Amgen Settles Royalty Dispute

Amgen Inc. has agreed to pay Massachusetts General Hospital $186 million to settle a dispute over royalties the Boston hospital was paid for its role in helping to develop Enbrel, a drug used to treat rheumatoid arthritis and psoriasis.

The one-time payment will free Thousand Oaks-based Amgen from obligations to pay future royalties from North American sales of Enbrel, the hospital said Tuesday after the settlement was reported in the Boston Globe.

The hospital will continue to earn royalties on sales of Enbrel made outside North America.

Combined royalties from Enbrel accounted for nearly $65 million of the hospital’s $90 million in licensing fees last year, hospital spokeswoman Peggy Slasman said.

“We can use this one-time payment to invest in the research program at the hospital at a time when funding from the National Institutes of Health has been cut off significantly,” Slasman said.

The arthritis drug’s creation stems from research done at Massachusetts General led by a Harvard University researcher. The hospital signed a licensing agreement with Immunex Corp., the Seattle-based company that initially developed Enbrel in the 1990s.

Amgen acquired Immunex in 2001 and began reviewing its licensing contracts.

Under the royalty agreement, Amgen’s obligations to the hospital have increased with Enbrel’s sales growth. The drug posted $2.6 billion in sales in 2005, up 35% from 2004.

Mark Edwards, a managing director of Recombinant Capital, a consulting firm, said the settlement was a show of strength for Enbrel.

“One, that Amgen would be willing to buy out the product, and two, that they are strong and getting stronger and that they are willing to give the university an offer it can’t refuse,” Edwards said.

Amgen shares rose 13 cents Tuesday to $67.61.