, a US unit of Anglo-Swedish drug major (AstraZeneca (LSE: AZN), that resolves all legal disputes between them, including those relating to MedImmune's respiratory syncytial virus infection drug Synagis (palivizumab), and PDL's patents known as the Queen et al patents.

Under the settlement agreement, PDL paid MedImmune $65 million on February 15, 2011 and will pay $27.5 million by February 10, 2012 for a total of $92.5 million. MedImmune has not paid royalties to PDL on sales of Synagis that occurred after September 30, 2009. No further payments will be owed by MedImmune to PDL under its license to the Queen et al patents as a result of past or future Synagis sales. As part of the settlement agreement, MedImmune has agreed not to challenge or assist other parties in challenging the Queen et al patents.

MedImmune, which was acquired by AstraZeneca in 2007, sued PDL in 2008, seeking a ruling that Synagis and a newer compound called motavizumab did not use the PDL technology. However, this is something of a pyrrhic victory because AstraZeneca dropped development of motavizumab for infant respiratory disease last year, after the US Food and Drug Administration called for additional clinical trials before it could approve the drug (The Pharma Letter December 21, 2010). As a result, the drug major also said that it would take a financial impairment charge of $445 million in its fourth-quarter 2010 results.