West Coast Editor
ImClone Systems Inc.'s shares are likely to wobble for a while, as the company deals with the loss of its patent war with Yeda Research and Development Co. and an embarrassing public skirmish between new board member Carl Icahn and chairman David Kies.
A federal judge ruled Yeda, which filed suit in 2003, rightly owns the patent issued in 2001, which deals with monoclonal antibodies used with chemotherapy against cancer. ImClone and partner Bristol-Myers Squibb Co., both of New York, licensed rights to the patent from Paris-based Sanofi-Aventis Group, also considered a loser in the court decision.
At stake are royalties and a potential license payment due Rehovot, Israel-based Yeda on Erbitux, the colorectal cancer blockbuster (also approved for head and neck tumors) that recorded $172.8 million in sales during the second quarter and could reach $1 billion this year.
"There's no specific number out there [due Yeda from Erbitux sales]," Nicholas Groombridge, lead attorney for Yeda in the case, told BioWorld Today. Co-chair of patent litigation and counseling with Weil, Gotshal & Manges in New York, Groombridge called a settlement "entirely negotiable" and expressed chagrin that ImClone has chosen to pursue the case with another lawsuit.
Whatever the possible payments ImClone ultimately makes, he said, the firm more importantly lost the ability to block from the market other epidermal growth factor receptor inhibitor drugs used with chemo against cancer. The court decision "removes what could otherwise have been a significant impediment to other players," Groombridge said.
Enter Amgen Inc., of Thousand Oaks, Calif., which licensed rights to the disputed patent from Yeda as soon as the Israeli firm's victory became clear. "Amgen had representatives at the trial sitting in the audience every day," Groombridge said.
The company's Vectibix (panitumumab), a would-be competitor for Erbitux (cetuximab), is likely to win FDA approval for colorectal cancer this month. Gained by Amgen through its $2.2 billion buyout of Fremont, Calif.-based Abgenix Inc., Vectibix was the main driver of the takeover. (See BioWorld Today, Dec. 15, 2005.)
Amgen was "aware of this patent at the very highest levels" - nervously so, Groombridge said, pointing to a conference call shortly after the Abgenix buyout, during which an analyst asked Amgen CEO Kevin Sharer about the possible intellectual property threat to Vectibix. Shearer replied with "noticeable irritation" that Amgen had a strategy for dealing with the patent issue, Groombridge recalled, though buying a license from Yeda probably wasn't what Sharer had in mind.
Others with EGFR drugs in the works that could fall under the Yeda patent include Merck KGaA, of Darmstadt, Germany. This summer, ImClone and Merck revised an existing deal to include a larger royalty rate tied to Merck's sublicense of intellectual property relating to an investigational EGFR-targeting antibody, matuzumab. (See BioWorld Today, July 21, 2006.)
Around the same time as the patent defeat at the hands of Yeda, ImClone shareholders put billionaire Icahn and associates on the board, and Icahn promptly fired off a letter to chairman Kies, asking him to step down. Icahn assailed Kies' failure to lay the patent battle to rest earlier and his choice to give interim CEO Joseph Fischer a long-term contract, "given that he has little or no expertise in biotech companies."
In the letter, which became part of an SEC filing, Icahn (who owns a 14 percent stake in ImClone) cited the "sorry record" of ImClone under Kies' watch, and declared that, if Kies does not give up his post, he "will have thrown down the gauntlet" and Icahn would "have to react accordingly."
Icahn, like CEO Daniel Loeb of the hedge fund Third Point, seems fond of penning letters that take officials to task and make headlines. In October, the text of his letter to Time Warner came out in a press release. "Why are a majority of the same directors who signed off on the disastrous AOL merger still steering the corporate ship?" he demanded.
ImClone's Kies responded to Icahn, also in an SEC filing, and called for a halt to "needlessly antagonistic" debate outside of the boardroom.
Catherine Polizzi, IP attorney with Morrison & Foerster in Palo Alto, Calif., said patent trouble such as ImClone/Sanofi's with Yeda should be handled as soon as officials realize a possible conflict.
"You want to be pre-emptive about this kind of thing," she said. "I see this all the time, and I flag it, especially if there's going to be a collaboration. You should be aware of it early, and make sure it's addressed."
ImClone's stock (NASDAQ:IMCL) closed Friday at $29.62, down 15 cents.