Two of biotechnology's top money-makers are headed into federalcourt over a lawsuit filed by Genentech Inc. charging Amgen Inc.with patent infringement in the production process it uses to make its$1 billion white blood cell booster, Neupogen.

Genentech, of South San Francisco, said three of its patents coveringvectors and methods for expressing cloned genes in microbial hostcells are infringed by Amgen, of Thousand Oaks, Calif., in itsmanufacture of recombinant granulocyte colony stimulating factor, orNeupogen. The protein drug is used to increase growth of whiteblood cells destroyed by cancer chemotherapy.

David Kaye, Amgen spokesman, said, "We contend we're not certainthey have a patent position, but we don't violate the position they saythey have."

Genentech approached Amgen several months ago about licensingthe patents and after discussions broke down, Genentech headed forcourt.

Although the lawsuit, filed Oct. 16, 1996, in U.S. District Court inSan Francisco, alleges patent infringement related to Neupogen, thetechnology claims are basic to recombinant vector expression of avariety of different genes in production of protein drugs.

In its complaint, Genentech said it is seeking an injunction againstfurther violation of the patents and treble damages for "the willfulwanton and deliberate character of the infringement." Absent thatrelief, the company said it, at least, is entitled to "a reasonableroyalty."

Differences over a licensing fee and royalty percentage apparentlyare what caused the failure of the negotiations that preceded the courtsuit.

David Stone, an analyst with Cowen & Co. in Boston, suggestedreasonable in this case likely would be a "small royalty at the low endof single digits."

He noted the patents, related to core technologies, are the kind thatcommand "a small toll," not "a big chunk out of someone's hide."

Stone compared the dispute to Biogen Inc.'s lawsuit alleging itspatents on protein secretion technology were violated by Pharmacia& Upjohn Inc. in production of its growth hormone drug,Genotropin.

The case was settled after Pharmacia & Upjohn, of Kalamazoo,Mich., agreed to pay Biogen, of Cambridge, Mass., $30 million andan undisclosed percentage of Genotropin sales in North America andJapan. (See BioWorld Today, Oct. 2, 1996, p. 3.)

Genotropin is sold in numerous countries outside the U.S. and 1995revenues were $388 million. The drug was launched in the U.S. thisyear.

Amgen is biotechnology's top revenue producer with two products _Neupogen and Epogen, which is recombinant erythropoietin, aprotein that stimulates red blood cell growth. Epogen, first marketedin 1989, is sold to combat anemia in dialysis patients. Neupogen waslaunched in the U.S. two years later in 1991.

In 1995, Neupogen and Epogen generated more than $1.8 billion insales for Amgen. Neupogen accounted for $936 million in revenueand Epogen, $883 million.

The patent dispute is not expected to affect Amgen's stock pricesignificantly. "The market is up and they're flat," Stone said,referring to Wednesday's trading. "Maybe that's holding them back."

Amgen (NASDAQ:AMGN) closed Wednesday at $59.875, up $0.75.Genentech (NYSE:GNE) ended the day up $0.25 to $53.875.

The three Genentech patents involved in the dispute are: No.4,704,362, titled "recombinant cloning vehicle for microbialpolypeptide expression," issued Nov. 3, 1987; No. 5,221,619, titled"method and means for microbial polypeptide expression," issuedJune 22, 1993; and No. 4,342,832, titled "method of constructing areplicable cloning vehicle having quasi-synthetic genes," issued Aug.3, 1982. n

-- Charles Craig

(c) 1997 American Health Consultants. All rights reserved.

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