A federal jury in a closely watched lawsuit ruled yesterday that Eli Lilly & Company had infringed a patent covering drugs that work through one of the body's basic biological pathways, in a verdict that could send ripples through the pharmaceutical industry.
The jury, in Federal District Court in Boston, ordered Lilly to pay $65.2 million in back royalties to Ariad Pharmaceuticals, a biotechnology company that had licensed the patent from Harvard and two other academic institutions. Lilly will also have to pay a 2.3 percent royalty on future United States sales of its osteoporosis drug Evista and its drug Xigris, used to treat septic shock.
The case has attracted attention because Ariad claims the patent, issued in 2002, covers any drug that works by influencing the action of an important protein in the body. Some critics have said that patents covering an entire pathway in the body, as opposed to a particular drug, could hinder drug development.
Ariad executives have said that the patent could cover drugs with billions of dollars in annual sales and that the company had sent letters offering licenses to more than 50 companies. Last week, the biotechnology giant Amgen filed a pre-emptive lawsuit against Ariad, seeking to shield its lucrative arthritis drug Enbrel from infringement charges based on the same patent.
Lilly argued in the trial that Ariad's patent covered a natural phenomenon and was therefore invalid. It also said its two drugs were under development before the protein at the heart of the Ariad patent was even discovered.
"The Ariad position is equivalent to discovering that gravity is the force that makes water run downhill and then demanding the owners of all the existing hydroelectric plants begin to pay patent royalties on their use of gravity," Robert A. Armitage, Lilly's general counsel, said in a statement yesterday.
Lilly said it would ask the judge, Rya W. Zobel, to set aside the verdict and, if that failed, would appeal. The United States Patent and Trademark Office is re-examining the validity of the patent at the request of Lilly.
Harvey J. Berger, the chairman and chief executive of Ariad, disputed Lilly's arguments. "The jury looked at the evidence, looked at this issue and concluded unanimously that the patent was valid and infringed," he said.
No one has yet agreed to pay to license Ariad's patent, according to Dr. Berger, who said companies had been waiting for the outcome of the Lilly litigation. He said Ariad did not want to stop other companies from developing drugs. "A reasonable royalty is what we're looking for," he said. Academic scientists doing noncommercial research do not need a license, he said.
Based on Lilly's 2005 sales for the two drugs, Ariad, based in Cambridge, Mass., would receive $17.8 million in royalties each year until the patent expires in 2019. The company will keep at least 75 percent of its proceeds and share the rest with its academic partners.
Evista, one of Lilly's biggest drugs, was approved by the Food and Drug Administration in 1997 and had United States sales last year of $652.9 million. Xigris, approved in 2001, had United States sales of $119 million in 2005. While royalty payments are not expected to be a big burden for Lilly, they could be a significant boon to Ariad, an unprofitable company that has not yet brought a drug to market.
The case was important enough to his company that Dr. Berger sat through the entire trial, which started April 10. Ariad's shares jumped $1.45, or 26 percent, to $6.99 yesterday, while Lilly rose 6 cents, to $52.02. Analysts had generally expected Lilly to win.
Kyowa Hakko and Amgen Enter Licensing Agreement for Anti-CCR4 Humanized Monoclonal Antibody Tools Email Print Contact Author Kyowa Hakko and Amgen Enter Licensing Agreement for Anti-CCR4 Humanized Monoclonal Antibody KW-0761 Studies Underway in Inflammation and Oncology
THOUSAND OAKS, Calif. & TOKYO -- March 5, 2008 -- Kyowa Hakko Kogyo Co., Ltd (Kyowa Hakko) (TSE: 4151) and Amgen (NASDAQ: AMGN) today announced an agreement under which Amgen will receive an exclusive license to develop and commercialize Kyowa Hakko's humanized monoclonal antibody KW-0761 worldwide, except in Japan, Korea, China and Taiwan. Kyowa Hakko will retain the development and commercialization rights in these countries.
Under the terms of the deal, Amgen will make an upfront payment to Kyowa Hakko of $100 million. Kyowa Hakko could receive up to $420 million in additional payments, including development, approval and sales milestones. Kyowa Hakko will also be entitled to receive double digit royalties on sales.
KW-0761 is currently being studied in inflammation and oncology settings. Kyowa Hakko has completed Phase 1 studies of KW-0761 in healthy volunteers and allergic rhinitis patients, and is currently conducting Phase 1 studies of KW-0761 in lymphoma patients.
Amgen will initially acquire rights in all non-oncology indications, and Kyowa Hakko will continue its development activities in oncology until the completion of Phase 2a. At that time, Amgen may elect to reimburse Kyowa Hakko for its oncology-related development costs, expand its license to include oncology and assume the development and commercialization of KW-0761 in oncology settings.
The agreement is subject to approval from the Federal Trade Commission and will be effective immediately upon such approval.
Financial guidance previously provided on Jan. 24, 2008 by Amgen for 2008 adjusted earnings per share will remain unchanged by this transaction.
About CCR4 and KW-0761
CCR4 is a chemokine receptor that binds specifically to its ligands TARC and MDC, and participates in the control of T cell migration. CCR4 is expressed mainly on Th2-type helper T cells and regulatory T cells in normal conditions. CCR4+ T cells are implicated in the pathology of asthma and other inflammatory diseases and T-cell malignancies.
KW-0761 is a humanized monoclonal antibody targeting CCR4 utilizing the POTELLIGENT(R) technology platform for the development of antibody-dependent cell-mediated cytotoxicity- (ADCC) enhanced antibodies.