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Nobel laureate demands higher cancer drug royalties from Ono Pharma

2018 winner in medicine plans to renegotiate contract for blockbuster Opdivo

Kyoto University professor Tasuku Honjo, left, speaking about his royalty payments for the revolutionary cancer drug Opdivo.

TOKYO -- A Japanese Nobel laureate is demanding more money for his role in developing the breakthrough cancer treatment Opdivo, saying Wednesday that co-developer Ono Pharmaceutical should pay him a higher percentage of profits than in their 2006 contract.

Tasuku Honjo, a Japanese immunologist, identified a protein found in immune cells called programmed death receptor 1, or PD-1, in 1992. Soon after that discovery, he began negotiations with Ono Pharmaceutical to turn the finding into a cancer therapy, which would become Opdivo.

The partners filed for a patent in 2003 and reached a licensing agreement in 2006. The drug helped Honjo win the Nobel Prize last year.

The Kyoto University professor now wants to renegotiate his contract with Ono Pharmaceutical. Honjo has said that he is only entitled to less than 1% of Ono Pharmaceutical's sales of Opdivo and licensing revenue from other companies. A year's supply of the drug, which helps the body's immune system attack cancer cells, can cost upward of $150,000 in the U.S. and other markets.

"That is an unreasonable level," his lawyer said at a press conference on Wednesday. Honjo has requested direct negotiations with Ono Pharmaceutical to avoid a lawsuit. There was an inaccurate explanation of the contract's substance when it was signed, he claims. 

 

A bottle of Opdivo. A year's supply of the drug can exceed $150,000 depending on the market.   © Reuters

Although Honjo had been considering a broad patent that covered applications of his discovery in cancer therapies, Ono Pharmaceutical's contract called for a narrower patent covering only the gene that produces PD-1, leaving the professor with low royalties.

"A reasonable level is 5% to 10% for patents that cover usage," Honjo's lawyer said.

An Ono Pharmaceutical spokesperson told Nikkei the company would not comment until it confirmed "information discussed at [Honjo's] press conference."

The confrontation between Honjo and Ono Pharmaceutical may stem from the poor handling of intellectual property in partnerships between universities and businesses.

Honjo originally asked Kyoto University to file a patent in 2003, but the school lacked the staff, expertise or funds to do so at the time. The result was a joint patent by Ono Pharmaceutical and Honjo.

"There is no ordinary market for these types of contracts, but it is common for royalties to be in the single digits for initial patents," an intellectual property officer at a major pharmaceutical company said. "Saying that it should be raised after products are for sale is unusual."

New drug development is an extremely costly process in both money and time. With a success rate of one in about 30,000, the business is practically considered gambling.

But with high risk comes high reward. Nobel laureate Satoshi Omura was paid over 20 billion yen ($180 million) in patent fees by a U.S. drugmaker for an antiparasitic medication made with an agent he discovered.

Before the development of Opdivo, cancer immunotherapy was "in the dark," according to an industry source. But Ono Pharmaceutical, a mid-size drugmaker with 100 billion yen in sales at the time, bet tens of billions of yen on drug's development. That is a massive gamble for the company, which had no experience with other cancer medications.

Prolonged confrontation between Honjo and Ono Pharmaceutical could dampen Japan's efforts to spur innovation through collaboration between companies and universities.

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