By Charles Craig

Biogen Inc. officials said Thursday revocation of its production patent for Avonex in Europe will not affect sales there and should not have any bearing on the company's intellectual property protection for the multiple sclerosis drug in the U.S.

Berlin-based Schering AG, which markets a competing multiple sclerosis drug, succeeded in persuading the European Patent Office (EPO) to revoke Biogen's patent covering production of Avonex, which is recombinant beta interferon.

Schering's product, Betaseron, also is recombinant beta interferon and is nearly the same molecule as Avonex. Schering's successful appeal of the Avonex process patent came on the company's second attempt. In 1991 the EPO ruled in Biogen's favor, upholding the 1990 patent, which relates to recombinant production in unicellular organisms. Biogen has defined unicellular as either bacterial or mammalian cells.

Kathryn Bloom, spokeswoman for Cambridge, Mass.-based Biogen, said the company may have been able to collect royalties on sales of other recombinant beta interferons in Europe if the patent were upheld. But the EPO's decision, she observed, does not stop Biogen from selling Avonex in Europe.

She said the EPO's action, based on a ruling the recombinant production process was obvious, also should not affect Biogen's U.S. application for the same process patent protection for Avonex.

In addition to the European patent fight, Biogen and Schering, whose subsidiary, Berlex Laboratories Inc., sells Betaseron in the U.S., are locked in patent litigation there.

Berlex, of Wayne, N.J., sued Biogen in federal court in New Jersey for alleged infringement of a 1994 patent covering recombinant production of all interferons in mammalian cells. Biogen filed suit in federal court in Boston to have the Berlex patent ruled invalid and not infringed by Avonex. Those cases are consolidated in U.S. District Court in Boston.

Berlex's 1994 patent does not relate to Betaseron, which is made by Chiron Corp., of Emeryville, Calif., in bacterial cells. Biogen produces Avonex in mammalian cells.

Sharon Seiler, analyst for Oppenheimer & Co., in New York, said "it is impossible to know" whether the EPO ruling holds any implications for Biogen's U.S. patent application.

But she said regardless of how the process patent battles are resolved in the U.S., the most likely outcome could involve payment of a low, single-digit royalty by the losing company.

In the marketplace, Biogen has said it is winning the battle for patients. Both Avonex and Betaseron are approved for relapsing and remitting multiple sclerosis, which affects 50 percent of the people suffering from the disease. The others experience a steady decline.

Biogen said Avonex, launched in May 1996, was being used by more multiple sclerosis patients than Betaseron after only eight months on the market.

Biogen said 1996 Avonex sales totaled $78 million. Wall Street analysts have predicted 1997 revenues of $300 million in the U.S. and Europe.

Schering sales figures for Betaseron in the U.S. and Europe were not available. But Chiron reported $67 million in sales of the drug to Berlex in 1996.

Seiler said Avonex has several advantages over Betaseron, two of which are related to their processing. Because Avonex is made in mammalian cells, sugars that attach to the beta interferon protein during production are more like sugars in humans. Betaseron contains bacterial sugars and those may be the reason multiple sclerosis patients generate more neutralizing antibodies to Betaseron than Avonex.

In addition, the difference in sugars may allow Avonex to stay active in the blood steam longer, which is related to the frequency of administration. Avonex is given once a week while Betaseron is administered daily.

Avonex's label also is stronger, based on clinical trials demonstrating the drug not only reduced flare-ups associated with the relapsing and remitting multiple sclerosis, but also slowed progression of the degenerative inflammatory disorder.

Betaseron's clinical studies demonstrated it could reduce relapses, but the drug fell short of proving it affected the disease's deteriorating march.

Biogen's stock (NASDAQ:BGEN) closed at $38.75 Thursday, an increase of $0.75 over the close Wednesday. Biogen reported the EPO ruling Wednesday and its stock ended the day down $1.25 to $38. *