Gilead Sciences, Roche end Tamiflu dispute

By Jennifer Chiou

New York, Nov. 16 - Gilead Sciences, Inc. and Roche Holding AG said they ended their Tamiflu dispute in order to work together to address public health needs.

Tamiflu, an oral antiviral for influenza A and B, was invented by Gilead and licensed to Roche in 1996.

In June, Gilead delivered a notice of termination to Roche for the companies' 1996 agreement and, as a result, the companies entered into arbitration. Gilead terminated arbitration proceedings with Roche due to an amendment to the agreement.

Under the terms of the amended agreement, Gilead and Roche will establish joint committees to oversee manufacturing, commercial and pandemic planning for the product, the companies said. Gilead also has the option to co-promote Tamiflu in specialized areas in the United States.

"We have ended our dispute with Roche in an effort to work together, with the utmost diligence, to address this global public health need," said John C. Martin, Gilead president and chief executive officer, in a news release.

"As the inventor and the company that devised the manufacturing process for Tamiflu, Gilead looks forward to partnering our expertise with that of Roche, serving as an additional resource to support this important product."

Gilead noted it receives a blended royalty on sales of Tamiflu, tiered from 14% to 22% based on Roche's annual net sales. Roche has agreed to eliminate the pre-existing contractual cost-of-goods adjustments from the royalty calculations, retroactive to 2004 and for all future calculations.

As a result of the elimination of the cost-of-goods adjustment, Roche will begin to pay Gilead at the contractually specified royalty rate based on the level of sales achieved, instead of the prior year's effective royalty rate.

Within 15 days after the amendment becomes effective, Roche will pay Gilead $62.5 million to reimburse Gilead for cost of goods adjustments retroactive to 2004 as well as to update the royalties payable to Gilead for the first nine months of 2005 based on current year royalty rates, the companies added.

Roche also agreed to waive its rights on the $18.2 million that Roche previously paid to Gilead.

Gilead Sciences is a Foster City, Calif., biopharmaceutical company.

Based in Basel, Switzerland, Roche is a research-focused health care group.

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