A choppy year for Amgen Inc. may be smoothing out after the U.S. District Court of New Jersey ruled that patents for Sandoz Inc.'s biosimilar, Erelzi (etanercept-szzs), a potential competitor to Amgen's highly lucrative arthritis treatment Enbrel (etanercept), should never have been granted.

Amgen (AMGN:NASDAQ) stock rose 4.86% on Monday, building on the momentum it raised since May when the share price was 23% lower. Shares closed Monday at $205.78.

Sandoz, the generics division of Novartis AG, plans to appeal the court ruling, saying the "ruling prevents launch of an important, affordable treatment option for U.S. patients affected by chronic autoimmune and inflammatory diseases." Novartis stock (NASDAQ:NVS) held its ground Monday, closing up less than 1%.

"Valid intellectual property should be respected; however, we continue to consider the patents in this case to be invalid," said Carol Lynch, president of Sandoz U.S. and head of North America. "Amgen asserted two patents that it obtained from Roche, in what we believe is an attempt to extend its U.S. compound patent protection for etanercept to 2029."

As its biggest seller, Enbrel is an Amgen powerhouse, raking in $1.36 billion in the U.S alone in the second quarter of 2019 as its sales increased 5% over the same period last year. Despite lower demand, sales rose due to its net selling price and favorable changes in inventory levels. Enbrel is responsible for 22% of Amgen's total revenue.

The decision doesn't increase the revenue outlook for Enbrel, or prevent it from declining, but it does eliminate the possibility of an accelerated "biosimilar-like" decline, SVB Leerink analysts wrote Monday.

"Over time we believe this is likely to result in Amgen trading at a valuation closer to large pharma companies (with low single-digit revenue growth expectations), than at a biotech multiple, and this difference is approximately 1-1.5 turns of multiple, or 10-12% valuation upside compared to the stock's recent range," the Leerink analysts concluded.

Now the company and investors will concentrate on Amgen's pipeline, including AMG-510, a KRASG12C inhibitor in a phase I study for patients with locally advanced or metastatic KRASG12C-mutant solid tumors. Data for that trial are expected before year-end. There is also a phase I dose-escalation study evaluating AMG-420, a B-cell maturation antigen-targeting BiTE molecule, in patients with relapsed or refractory multiple myeloma. Data from that trial are expected early next year. In phase III for treating severe asthma and in phase II for treating atopic dermatitis is tezepelumab. The two trials are being co-developed with Astrazeneca plc. Last September, the FDA granted breakthrough therapy status for tezepelumab in patients with severe asthmas without an eosinophilic phenotype. Data aren't expected until next year.

Not to be outdone, Amgen is rolling out its own line of biosimilars. Launched last month with Allergan plc were Mvasi, a biosimilar to Avastin (bevacizumab), and Kanjinti (trastuzumab-anns), a biosimilar to Herceptin (trastuzumab), for HER2-overexpressing adjuvant and metastatic breast cancer and HER2-overexpressing metastatic gastric or gastroesophageal junction adenocarcinoma. Mvasi is for treating five types of cancer: in combination with chemotherapy for metastatic colorectal cancer; in combination with chemotherapy for nonsquamous non-small-cell lung cancer; recurrent glioblastoma; in combination with interferon-alfa for metastatic renal cell carcinoma; and in combination with chemotherapy for persistent, recurrent or metastatic cervical cancer. It was the first biosimilar approved in the U.S. for the treatment of cancer. (See BioWorld, Sept. 15, 2017.)

Amgen has said the wholesale acquisition cost of Mvasi and Kanjinti will be 15% lower than their reference products.

Marveling at Amgen's success

Amgen and affiliates Immunex Corp. and Amgen Manufacturing Ltd., along with the owner and licensor of the two patents, Hoffmann-La Roche Inc., brought the patent infringement action against Sandoz, which had secured FDA approval for a biosimilar etanercept nearly three years ago. The action circled around U.S. Patent Nos. 8,063,182 and 8,163,522. The court found, after more than a year of study and hearings, that Sandoz had not met its burden to prove all seven of the asserted claims were invalid. The '182 patent expires in 2028 and '522 expires in 2029.

Piper Jaffray analysts were awed by Amgen's legal prowess: "We do think it's worth stepping back and marveling at AMGN's successes through the years with respect to defending its intellectual property, including this case, the PCSK9 litigation with Regeneron, and extending Enbrel's IP to the late 2020s begin with, among just a few examples."

The wagons are still circled against this kind of competition in the same venue, though with a different biosimilar. In April, the FDA approved Samsung Bioepis etanercept biosimilar, Eticovo (SB4) and mere days later Amgen, along with Immunex and Roche, filed a complaint alleging patent infringement in the New Jersey district, asking for relief under the Biologics Price Competition and Innovation Act by seeking damages. The suit alleges that five of Samsung's asserted patents were infringements. The filing notes that Immunex owns the 7,915,225, the 8,119,605 and 8,722,631 patents. Roche, according to the filing, owns the '182 and '522 patents and Immunex is the exclusive licensee of all commercial rights in the Roche patents, "including all rights to sell Enbrel in the United States and its territories."

The patent issue isn't as touchy in Europe as other Enbrel biosimilars are on the market, including Samsung's Benepali and Erelzi from Sandoz. Pfizer has the rights to Enbrel in Europe. Benepali is approved worldwide.

And the competition doesn't stop there. Two years ago, LG Chem Ltd. received marketing approval for Eucept, its etanercept biosimilar based on Enbrel, from South Korea's Ministry of Food and Drug Safety. Eucept launched in South Korea in June 2018. The approval for Eucept was significant for LG Chem, marking the first monoclonal antibody it has developed. The South Korean chemicals company is also developing a biosimilar version of adalimumab based on Abbvie Inc.'s Humira (adalimumab). (See BioWorld, March 21, 2018.)

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