Outcome of Amgen Suit Could Affect Entire Biotech Industry

For the past three weeks, a hundred or more patent attorneys, Wall Street analysts and journalists have been filing into Boston’s harborside federal courthouse, where Amgen Inc. finds itself in the middle of one of the most widely watched patent trials of the biotech era.

Judge William G. Young will determine whether Amgen, the world’s biggest and most profitable biotechnology company, can keep a tight hold on its signature product, Epogen--a genetically engineered version of a natural protein that brings the company $1.8 billion a year in sales.

The Thousand Oaks company contends that Transkaryotic Therapies of Cambridge, Mass., and European pharmaceutical giant Aventis are infringing five of its patents by producing their own version of the lifesaving product used by kidney dialysis patients and cancer patients undergoing chemotherapy.

The case also raises fundamental questions about how much territory a company can claim based on a pioneering genetic discovery.

And if Transkaryotic should prevail, the case could pose a threat to a number of other biotech products in addition to Epogen, also referred to as EPO.

The current suit, Amgen Chairman Gordon Binder said in a recent interview, “is important for the industry as a whole. Because to the extent that [Transkaryotic] could use its technology to copy EPO, it could use the same technology to copy virtually any biotech product.

“Now every patent is different, so it doesn’t mean necessarily if it does lose this one, it can’t copy someone else’s product,” Binder said. “But the industry is watching very closely here and certainly hoping we win.”

Transkaryotic is mounting a spirited counterattack--charging that Amgen’s patents are flawed, overly broad and unless overturned could give the company a government-sanctioned monopoly for 15 more years, well beyond the usual life for a patented discovery.

“This case poses a fundamental question of the biotechnology age--just how far can a patent extend beyond what it discloses to the public as its invention, to preempt future progress and innovation by others?” Transkaryotic’s lawyers asked in a legal brief.

All of this may look familiar to those who have followed biotech disputes over the past two decades. The biotech landscape is littered with the smoldering wrecks of patents destroyed or immobilized in the aftermath of all-out legal battles. Patent wars have been fought over who owns rights to such essential human proteins as insulin and human growth hormone.

What is surprising here is that this should still be going on with EPO, or erythropoietin, the hormone made by a human gene that was isolated in 1983 by Amgen scientist Fu-Kuen Lin and first marketed as Epogen by Amgen a decade ago.

Amgen’s discovery of the EPO gene was one of the early triumphs of a young biotech industry.

In 1976, a University of Chicago scientist succeeded in isolating minute amounts of erythropoietin from human urine. The natural protein, produced in the kidneys, stimulates red blood cell production. Patients suffering from kidney failure don’t produce enough of it and so become severely anemic, requiring frequent blood transfusions. Kidney dialysis patients who remember life before EPO describe it as a life-transforming drug.

In the early days of biotech, several companies sought the human gene that directs EPO production. The idea was to insert a switched-on human gene into animal cells grown in vats to produce industrial quantities of the hormone.

At least two companies succeeded, Amgen and Genetics Institute of Cambridge, Mass. In a lengthy patent fight, Amgen established that it had made its discovery just months before scientists at the rival company.

To market EPO, Amgen formed an alliance with a division of Johnson & Johnson. Amgen sells the product for kidney dialysis patients in the U.S.; Johnson & Johnson sells EPO for use by cancer patients whose red blood cells have been depleted by chemotherapy in the U.S. and for all uses in most of the rest of the world.

The product now boasts worldwide sales in excess of $4 billion.

Amgen’s multiple patents guaranteed the two companies exclusive access to the U.S. market for EPO, until Transkaryotic came along with a new way of producing it.

The company’s gene-activation technique takes advantage of the presence of a full set of human genes in virtually every human cell--although only a few are switched on at any time. Instead of inserting the human EPO gene into an animal cell, as Amgen does, Transkaryotic’s patented method inserts a switch to turn on the EPO gene in human cells and trigger EPO production.

Transkaryotic’s EPO is slightly different chemically from Amgen’s, and the two sides disagree whether the differences are substantial.

Patent law grants a government-recognized monopoly to inventors for a period of time--20 years from the time of a patent application under current statutes.

Amgen claims that its patents, some filed as late as 1995, cover all methods of producing EPO, including the one developed by Transkaryotic.

“It makes no difference by which path or process, new or old, inferior or improved, an infringing product is made,” argued Amgen attorney Lloyd R. Day Jr. in his opening statement. “If the claimed invention is to a product and the accused product is substantially the same, it matters not by what process it is made.”

But Transkaryotic and Aventis argue that their product is different in small but important ways from Amgen’s Epogen and that Amgen’s original patents never anticipated alternative ways of producing EPO.

Amgen’s claim is tantamount to Columbus claiming the entire world except for Europe “merely because he traveled to a small chain of Caribbean islands in the Americas in 1492,” the opposing lawyers contend. “No doubt his discovery was profound, even revolutionary. But he indisputably did not discover Asia, Africa, Australia or Antarctica.”

The trial itself, which began last month, is expected to last 20 days. And both sides agree that, regardless of how the judge rules, the losers will almost certainly appeal.

If so, it could be several years more before the case is settled and before biotech watchers will know whether it will have an industry-wide impact or just a narrow one.

Amgen won a preliminary victory even before the trial began when Judge Young ruled that Transkaryotic and Aventis had infringed a single claim in one of five Amgen patents. But that does not settle the matter if Transkaryotic can successfully show that the patent itself is flawed and unenforceable.

Amgen officials believe they will prevail, especially after Young’s pretrial ruling. “We’ve been confident of our patent position from the start,” said Amgen spokesman David Kaye.

Aventis and Transkaryotic say they are undeterred by the unfavorable ruling. “We believe that it is premature to draw any conclusions as to the final outcome of this case,” the companies said in a joint statement. “We believe we have compelling arguments and remain confident in our legal position.”

The combatants are important enough and the case looms large enough that Wall Street analysts bring along their own patent lawyers to interpret events in the courtroom.

PaineWebber analyst Elise Wang, who has long followed Amgen, believes that the company now has the edge in the case. But she also notes that Amgen has a second generation, longer-lasting version of EPO still awaiting regulatory approval that will give it a larger share of the worldwide market, whatever the outcome of the case.

But if Aventis and Transkaryotic prevail, she said, the case would have an adverse effect on the price that Amgen would be able to charge for its new product.

Dennis R. Harp, an analyst at Deutsche Banc Alex. Brown, believes that “Amgen should prevail. But I do believe that [Transkaryotic] can succeed in getting on the market in Europe.”

Transkaryotic, which has yet to market its first product, has a number of new drugs under development, including several that employ the same gene-activation technology used to produce its version of EPO. The company will not identify those other potential drugs.

Among those watching the court proceedings daily is Thomas J. DesRosier, chief patent counsel for Genzyme Corp. of Cambridge, Mass. The company markets Cerezyme, a genetically engineered version of a natural human enzyme missing in patients with Gaucher disease, a rare disorder that causes a buildup of fats in the liver, spleen and bone marrow. Transkaryotic’s annual report suggests it may be preparing its own treatment for Gaucher.

Attending the trial, said DesRosier, is “a good way to gather competitive intelligence.”

Depending on the scope of the final ruling, he said, it is “possible that it could have some grandiose, broad impact on all of biotech.”