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Executive Summary

EPO PATENT DISPUTE ORAL ARGUMENTS SCHEDULED FOR FEB. 14 in Boston federal court. The court will hear oral arguments on a Jan. 30 filing by Genetics Institute and Chugai. The filing seeks a permanent injunction against Amgen's Epogen (erythropoietin, EPO) on grounds that the product infringes Genetics Institute's '195 erythropoietin patent. Genetics Institute and Chugai are not seeking an immediate removal of Epogen from the market but are requesting that Amgen's profit from the sale of Epogen be put into an escrow account to be awarded as damages when the patent litigation is settled. Genetics Institute and Chugai are proposing a stay of the injunction, if granted, pending an appeal by Amgen. The stay would assure the availability of EPO in the U.S., the filing notes. The stay would also presumably allow time for FDA approval of Marogen, the erythropoietin product licensed from Genetics Institute by Chugai. If approved, Marogen will be marketed in the U.S. by Chugai-Upjohn. With regard to the escrow account, the motion requests that "Amgen shall deposit a sum equaling the difference between its standard cost of producing the erythropoietin shipped and the amount to be received by Amgen as compensation for each such shipment." The filing further states that "Amgen's standard cost is hereby determined to be 25% of the sales price of each gram of erythropoietin produced, necessitating a deposit of 75% of Amgen's final sales price of erythropoietin." The filing offers to impose similar standards against Genetics Institute by placing profits from the company's exportation of bulk EPO to its foreign affiliate, Boerhinger Ingelheim, in an escrow account pending resolution of the suit. Genetics Institute and Chugai filed the motion after claiming to have been "rebuffed" in attempts to reach an out-of-court settlement agreement with Amgen. A proposal for a cross-licensing arrangement was turned down within the past two weeks, according to Chugai-Upjohn. The firm said the agreement was designed to assure multiple sources of product. Amgen CEO Gordon Binder said in a Jan. 30 response to the permanent injunction filing: "We are disappointed that Genetics Institute broke off settlement discussions and elected to take this action. We are hopeful that a reasonable settlement can be achieved." Amgen estimates that 45,000 patients in the U.S. are receiving Epogen for chronic anemia. Genetics Institute and Chugai are also attempting to remove one possible complication relating to approval of Marogen by seeking rescission of the orphan drug market exclusivity held by Epogen. The companies are maintaining that a recent court decision confirms the legal impropriety of the continued marketing of Epogen and therefore makes future supply of the product uncertain, which is one reason under the law for removing orphan exclusivity from a product. Genetics Institute and Chugai requested that the court "order Amgen to certify to the FDA that it cannot assure the supply of its EPO in light of the court's previous decision that Amgen's manufacture and sale of the product infringe valid claims of Genetics Institute's EPO patent," the companies said. "This certification should avoid any possibility of an orphan drug exclusivity conflict as the FDA considers registrations of Marogen Sterile Powder." The Dec. 11 decision handed down by Boston Federal Court Magistrate Patti Saris found that both Amgen's and Genetics Institute's patents infringed certain claims of the other's patent ("The Pink Sheet" Dec. 18, p. 15). The judge also found that Chugai does not infringe the Amgen patent by importing or selling EPO in the U.S., which Genetics Institute and Chugai contend gives them the stronger patent position. Genetics Institute and Chugai said they are additionally seeking "an entry of final judgement of all issues decided by the court on Dec. 11," in essence to make the decision "appealable."

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