National Editor

Laying to rest a patent fight that dates back to 1996, Amgen Inc. is making an undisclosed, one-time payment to Genentech Inc. as part of a settlement reached between the two firms.

"It's not surprising," said Matthew Geller, analyst with CIBC World Markets in New York, who estimated the amount due Genentech at $150 million.

Intellectual property, Geller noted, "can be worth a lot of money. Even a strong legal group like Amgen's realizes you can't flout patents." He said he expects "limited" long-term impact on the companies, and CIBC maintains an "outperform" rating on both.

The lawsuit by South San Francisco-based Genentech claimed that Amgen's processes for making Neupogen (filgrastim) and its longer-acting version, Neulasta (pegfilgrastim), which are used to decrease infection during chemotherapy, infringed on several Genentech patents. (See BioWorld Today, Nov. 7, 1996.)

In 2000, the District Court of California ruled that Amgen, of Thousand Oaks, Calif., did not infringe on the patents, but last year the appeals court remanded the case back to California. Now, under the settlement in the U.S. District Court for the Northern District of California, Amgen makes a payment but takes no license under the Genentech patents.

Stephanie Ashe, spokeswoman for Genentech, called the agreement "a way to put it all behind us and focus on what we do best."

Sabrina Johnson, director of global external communications for Amgen, said the company was "pleased to have the dispute settled" and expects that "we may receive some recoveries [of the amount due to Genentech] from global partners," but declined to be specific.

Geller said his firm's "best guess is that Amgen is sharing the pain" with Japanese partner Kirin-Amgen and with European partner Roche Holding AG to the tune of about $55 million, leaving the payout from Amgen's coffers at about $95 million.

Amgen estimated the financial impact at less than 5 cents per share on a GAAP basis, to be recorded in the third quarter. Genentech said it expects a 20-cent increase per share on a GAAP basis in the third quarter.

The $150 million amount is "what the numbers seem to work out to," said Geller. "We've showed our work," he added, referring to a research note.

In separate news, the FDA has sent Genentech a letter about labeling on Nutropin (somatropin), the injectable human growth hormone. A letter to Genentech posted on the FDA's website said the labels on Nutropin, Nutropin AQ and Nutropin Depot fail to provide risk information.

The agency said "isolated references to seek out risk information do not mitigate the complete omission of risk information in the promotional panels" and "misleadingly suggests" the drug is "safer than has been demonstrated by substantial evidence or substantial clinical experience."

Genentech spokeswoman Tara Cooper said the company is "working with the FDA to quickly rectify the situation," and noted that the promotional materials in question are no longer in use.

"It wasn't a warning letter," she added.

Amgen's stock (NASDAQ:AMGN) closed Thursday at $66.28, up 55 cents. Genentech's shares (NYSE:DNA) ended the day at $79.75, up 60 cents.