UPDATED: Merck demand triggers expanding patent war over Gilead's sofosbuvir

Gilead is rolling out its big legal guns to defend its control of the experimental hepatitis C drug sofosbuvir, one of the most valuable therapies in the industry's late-stage pipeline.

On Friday the company fired a preemptive shot over Merck's bow, filing suit in the Northern District of California after Merck contacted the company a few weeks ago to stake a claim to 10% of the revenue generated by sofosbuvir. Merck ($MRK) wants Gilead ($GILD) to sublicense two of its hep C-related patents, according to the lawsuit. The pharma giant sells Victrelis (boceprevir), its recently approved hep C drug, which is likely to be swept away as sofosbuvir and companion therapies make it to the market, offering a treatment less likely to trigger side effects and quicker to quell the virus. And the Gilead suit says that Merck claims to have already snagged one 10% deal on an unspecified therapy. 

In a letter filed with the lawsuit, Merck's Pamela Demain, the executive director of corporate licensing, explained on Aug. 5 that Merck was seeking the 10% royalty based on the two patents: '499 and '712. And she set an August 31 deadline for a response, drawing a line in the legal sand.

Merck's terms: "Gilead shall pay Merck a 10% royalty on the Net Sales of Licensed Product … by Gilead, its distributors or sublicensees, including sales of Licensed Product that is co-packaged with one or more other pharmaceutical products, from the first sale of sofosbuvir until the expiration of the last to expire patent within the Licensed Patent Rights."

And that's just one of several legal fights brewing as an FDA marketing decision on sofosbuvir looms in early December.

In its first-half financial report, Gilead also notes that Roche is claiming control of sofosbuvir based on a 9-year-old, $168 million partnership it struck with Pharmasset, which Gilead bought for a whopping $11 billion in order to seize full ownership of sofosbuvir while it was still in midstage development. According to the SEC filing, Roche ($RHHBY) believes that its 2004 deal to develop a nucleoside polymerase treatment with Pharmasset gives it an exclusive license on sofosbuvir, which Roche claims is a "prodrug (or precursor) of PSI-6130."

Gilead says the arbitration demand filed by Roche is without merit, noting that the deal ended about two years after it began--long before it acquired the company. 

The Roche move follows an effort by Idenix ($IDIX) in 2012 to establish that it was the first to invent sofosbuvir. "Our patent covers metabolites of sofosbuvir and RG7128. Idenix is attempting to claim a class of compounds, including these metabolites, in its pending patent application," notes Gilead.

Analysts at Leerink Swann initially scored the dispute in Gilead's favor.

"Both MRK and IDIX nuc patents are relatively broad, claiming a large number of compounds," noted analysts. "Based on our review, the MRK and IDIX patents do not appear to specifically provide examples of nucs with 2'-methyl, 2'-fluoro-sustituted sugar, the class of nucs including sofosbuvir that Pharmasset had focused on. Although this does not by itself automatically disqualify these claims, we believe a key issue for the IP disputes will be whether there is sufficient specification in the patent to teach those skilled in the art how to make and use the full scope of the claimed invention with regard to sofosbuvir-like compounds."

The growing flank attack on the sofosbuvir patent highlights the increasingly complex relationships among pharma companies as they become more likely to partner with academics and biotechs to broaden their pipelines. Big Phase III programs often attract litigation, like Medivation's ($MDVN) claim on Aragon's cancer therapy, ARN-509, since acquired by J&J ($JNJ). And sometimes they win, as we saw when Onyx ($ONXX) successfully laid claim to a 20% royalty of Stivarga from Bayer after bristling over its similarities to their partnered drug Nexavar.

Gilead will spare no expense in this fight. Analysts believe that sofosbuvir is an almost certain blockbuster, with peak sales estimates hovering around $4 billion to $5 billion. It's the leader in a pack of programs which are in the process of rewriting the standard of care for hepatitis C as AbbVie ($ABBV), Bristol-Myers Squibb ($BMY), J&J and other rivals hustle to catch up. And the prospect of gaining even a slice of that action is worth a considerable sum in legal costs to any company that thinks it has an actionable claim.

A spokesperson for Merck told FierceBiotech Saturday that the company has "nothing to add at this time."