A federal judge on Monday upheld two rival patents to biotechnology's hottest new drug, which analysts said would force the rival companies to split up a market potentially worth hundreds of millions of dollars a year.
The rivals, Amgen, based in Thousand Oaks, and Genetics Institute of Cambridge, Mass., tried to invalidate each other's patent on erythropoietin, a biotech version of a human protein that alleviates chronic anemia in patients suffering everything from kidney disease and arthritis to AIDS.
Amgen won Food and Drug Administration approval last June to sell EPO and has been selling the drug at the rate of about $125 million a year.
Although Amgen got the go-ahead to sell EPO to patients suffering from kidney disease, some biotech analysts peg annual sales of EPO at $1 billion to $2 billion a year in this country during the 1990s as the drug is prescribed for other uses.
Genetics Institute licensed its rights to EPO to a joint venture between Chugai Pharmaceutical of Tokyo and Upjohn, which expects to win FDA approval to sell the drug in a few months.
Many expected the 4-month-long court case to produce a landmark biotech patent decision. But the ruling by Judge Patti B. Saris of U.S. District Court in Boston narrowed each patent slightly, while ruling that each patent infringed upon the other.
"This decision strikes me as a . . . standoff," said Richard Bock, senior vice president of the biosciences group for Sutro & Co. He said it would likely "force the companies, if they don't contest the ruling, into a negotiated settlement through cross licensing."
Genetics Institute's Garen Bohlin, senior vice president of finance, was asked if his company would now go ahead and reach a cross-licensing deal with Amgen. "We're always willing to talk about a reasonable business deal," he said.
An Amgen spokesman, Mark Brand, said the company needed more time to read the 184-page decision before deciding what it would do next.
The court decision won't end the uncertainty for the companies, said Denise Gilbert, a biotech analyst with Montgomery Securities. "This decision trades one uncertainty for another. In a cross-licensing arrangement, we don't know the terms of what company would pay what."
There remain other unsettled twists to the EPO patent saga. The U.S. Patent Office is currently reviewing the EPO patents, and Amgen has filed additional patent applications relating to EPO. Gilbert said Saris' ruling "clearly said that Amgen was the first to discover recombinant (biotech-engineered) EPO. It may clear the way for some of Amgen's strong drug patent" applications.
EPO is a gene-spliced version of a protein found in the kidney that triggers essential production of red blood cells that in turn transport oxygen throughout the body. Patients suffering from kidney disease don't produce enough red bloods cells and they usually have very little energy as a result.
The protein was discovered by scientists in 1906, but because EPO occurs in the body in only microscopic amounts, until biotechnology came along, the problem had been how to get enough of it.
One of Amgen's scientists pulled off a remarkable bit of medical detective work several years ago when he found the gene that triggers production of EPO. By inserting the gene into Chinese hamster cells, Amgen is able to create a mini-cell factory that keeps reproducing the drug. There is no medical alternative for EPO, which is why the drug has attracted so much attention.
Patients are given EPO by injections, usually two or three times a week. Valerie Buhler, who suffers from kidney disease, told The Times earlier this year that after taking the drug, "The difference has been remarkable. I don't sleep all afternoon. I have energy and zest for life." Before taking the drug, she said, "running a few errands just tired me out."
This burst of energy doesn't come cheap. Annual treatments of EPO can cost $4,000 to $8,000 per patient, although the federal government reimburses most of the cost for some kidney patients.
The Amgen and Genetics Institute EPO patents differ considerably. Amgen's patent covers part of the biotechnology process for making the drug, while Genetics Institute's patent covers a purified form of EPO that was extracted from urine.
During the trial one of Amgen's attorneys dismissed Genetics Institute's patent as a "dwarf" because it didn't help scientists produce the drug with biotech methods. But Genetics Institute countered that its patent covered the final version of EPO that Amgen produces in its laboratory.
Genetics Institute's scientists later figured out how to make EPO through biotechnology and then licensed that technology to Chugai and Upjohn.
The court decision was announced after the stock market closed. Amgen's stock closed Monday at $57 a share, down 75 cents. Genetics Institute's stock closed at $30.25, up 50 cents.