QLT Inc. announced that its wholly-owned subsidiary, QLT USA, Inc. (formerly Atrix Laboratories, Inc.) has reached an agreement to settle the litigation captioned "TAP Pharmaceutical Products Inc., Takeda Chemical Industries, Ltd. and Wako Pure Chemical Industries, Ltd. v. Atrix Laboratories, Inc. and Sanofi-Synthelabo Inc.," No. 03-C-7822, United States District Court for the Northern District of Illinois and the appeal pending there from in the United States Court of Appeals for the Federal Circuit. The settlement will resolve litigation that was initiated by TAP and its co-plaintiffs in 2003 in which TAP and its co-plaintiffs claimed that Atrix's (now QLT USA's) Eligard products infringed US patent no. 4,728,721.
Under the terms of the settlement agreement, and without admitting liability, QLT USA will pay US$112.5 million and Sanofi-Synthelabo will pay US$45 million, for an aggregate settlement amount of US$157.5 million. As part of the settlement, TAP and its co-plaintiffs will release their claims made in the United States litigation against QLT USA and Sanofi-Synthelabo.
In addition, to avoid further disputes regarding Eligard sales in the United States and Canada, each of TAP, Takeda, Wako and Abbott Laboratories, Limited - Laboratories Abbott, Limited will grant QLT USA a non-exclusive, perpetual, royalty-free license under any of their past and future patents to make, use and sell QLT USA's currently-marketed Eligard products in the United States and Canada. Payment of the settlement amount will be made, and the settlement will become effective, once the litigation has been formally dismissed by both the District Court and the Court of Appeals for the Federal Circuit, a QLT press release stated.
This settlement resolves only the United States litigation commenced by TAP and its co-plaintiffs against QLT USA and Sanofi-Synthelabo and does not affect the ongoing litigation in Germany commenced by Takeda and Wako German affiliates against QLT USA's European licensees of its Eligard product. The Takeda patent at issue in that case has been declared invalid by a German court, although that decision has been appealed by Takeda.
As a result of this settlement, QLT Inc. will record a charge of US$112.5 million in its consolidated 2006 results. As of December 31, 2006 (before payment of the settlement amount), QLT Inc's consolidated total cash, short term investments, long-term investments and escrowed funds was approximately $378 million.