With patent dispute settled, Penn and Novartis can push ahead with immunotherapy

The breakthrough cancer immunotherapy being developed by the University of Pennsylvania and Novartis Pharmaceuticals can now move ahead without the cloud of a patent lawsuit.

Novartis on Monday agreed to settle that long-running fight by paying $12.25 million now - and more in the future - to Juno Therapeutics, a well-funded biotech start-up that is also working on therapies designed to harness the immune system to beat cancer.

Juno will share some of the payments with St. Jude Children's Research Hospital, which launched the legal battle in 2012, claiming Penn effectively stole key technology that the esteemed Memphis hospital had invented.

The settlement had been expected because scientific intellectual-property lawsuits are usually resolved out of court. The costs of preparing for trial, the difficulty of educating juries about complex science, and the pall of uncertainty that litigation throws over a business create incentives for negotiation.

Still, the dispute reflects the explosive growth of research and investment in the field of cancer immunotherapy. Over just the last five years, Penn and other major centers, including the National Cancer Institute, have published impressive clinical-trial results, mostly against a variety of blood cancers. That has led more than 40 companies to join the commercialization race.

Several immunotherapies for melanoma have been approved by the Food and Drug Administration in the last three years, fueling the sense of optimism.

"I'm glad [the litigation] is settled, because that is the best thing for patients," said gene-therapy pioneer Carl June, who has led Penn's immunotherapy trials, building on decades of basic, often frustrating research.

The other parties in the case echoed his sentiment.

This settlement "benefits patients by allowing each party to advance its promising cancer immunotherapies, and rewards the investigators on whose insights those developments are based," Juno CEO Hans Bishop said in a statement.

Novartis said its "collaboration with Penn was formed to bring important new therapies to patients who are in desperate need of new treatment options. We are proud to be working with Carl June and the renowned researchers from Penn."

In its statement Monday, Juno offered some details of the settlement. In addition to the initial $12.25 million, Novartis will also pay Juno "mid-single-digit royalties" from U.S. sales of products that come to market, and a "low double-digit percentage" of the royalties that Novartis winds up paying to Penn for global net sales.

Juno Therapeutics is a relative newcomer, but already a major force. Launched in January 2014 with $120 million in start-up funding, its scientific partners include Memorial Sloan-Kettering Cancer Center and the Fred Hutchinson Cancer Research Center; its investors include Amazon's Jeff Bezos.

The roots of the dispute between Penn and St. Jude stretch back to 2003. That year, according to legal filings in the case, Carl June attended a conference where he heard Dario Campana, then a pediatric oncologist at St. Jude, describe how he had used a relatively obscure signaling molecule to help reprogram an immune-system T cell to attack blood cancer cells.

Because June was working on a similar approach, that chance encounter led to a formal technology-sharing agreement between Penn and St. Jude, which went on to patent the signaling molecule. The contract prohibited Penn from commercializing any product using the molecule without St. Jude's permission.

Not long after Penn partnered with Novartis in 2012, St. Jude accused Penn of breaching the technology-sharing agreement and infringing on St. Jude's patent. Penn denied those claims, arguing that its T-cell-signaling molecule was significantly different.

As part of the newly announced settlement, all the parties' claims are dismissed.

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