By Matthew Willett
U.S. District Court of Massachusetts Judge William Young ruled in favor of Amgen Inc. in its three-year patent dispute with Transkaryotic Therapies Inc. and Aventis Pharma AG late Friday, siding with Amgen on eight claims of patent infringement re lated to three pat ents.
The patents at issue cover Epogen alfa, Amgen's billion-dollar blockbuster anemia therapeutic, a recombinant form of erythropoietin, a red blood cell production-regulating hormone.
TKT officials, however, said the war is far from over, and vowed to turn the ruling they called "interim" around on appeal.
Analysts call the decision a decisive round for Amgen, and some say the knockdown leaves TKT all but TKO as it relates to its EPO product. That product, called Dynepo, has completed clinical testing and is awaiting marketing authorization in the U.S. and Europe.
Even a Rocky-esque 12-round comeback in appeals court from Cambridge, Mass.-based TKT wouldn't matter, some analysts said, since Amgen's Aranesp, a sustained-release formulation of EPO, is primed for approval and launch early this year, long before the 12- to 18-month appeal could be completed.
TKT President and CEO Richard Selden said he's optimistic about the company's chances in appeal, and said the decision wouldn't affect plans on pipeline advancement, especially the six Gene Activated platform products and particularly GA-II, TKT's second Gene Activated protein, now approaching Phase II testing.
"I don't want any of you to think we're not disappointed, but we would be mistaken to allow this, which is in effect an interim decision, to affect our mission," Selden said.
"I don't think it'll have any impact on any product in our pipeline, particularly GA-II," Selden said. "Until it gets to appeal, making a major decision based on an interim ruling, in effect, wouldn't be wise. With respect to many different products in the pipeline, taken together, this has no effect on GA-II or others."
Friday's decision in U.S. District Court of Massachusetts ruled for Amgen on eight claims concerning three patents: U.S. Patent Nos. 5,621,080; 5,756,349; and 5,995,422. Young ruled TKT didn't infringe on Amgen's U.S. Patent No. 5,547,933, and that it would be invalid if it were infringed.
Young also ruled that Amgen's U.S. Patent No. 5,618,698 wasn't infringed. A full copy of the decision is available at http://www.mad.uscourts.gov.
Pacific Growth Equities Senior Analyst Tom Dietz said the effect on either company is largely short term, though it could set the stage for the evolution of Amgen's EPO franchise in the future.
"This is, for TKT, a disappointment that they lost at this level," Dietz told BioWorld Today. "For Amgen it's good, but the ultimate battle will be on the appeal playing field, and it seems to us there's plenty of fodder for appeal."
Other watchers, however, say it's a solid victory for Thousand Oaks, Calif.-based Amgen. Even if TKT wins the case on appeal, Deutsche Banc Alex. Brown Analyst Kevin Tang told BioWorld Today Amgen can keep its EPO franchise through the sustained-release EPO product nearing approval, Aranesp.
"We expect [Amgen] will be able to convert their existing EPO franchise over to the Aranesp product if they need to, if TKT wins on appeal," Tang said. "If they don't, they can maintain the franchise with the first-generation product and expand it with their second-generation product."
Jeff Richardson, Amgen's director of global public relations, said the decision affirms the strength of patent protection for the whole industry. He said the company is still planning for Aranesp's launch by mid-2001, pending FDA approval.
"We can only say that our patents run out to 2015, and a judge has held them valid," Richardson said. "The way we look at it, it's much more than an Amgen issue, it's an industry issue. Patents are the lifeblood of innovation. They support every research-based company; they're really the foundation. We're pleased for us, and we're pleased for the industry."
Richardson added that the decision maintains the viability of drug discovery.
"I think it bolsters the feeling of what a patent is, the notion of those two words: patent protection," he said. "The search for new medicines is time consuming, highly risky, costly, and the search for new medicines wouldn't be as robust as it is in the U.S. without patent protection."
At issue is an annual market worth billions, a market centered on erythropoietin, a glycoprotein hormone that regulates the level of red blood cells in circulation by stimulating their production in bone marrow.
The dispute dates to April 1997 when Amgen sought an injunction preventing TKT and Aventis Pharma AG, formerly Hoechst Marion Roussel, from making, importing, using or selling EPO in the U.S. (See BioWorld Today, April 17, 1997.)
Amgen claimed patent infringement related to Dynepo, TKT's gene-activated erythropoietin. TKT claimed Amgen's patents didn't apply since TKT's EPO product uses a normal human cell with a normal EPO gene present, turning on the gene to produce a naturally occurring form of EPO.
Amgen's product for treatment of anemia in kidney dialysis patients is made by inserting a human gene into hamster cells, which then produce EPO.
A similar case in Europe is under way. TKT officials say the case is "off to a good start," and expect a decision in the second or third quarter of this year.
Third-quarter product sales for Amgen were $851 million. Sales in 2000 as of Sept. 30, were $2.355 billion. Total revenues for Amgen for those periods were $949.5 million and $2.678 billion, respectively. Of those sales, EPO represented more than half, logging $461.1 million and $1.429 billion for the three- and nine-month periods ending Sept. 30, respectively. Those sales represent increases of 11 and 12 percent, respectively, over the same periods in 1999.
Amgen partners with Johnson & Johnson for Epogen marketing and distribution in Europe and nondialysis applications in the U.S.
Of the most significance, at least initially, for each company, analysts agreed, is the lifting of the litigation clouds that until now hung darkly over the pair's stocks.
"For Amgen it lifts a cloud that's been sitting on them in terms of what the EPO market is and what the shares will look like in a couple of years and onward," Dietz said. "[For TKT] there's certainly some short-term volatility they'll have to deal with in their share price. They're moving ahead with all their programs, and they now know the groundwork they're going to have to do on appeal."
Amgen shares (NASDAQ:AMGN) rose $7.625 Monday on the news, or about 13 percent, closing at $67.625, while TKT's shares dropped 32 percent, falling $10.875 to close at $23.125.