UK biotechnology company Acambis has ended its long-running patent battle with Danish rival Bavarian Nordic over the Modified Vaccinia Ankara (MVA) technology underlying the two companies’ smallpox vaccines.

Acambis and Bavarian Nordic have reached a global settlement that draws a line under their MVA patent disputes at the US International Trade Commission (ITC) and the Commercial Court in Vienna, Austria, as well as the conversion, unfair trade acts and unfair competition action at the US Federal District Court for the District of Delaware.

All pending litigation and any further appeals will cease under the settlement. Bavarian Nordic will grant Acambis a licence to some of its MVA patents in exchange for an undisclosed upfront payment. Acambis will also make royalty and milestone payments to Bavarian Nordic should it develop or commercialise certain MVA products in the future. Both companies said the agreement would have no impact on previously issued financial guidance.

Any further terms of the settlement remained confidential. In a joint statement, Ian Garland, chief executive officer (CEO) of Acambis, and Peter Wulff, president and CEO of Bavarian Nordic, commented: “This settlement brings to an end the litigation between our two companies and provides a basis for both companies to progress their respective vaccine businesses unhindered by these legal disputes”.

Legal developments in the last few months suggested Acambis was gaining the upper hand in the MVA dispute. On 22 June, the pending case in Vienna’s Commercial Court was dismissed on the basis that Acambis’ MVA3000 smallpox vaccine did not infringe Bavarian Nordic’s Austrian MVA patent. At the time, the Danish company said it was confident the ruling would be overturned on appeal, as the court had erred in interpreting the patent claims as covering only the virus material physically deposited at the European Collection of Cell Cultures under the Budapest Treaty.

Bavarian Nordic was also appealing against the Delaware court’s dismissal in May of the company’s claims that Acambis had improperly obtained and converted the MVA strain that makes up MVA3000, as well as engaging in unfair competition and trade practices.

The Danish company fared better at ITC, which in February vacated the initial determination by an Administrative Law Judge invalidating Bavarian Nordic’s MVA patent claims. Acambis had claimed victory following the initial determination in September 2006, although Bavarian Nordic insisted the judge had acknowledged that the two disputed patents were both infringed and enforceable.

The Administrative Law Judge recently assigned to the ITC case had set a date of 20 November 2007 for a new initial determination. Acambis and Bavarian Nordic will now submit a joint motion to the ITC to terminate that investigation.

Positive news flow

For Acambis, the patent settlement continues the more positive news flow of recent months, in contrast to last year’s bruising experience of losing out on a US$1 billion contract to supply MVA attenuated smallpox vaccine to the US government. The lucrative Department of Health and Human Services contract instead went to Bavarian Nordic’s MVA vaccine, Imvamune. Last March, Acambis announced the departure of its chief executive and finance director as well as a restructuring programme that involved a 15% reduction in its workforce.

On the brighter side, the UK company is expecting a decision by 31 August from the US Food and Drug Administration on its ACAM2000 smallpox vaccine, which was recommended unanimously for approval by a FDA advisory committee in May. The vaccine is currently being stockpiled by the US government.

Acambis also announced earlier this month that it had started a Phase I clinical trial of its universal ‘flu vaccine candidate, ACAM-FLU-A. Results are expected around the end of this year.