Transcript Amgen Inc.*s Epogen

Epogen
Amgen Inc.’s _______
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COMMERCIALIZING THE FIRST BIOTECH
BLOCKBUSTER DRUG
PRESENTED BY:
FARYN KAPALA
O C T O B E R 2 6 TH, 2 0 1 0
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 Brief History of Key Players
Presentation
Outline
 What is Epogen? Uses?
 Who Discovered Epogen?
 How did they protect their IP?
 3 types of patents
 Legal Issues
--------------------------------------- How IT has changed business
processes

How to do a patent search
 IT Developments
 IT Department Organization
EPO – Key Players
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 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
EPO – Key Players
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 Bill Bowes
 B.A. in Economics from Stanford University
 MBA from Harvard University
 Venture Capitalist
 One of Amgen’s original founders
EPO – Key Players
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 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.
Epogen’s Uses
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 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
What is Epogen (Epoetin Alfa)?
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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
Who Discovered Epogen?
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 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
So what did Amgen discover?
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 Not the protein
 Not the technique to
synthesize the protein
 They isolated the gene (1983)
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
2 year process
Fu-Kuen Lin & Chi-Hwei Lin
 Transformed CHO cells
to produce biologically
active EPO (Feb. 1984)
Protecting Their Intellectual Property
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 3 requirements for a biotech patent:
1.
NOVEL
Nobody ever made the product before
2.
NONOBVIOUS in light of prior art
Prior Art: Publications, other patents
Ex.) Pencil & Eraser
3.
UTILITY
It has to somehow be useful
3 Types of Patents
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 Product Patent
 Process Patent
 Patent the Starting
Materials
1.) Product Patent
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 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
2.) Process Patent
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 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 Resistance
SAME PROCESS
Product vs. Process
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Dividing line between Product & Process is vague
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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…”
3.) Patent Starting Materials
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 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
October 1987 - Surprise!
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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!
Genetics Institute
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 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
Legal Stalemate
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 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
Who Wins?
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 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
bank
 Genetics Institute argued that they needed this
 Courts 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
Stalemate Continues
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 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
Amgen Wins! (1991)
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 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!
Let’s Change Directions
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How has IT changed the business process?
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 Patent Searching & Research
 Much easier to do today then in 1980 (EPO years)

TCP/IP came about in the mid 1980’s
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In Amgen’s early days they had a modem connection to a
service at USF through which they did sequence comparisons
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Patent searches were done via mail, telephone, etc. and often
sent out to patent search specialists to perform
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Amgen also had a small (one room) on-site library with a
librarian who assisted in patent searching.
www.uspto.gov
 Patent
Searching
EPOGEN
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www.google.com/patents
 Patent
Searching
EPOGEN
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IT Developments at Amgen
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 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
IT Developments at Amgen
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 Amgen purchased a copy of GenBank and the
programs to enable searching and analysis
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
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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/
IT Developments at Amgen
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 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.
IT Developments at Amgen
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 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
Amgen’s IT Department
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ORGANIZATIONAL CHANGES
SEE CH.2 – PAGE 65 IN YOUR
MIS BOOK!
Early 1990’s
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 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
A.) IT within each functional area
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Early 1990’s
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Advantages
Disadvantages
 Didn’t scale well as the
 Each department was
an expert at their
applications
 Problems often solved
within minutes
company grew
 Duplicated efforts &
resources
 Some departments not
operating at full
capacity
Late 1990’s – Department Level IT
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 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
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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Late 1990’s
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Advantages
Disadvantages
 Scaled better
 Centralized IT person
 Resources could be
pooled and shared
 End users received
excellent support
 Compatible systems
may not understand
intricacies of each
department
 Application support
still needed
 Can take longer for the
right person to be
assigned
Amgen Today
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 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
Amgen Today
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 PC based
 Numerous rooms dedicated to video conferencing
 Windows Servers, Unix servers (LINUX and Solaris)
 Research has a few hefty parallel computers
Amgen Today
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 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.)
Special Thanks
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 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

References
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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-fightover-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-dialysispatients/883323
WikiInvest. (2009). WikiInvest. Retrieved October 24, 2010, from Stock: Amgen:
http://www.wikinvest.com/stock/Amgen_(AMGN)