By Randall Osborne

Laying to rest a lawsuit over alpha interferon dating from 1996, Biogen Inc. signed multi-party agreements with Schering-Plough Corp., Hoffman-La Roche Ltd. and Genentech Inc.

The complex battle began in the early 1980s, when Biogen and South San Francisco-based Genentech (with partner Roche, of Basel, Switzerland) filed competing patents. In December 1995, the U.S. Patent and Trademark Office's appeals board ruled Genentech/Roche invented alpha interferon earlier than Biogen.

A year later, Biogen filed a lawsuit in U.S. District Court, seeking to reverse the patent board's decision. No patent has been issued to either party, although one is expected for Genentech/Roche.

In the settlement, Cambridge, Mass.-based Biogen and licensing partner Schering-Plough withdrew the court case related to the patent board's decision. Schering-Plough, of Madison, N.J., has agreed to pay Biogen undisclosed sums based on the U.S. sales of its alpha interferon product, Intron A, from July 2002 until the anticipated Genentech/Roche patent — expected to last 17 years — expires.

"This effectively kicks in at a point where no one has indicated we would have royalties on the drug," said Kathryn Bloom, spokeswoman for Biogen. The royalties will be only for the U.S. sales, whereas current royalties from Schering-Plough are global, but they will come "at a time when we hadn't been expecting revenue," Bloom added.

Schering-Plough's royalties to Biogen on worldwide sales of Intron A are based on an already-issued patent that covers the DNA sequence of alpha interferon and the use of that DNA to make the recombinant drug.

Schering-Plough and Roche also have modified their agreement covering the cross-licensing of alpha interferon patents, under which Schering-Plough has rights to the anticipated Genentech/Roche patent, allowing each company to continue marketing their respective alpha inteferons. Genentech/Roche's alpha interferon product is Roferon-A.

Biogen's money-making interferon product is Avonex (interferon beta-1a) for relapsing multiple sclerosis. Licensees sell a number of Biogen products, including alpha interferon and hepatitis B vaccines.

The alpha interferon clash was hardly of an unfamiliar type, Bloom said.

"You had two groups of scientists working on the same area, and they made discoveries at similar points," she said. "You rush to publish and get your patents filed. It's part of the competitiveness of the industry."

Biogen's stock (NASDAQ:BGEN) closed Friday at $46.125, down $0.625. *

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