BioMarin Shares Jump 5% After Global Patent Settlement With Ascendis

BioMarin Pharmaceutical Inc. (NASDAQ: BMRN )'s stock rose 5% on August 31 after the company announced that it has entered into binding agreements with Ascendis Pharma A/S (NASDAQ: ASND ) to resolve a global patent dispute over Ascendis's achondroplasia drug Yuviwel. The settlement resolves litigation currently pending in numerous jurisdictions, including a Section 337 investigation by the US International Trade Commission, which BioMarin has agreed to drop as part of the settlement. Ascendis reiterated the same terms in its own announcement the following day, calling the arrangement a binding term sheet awaiting a definitive agreement.

The lawsuit stemmed from competing achondroplasia treatments produced by the two companies. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) holds patents related to the condition, a genetic ailment that inhibits bone growth, and filed a complaint with the US International Trade Commission, alleging that Ascendis' medicine, which was still under FDA assessment, infringed on that intellectual property. Ascendis Pharma A/S (NASDAQ:ASND) responded by bringing its own declaratory judgment action in federal court in California, claiming that its operations were protected by the "safe harbor" regulation, which protects regulatory-approval-related conduct from patent infringement lawsuits. That controversy made its way to the US Court of Appeals for the Federal Circuit earlier this year, with the two sides arguing over procedural issues such as which forum, the ITC or the district court, should hear the matter first.

As part of the settlement, Ascendis Pharma A/S (NASDAQ:ASND) will pay BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) a royalty equal to 20% of Yuviwel's net sales in the US, retroactive to the drug's first commercial sale, and 18% of net sales in the European Union, Brazil, and South Korea. These royalties will be paid till May 20, 2030. In exchange, BioMarin will provide Ascendis a non-exclusive, worldwide, royalty-bearing license for navepegritide, Yuviwel's active compound, allowing Ascendis to continue studying, developing, manufacturing, and commercializing the medication without restrictions.

The Outcome Seems Positive On Both Sides

Both companies rushed to portray the outcome positively. BioMarin CEO Alexander Hardy stated that the settlement encourages companies like BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) to continue investing in the type of long-term innovation required to bring breakthrough treatments to patients, tying the outcome to the company's decades of research into the basic biology of rare genetic conditions. Ascendis CEO Jan Mikkelsen, for his part, cited Yuviwel's commercial success as proof of the settlement terms, saying it reflects the drug's differentiated profile and the significant unmet medical need it addresses as an important new foundation of care in achondroplasia and other skeletal dysplasias.