COMMERCIALIZING THE FIRST BIOTECH BLOCKBUSTER DRUG

PRESENTED BY:

FARYN KAPALA

OCTOBER 26 T H , 2010

Amgen Inc.’s _______Epogen1

Presentation Outline

Brief History of Key PlayersWhat is Epogen? Uses?Who Discovered Epogen?How did they protect their IP?

3 types of patentsLegal Issues

----------------------------------------How IT has changed business

processes How to do a patent search

IT DevelopmentsIT Department Organization

2

EPO – Key Players

Franklin “Pitch” Johnson BS in Mechanical Engineering from Stanford MBA from Harvard Stanford Graduate School of Business Teacher (12+

yrs.) Independent Venture Capitalist since the early 1960’s One of Amgen’s original founders

3

EPO – Key Players

Bill Bowes B.A. in Economics from Stanford University MBA from Harvard University Venture Capitalist One of Amgen’s original founders

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EPO – Key Players

George Rathmann “Golden Throat” Accepts position as CEO of Amgen in 1980 Former director of research at Abbot Laboratories Came to CA to study Molecular Biology at UCLA UCLA professor impressed with his business

background invited him to head Amgen In the early years much of Amgen’s research was done through collaborations with UCLA and CIT.

5

Epogen’s Uses

Chronic Renal Failure (CRF) – Kidney Failure Dialysis patients Covered by Medicare

Prior to surgeries that may involve heavy blood loss

Treating anemia caused by HIV medications Chemotherapy

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What is Epogen (Epoetin Alfa)?

Mimics a naturally occurring hormone erythropoietin

Produced in the kidneys

Stimulates the production of RBC’s by the bone marrow

RBC’s carry oxygen around our bodies

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Who Discovered Epogen?

The protein, erythropoietin, was discovered in 1976 Eugene Goldwasser at the University of Chicago They did not patent it or try to synthesize it

NIH-funded research at Columbia University invented a technique for synthesizing the protein and patented this.

Amgen then licensed the technique from Columbia

The public pays twice? 1st by supporting the research that discovered it 2nd by paying for it through Medicare

8

So what did Amgen discover?

Not the proteinNot the technique to

synthesize the protein

They isolated the gene (1983) 2 year process Fu-Kuen Lin & Chi-Hwei Lin

Transformed CHO cells to produce biologically active EPO (Feb. 1984)

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Protecting Their Intellectual Property

3 requirements for a biotech patent:

1. NOVEL Nobody ever made the product before

2. NONOBVIOUS in light of prior artPrior Art: Publications, other patents

Ex.) Pencil & Eraser

3. UTILITYIt has to somehow be useful

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3 Types of Patents

Product Patent

Process Patent

Patent the Starting Materials

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1.) Product Patent

Best level of protection

Excludes competitors from making, using, selling or importing the patented invention

Difficult to obtain in the biotech industry because many drugs are based on purified proteins that have previously been identified (naturally occurring)

Any mention of their discovery or isolation in scientific literature can qualify as prior art

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2.) Process Patent

The next best level of protection

Covers the method to make the final product

Worded in general terms which often offered increased protection as it protected even unknown methods of achieving the outcome.

Ex.) Alexander Bell – The Telephone“transmitting vocal sounds telegraphically

by using electrical undulations”*His invention: Electromagnetism

*Better invention: Variable ResistanceSAME PROCESS

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Product vs. Process

Dividing line between Product & Process is vague

Product: “An apparatus for measuring activity of the autonomic nervous system of a patient…”

Process: “A method of measuring activity of the autonomic nervous system of a patient…”

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3.) Patent Starting Materials

Genetically engineered cells Host cell and vectors (usually a virus or bacteria)

Even if an end product isn’t patentable because it lacks novelty the inventor can patent the starting materials

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October 1987 - Surprise!

1.) Product Patent Denied!

Epogen had already been patented!

2.) Process Patent Denied! This one was expected based on recent

biotech laws…

3.) Starting Materials Granted!

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Genetics Institute

Founded by 2 Harvard scientists in 1981

Isolated EPO from human urine in 1984 5 months AFTER Amgen’s breakthrough

Unable to produce it in significant quantities because they didn’t know what gene produced it

Not feasible to isolate it from urine 6 million gallons of urine to treat one patient for a year

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Legal Stalemate

Genetics Institute asks for a cross-patent which would allow them to use Amgen’s starting materials

In response, Amgen filed for patent infringement

Genetics Institute would infringe on Amgen’s patent if they attempted to produce EPO

Genetics Institute countersues claiming that Amgen infringed on their product patent for EPO

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Who Wins?

Dec. 1989 – Genetics Institute wins the lawsuit “GI’s patent covered EPO irrespective of how the drug

was produced.”Amgen never deposited their cell line in a

public cell bankGenetics Institute argued that they needed

thisCourts declared that Amgen had provided

sufficient description of the method they had used and a person skilled in the art would have no difficulty replicating Amgen’s procedure

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Stalemate Continues

Neither company was able to produce EPO without infringing the other’s rights

Legal bills were stacking up

Stock prices of both companies were dropping

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Amgen Wins! (1991)

Court of Appeals for the Federal Circuit ruled that…

Genetics Institute had not proved that it had isolated a protein with the biological

characteristics described in the patent. As a result, Genetics Institute's claims were invalid.

Amgen stock jumps from $12 to $113 overnight!

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Let’s Change Directions

How has IT changed the business process?

Patent Searching & Research Much easier to do today then in 1980 (EPO years)

TCP/IP came about in the mid 1980’s

In Amgen’s early days they had a modem connection to a service at USF through which they did sequence comparisons

Patent searches were done via mail, telephone, etc. and often sent out to patent search specialists to perform

Amgen also had a small (one room) on-site library with a librarian who assisted in patent searching.

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Patent Searching

www.uspto.gov

EPOGEN

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Patent Searching

www.google.com/patents

EPOGEN

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IT Developments at Amgen

They had a Zilog, with unbelievably small (by todays standards) amount of ram and disk space

Shared by all the scientists

Sole purpose was for searching genetic sequences via modem

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IT Developments at Amgen

Amgen purchased a copy of GenBank and the programs to enable searching and analysis Genetics Computer Group (GCG) Subscriptions to DNA & Protein sequence databases Today anyone can access GenBank for free at

http://www.ncbi.nlm.nih.gov/genbank/

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IT Developments at Amgen

Next, a VAX (VMS) machine was setup in Bldg 5 and a cable was ran through conduit back to Bldg 2 so that groups in both buildings (about a block apart) could use it.

Each scientist had a terminal that connected to VAX, with all data stored centrally on it.

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IT Developments at Amgen

Next step is the installation of an onsite network Primarily to support sales and development

It took years for ‘terminals’ to be replaced by desktop computers (Macs) in the research department

In ~1996 Amgen switched from Macs to PC’s

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ORGANIZATIONAL CHANGES

SEE CH.2 – PAGE 65 IN YOUR MIS BOOK!

Amgen’s IT Department30

Early 1990’s

Each department had their own IT group

A centralized IT group oversaw telephones, network support, infastructure (cabling, switches, routers, etc.) and desktop support

Quite independent of each other

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A.) IT within each functional area

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Advantages Disadvantages

Each department was an expert at their applications

Problems often solved within minutes

Didn’t scale well as the company grew

Duplicated efforts & resources

Some departments not operating at full capacity

Early 1990’s33

Late 1990’s – Department Level IT

Merged all of the IT departments into one big group

Database and application servers consolidated

Centralized IT Help Desk

Each department still maintained a small group of application based IT personnel

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B.) Separate IT departments under central control

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C.) Represented in each division of a large company but under central control

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Advantages Disadvantages

Scaled betterResources could be

pooled and sharedEnd users received

excellent supportCompatible systems

Centralized IT person may not understand intricacies of each department

Application support still needed

Can take longer for the right person to be assigned

Late 1990’s37

Amgen Today

Central IT support is outsourced

Maintains application experts and system architects

Computer installation, network support is outsourced

Computers are an integral part of everyone's job

Heavily reliant on e-mail and MS Office Suite

Numerous teleworkers

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Amgen Today

PC based

Numerous rooms dedicated to video conferencing

Windows Servers, Unix servers (LINUX and Solaris)

Research has a few hefty parallel computers

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Amgen Today

Personal Electronic Library with it’s own IT support

Online articles, databases, research, patents, etc.

They still have a physical library but it is used less and less

All business processes use IT ( Manufacturing, Sales & Marketing, Finance & Accounting, Human Resources, R&D, etc.)

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Special Thanks41

To Jim Duliakas and Jody Simon Jim has been at Amgen since 1994 – Snr. Technologist Jody since the beginning!

Started in Research Later moved to IT

References42

Amgen. (2010). Epogen. Retrieved October 24, 2010, from http://www.epogen.com/patient/about_anemia

Andrews, E. L. (1991, March 7). The New York Times. Retrieved October 26, 2010, from Amgen Wins Fight Over Drug: http://www.nytimes.com/1991/03/07/business/amgen-wins-fight-over-drug.html?pagewanted=3

Business Week. (1998). How George Rathmann Mastered the Science of the Deal. Business Week.

Fu-Kuen Lin, S. S.-H.-H. (1985). Cloning and Expression of the Human Erythropoietin Gene. Proceedings of the National Academy of Sciences of the USA, 7580-7584.

Jim Duliakas, J. S. (2010, October 25). An Interview with Two Current Amgen Employees. (F. Kapala, Interviewer)

Lin, F.-K. (1987). Patent No. 4,703,008. United States Patent. Marcia Angell, M. (2005). The Truth About the Drug Companies: How they deceive us and what

to do about it. New York: Random House, Inc. Warren, J. M. (2010). Patterns of Entrepreneurship Management. Hoboken: John Wiley & Sons,

Inc. Wellsphere. (2009, November 16). Wellsphere. Retrieved October 24, 2010, from Kidney Failure

Community - Anemia in Kidney Failure and Dialysis Patients: http://www.wellsphere.com/kidney-failure-article/anemia-in-kidney-failure-and-dialysis-patients/883323

WikiInvest. (2009). WikiInvest. Retrieved October 24, 2010, from Stock: Amgen: http://www.wikinvest.com/stock/Amgen_(AMGN)