Genetics Institute Inc. (GI) and Amgen Inc. announced Tuesdaythat they have agreed to bring to a close all outstanding patentdisputes in the U.S. between them on erythropoietin (EPO).

As part of the settlement, GI (NASDAQ:GENIZ) of Cambridge,Mass., will pay Amgen (NASDAQ:AMGN) $14 million, along withan additional $2 million "contingent on the outcome of certainfuture events." GI had already put aside $11 million inanticipation of this settlement, and its European marketingpartner for EPO, Boehringer Mannheim GmbH, will reimburse "aportion of these payments."

Thus ends an era of high-profile litigation between the twobiotechnology companies, which have been in and out of courton patent rights for EPO since the mid-'80s.

Even though the major issues were resolved in March 1991,when the U.S. Court of Appeals for the Federal Circuit ruledthat Amgen's product patent on the drug was valid, that GI hadinfringed that patent and that GI's product patent was invalid,some of the process patents "remained in interference,"according to Dennis Harp, GI's director of corporatecommunications. And GI was held liable for the infringement.

"Before today's settlement, we would have had to go to court toadjudicate the damages," Harp told BioWorld. "The settlementeliminates this whole second phase." In fact, "this settlementresolves all outstanding disputes on EPO, whether process orproduct," he said.

The settlement also "clears the way for the issuance of Amgen'spreviously allowed recombinant EPO process and productpatents in the U.S.," according to Gordon Binder, Amgen's chiefexecutive officer. Those patents, for which the Thousand Oaks,Calif., company submitted applications in October 1987, werethe subject of the trailing interferences that Tuesday'ssettlement resolved.

Biotech analysts see this settlement of settlements betweenAmgen and GI as a non-event.

"It's the final chapter on something which in a commercialsense is a fait accompli," said David Stone, an analyst withCowen & Co. "Amgen already effectively has a lock on themarket," Stone said.

"It's not been a major source of uncertainty in the Amgenstory," added Greg Brown, who follows Amgen for VectorSecurities International. The settlement "won't have a materialeffect on Amgen's revenues, earnings or stock price," he added.

"It's a win-win settlement" for both companies, Stone added.

There's still one issue in the U.S. to be resolved, however. InAugust 1991, Amgen's licensee, Ortho Pharmaceutical Corp.,initiated infringement proceedings against GI in the U.S. DistrictCourt for Massachusetts. But although Ortho tried to join itscase with Amgen's, Amgen and GI moved to have Ortho'sclaims dismissed, Ortho has appealed the District Court'sdecision, and the matter is still pending.

The EPO patents were also being disputed in Japan, but bothcompanies' licensees settled their differences earlier this year,Harp said. In Europe, however, the dust hasn't quite settled."The dispute is continuing on country by country," Harp toldBioWorld.

-- Jennifer Van Brunt Senior Editor

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