Important note: Information in this article was accurate in 1996. The state of the art may have changed since the publication date.
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The Wall Street Journal - July 24, 1996
Christopher J. Chipello, Staff Reporter of The Wall Street Journal
But Glaxo Wellcome and BioChem quickly challenged the patent's validity. "We believe the patent granted to Emory is invalid, and we will defend our patent position vigorously," said Ramona Jones, a spokeswoman for Glaxo's U.S. unit in Research Triangle Park, N.C.
The British drugmaker markets 3TC, also known as Epivir, under a licensing arrangement with BioChem Pharma, a Montreal biopharmaceutical company. Epivir has gained a big share of the HIV-drug market since it was approved for sale in the U.S. in November, and some analysts estimate that first-year sales could reach $250 million.
In trading on the New York Stock Exchange, Glaxo Wellcome's American depositary receipts closed at $28, up 37.5 cents. BioChem Pharma's shares were halted on the Nasdaq Stock Market shortly before Emory's announcement yesterday afternoon. The stock last traded at $33.125, up 25 cents from Monday's close.
Earlier this year, Glaxo and BioChem had said they were confident that BioChem had all necessary patents on 3TC. Francesco Bellini, BioChem's president and chief executive, said yesterday evening the company will seek to invalidate Emory's U.S. patent. BioChem receives a royalty of around 14% of Glaxo's sales of 3TC, and under their agreement part of any third-party royalties would come out of BioChem's share.
Any royalties for Emory could cost BioChem a couple of percentage points, but would be "not a big loss" for BioChem, said Mr. Bellini, adding that for now "we don't even consider such things."
But Ezra Lwowski, an analyst at Yorkton Securities in Toronto, warned that the prospect of a legal battle creates a risk that is likely to hurt BioChem's share price, at least in the short term.
Vince La Terza, Emory's director of patents and licensing, said yesterday that the university's position is that a license under its patent "is required" for a company to sell 3TC.
Emory said 3TC is one of two components of BCH-189, which was discovered by a scientist at BioChem Pharma. BCH-189 is a mixture of two compounds, and BioChem's patent describes how to obtain the mixture, but not the purified drug that is now on the market, the university said. Emory's patent specifically covers 3TC, said Sherry Knowles Zalesky, an Atlanta attorney representing the university.
Mr. La Terza declined to discuss possible court action. "From every perspective, it will be to the benefit of Glaxo, BioChem Pharma and, of course, Emory to resolve this situation amicably, and sooner rather than later," he said.
In a situation involving another AIDS drug, Glaxo and Vertex Pharmaceuticals Inc. recently agreed to pay $25 million and subsequent royalty payments to G.D. Searle & Co. for the right to continue developing a protease-inhibitor drug free of intellectual-property claims by Searle.
Separately, BioChem Pharma late yesterday reported second-quarter net income of 4.1 million Canadian dollars (US$3 million), or eight Canadian cents a share; a year earlier, it posted a net loss of C$2.3 million, or five cents a share. The improvement was due mainly to royalty revenue BioChem receives on sales of 3TC.
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