Suit Unlikely to Hinder Anemia Drug Debut

Amgen’s domestic introduction of a potentially lucrative anti-anemia biotechnology drug is unlikely to be delayed by a lawsuit filed by the Thousand Oaks company’s marketing partner, Ortho Pharmaceutical Corp., analysts and legal experts said Monday.

The dispute centers on the drug erythropoietin (EPO) and surfaced Thursday when Ortho, a subsidiary of the giant health-care company Johnson & Johnson, sued Amgen in U.S. District Court in Wilmington, Del., for allegedly violating a 1985 marketing agreement between the two companies. Ortho contends that Amgen will unfairly beat it to market because its brand will be available to certain patients that the two companies previously agreed would be Ortho customers.

Initially, there was speculation that the suit would delay U.S. Food and Drug Administration’s approval of the drug or prevent its sale, reducing the critical lead Amgen and Ortho have over their competitors. On Monday, however, experts discounted that view.

“The judge will look at it and say that if Johnson & Johnson has been wronged it can be compensated with money down the road. He’s not going to slow down a lifesaving drug because there are people who need it,” said Thomas D. Kiley, former corporate counsel for Genentech, a South San Francisco-based biotechnology concern.

EPO is a hormone that triggers production of red blood cells and has been shown in clinical tests to be successful in treating patients with kidney disease.

Within two months, analysts expect, Amgen will be the first company to win U.S. Food and Drug Administration approval to sell EPO in this country. They estimate the drug’s total annual domestic market at close to $500 million.

U.S. Market Primary

Amgen retained the rights to sell EPO to kidney dialysis patients in the United States, considered by analysts as the primary market for EPO, worth about $200 million a year in sales.

Kidney dialysis eliminates impurities in the blood, but patients tend to be chronically anemic and need frequent blood transfusions. With EPO, the patients often don’t need the blood transfusions and can regain much of their lost energy. But Amgen sold the marketing rights to Johnson & Johnson for other domestic uses of EPO.

Ortho says the lawsuit could have been prevented if Amgen had filed certain documents and test results supporting Ortho’s research with Amgen’s FDA application to sell EPO.

But Gordon Binder, Amgen’s chief executive, said the company has refused to amend the application for two reasons. First, he said, it would delay FDA approval to sell the drug. He also said that FDA rules require Ortho to file its own application.

“If Ortho wants to sell Ortho’s brand, Ortho has to file,” he said.

Montgomery Securities analyst Denise Gilbert said she was puzzled that Johnson & Johnson would not take the responsibility to file its own application.

Prudential-Bache Securities analyst Stuart Weisbrod said he was surprised by the suit because Johnson & Johnson has a large number of joint agreements with other companies and does not want to develop a reputation for suing its partners.

Johnson & Johnson agreed to help pay for Amgen’s EPO research, which so far has cost a total of $70 million over seven years. In return, Johnson & Johnson’s Ortho subsidiary has the rights to market the drug to non-dialysis patients. Ortho hopes to sell EPO to people suffering from other kinds of anemia, including cancer patients treated with chemotherapy and AIDS patients who use the drug AZT.

Under the agreement, Amgen will manufacture the drug and supply it to Ortho.

Johnson & Johnson says the marketing agreement also includes “pre-dialysis patients,” or those who have the early symptoms of kidney disease but are not dialysis patients. Ortho alleges that the FDA will issue Amgen a broad approval that will enable it to sell the drug to dialysis patients and the pre-dialysis patients that Ortho says should be its customers.

The lawsuit caught analysts by surprise because Johnson & Johnson, through its Cilag subsidiary division, has been selling EPO in Europe and will pay Amgen a royalty.

Amgen’s stock closed Monday unchanged at $37.25 per share.