Updated on 25 June 2013
Genentech may be in trouble - If judges at the American Arbitration Association in New Jersey side with PDL, then Genentech could be in the hole for more than $1 billion
Singapore: PDL BioPharma, Nevada, US, filed a notice of arbitration against Genentech, citing derelict royalty payments on several drug treatments, including three for cancer. The suit stems from a 2003 agreement that the two companies made over a patent dispute, which required Genentech to pay licensing fees to use PDL's medical technologies.
PDL claims that Genentech's cancer blockbuster Herceptin and a slew of other treatments rely on certain proprietary techniques for humanizing antibodies, some of which emerged from PDL's Redwood City lab, where the company was located before it moved to Nevada in 2008.
PDL hired audit firm KPMG in 2009 to look at Genentech's books, and built a case that led to the current arbitration. If judges at the American Arbitration Association in New Jersey side with PDL, then Genentech could be in the hole for more than $1 billion. PDL has also threatened to terminate its license agreement with the company, or a demand a flat 3.75 percent royalty on all future products that use the antibody technology. Nevada Judge David Hardy denied two of Genentech's motions to throw out the case.
Genentech's lawyers have said they will ask the Nevada Supreme Court to review motions in the case that required Genentech and its parent company, Roche, to produce financial documents. Barring a successful arbitration, the companies are set to go to trial in October 2013. That could be delayed by several months if the Supreme Court decides to intervene.
A spokeswoman for the South San Francisco company said PDL's arbitration claims are baseless, and that Genentech will defend itself "vigorously".