By Charles Craig

CellPro Inc., whose device for restoring bone marrow destroyed by cancer chemotherapy was approved by the FDA three months ago, is back in federal court this week fighting patent infringement claims related to the product filed by three plaintiffs.

While the court battle rages, CellPro has filed a petition on another government front to nullify the litigation and ensure continued sale of its Ceprate SC Stem Cell Concentration System, which was approved in December 1996.

The device is used to isolate stem cells from the bone marrow of a cancer patient prior to chemotherapy. After the treatments, the purified stem cells are reinfused to reconstitute the patient's depleted bone marrow, which is responsible for replenishing blood and immune system cells of the body. CellPro's method significantly reduces the toxicities associated with traditional bone marrow transplants.

CellPro, of Bothell, Wash., has asked the U.S. Health and Humans Services Department to intervene in the patent dispute by issuing the company a license to the Johns Hopkins technology that is the subject of the fight.

CellPro's stock (NASDAQ:CPRO) closed Wednesday at $9.375, down $1.625.

Baltimore-based Johns Hopkins, which developed its stem cell isolation technology with government funds, licensed the patents to Becton Dickinson & Co., of Franklin Lakes, N.J. Becton Dickinson then licensed the technology for therapeutic uses to Baxter Healthcare Corp., of Deerfield, Ill. All three are plaintiffs in the patent infringement litigation against CellPro.

Because Johns Hopkins developed its technology with government funds, the Health and Human Services secretary can issue licenses to it * even if the patent rights already were transferred to private companies * if the public interest warrants such action.

Joann Reiter, CellPro spokeswoman, said the federal government's intervention will help ensure an FDA-approved product stays on the market for the benefit of cancer patients.

If the government does step in on CellPro's side, Reiter said, the likely outcome would be negotiation of a reasonable license for her company from Baxter, ending the court fight.

Reiter said that resolution would be a compromise for CellPro, which through five years of litigation has maintained it does not infringe the Johns Hopkins patents.

She noted in August 1995 a federal jury agreed with CellPro, but the judge in the case threw out the verdict. Since then, she added, the judge has ruled CellPro infringes two Johns Hopkins' patents related to a monoclonal antibody used to isolate stem cells.

CellPro has said it will appeal those decisions.

The litigants are back in court this week for a new jury trial to assess damages against CellPro and to determine if the patent infringement was willful.

Regardless of the outcome of this phase of the case, Baxter, Reiter said, has indicated it will seek an injunction from the federal court to prevent CellPro from continuing to sell its product.

Reiter said the patent dispute focuses only on use of the Ceprate system with a specific antibody for selecting particular stem cells, not on the device's core technology, which is patented in the U.S. and Europe, for isolating rare populations of cells in general.

A decision in the jury case is expected by the end of next week, Reiter said. If Baxter proceeds with its intention to seek an injunction, it likely would take another two to four weeks to argue.

Reiter said she does not have sales figures for the Ceprate SC Stem Cell Concentration System since its FDA approval, but the device has been used in 60 clinical trials at 40 medical centers. More than 5,000 patients with breast cancer, multiple myeloma and lymphoma have been treated in those studies.

Since the FDA clearance, Reiter said, "One of our best customers is Johns Hopkins," which uses the Ceprate system for medical research and for treating cancer patients.

The Health and Human Services' authority to intervene on CellPro's behalf was created by the 1980 Bayh-Dole Act, named for its sponsors, former U.S. Senators Birch Bayh (D-Ind.), and Robert Dole, (R-Kan.). The legislation granted universities the right to patent discoveries from federally funded research and to license those inventions to private companies for commercial development. *