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Feature

The trials of Amgen

It is a company that has become used to major patent litigation. But Amgen’s latest battle could turn out to be the most significant yet, especially at the end of a period when acquisitions and the establishment of a venture fund have marked a change in strategy

The Lilly perspective By Victoria Slind-Flor Almost simultaneously with the patent’s issuance, Ariad filed suit against Lilly in A very big patent is threatening the world’s federal court in Boston. Ariad charged largest biotech company. Although Amgen infringement by two different Lilly drugs: Incorporated of Thousand Oaks, California, sits Evista, which treats osteoporosis; and on top of a powerhouse portfolio of rights and Xigris, which is used against toxic shock. produces bioengineered drugs for diseases According to members of the biotech patent affecting a broad swathe of the population, bar, Ariad also contacted Amgen and as many Amgen products could potentially be many as 50 other biotech and pharma infringing a patent assigned to a small companies, warning them they were Cambridge, , biotech company. potentially infringing the patent. If a jury verdict handed down in early May The case went to trial this year before against is any indication, US District Judge Rya Zobel and in early Amgen officials need to be very concerned. May, a jury awarded Ariad more than US$62 The patent in question relates to a million in royalties for past infringement and method of inhibiting a certain kind of human a 2.3% royalty on future sales of Lily’s two protein involved with cellular response to drugs up to 2019. The verdict is under stress. This technology was developed by two appeal, and the patent is also under re- Nobel prize-winners, David Baltimore – now examination at the US Patent and Trademark president of California Institute of Technology Office, but still, many observers of the – and Philip Sharp, of Massachusetts biotech scene anticipate that Amgen would Institute of Technology, together with Harvard be Ariad’s next planned target. University biologist Thomas Maniatis. This Ariad was represented by a team from particular protein, which is known as NF-κB, New York’s Kaye Scholer, led by veteran is implicated in many diseases, including biotech patent litigator Leora Ben Ami. Ariad rheumatoid arthritis, cancer and auto-immune Chairman and Chief Executive Officer Harvey disorders. Ironically, Baltimore, the lead J Berger has said he’s confident that the jury inventor, is also a member of Amgen’s board verdict will be upheld by the appeals court. of directors. Amgen makes a tempting potential deep- The ‘516 patent issued in June 2002 pocket defendant. The 26-year-old biotech and is licensed to Ariad Pharmaceuticals by company brought in US$12.4 billion revenues Harvard, MIT and the Whitehead Institute for in 2005, with US$2.57 billion coming from Biomedical Research. It is lengthy, with 203 Enbrel, which is used to treat rheumatoid separate claims around the reduction of arthritis. And Amgen’s pipeline of up-and- NF-κB in a variety of cells, including liver, coming drugs includes new treatments for lymphoid and immune cells. This reduction arthritis, cancer, lupus and asthma, all of is a pathway or drug target that is employed which are likely to work by reducing the NF-ÎB by a wide range of existing drugs and even protein as is outlined in the Ariad patent. such common substances as red wine, In an effort to head off a possible aspirin and garlic. infringement action, Amgen went to federal

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court in Delaware at the end of April, asking a Amgen R&D expenditures judge to rule that all of the claims in Ariad’s ‘516 patent are invalid and that several 2.5 products, including Enbrel, do not infringe. Ariad proved to be a challenging litigation 2.0 opponent in the Lilly case. As one senior biotech patent lawyer – who spoke on the 1.5 condition of anonymity – said: “When Ariad brings two Nobel laureates and an issued patent into court, jurors are unduly 1.0 US$ Billion impressed.” Plus, he continues, the science is so difficult to understand and the patent 0.5 so long and involved that jurors, and even the federal judges who hear patent cases, are easily daunted. 0

Not an open and shut case 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 But Charles Hoyng, a biotech partner at the Silicon Valley office of Los Angeles firm Robert Armitage, Lilly’s general counsel Latham & Watkins, points out that the and senior vice president, has equally harsh “learned judges” of the appeals court are less words about the patent. After the verdict likely to be swayed by Ariad’s marquee-name came down in May, Lilly issued a statement scientists. He anticipates the CAFC will in which Armitage said that Ariad’s dispose of the ‘516 patent as summarily as infringement charges are “equivalent to the court rejected the University of discovering that gravity is the force that Rochester’s ‘850 patent for a method of makes water run downhill and then screening for the COX-2 inhibitors used to treat demanding the owners of all the existing arthritis. In 2004 the appeals court found that hydroelectric plants begin to pay patent the university’s patent was invalid because it royalties on their use of gravity”. failed to demonstrate a method of treatment. However, if Ariad continues to prevail, In any case, Amgen had to proceed almost every pharmaceutical and biotech separately from the Lilly litigation because company could potentially be found to each dispute focuses on specific drugs infringe the patent. That is why every biotech proprietary to the companies. Members of the lawyer is watching the case so closely. patent bar estimate that the minimum cost Amgen will incur in challenging the Ariad A history of litigation patent is US$10 million. But that is a Amgen has faced bet-the-company litigation miniscule amount of money compared to before. Back in 1997, it charged Transkaryotic Amgen’s potential exposure. All in all, Therapies Inc (TKT) of Cambridge, challenging Ariad is bet the company litigation Massachusetts, with infringing five patents for on which Amgen’s very survival could depend. bioengineered erythropoietin, which is used to Warren Woessner of Minneapolis’s treat anaemia. Lawyers for TKT argued that Schwegman, Lundberg, Woessner & Kluth there was no infringement because the has read the ‘516 patent carefully and says company used the different process of “gene it contains “many ‘Hail Mary’ claims activation” to create erythropoietin. Lloyd because, like a[n American football] pass, “Rusty” Day of Cupertino, California’s Day it’s thrown as far and hard as you can and Casebeer Madrid & Batchelder served as you hope there will be someone who can Amgen’s lead counsel. catch it on the other end.” That case was also closely watched, with He anticipates that the patent may well armies of lawyers paid by investment-bank not survive the re-examination because, clients to sit in the courtroom every day and under US patent law, it fails to “enable” the monitor the process of the litigation. invention. It does not mention any specific Ultimately, US District Judge William G Young drugs that can be used to reduce the NF-ÎB found that TKT did infringe several of Amgen’s level. Additionally, if other drugs and patents and he was later affirmed by the US substances such as red wine and aspirin Court of Appeals for the Federal Circuit. have been operating against this protein for Amgen did not meet with the same years and years, then Woessner says the success overseas. In 2004 the UK’s House method the patent claims is already in the of Lords upheld an earlier Court of Appeal public domain. ruling that TKT did not infringe Amgen’s

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Amgen employees biotech lawyer. “This could cover many, many drugs,” he says. “It’s the single most 15000 important biotech case at the moment.”

12000 Building a biotech behemoth Amgen started small back in 1980 and, early on, the company was without a strong 9000 focus. Indeed, one of the first patents that issued to Amgen was for bioengineered 6000 indigo dye and another was for a shipping unit to protect its contents from freezing. But Amgen employees 3000 the company hit the jackpot in 1983 when a company scientist successfully cloned a gene that affects red-blood cell production. 0 This discovery led to the development of erythropoietin, the anti-anaemia blockbuster 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 drug that received approval from the US Food and Drug administration in 1989. In European patent of erythropoietin, because the same year, it was named “product of the TKT used a different method of producing year” by Forbes magazine. the drug. (TKT was acquired by the UK’s Neupogen, which stimulates white blood Shire Pharmaceutical Group in mid-2005.) cell production, was the company’s second Amgen is still involved in erythropoietin- big hit. Cancer patients undergoing related court battles. In November 2005, chemotherapy and others with impaired Amgen filed suit in Boston against Roche immune systems receive injections of Holding AG, in efforts to halt Roche’s Neupogen to help them fight off infection. importation of its longer-acting peg-Epo The patent for Neupogen issued in 1989 and version of the drug. Amgen charged Roche was Forbes’s product of the year for 1991. with violation of six patents. Amgen also went Amgen is the assignee for 428 US to the US International Trade Commission in patents and 207 published US applications. April 2006, seeking an order that would On a pure numbers basis, this puts the permanently bar Roche from importing its company way behind its closest rival, version of erythropoietin into the country. In , which has 1,030 issued US early May the ITC agreed to investigate Roche. patents and 2,296 applications. But Prior to all of this, Amgen went through a Amgen’s judicious mergers in recent years tortuous patent litigation with Johnson & are fattening the company’s IP portfolio. Johnson of New Brunswick, New Jersey. That The company has not been merger- battle related to a licensing decision Amgen happy, but it has carefully acquired five made in the mid-1980s, in efforts to generate smaller biotechs with research and enough cash to get Epogen to the market. In intellectual property to expand the number of 1985, Amgen licensed Japanese rights to drugs in the company’s pipeline: erythropoietin to brewing giant Kirin, and • In early 2006, Amgen spent US$2.2 made a deal with J&J allowing that billion on Abgenix Inc, of Fremont, pharmaceutical company to sell erythropoietin California, which had developed a “fully in Europe and in the US for those forms of human” antibody cancer treatment that anaemia unrelated to kidney dialysis. contains no mouse protein. This drug, J&J argued that this licence gave the Penitumumab, is now in Phase III clinical company rights to Aranesp, an Amgen- trials for the treatment of colorectal developed longer-lasting version of cancer. Bringing in Abgenix’s technology erythropoietin. The fight dragged on for for creating “totally human” biologics is years, until the parties submitted to binding potentially big news because many people arbitration in 1998. Amgen prevailed, but are allergic to mouse protein and have last October J&J filed an antitrust suit in adverse reactions to even the smallest federal court in Trenton, New Jersey, snippet of it in bioengineered products. charging Amgen with anti-competitive Abgenix is also the source of business practices relating to its sale of Denusumab, which treats bone loss erythropoietin. A lengthy battle is expected. related to osteoporosis and metastasised Still, the threat from the Ariad patent is cancer. Denusumab is in Phase III trials potentially much larger than anything Amgen for several different conditions. According has encountered to date, says one senior to the USPTO website, Abgenix is the

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Amgen

An Amgen timeline

assignee for 23 issued US patents and Inc, of Mountain View, California. Avidia is • 1980: AmGen (Applied Molecular 13 published applications. working with avimers, which are small Genetics Inc) established • In 2004, Amgen acquired another protein chains that can target a variety of • 1983: Company name changed to Northern California biotech company, multiple targets in the body at once. Amgen; IPO raises $40 million; gene Tularik Inc, of South San Francisco, for for human erythropoietin cloned - this US$1.3 billion. This acquisition grew out of The future is the genesis of Amgen’s Epogen a licensing arrangement between the two What lies ahead for the biotech giant? Over (epoetin alfa) companies. Tularik’s expertise was in oral and over again, industry observers say that • 1985: Gene cloned for human therapies for cancer, and inflammatory and the single most important issue facing granulocyte colony-stimulating factor - metabolic disorders through gene Amgen is the steady expansion of its drug- this is the genesis of Amgen’s regulation. Tularik has 130 issued patents development pipeline. According to a Neupogen and 60 published applications. statement the company released in January • 1987: Amgen receives patent on DNA • Amgen picked up Seattle’s Immunex 2006, Amgen has eight different drugs in used to produce Eopetin alfa Corporation in 2002 for US$9.45 billion Phase 3 clinical trials and another five at • 1989: Immunex develops Enbrel; and got a firm foothold in the arthritis Phase 2. But there are also another 12 still Amgen receives patent for Neupogen; market as a result. Enbrel, the only in Stage 1, aimed at everything from FDA approves use of Epogen for some blockbuster arthritis drug that brought neuroscience through oncology to obesity. kinds of anaemia Amgen US$2.57 billion in 2005, had its Officials at the 15,000-employee company • 1991: FDA approves Neupogen to origin in Immunex labs. Immunex has are hoping one of them will be the next reduce infection in chemotherapy 206 issued patents and another 100 blockbuster. Given Amgen’s drug- cancer patients. published applications. development track record, the hope is • 1992: Amgen sales hit US$1 billion • Amgen reached for the small-molecule justifiable. Unless Ariad manages to derail • 1996: Amgen sales hit US$2 billion market in 2000 with the US$170 million the whole process. • 1998: FDA approves Enbrel to treat acquisition of Medford, Massachusetts’s patients with rheumatoid arthritis Kinetix Pharmaceuticals. The USPTO • 1999: Amgen sales hit US$3 billion website does not indicate any patents or • 2001: FDA approves Aranesp pending applications for Kinetix. (darbepoetin alfa) to treat anaemia • The first Amgen acquisition was associated with kidney failure; Amgen Synergen Inc, of Boulder, Colorado, completes acquisition of Immunex for which was picked up in 1994 for US$16 billion; FDA approves Enbrel to US$262 million. Synergen was then the treat patients with psoriatic arthritis Rocky Mountain region’s largest biotech • 2003: FDA approves Enbrel for company, trying to develop a genetically treatment of psoriasis engineered treatment for sepsis. • 2004: Amgen acquires Tularik for Synergen had 14 issued US patents. US$1.3 billion Today Amgen conducts large-scale • 2006: Amgen acquires Abgenix for manufacturing of its anti-anaemia drug US$2.2 billion Epogen in Boulder.

In 2004, Amgen headed off in a new direction. To jump-start outside innovation and stimulate the development of new drugs for its pipeline, the company set aside US$100 million and established Amgen Ventures, its own corporate venture fund based in San Diego. Amgen Ventures puts between US$1million and US$3 million into companies with promising emerging therapeutics to target cancer, inflammation, kidney and blood disorders, metabolic problems and cardiovascular disease. Amgen’s stated goal is to own no more than 15% of any of the companies in which the fund invests. Amgen Ventures is led by attorney Jay Hagen. Seattle-based Accelerator Corp, a biotech incubator, was an early recipient of a grant from Amgen Ventures for an undisclosed amount. In May 2006, Amgen Ventures participated in a financing round for Avidia [email protected]

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