Sunday, March 29, 2015

Gilead Vs. Merck: Despite Raging Discovery Battles In California's Northern US District Court, I STILL Expect This Will Settle Via ADR

As of the end of this week, there is a motion to compel pending, against Merck -- and it offers some rather pungent assessments of what nearly sounds like an allegation of bad faith, on Kenilworth's part -- according to Gilead's lawyers.

Meanwhile, globally the Gilead v. Merck/Idenix/Isis sofosbuvir patent spats march forward on at least seven fronts. The stakes are gargantuan (perhaps more than $10 billion in damages is at stake), but the lawyers' bills must now be running over $75 million per year, world-wide, if we add up both sides' legal expenses. And that, my friends just doesn't make sense, for the shareholders of either company.

Remember, if there isn't a settlement or other resolution before December 14, 2015 -- a little under a nine months from now -- the very able federal District Court Magistrate Judge Christopher J. Burke, sitting in Wilmington, Delaware, has ordered the beginning of an ADR processes. [Prior rundown of the international litigation status here.]

Each side knows that it ought to find a solution both can live with, by agreement, prior to then, or they will run the risk that a panel of arbitrators, or a mediator, will impose one upon them. This is, in my estimation, a smoke signal from the court that it feels the case ought to be settled -- and settled soon. Here's a bit of that order, entered on New Year's Eve 2014:

. . . .IT IS ORDERED that a teleconference has been scheduled for Monday, December 14, 2015, at 11:00 a.m. with Magistrate Judge Burke to discuss alternative dispute resolutions. . . .

I would hope that, come December 2015, the central point of discussion will be whether Gilead might be willing to pay perhaps one half of one per cent in royalties to Merck -- to "buy peace". That would be a 20 fold discount (or a 95 per cent decrease, if you prefer), from Merck's initial 10 per cent of all sales demand. As I've written before, if it settles prior to December 2015, my guess is that it will settle at a rate below 1.5 per cent of sales. And that would not even be a $200 million settlement. At $75 million a year in legal expenses, it sure makes sense to get this over with, capping it at $200 million. Just my musings, here.

Now when the Sun inexorably rises, I'll be off for the northlands -- (do enjoy Mass) on a fine Sunday morning, here. Be kind to one another. For in the end, only kindness matters.

No comments: