By Jared S. Hopkins

A dispute over a microscopic enzyme is threatening Merck & Co. plans to sell a new version of Keytruda, the cancer drug that generates nearly half of the company's sales.

Merck has been tweaking Keytruda to make it easier to use -- and to protect billions of dollars in revenue the company could lose after U.S. patent protection runs out in 2028 and rivals can begin selling copycats.

The enzyme in the new Keytruda allows it to be injected, rather than given intravenously. It is the subject of a brewing patent dispute between Merck and a biotech called Halozyme Therapeutics.

Merck last year began asking U.S. patent regulators to reconsider certain patents granted to Halozyme for its enzyme called Mdase, saying in part the patents were overly broad.

Halozyme executives said during a TD Cowen investor conference on Wednesday that the new Keytruda infringes on the company's patents.

Chief Executive Helen Torey also said she reached out to Merck to offer a chance for a licensing agreement and hopes Merck will engage. "Our business model is these licensing agreements and that's what we would like to happen," she said.

Halozyme Chief Legal Officer Mark Snyder said if the sides can't reach a deal, "the next step for us would be to legally enforce our intellectual-property rights, and, of course, what I'm talking about there is us bringing patent-infringement litigation."

A Merck spokesman said the enzyme the company used was developed independently from Halozyme. "We strongly believe that any Halozyme patents that attempt to cover this variant are invalid," the spokesman said. "We are confident in our legal position."

Halozyme prefers to sign a license agreement with any company using its intellectual property to deliver drugs as an injection with the special type of enzyme needed to do so, a spokesman said.

Ownership of medical breakthroughs is a common source of friction among pharmaceutical companies and scientists because of the sums that can be at stake. Patents grant the exclusive right to exclude others from selling a drug for years without competition.

A patent dispute between Merck and Halozyme would be among the industry's most dramatic. Merck reported $29.5 billion in Keytruda sales worldwide last year, making it the top-selling pharmaceutical globally.

Sales could drop after Keytruda's U.S. patents run out. To stem losses, Merck developed an injected version protected by new patents.

Patients could take it at home or a doctor's office, instead of at an infusion center or hospital where the original has been administered.

Merck has estimated up to 40% of patients will switch to injectable Keytruda within 18 months to two years after it becomes available. The Food and Drug Administration is reviewing the new version and could approve its sale later this year.

Analysts predict the medicine could eventually ring up more than $6 billion in yearly sales from the new version.

The new Keytruda contains an enzyme from South Korea-based Alteogen. Merck has said that the enzyme gives the new Keytruda its injectable powers.

Merck's patent petitions are "tipping their hand that the Halozyme patents might be a problem for them," said Zachary Silbersher, co-founder of Markman Advisors, a patent consulting firm.

Alteogen said it is confident in the strength of its intellectual property.

San Diego-based Halozyme pioneered the development of enzymes, called human-derived hyaluronidases, to enable administration of drugs by injection.

Halozyme's enzyme Enhanze can enable four- to six-hour intravenous drug treatments to be given in a matter of minutes. An injected version of Bristol-Myers Squibb's rival cancer drug Opdivo uses Enhanze.

The biotech unveiled last year another enzyme for injected drug delivery called Mdase.

Merck last year petitioned the U.S. Patent and Trademark Office to reconsider seven of the Mdase patents granted to Halozyme, arguing that they shouldn't have been granted partly because they are too broad.

Halozyme has until mid-March to start responding to the petitions.

Write to Jared S. Hopkins at jared.hopkins@wsj.com

(END) Dow Jones Newswires

March 05, 2025 14:42 ET (19:42 GMT)

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