Pfizer Subsidiary Seagen Loses Crucial Royalty Stream in Patent Ruling

A U.S. appeals court has delivered a significant legal blow to Seagen, now a subsidiary of Pfizer Inc., by invalidating a key patent. The decision overturns a prior award of $41.8 million in damages and, more critically, eliminates all future royalty payments related to the blockbuster cancer therapy Enhertu.

On Tuesday, the U.S. Court of Appeals for the Federal Circuit vacated the earlier judgment from a district court. The appellate judges ruled that a fundamental patent covering antibody-drug conjugate (ADC) technology was invalid due to insufficient description and disclosure. They found the original 2004 patent filing did not provide an adequate basis to cover the specific drug developed by Daiichi Sankyo.

• Previous Judgment Overturned: The appeals court vacated the lower court's ruling.
• Patent Invalidated: The core patent was declared invalid.
• Financial Impact: The $41.8 million damage award is voided, and an 8% royalty on sales is terminated.

The Financial Fallout: Blockbuster Revenue Vanishes

While the loss of the damages is substantial, the termination of future royalty payments strikes at a core revenue stream. Enhertu, developed by Daiichi Sankyo and AstraZeneca, is a top-selling oncology drug. In just the first nine months of 2025, the therapy generated approximately $3.58 billion in global sales.

Should investors sell immediately? Or is it worth buying Seagen?

An 8% royalty on that sum would have delivered nearly $280 million in pure profit to Seagen during that period alone. This high-margin, passive income was a valued asset considered during Pfizer's acquisition of Seagen and has now been permanently erased.

Legal Pathway Appears Closed

The ruling from the federal appeals court is considered precedent-setting, making a successful appeal to the U.S. Supreme Court highly unlikely. The legal avenue to restore these royalties is effectively blocked.

For Pfizer, the news diminishes the value of the assets it acquired through Seagen. Market reaction was muted but negative: Pfizer shares (PFE) traded down 0.7% at $25.10 on the day of the announcement. The outcome places immediate and greater pressure on Seagen's own product pipeline, now under the Pfizer umbrella, to create value for investors. The anticipated passive income from Enhertu is definitively a thing of the past.