The award of a patent to Amgen last week for its biotechnology process for making a drug thought to combat anemia will make it the dominant player in a market estimated to be worth as much as $300 million a year domestically, analysts said.
But how strong a lock the Thousand Oaks biotechnology firm will have on the business remains uncertain, analysts said, because crucial legal and patent issues have yet to be resolved.
The drug, erythropoietin, or EPO, controls the production of red blood cells and is considered an important advancement in the treatment of anemia for people with kidney disease. Among its potential applications is treatment of dialysis patients who now are required to have frequent blood transfusions.
The patent covers a form of EPO produced through genetic engineering, in which large numbers of the protein's cells are reproduced. The patent makes it more likely that Amgen will win approval from the U.S. Food and Drug Administration to sell EPO as early as next year, analysts said.
"There's no question they will be able to go ahead and make some EPO and they will make a lot of money out of it," said James McCamant, editor of the Medical Technology Stock letter in San Francisco.
Since the patent announcement, Amgen's stock has jumped, recovering somewhat from the pummeling it took in last month's market collapse. Amgen closed at $28.75 per share Monday. Last month, it fell to as low as $16 from a high of $44.75 earlier this year.
While the patent was good news for Amgen, some legal issues remain.
Last week Amgen filed lawsuits against biotechnology rivals that also are developing EPO, one against Integrated Genetics of Framingham, Mass., and another against Genetics Institute of Cambridge, Mass., and its partner, Chugai Pharmaceutical of Japan.
Genetics Institute and Chugai countersued Amgen for patent infringement. Last June, Genetics Institute was granted a patent on a different, more naturally occuring form of EPO. In a terse statement, Gabriel Schmergel, president and chief executive officer of Genetics Institute, said that Amgen "has chosen the courts to be the arena for the resolution of this dispute."
Robert Kupor, a biotechnology analyst with Cable Howse & Ragen in Seattle, said he questions whether either patent is strong enough for one company to dominate the market.
Kupor questions whether Amgen's patent would protect the company should Genetics Institute and Chugai manufacture EPO in Japan for export to the United States, as they indicate they will do.
But Philip J. Whitcome, Amgen's director of strategic planning, said the company is confident that its patent is "broad enough and comprehensive enough to . . . exert our rights."
The key, Kupor said, is whether Amgen will get patent protection on the protein itself, as opposed to simply the process of making erythropoietin. If the broader protection is granted, Amgen's legal position could give it a virtual monopoly on the product, Kupor said.
Whitcome said he believes that Amgen will get the patent coverage it is seeking.
"Although the patent we have relates only to the United States, we fully expect similar coverage overseas and in Europe," Whitcome said.
Eventually, Kupor believes, Amgen and Genetics Institute may settle the dispute by agreeing to "cross-license" the product in which they both would pool their patent rights and attempt to block any other companies from entering the erythropoietin market.
In a separate matter, Amgen posted its second quarter results. Earnings rose 33% to $393,000, or 2 cents a share, in the period ended Sept. 30. Revenue, the bulk of which comes from payments from research partners, rose 70% to $12.6 million.
For the six months, Amgen's earnings rose 15% to $887,000 as revenue increased 66% to $25.2 million.