Halozyme Wins Injunction Against Merck's Keytruda SC in Germany
Court ruling halts German launch of the subcutaneous version of Merck's blockbuster cancer drug, setting the stage for high-stakes patent negotiations.
Halozyme Therapeutics Inc. has secured a significant legal victory against pharmaceutical giant Merck & Co., obtaining a preliminary injunction from a German court that halts the launch of a highly anticipated under-the-skin version of the blockbuster cancer drug, Keytruda.
The ruling, issued by the Munich Regional Court, found that Merck's subcutaneous Keytruda (Keytruda SC) likely infringes on a Halozyme European patent for its drug delivery technology. The decision forces Merck to pause all distribution and launch activities for the new formulation in Germany, handing the San Diego-based biotech powerful leverage in a high-stakes dispute over a product central to Merck's future growth.
Despite the landmark legal win, Halozyme's shares (NASDAQ: HALO) closed down approximately 2.8% in Thursday's trading session. The muted market reaction suggests investors may be looking past the immediate victory towards the complexities of a potential appeals process and the ultimate financial terms of a settlement.
The Billion-Dollar Technology at Stake
The dispute centers on European Patent No. 2 797 622, which protects Halozyme's MDASE technology, a method for the rapid subcutaneous delivery of drugs. This technology is crucial for reformulating treatments like Keytruda, which are traditionally administered via lengthy intravenous infusions. A subcutaneous injection can be given in minutes, dramatically improving convenience for patients and healthcare providers.
For Merck, a successful launch of Keytruda SC is a critical strategic priority. Keytruda is the world's best-selling drug, but moving patients to a new, more convenient formulation would help defend its franchise from biosimilar competition as its main patents begin to expire. Analysts have estimated that Keytruda SC could generate peak annual sales between $3 billion and $4 billion for Merck.
In a statement confirming the injunction, Halozyme asserted that this specific MDASE patent is distinct from its widely licensed ENHANZE® technology platform. Merck has previously contended that its product was developed independently.
Financial Implications and Future Outlook
The court's decision effectively forces Merck to the negotiating table. While Merck is expected to appeal the ruling, the injunction creates immediate commercial pressure. Analysts have projected that a settlement could result in Halozyme receiving annual royalties of 3% to 7% on Keytruda SC sales. Based on peak sales estimates, this could translate into a recurring revenue stream of $100 million to $200 million annually for Halozyme, a substantial sum for a company with a market capitalization of roughly $7.8 billion.
"We are extremely pleased with the court's decision to recognize the validity of our intellectual property," said Dr. Helen Torley, president and CEO of Halozyme. "This ruling underscores the strength of our patent estate and our leadership position in drug delivery technology."
This legal battle is not confined to Europe. Halozyme is also pursuing patent infringement litigation against Merck in a U.S. federal court over the same subcutaneous formulation. The German ruling, while not binding in the U.S., could be viewed as a positive indicator for Halozyme's case.
For now, Merck must navigate a significant setback to one of its key product launches in a major European market. Patients in Germany will continue to have access to the established intravenous form of Keytruda, which is unaffected by the order. The focus now shifts to the appeals process and the closed-door negotiations that will determine how the revenue from one of the next decade's most important drug formulations will be shared.