Alexion Announces Settlement On Eculizumab Patent; $66.4 Million In Sales For Soliris

The single-product company will pay Oklahoma Medical Research Foundation $10 million, ending a patent-infringement suit.

Alexion Pharmaceuticals will pay Oklahoma Medical Research Foundation $10 million to settle a patent-infringement dispute related to the C5 complement inhibitor Soliris (eculizumab), Alexion announced in tandem with the release of its year-end sales and earnings figures Feb. 14.

Under the settlement, Alexion acquires all rights to specified patents on complement-inhibition technology advances made by OMRF in the 1980s. Alexion previously had licensed limited rights to the technology.

The settlement ends a disagreement over Alexion's definition of the eculizumab compound, which limits claims of the OMRF patent to Alexion's monoclonal antibody.

OMRF filed a $55.4 million patent-infringement suit March 15, 2007, in the U.S. District Court for the Northern District of Oklahoma. Although specific details of the settlement were not disclosed, Alexion issued a statement saying that it will pay OMRF $10 million in "various amounts" during 2008 and the first half of 2009 to acquire the rights and interests to the patents.

The firm also noted that no further amounts, including royalties, will be owed to OMRF, and the claims and counterclaims will be dismissed.

Cheshire, Conn.-based Alexion also released fourth-quarter and year-end earnings, beating analyst estimates on the strong sales of Soliris in the U.S. and Europe.

Net product sales of the firm's only product were $33.9 million in the fourth quarter, up 56 percent over third-quarter sales of $21.8 million.

The first-in-class orphan drug, approved for treatment of paroxysmal nocturnal hemoglobinuria to reduce hemolysis - the destruction of red blood cells, boosted total 2007 revenues to $72 million, including net product sales of $66.4 million in the first nine months of Soliris' commercial availability.

FDA approved the drug in March 2007 under priority review, followed by approval in the E.U. in June 2007 (¹ (Also see "Alexion Biologic Soliris Is First To Get FDA Nod For Rare Blood Disease" - Pink Sheet, 19 Mar, 2007.)). Soliris was the first drug approved under the accelerated assessment procedure in the E.U. (² (Also see "EMEA Grants First Positive Opinion Under Accelerated Assessment To Soliris" - Pink Sheet, 30 Apr, 2007.)).

While 70 percent of revenue came from U.S. PNH patients overall in 2007, Alexion President and Chief Operating Officer David Keiser said the company expects an increase in the number of European patients in 2008.

"As we expected from the start, there are significant differences in obtaining full commercial status from one country to the next, especially in the key areas of pricing, reimbursement and funding," Keiser told investors during the Feb. 14 call.

Patients are transitioning from clinical trial to fully funded status in Germany, France, Italy and Spain, Keiser said. Reimbursement has lagged in the United Kingdom, but Cowen and Company analyst Rachel McMinn suggested in a research report that a decision should be made when funds from the U.K.' s new fiscal government year become available in March or April.

"While we continue to achieve steady growth in the U.S.," Keiser said, "our European business is on track to account for the majority of our total revenues in 2008."

The first U.K patients should transition to paying status by the end of the first quarter, Bear Stearns analyst Akhtar Samad observed in a Feb. 15 note. Also, "importantly, Soliris does not need to be reviewed by NICE, a positive for uptake ramp in the U.K." Samad predicted continued growth of Solaris in PNH, aided by its current broad label and the potential upside of positive results from ongoing research.

CEO Leonard Bell predicted worldwide sales of $200 million to $215 million in 2008. "At the same time," Bell noted, "we are committed to driving clinical studies in four to seven additional medical conditions during this year while keeping R&D expenses in check."

Alexion announced the initiation of dosing in the AEGIS single registration trial in Japan in January and expects to complete enrollment in March. The firm estimates submitting a 2009 marketing approval application to Japanese regulatory authorities.

Planning for preclinical studies investigating eculizumab in myasthenia gravis in the U.S. and multifocal motor neuropathy in Europe is underway, as is an intravitreal formulation for age-related macular degeneration.

A Phase I trial exploring both intravenous eculizumab and a nebulized formulation for asthma patients is ongoing, and the company expects an investigator-initiated trial in kidney transplantation to start this year.

Bell told investors he expects to commence site initiation for a clinical study of Alexion's other pipeline candidate, an antibody targeting CD200 in patients with chronic lymphocytic leukemia, in the second quarter.

With partner Procter & Gamble, Alexion dropped its former fast-track drug candidate, terminal complement inhibitor pexelizumab, for coronary artery bypass graft surgery and acute myocardial infarction, after the drug failed in two Phase III trials (³ (Also see "Alexion/P&G Pexelizumab Failed Phase III Could Compromise Development Partnership" - Pink Sheet, 29 Jun, 2006.)).

The company continues to enroll patients in a long-term safety and efficacy extension trial, and in the EXPLORE diagnostic trial, initiated in 2006 to examine the frequency of PNH in patients with aplastic anemia, myelodysplastic syndrome, and other bone marrow failure disorders.

-Becky Jungbauer ([email protected])