Motion denied: Gilead still on the hook for $1.5B in damages over CAR-T patent dispute with Bristol Myers Squibb

Gilead?s bid to overturn a jury verdict that ordered it to pay Bristol Myers Squibb about $752 million for CAR-T patents owned by its subsidiary Juno Therapeutics has ended in vain.

The ruling leaves Gilead vulnerable to an even bigger $1.5 billion payment that Bristol is now demanding ? adding fuel to the fiery criticism some analysts are already heaping on its $11.9 billion Kite buyout.

In a 30-page document unsealed on Monday, Judge James Otero of the district court in Los Angeles struck down several different arguments for a new decision. Here are Morgan Stanley analysts? takeaways:

The court, in particular, denied Kite?s contentions (1) that Juno?s patent is invalid, (2) the damages award was unreasonable, and (3) that a new trial should take place. The court also denied Kite?s argument that its infringement was not willful.

Gilead is likely to appeal to the federal circuit, they noted, but the odds are not in their favor as the same standard for evidence will be applied in that court. Appeals typically take 16 months.

Before that, the lower court is due to rule on Juno?s own post-trial motion to double the damages from $585 million to $1.5 billion, and raise the running royalty rate payable to Bristol Myers from 27.6% to 33.1%.

The numbers are astronomical on their own, but especially so considering that Yescarta has only earned $456 million in sales last year ? which is already a jump from $264 million in 2018. Gilead will have to pay royalties until Juno?s patents expire in August 2024, which ?makes Yescarta potentially a negative-margin business.?

It is yet unclear whether, or how much, the patent issues will affect the other CAR-T products in Kite?s pipeline. Under CEO Kristi Shaw, the group has scored priority review for a second CAR-T dubbed KTE-X19.

At the crux of the dispute is the claim that Steve Rosenberg of the National Cancer Institute copied MSK investigator Michel Sadelain?s CAR backbone in creating the CD19-targeting construct that he later licensed to Kite.

During the proceedings the interaction between Arie Belldegrun, who co-founded Kite and has since moved onto pioneering allogeneic CAR-T therapies, and Memorial Sloan Kettering execs were thrust into the spotlight. The court again highlighted those episodes as part of the ?sufficient evidence of willfulness.?

Plaintiff?s fact witness Dr. Dash testified that Dr. Belldegrun was so desperate to pursue a license to the ?190 Patent that he appeared at her office, despite not having a meeting. Dr. Jakobovitz similarly testified that Dr. Belldegrun met with Plaintiffs in an attempt to license the ?190 Patent. Plaintiffs further argued that Defendant?s filing of the IPR against the ?190 Patent demonstrated the importance of the ?190 Patent to Defendant.