'Tis the season for giving -- which I guess makes it very apropos that ImClone Systems (NASDAQ:IMCL) and partner Sanofi-Aventis (NYSE:SNY) each decided to shell out $60 million to settle a lawsuit over the patents on cancer therapy Erbitux.
The $120 million ($60 million of ImClone's cash) settlement that ImClone announced on Friday is the culmination of a lawsuit that Yeda Research and Development Company, an affiliate of an Israeli research institute, had filed; it claimed ImClone and Sanofi infringed on its patents in their development of cancer drug Erbitux. Besides the up-front cash, ImClone also agreed to pay Yeda a low-single-digit royalty on future sales of Erbitux.
The settlement comes on the same day that hearings were scheduled to begin on ImClone's appeal of the original U.S. district court ruling in favor of Yeda last year. That ruling gave Yeda complete ownership of the patents that ImClone thought it had previously licensed from Sanofi.
In September, ImClone and Sanofi settled another lawsuit brought by Repligen (NASDAQ:RGEN) and MIT over another set of patents related to Erbitux. That settlement cost ImClone $65 million, but won't cost it any future royalty payments.
Getting the majority of the Erbitux lawsuits out of the way may have taken a costly $125 million out of ImClone's coffers, but at least it eliminates most of the litigation hanging over its head. But there are still outstanding cases related to Erbitux patents from Abbott Labs (NYSE:ABT) that could end up costing ImClone even more.
Mediation on the Abbott case is set to begin Dec. 20. With more than $1 billion in cash and investments on its balance sheet at the end of the third quarter, ImClone has plenty of resources to deal with the Abbott challenge, even if it ends up having to settle this case as well.
