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Executive Summary

EPO PATENT CASE JUDGE SUGGESTS PRELIMINARY INJUNCTION AGAINST AMGEN requiring a royalty-free cross-licensing agreement between Amgen and Genetics Institute, with a provision that Amgen allows Genetics Institute licensee Chugai to market its recombinant erythropoietin product Marogen in the U.S. Under such an arrangement, "everybody comes on line," Boston Federal Court Judge William Young told Amgen's counsel. "Wouldn't that serve the public interest?" Young's remarks were made March 8 during presentation of oral arguments by the two sides. Oral arguments will continue before Judge Young on March 14. The judge and the three companies have met three times privately in unsuccessful attempts to work out a settlement ("The Pink Sheet" Feb. 26, p. 11). Amgen has argued against the injunction, filed by Genetics Institute on Jan. 30 ("The Pink Sheet" Feb. 5, T&G-1), maintaining that such an action would not be in the public interest since Amgen is the only producer of EPO in the U.S. The Epogen marketer has said it would be willing to accept a royalty-free cross-licensing agreement, but remains intransigent on the question of allowing Chugai to market its product in the U.S. In order for Chugai to market Marogen in the U.S., Amgen would be required to ask FDA to withdraw orphan exclusivity for Epogen. Amgen maintained that requiring the company to do so is not within the jurisdiction of the court. Young acknowledged that it is not clear whether he could require such an action, but commented that it would appear fair to allow both companies to market their products pending a ruling by an appeals court on the patent issue. The judge voiced his dismay at the direction the patent case has taken since the Dec. 11 decision by Boston court magistrate Patti Saris, who found that both Amgen's and Genetics Institute's patents are valid and that Chugai would not infringe Amgen's patent if it marketed Marogen in the U.S. ("The Pink Sheet" Dec. 18, p. 15). Calling Saris' ruling an "extraordinarily fine" opinion, Young asked the companies why no business accommodation had been made since the ruling. He added that he would "assume that [Saris] is going to be affirmed across the board" in the appeals court. In response to Amgen's argument that Epogen would be removed from the market if an injunction is ordered and the company loses in appeals court, Young pointed out that Amgen is infringing a valid patent. "My duty is to enforce a valid patent," the judge said, adding: "But I understand the arguments against it." Although a discussion of damages was minimal at the hearing, Amgen raised the point that if an injunction were imposed, then damages should be set according to the seven-year orphan exclusivity period. Amgen projects sales over seven years to total $1.5 bil. If Amgen is forced to share the market with Chugai, the company said it would lose $750 mil. Consequently, a suitable bond would be in excess of $500 mil., Amgen asserted. Genetics Institute and Chugai are holding to their original motion for an injunction against Amgen that would be stayed pending a final appellate decision. While Amgen would be allowed to market Epogen until the final appeal, the injunction could force FDA to withdraw Amgen's orphan exclusivity under the provision of the Orphan Drug Act that stipulates orphan exclusivity may be withdrawn if a company cannot assure supply of the drug to the patients. Meanwhile, Chugai opposes a royalty-free agreement on the basis that in the Saris decision, the Japanese firm was found not to infringe Amgen's patent. "What authority have I to let you onto the market?" Judge Young asked Chugai attorneys. Chugai responded that Amgen's orphan exclusivity was obtained with a product that infringes Genetics Institute's patent. Young agreed that "Chugai is entitled to an immediate injunction" and if the injunction is stayed against Amgen, that Chugai should receive equitable terms. Public interest is strong to "let Chugai on the market," Young commented, noting that it would widen the availability of EPO and bring down the price. However, the judge remarked: "The fact that I can articulate it does not mean that I adopt it." Young has indicated that he will not rule from the bench on an injunction but may make a final determination on liability issues related to Saris' decision. Certification by the judge of the findings in the Saris decision will clear the way for Amgen to appeal the decision to the Federal Circuit Court.

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