Novartis has received a one-off payment of $200m (€144m) from Bayer, covering equipment and lease of buildings at the Emeryville, California site where the drug is manufactured, as well as other interferon beta-1b product inventory.
The two companies had been at loggerheads over the MS drug since Novartis' acquisition of vaccine manufacturer Chiron in 1996.
Bayer had previously signed an agreement with Chiron covering the regulatory filing, development and supply of Betaseron, and in 1996 announced its intention to exercise change of control rights and acquire all Betaseron-related assets at the former Chiron site in Emeryville.
Novartis disputed this move, and the two firms had been continuously 'discussing' the situation until finally coming to a mutually agreeable compromise in March this year.
This latest news represents the completion of that agreement, whereby all responsibility for manufacturing the drug has now been transferred to Bayer Schering.
$110m of the lump sum paid to Novartis last week goes towards equipment and leasing of buildings at the Emeryville site, with the remaining $90m for other product inventory.
After six years all land and buildings leased to Bayer are due to revert back to Novartis, who will continue vaccine and diagnostics operations at the site, along with pharmaceutical research carried out by the company's Institutes of Biomedical Research.
Novartis will continue to receive royalties from Bayer equivalent to those currently being paid on net sales of Betaseron, until the expiry of the original Bayer/Chiron agreement in October 2008.
In addition to the agreements covering the current Betaseron product, which generated sales of €500m over the first half of the year, the terms of the deal also dictate that Bayer will support Novartis in its efforts to develop its own interferon beta-1b product.
Novartis is planning to produce its own branded 250mcg version of interferon beta-1b, to be launched in 2009.
Following regulatory approval of the Novartis product, Bayer will supply the 250mcg version to the company from 2009 onwards and receive a double-digit royalty payment from Novartis in return.
Novartis also has the right to further develop new formulations and presentations of its branded version of Betaseron.
The company is hoping that the product will help it establish a stronger presence in MS therapy market, with the launch of the treatment coinciding with regulatory submission of the company's hotly anticipated once-daily oral MS therapy, FTY720 (fingolimod).
FTY720, currently in Phase III trials, has the potential to be the very first oral MS treatment to hit the market.
The company has some stiff competition however, with several firms in the race to develop an effective oral MS therapy and make it to market as soon as possible.
Bayer, although not currently working on an oral formulation, is however investing in life cycle management initiatives to protect the Betaseron franchise.
For example, the company currently has a Phase III study underway looking at administering double doses of Betaseron to patients.
With results from the study expected later this year, Bayer hopes to be able to launch the new higher dose regimen in 2008.
The company is also investigating Betaseron (in both standard and double doses) versus Copaxone (glatiramer acetate), as well as evaluating the administration of Betaseron early - after the first event suggesting MS rather than the second.
The company also has an antibody therapy for MS in development, alemtuzumab, which has recently completed Phase II studies.