Biogen Inc.'s stock dropped 16 percent Wednesday on Wall Streetspeculation that a U.S. patent issued to Germany-based Schering AGfor the manufacture of mammalian beta interferon may relate toBiogen's production process.

Ed Hurwitz, of Robertson Stephens & Co. in San Francisco, said theSchering patent revolves around an expression system for theproduction of beta interferon and would be the first to cover themanufacture of the drug from a mammalian source.

If the Schering patent is valid and if Biogen's manufacturing processis the same, Hurwitz said Biogen may have to license the patentrights from Schering. However, he added, it is unclear whether theSchering patent affects Biogen's mammalian expression system.

What may be more certain, Hurwitz said, is that the Schering U.S.patent claims could signal the start of protracted legal proceedingsover beta interferon.

"This could be a huge mess," he observed.

Biogen's stock (NASDAQ:BGEN) fell $6.90 to close at $35.40, a 16percent drop.

A Biogen spokesman said the company received a copy of the"previously undisclosed" Schering patent Wednesday and isreviewing it.

"As you are aware, the patent situation for any company making andselling beta interferon is complex and requires access to severalpatents," the spokesman said. "We don't know at this time whetherthe claims in Schering's patent are valid or whether they coverBiogen's technology. In addition, it should be remembered thatBiogen has a strong patent portfolio for beta interferon, includingpatent rights that have issued in numerous jurisdictions."

Last October, Biogen, of Cambridge, Mass., announced successfulPhase III trial results of beta-interferon for multiple sclerosis. Thecompany expects FDA approval this year.

Chiron Corp., of Emeryville, Calif., and its partner, Berlex, alreadyhave a beta interferon product on the U.S. market for multiplesclerosis. Chiron's Betaseron is manufactured using bacteria.

Although Biogen doesn't have a U.S. patent for its beta interferonmanufacturing process, it does have a European patent coveringexpression of beta interferon in bacteria. n

-- Charles Craig

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