REG - GlaxoSmithKline PLC - GSK announces settlement between ViiV and Gilead

GSKAnnouncement

02/02/2022 07:00

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RNS Number : 3913A  GlaxoSmithKline PLC  01 February 2022

Issued: 1 February 2022, London UK

 

GSK announces settlement between ViiV Healthcare and Gilead Sciences, Inc.
resolving litigation relating to Biktarvy and ViiV's dolutegravir patents and
entry into a patent licence agreement

 

·   Gilead will make an upfront payment of $1.25 billion to ViiV Healthcare
in the first quarter of 2022

·   Gilead will also pay a 3% royalty on future US sales of Biktarvy

 

 

GlaxoSmithKline plc (LSE/NYSE: GSK) today announced that ViiV Healthcare, the
global specialist HIV company majority-owned by GSK, with Pfizer Inc. and
Shionogi & Co. Limited (Shionogi) as shareholders, has agreed to settle
the global patent infringement litigation between GSK, Shionogi and Gilead
Sciences, Inc. (Gilead) concerning ViiV Healthcare's patents relating to
dolutegravir, an antiretroviral medication used, together with other
medicines, to treat human immunodeficiency virus (HIV).

 

ViiV Healthcare, GSK and Shionogi alleged that Gilead's Biktarvy, a triple
combination HIV medicine containing the HIV integrase inhibitor bictegravir,
tenofovir alafenamide and emtricitabine, infringed certain of their patents
relating to dolutegravir. As a result of the settlement, patent infringement
cases in the US, UK, France, Ireland, Germany, Japan, Korea, Australia, and
Canada will be discontinued.

 

ViiV Healthcare, GSK, Shionogi and Gilead have entered into a global
settlement agreement and a patent license agreement under which Gilead has
been granted a worldwide licence to certain ViiV Healthcare patents relating
to dolutegravir and a covenant not to enforce any patents controlled by ViiV
Healthcare, GSK or Shionogi against Gilead in connection with any past or
future claims of infringement relating to Biktarvy. ViiV Healthcare, GSK and
Shionogi have also agreed not to enforce their patents against any future
product containing bictegravir, to the extent that the patent enforcement
relates to the bictegravir component of the product.

 

Financial Considerations

Under the terms of the global settlement and licensing agreement, Gilead will
make an upfront payment of $1.25 billion to ViiV Healthcare which is expected
in the first quarter of 2022. In addition, Gilead will also pay a 3% royalty
on all future US sales of Biktarvy ($6.09 billion in 2020) and in respect of
the bictegravir component of any other future bictegravir-containing products
sold in the US. These royalties will be payable by Gilead to ViiV Healthcare
from 1 February 2022 until the expiry of ViiV Healthcare's U.S. Patent No.
8,129,385 on 5 October 2027. Gilead's obligation to pay royalties does not
extend into any period of regulatory paediatric exclusivity, if awarded.
Regulatory paediatric exclusivity would extend the period of exclusivity after
the expiry of the '385 patent by six months from 5 October 2027 to 5 April
2028.

 

The upfront payment and royalty income will be distributed in proportion to
the ordinary shareholding in ViiV Healthcare (GSK 78.3%, Pfizer 11.7%,
Shionogi 10%) net of the contingent consideration liability (CCL) to Shionogi
and applicable tax.

 

The upfront payment of $1.25 billion will be recorded in GSK's financial
results as an adjusting item in the income statement for the first quarter of
2022. The future royalty income will be recorded in total and adjusted results
in the income statements for 2022 to 2027 inclusive. Both the settlement and
the future royalty income increase the fair value of the CCL to Shionogi, and
the Pfizer put option.*  These increases in fair value will be reflected in
GSK's 2021 full-year and fourth-quarter results, and the associated charges
will be recorded within adjusting items.

 

Cash in-flows from the upfront payment and future royalty income and cash
out-flows from the CCL will be recorded in cash generated from
operations. The resulting increased dividends to Shionogi and Pfizer will be
included within financing cashflows. Full details of the operational
accounting of the CCL can be found on pages 52-53 of GSK's 2020 Annual
Report.

 

About ViiV Healthcare

ViiV Healthcare is a global specialist HIV company established in November
2009 by GlaxoSmithKline (LSE: GSK) and Pfizer (NYSE: PFE) dedicated to
delivering advances in treatment and care for people living with HIV and for
people who are at risk of becoming infected with HIV. Shionogi became a ViiV
Healthcare shareholder in October 2012. ViiV Healthcare's aim is to take a
deeper and broader interest in HIV/AIDS than any company has done before and
take a new approach to deliver effective and innovative medicines for HIV
treatment and prevention, as well as support communities affected by HIV. For
more information on the company, its management, portfolio, pipeline, and
commitment, please visit www.viivhealthcare.com
(http://www.viivhealthcare.com/) .

 

Notes

* Under the ViiV Healthcare shareholder agreement, Pfizer has an option to
request an initial public offering, which if not completed within nine months,
will require GSK to acquire Pfizer's shareholding in ViiV Healthcare.

 

About GSK

GSK is a science-led global healthcare company. For further information,
please visit  www.gsk.com/about-us (https://www.gsk.com/en-gb/about-us/) .

 

 

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Cautionary statement regarding forward-looking statements

This announcement contains statements that are, or may be deemed to be,
"forward-looking statements". GSK cautions investors that any forward-looking
statements or projections made by GSK, including those made in this
announcement, are subject to risks and uncertainties that may cause actual
results to differ materially from those projected. Such factors include, but
are not limited to, those described in the Company's Annual Report on Form
20-F for 2020, GSK's 2021 Q3 Results and any impacts of the COVID-19
pandemic.  GSK undertakes no obligation to update any forward-looking
statements, whether as a result of new information, future events or
otherwise.  Accordingly, no assurance can be given that any particular
expectation will be met and investors are cautioned not to place undue
reliance on the forward-looking statements.

 

This announcement contains inside information.  The person responsible for
arranging the release of this announcement on behalf of GSK is Victoria Whyte,
Company Secretary.

 

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