Biogen said today it has agreed to pay Forward Pharma $1.25 billion in cash to secure an irrevocable license to all intellectual property owned by Forward Pharma, including patents related to Biogen’s Tecfidera® and other multiple sclerosis treatments.

The companies have come to terms on a settlement and license agreement subject to two-thirds approval by Forward Pharma’s shareholders and other customary conditions. Shareholders representing approximately 77% of Forward Pharma’s voting share capital have agreed to vote in favor of the agreement, Biogen said.

Forward Pharma is expected to secure a formal approval of its shareholders at an extraordinary general meeting scheduled for February 1.

“We believe this agreement will clarify and strengthen our intellectual property for Tecfidera,” Biogen CEO Michel Vounatsos said in a statement.

Under specified circumstances, Biogen also agreed to pay Forward Pharma royalties on net sales of Biogen treatments for multiple sclerosis that are covered by a Forward Pharma patent and have dimethyl fumarate (DMF) as an active pharmaceutical ingredient.

The agreement does not resolve legal disputes by the companies over patents that have resulted in an interference proceeding in the U.S. and an opposition proceeding in the EU.

Biogen said it will only have to pay Forward Pharma royalties in the U.S. if Forward obtains patent rights covering treatment of a human for multiple sclerosis by orally administering 480 mg per day of DMF arising from an ongoing interference proceeding between Biogen and Forward Pharma in the U.S.

The interference, declared in April 2015, is now before the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office. At issue are Biogen's U.S. Patent No. 8,399,514 and a patent application, 11/576,871, by Forward, with Forward being designated the “senior party” based on its earlier patent application filing date.

If royalties are payable in the U.S. and Biogen holds a co-exclusive license, Biogen will pay a 1% royalty from January 1, 2023, until the patents included in all of Forward Pharma’s IP owned in the U.S. either expire or are found unenforceable or invalid, whichever happens first.

But if Biogen’s license is exclusive, the company added, it will pay a royalty of 10% from January 1, 2021, to December 31, 2028, and a royalty of 20% from January 1, 2029, until Forward’s U.S. IP either expires, or is found unenforceable or invalid, whichever occurs first.

Outside the U.S., Biogen will only have to pay Forward Pharma royalties if Forward Pharma obtains patent rights covering treatment of a human for multiple sclerosis by orally administering 480 mg per day of DMF in an ongoing opposition proceeding against Forward Pharma’s European patent EP 2801355 (Application No. 14172398.1).

If royalties are payable in countries other than the U.S., Biogen said, it will pay a royalty of 10% of net sales of applicable infringing products on a country-by-country basis, from January 1, 2021, to December 31, 2028, and 20% on a country-by-country basis from January 1, 2029, until the IP expires or is deemed unenforceable or invalid.

The agreement was reached between Biogen’s wholly owned subsidiaries, Biogen Swiss Manufacturing GmbH and Biogen International Holding Ltd., and Forward Pharma.