Novartis will pay Juno Therapeutics more than $12.25 million to settle a nearly three-year legal wrangle over ownership of patents covering the technology for chimeric antigen receptors (CARs) used in cancer immunotherapies.

The settlement resolves a dispute that began in 2012 and expanded as Novartis licensed CAR T-cell technology from Trustees of the University of Pennsylvania (Penn), while Juno licensed a CAR technology from St. Jude Children’s Research Hospital. The competing technologies are both designed to fight cancer by using a patient’s own immune system.

In addition to the $12.25 million initial payment, Novartis agreed to give Juno future milestone payments, and “mid-single digit” royalties from U.S. net sales of product candidates based on the patents at issue—as well as a “low double-digit” percentage of royalties Novartis pays to Penn for global net sales for those product candidates. 

“We are pleased by this settlement, which benefits patients by allowing each party to advance its promising cancer immunotherapies and rewards the investigators on whose insights those developments are based,” said Juno CEO, Hans Bishop.

Juno is a spinout of the Fred Hutchinson Cancer Research Center, having been launched in December 2013 by Fred Hutch, as well as MSKCC, and Seattle Children’s Research Institute. Four of Juno’s compounds are now in clinical trials, according to its website—three targeting CD19, the other, WT-1.

“Within the next 12 months, we expect to have 10 product candidates in clinical development directed at six different cancer-associated antigens,” Bishop said March 18 in a press release announcing 2014 results.

Juno is also well-funded: In December 2014, Juno successfully closed on an initial public offering, raising about $265 million. The IPO followed the company’s privately raising more than $300 million from investors that include founder Jeff Bezos. Juno finished 2014 with cash, cash equivalents and marketable securities of $474.1 million, though the company also reported a cash burn of $89.2 million for last year.

As for the settlement, Juno said it will share payments received from Novartis with St. Jude as called for under their license agreement. All parties agreed to dismiss legal claims in the case.

It was St. Jude that took the dispute to court in 2012 when it contended that Penn wrongly used material covered by St. Jude’s U.S. Patent No. 8,399,645, which Juno agreed to license upon its launch in December 2013, and two earlier material transfer agreements (MTAs) in the development of its own chimeric T-cell receptor.

Under the first MTA in 2003, St. Jude provided an anti-CD19-BB-zeta chimeric T-cell receptor construct and a related gene sequence to Penn and Carl June, M.D., director of Translational Research in Penn’s Abramson Cancer Center. A second MTA in 2007 allowed Dr. June to use the construct in clinical trials.

Penn denied wrongdoing and asked to have the charges dismissed. Penn contended that Dr. June and colleague Michael Milone, M.D., Ph.D., developed a largely-different CAR than Dr. Campana’s—though during the lawsuit, a letter surfaced in which Penn’s director of legal affairs, Kathryn A. Donohue, acknowledged: “We incorporated the cDNA from Dr. Campana/St. Jude into the vector.”

Penn told St. Jude it was ending the MTAs in 2011. A year later, Penn joined Novartis in launching an alliance to expand use of personalized T cell therapy. Novartis contributed $20 million toward a Center for Advanced Cellular Therapies with joint R&D focused on discovery, development and manufacturing of adoptive T cell immunotherapies.

After St. Jude filed its initial complaint in July 2012 with the U.S. District Court Western District of Tennessee, Penn filed its own complaint against St. Jude in the district court’s Eastern District of Pennsylvania. Penn contended St. Jude tortuously interfered with the university’s prospective contractual relations, denied having breached the MTAs, and argued that the patent was invalid.

The cases were consolidated in October 2012, and the tort claim dismissed in April 2013. Efforts to settle the case stepped up last year.

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