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Appeals Court Rules Gemzar Patent Invalid

Appeals Court Rules Gemzar Patent Invalid: Lilly, Which may appeal panel's decision, could lose exclusivity to drug this fall [The Indianapolis Star]

From Indianapolis Star (IN) (July 29, 2010)

July 29--Same courtroom, same lawyers, same legal arguments.

Eli Lilly and Co. is facing another uphill fight for the exclusive rights to a drug that contributes billions of dollars to the company’s income.

A panel of the U.S. Court of Appeals ruled Wednesday that a key patent related to Lilly’s blockbuster cancer drug Gemzar is invalid.

The 17-page ruling by the court in Washington was reminiscent of a decision a decade ago, when the same court invalidated a key patent on Lilly’s antidepressant Prozac, opening that $2 billion-a-year Lilly drug to generic competitors.

Gemzar, used for treatment of life-threatening lung, breast, pancreatic and ovarian cancers, contributed $1.36 billion in global sales to Lilly’s income in 2009.

Wall Street reacted to the court’s ruling Wednesday by shaving the price of Lilly stock, which closed Wednesday at $35.67, down 43 cents a share, or 1.2 percent. But analysts said the ruling was not unexpected.

In the federal lawsuit, India-based generic drug maker Sun Pharmaceuticals Industries challenged the way Lilly attempted to extend the years of patent protection for Gemzar by filing what it claims is a second over-lapping or "double patent" on the drug.

Lilly denied double patenting the drug.

Depending on further court appeals, Lilly’s exclusive rights to make and sell the drug could end as early as November rather than continue to 2013. Lilly completes the manufacturing of Gemzar at its facilities in Indianapolis.

Makers of generic versions of the drug gemcitabine, the chemical name for Gemzar, could crowd into the market at least two years early.

However, Lilly immediately signaled that the legal fight might not be over.

Much as in the Prozac court fight 10 years ago, Lilly could ask the full membership of the Court of Appeals to review the three-member panel’s ruling on Gemzar. The panel upheld a federal District Court judge in Detroit who agreed with Sun and found the patent invalid.

"We strongly disagree with the ruling of the U.S. Court of Appeals regarding Gemzar’s method-of-use patent. We continue to believe that our patent should be found valid and should remain in effect until mid-2013," said Robert A. Armitage, senior vice president and general counsel for Lilly.

"We will consider all possible legal options, including a request for a further review of the panel decision by the full court," he said in a written statement.

Lilly stressed that the ruling does not immediately allow generic gemcitabine into the U.S. market and told shareholders that projected profits for 2010 remain unchanged.

"Protection of intellectual property rights is extremely important to the biopharmaceutical industry and the patients we serve, as these rights help support the development of the next generation of innovative medicines," said Lilly Chairman and Chief Executive Officer John Lechleiter in a news release.

"Despite (Wednesday’s) ruling, our business remains strong, supported by the growth of key marketed products and a promising pipeline of potential new medicines that currently boasts nearly 70 molecules in clinical development," he said.

Chicago attorney James Hurst, who was an attorney for generic drug maker Barr Pharmaceuticals in the Prozac lawsuit 10 years ago, is representing Sun in the Gemzar suit.

"I guess it is like deja vu all over again, with the same lawyers in the same court. Barr began marketing (generic Prozac) about two years early, and we could have that again with Gemzar," Hurst said.

Stock analysts said there are big differences in the Prozac and Gemzar patent fights. Prozac was much more important to the Lilly bottom line at the time.

However, Lilly also will lose patent protection next year for its biggest seller, Zyprexa, which posted sales of $4.9 billion in 2009.

Les Funtleyder, a health-care industry analyst and portfolio manager for Miller Tabak in New York, said, "I don’t think Gemzar will fall off a cliff. These are hard drugs to manufacture, and they tend to have brand loyalty."

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Posted: July 2010