National Editor

With an appeals court decision that Biogen Inc. must pay another $55 million to Schering AG in their patent fight over beta interferon, the longstanding dispute apparently has been laid to rest.

Not on paper, maybe, but in reality.

The U.S. Court of Appeals ruled that Biogen didn't literally infringe on patents held by Berlex Laboratories Inc., the U.S. subsidiary of Berlin-based Schering, but remanded the case to district court for further study of whether there might be infringement under what's called the doctrine of equivalents.

That doesn't much matter, said Jane Kramer, vice president of public affairs for Berlex, since "both sides have elected not to engage in further proceedings." Neither will seek any more damages from the other in the case, which began in July 1996 and included five court decisions, Kramer said.

Said Tim Hunt, director of public affairs for Biogen: "It's done. The litigation's over."

Kramer said Biogen must "make the [$55 million] payment within 30 days. They had already paid us $20 million and it could have been more."

If the appeals court had gone entirely against Biogen, Hunt acknowledged, the company would have been obligated to pay another $230 million.

Under the doctrine-of-equivalents rule, if a patent holder makes a minor change but gets the same result as a previous patent holder, damages may be due. But the point is moot, and the backing off of both parties is a relief for Biogen that William Blair & Co. LLC of Chicago said in a research report will "easily offset the near-term balance sheet impact."

Biogen, with about $87 million in cash and riding high in the saddle thanks to the approval last week of its psoriasis drug Amevive (alfacept), didn't suffer on Wall Street as a result of news about the court decision. (See BioWorld Today, Feb. 3, 2003.)

The company's shares (NASDAQ:BGEN) closed Monday at $39.46, up $1.21.

Biogen, of Cambridge, Mass., already has paid $20 million to Berlex, of Richmond, Calif., to settle the argument over whether Biogen's manufacturing process for making Avonex (interferon beta 1-a) for multiple sclerosis infringed on patent rights of Schering, which offers Betaseron (interferon beta 1-b) for the same indication. Biogen got a royalty-free, nonexclusive license to the patents held by Berlex.

Upon paying the $20 million, Hunt told BioWorld Today, Biogen "created a framework that allowed us to manage all future risk," and the potential $230 million additional payment was at the high end.

"I don't know if [what the district court might do with remaining issues] will even be pursued at this point," he said.

Biogen and Schering's dispute centered on the production of human beta interferon in mammalian Chinese hamster ovary cells. Schering noted that it will share the Biogen payments with Emeryville, Calif.-based Chiron Corp. and with Stanford University, under existing contractual agreements.

The court decision in the highly competitive MS field comes almost a year after another drug entered the market: Serono SA's Rebif (interferon beta 1-a). Biogen had orphan drug status for Avonex, which would have given it market exclusivity in the U.S. until May of this year if the FDA hadn't approved the Switzerland-based company's Rebif - market leader in the rest of the world - on the basis of superior efficacy. (See BioWorld Today, March 11, 2002.)

In July of last year, Serono said it reached its own agreement with Schering and Berlex over making interferon beta. Serono got a nonexclusive license to import, manufacture and sell Rebif in the U.S. and will pay royalties to Berlex, as well as an undisclosed one-time license payment. The royalty structure was dependent on the outcome of the case between Berlex and Biogen.

Another MS drug on the market is Copaxone (glatiramer acetate for injection), from Jerusalem-based Teva Pharmaceuticals Industries Ltd.

As for market leadership, "the numbers change quite a bit; it's a horse race," Kramer told BioWorld Today, but the most recently available data for a 12-month period (covering 2001) show Teva and Schering tied at about 22 percent of the U.S. market.

"Rebif [the Serono drug] has 7 percent now," she said. "We see it taking market share from Avonex, but we're taking from Avonex as well. Copaxone [from Teva], which is not an interferon, seems to be growing very nicely in the U.S. as well. A lot of people think Rebif is the one to look [out] for, but I think Copaxone is."

Kramer said the clinical evidence of efficacy for Copaxone is "somewhat weak," but the side effects are minimal so the drug is easier to take.

In Europe, Schering's drug is "virtually tied with Rebif, with about 35 percent each," Kramer said. "Copaxone has about 6 percent, and Avonex has about 24 percent," she added, noting that "if you look at it month to month, it varies."