Amgen, Rival Told to Split Rights to Anti-Anemia Drug

A federal judge on Wednesday ordered Amgen and its biotechnology rival, Genetics Institute, to file cross-licensing agreements within 60 days that would allow both companies to keep rights to a valuable anti-anemia drug without having to pay each other royalties.

The order is the latest step in a lengthy patent dispute involving erythropoietin, or EPO, a biotechnology drug that is already hot selling and that analysts expect to develop into a $1-billion-a-year worldwide market in a few years.

Peter Drake, a biotechnology analyst with Vector Securities, hailed the court decision as a plus for both companies: “The judge is letting the marketplace determine the advantages of one product versus another and will leave the ultimate winner up to each company’s sales force.”

Amgen, based in Thousand Oaks, is the only company now selling the drug in this country. It won Food and Drug Administration approval in June, and in its most recent quarter, Amgen sold about $50 million worth of the drug.

Genetics Institute has licensed its version of EPO to Chugai-Upjohn, a joint venture between one of Japan’s major pharmaceutical companies and Upjohn Co. of Kalamazoo, Mich. Chugai-Upjohn is still waiting for FDA approval to sell the drug.

In his order Wednesday, U.S. District Judge William G. Young in Boston also ordered Chugai-Upjohn to submit a cross-licensing agreement.

If the companies fail to file the licensing agreements, the judge said the firms will face injunctions preventing them from producing the drug.

Wall Street was happy with the ruling. Amgen’s stock closed Wednesday at $60.125, up 62.5 cents, just off its all-time high. Genetics Institute closed at $38.25, up 50 cents, to hit a new 52-week high.

The case is considered important not only because of the commercial value of the drug, but also because it involves complex issues in the nascent field of biotechnology patent law.

EPO is a gene-spliced version of a human protein found in kidneys that triggers production of red blood cells that carry oxygen throughout the body. Patients with kidney disease and other ailments suffer from chronic anemia because their bodies cannot produce enough red blood cells. But patients treated with EPO recover most of their old energy within a few days.

EPO has been widely hailed as a wonder drug by doctors and patients, but it is very expensive. Kidney patients may need $4,000 to $8,000 worth of the drug each year, although the federal government picks up most of the cost.

Drake said that once Chugai-Upjohn wins approval to sell EPO, he expects the extra competition to lead to a 20% price cut as the newcomer tries to grab as much business as possible. He said there will be plenty of business for both companies, as EPO use widens to treat chronic anemia suffered by cancer and patients with acquired immune deficiency syndrome.

Amgen owns the rights to sell EPO to patients with severe kidney disease, while it has licensed Johnson & Johnson to sell its drug for other uses.

Drake expects the total EPO market to hit $500 million in this country by 1993, with the market split evenly between Chugai-Upjohn and Amgen and its partners.

Judge Young’s decision will also probably require Amgen to drop its objection to the FDA’s review of Chugai-Upjohn’s version of the drug. If so, FDA approval might come within 45 days, a Chugai-Upjohn attorney said. Young mentioned “an overriding interest of the public that there be as many capable and qualified sources of EPO on the market as soon as possible.”

In December a federal magistrate upheld EPO patents held by Amgen and Genetics Institute. The magistrate also said each company was infringing on the other’s patent.

The Amgen-Genetics Institute case centered on radically different patents. Amgen’s patent covers part of the biotechnology process for making EPO, while Genetics Institute’s patent covers a purified form of EPO extracted from urine.

EPO occurs only in minuscule amounts in the body. Several years ago, an Amgen scientist was the first to isolate the gene that triggers EPO production. When that gene is inserted into Chinese hamster cells, it creates a cell mini-factory that keeps reproducing the valuable drug.