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QLT Inc. has agreed to pay $20-million (U.S.) to settle a legal dispute with Massachusetts General Hospital.

In return for the payment, the Boston-based hospital has agreed to dismiss its claims against the Vancouver-based drug developer.

Shares in QLT rose 9.55 per cent or 38 cents to $4.36 in morning trading on the Toronto Stock Exchange.

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QLT is the co-developer of the Visudyne treatment for a common form of age-related blindness.

MGH sued the company in February seeking higher royalties on the sales of Visudyne, which is used to treat age-related macular degeneration.

QLT said it has been paying the hospital a 0.5 per cent royalty on Visudyne sales in the United States and Canada. The hospital was seeking a royalty in line with what QLT was paying Massachusetts Eye and Ear Infirmary.

MEEI was awarded a 3.01 per cent royalty rate, on worldwide sales, in a legal action against QLT.

QLT said Wednesday that the $20-million will be payment in full for all past and future royalty obligations under the license agreement between the company and MGH.

"We are pleased to put this matter behind us and continue to concentrate on our clinical programs and strategic growth initiatives," Bob Butchofsky, QLT's president and chief executive officer, said in a statement.

"We believe that this agreement fairly resolves our dispute and serves to recognize the critically important contributions made by MGH in the development of Visudyne."

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Revenue from sales of its flagship Visudyne treatment fell nearly 20 per cent in the third quarter compared with last year.

QLT has said it believes Visudyne revenue will increase further after it announced a deal last month for exclusive rights to sell and market the drug in the United States starting next year.

After several years of diversification into other product areas, QLT has been working to refocus its business on Visudyne and the development of other eye treatments. In September it struck a deal to sell its Eligard prostate cancer treatment and last year sold its Aczone acne gel business.

While Visudyne sales have been falling in recent years due to competing drugs for age-related macular degeneration, QLT believes its new focus will give it an advantage in the ocular field in the future.

QLT said net worldwide sales of Visudyne were about $2.6-billion between 2000 and 2008. Visudyne sales for 2008 were $141.9-million, 34 per cent lower than in 2007.

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