US drugmaker Merck has settled its patent dispute with rival Bristol-Myers Squibb (BMS) and Japan’s Ono Pharmaceutical over cancer immunotherapy Keytruda. Under terms of the settlement, Merck will pay BMS the one-off sum of $625 million plus royalties of worldwide sales of Keytruda for a non-exclusive license to market the drug in any territory where it is approved.

The litigation related to the use of an anti-PD-1 antibody for treating cancer. BMS and Ono, which launched the first PD-1 antibody Opdivo in July 2014 in Japan, argued that fellow PD-1 antibody Keytruda infringed their patents in Europe, the US, Australia and Japan.

Merck will pay royalties on global Keytruda sales of 6.5% for the period 2017 to 2023 and 2.5% between 2024 and 2026, which will be split 75:25 between BMS and Ono, respectively. The agreement allows for the companies to give each other specific rights under their respective PD-1 patent portfolios.

BMS and Ono said the agreement will result in the dismissal of all patent litigation filed against Merck relating to Keytruda. Both Opdivo and Keytruda have been approved for a number of tumor types.