Massachusetts General Hospital will receive $186 million, which will end royalty payments from the sale of the rheumatoid arthritis drug Enbrel in North America.

01:00 AM EDT on Wednesday, June 7, 2006

BY ANDREA L. STAPE
Journal Staff Writer

Massachusetts General Hospital and West Greenwich-based Amgen Inc. have agreed to settle a licensing dispute over the blockbuster drug Enbrel with a $186-million payment to the Boston research hospital.

The $186 million is a one-time payment that will end any future royalty payments to Mass General from sales of Enbrel in North America, according to a statement released by the hospital yesterday.

A researcher at Mass General discovered the basis of the rheumatoid arthritis drug in the 1990s and the drug was licensed to Immunex Corp. to develop and commercialize. Amgen purchased Immunex in 2002 for $9.45 billion.

"This settlement comes at a good time for Mass General because it allows us to invest in our research program" at a time when the federal government has cut research financing, said Peggy Slasman, a hospital spokeswoman. "It ensures that it's a robust program going forward."

Royalties from the drug added up to about $67 million for the hospital last year, 75 percent of the total $89.4 million Mass General received in royalties, according to an annual report on the hospital's research and licensing program. Amgen, which manufactures and distributes the drug, sold $2.47 billion worth of the drug in North America last year -- about 21 percent of the biotechnology company's total revenue.

Mass General, which is associated with Harvard University, will continue to receive royalties from international sales of the drug, according to Slasman. Amgen sold $103 million worth of Enbrel internationally last year, according to the company.

"We're pleased to have reached an amicable resolution to this issue," said David Polk, a spokesman for Amgen, which is based in Thousand Oaks, Calif.

Since full-scale production of the drug started in Amgen's West Greenwich plant in 2002, sales of Enbrel -- which also treats ankylosing spondylitis, a painful spine condition, and psoriasis -- have skyrocketed. Sales were $2.6 billion last year, compared with $1.9 billion in 2004.

Amgen makes Enbrel in two plants in Rhode Island, which employ about 1,300 people. The West Greenwich plants generate about 50 percent of Amgen's worldwide Enbrel supply. The drug has been used to treat about 388,000 patients worldwide, according to Amgen.

Representatives of Mass General and Amgen declined to say how long the licensing dispute had been going on, or how long it took to reach a settlement. Details of the original licensing agreement were not released. The dispute was specifically over the North American licensing rights, said Slasman. Unclear is how much future revenue the hospital could have collected if the royalty payments had continued.

It is common for research institutions to license technology to companies and entrepreneurs for commercialization. If the drug or invention takes off, the university or hospital stands to make millions in royalties.

astape@projo.com / (401) 277-7269