By Karen Pihl-Carey
In what appears to be a positive development for Amgen Inc. in its litigation against Transkaryotic Therapies Inc. (TKT), a federal judge ruled Wednesday that TKT infringes on one of 18 claims involving Amgen's erythropoietin (EPO) patents.
Chief Judge William Young of the U.S. District Court of Massachusetts in Boston decided that based on the literal interpretation of a claim involving Amgen's U.S. Patent No. 5,955,422, TKT and partner Aventis Pharma AG (formerly Hoechst Marion Roussel) infringed claim one of the patent with its pharmaceutical composition containing EPO.
The judge chose not to rule on two other claims involving Amgen's Patent No. 5,756,349, which were argued in a court hearing as part of Amgen's motion of summary judgment of patent infringement. Those claims will be argued again later at a trial scheduled to begin May 15 and expected to take four weeks.
Investors responded by boosting Amgen's stock (NASDAQ:AMGN) a bit. It closed Wednesday at $57.25, up $2.937, or 5.4 percent. TKT's stock (NASDAQ:TKTX) closed at $28, down $4.125, or 12.8 percent.
In a joint statement, Aventis and TKT said they remain confident in their legal position. "We believe this is very early stage of the case," said Daniel Geffken, TKT's vice president of finance and chief financial officer. "We think it's premature to draw any conclusions from the hearing."
Geffken told BioWorld Today: "This is going to be a long battle, and it's just getting started."
Amgen's Chairman and CEO Gordon Binder said in a statement he is pleased with the court ruling. "This is a first but important step in the final determination of Amgen's claims against Hoechst and TKT."
The judge's ruling relieves Amgen of the burden of proof - at least for this one claim, said Edmund Pitcher, an attorney with Boston law firm Testa, Hurwitz & Thibeault LLP, who was hired by New York-based PaineWebber Inc. to analyze the proceedings. "It simplifies the trial," he said in a conference call. "What it means is Amgen is relieved of the burden of having to prove in a full trial that TKT infringes the claim of their patent."
But Thomas Dietz, managing director of research at Pacific Growth Equities Inc. in San Francisco, said the ruling is no clear-cut victory for anyone. "It was basically a stage-setting event for the trial arguments," he said. "All he [the judge] said is, 'I'm going to choose a definition and a meaning for this claim, and under that meaning you [TKT] do infringe.' But he did make a comment that the claim may be broader than the specification."
At the trial, Dietz said the main arguments will be about the definitions of words in the claims and whether or not TKT infringes those. If the definitions suggest TKT does infringe, then arguments will focus on validity and enablement issues, as well as inequitable conduct, Dietz said.
"I think that if TKT has a chance of avoiding liability," Pitcher said. "If they have a chance to prevail, validity is probably the most likely issue to prevail on."
Amgen filed a patent infringement lawsuit against TKT, of Cambridge, Mass., and Hoechst Marion Roussel AG (HMR), of Frankfurt, Germany, in April 1997. The suit sought an injunction preventing the defendants from making, importing, using or selling EPO in the U.S. The complaint alleges that TKT's gene-activated EPO (GA-EPO) has the structure and biological activity of Amgen's EPO.
The case was stayed until TKT and HMR lost the protection of the clinical trial exemption. The two companies reopened it last June. (See BioWorld Today, June 10, 1999, p. 1.)
EPO, which is marketed by Amgen under the name Epogen, is a glycoprotein hormone that regulates the level of red blood cells in circulation by stimulating their production in the bone marrow. It was introduced for patients with anemia who are on kidney dialysis. Amgen posted first-quarter sales of the product of $440 million, compared with $395 million for the first quarter of 1999.
Analysts in support of TKT have said the company does not infringe on Amgen's claims because TKT's technology takes a normal human cell that has a normal EPO already present and turns that EPO on, creating a naturally occurring EPO. The company has said it avoids any patented approaches to the production of proteins that use conventional genetic engineering by activating genes in human cells to produce the protein, instead of manufacturing them by introducing cloned human genes into bacterial, yeast or non-human mammalian cells.
In September 1998, TKT and HMR launched pivotal Phase III studies in the U.S. and the UK of GA-EPO. The trials for anemia related to renal failure in dialysis patients and in pre-dialysis patients are completed. A Phase III trial testing the product in oncology is still under way.
Dietz said he expects the companies to file for FDA approval of GA-EPO around the middle of this year. While the litigation will not prevent TKT and Aventis from launching the product upon approval, Dietz said it is unlikely the FDA will grant approval until the litigation is settled.
Following the trial, the judge has whatever time he needs to write up his ruling, Dietz said. "I suspect he'll turn it around faster than not."
A final ruling not favorable for Amgen would mean the company likely would have to share its Epogen market, substantially eroding its profit margins.
In other news, Thousand Oaks, Calif.-based Amgen posted its financial results for the first quarter ended March 31. The company said its net income was $266 million, with earnings per share of 25 cents. This compares to a net income of $247 million and earnings per share of 23 cents for the first quarter of 1999. The company said its revenues were $814 million in the first quarter, compared with $746 million in the first quarter of last year. Total product sales increased to $698 million from $688 million last year. Sales were reduced by about $95 million due to inventory drawdowns at the wholesaler and provider levels. The company said it had cash and marketable securities of about $1.5 billion. It has 1.03 billion shares outstanding.