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'96

Leptin receptor

Progenitor

'96

Neuroimmunophil.

Guilford

'99

Abarelix

Praecis

'00

Epratuzumab

Immunomed

'02

Enbrel ®

Immunex

Fig. 3.23. Discovery and Licensing for Products* *Amgen, 2002, Public disclosures; Dates approximate research milestones and have less risk of failure), one molecule versus a family of related molecules, and the amount, extent, and timelines of research to be done. The discovery partner will obtain a higher percentage of future royalties for late-stage molecules.

In this example, Amgen obtained neurogenic molecules (BDNF and NT3) from Regeneron company in early 1990s, but both molecules have failed. Keratinocyte growth factor (KGF) was obtained from the NIH in 1992 for all indications involving the epitheilium and epidermis. The good news is that the product research was successful with approval in 2004 for a mucositis indication (Kepivance™), but it took 12 years and the indication is fairly narrow, mucositis in stem cell transplants in hematologenous cancers receiving highdose chemotherapy. In the inflammation area, one of Amgen's research focuses, two molecules were obtained from Synergen through acquisition of the whole company. One molecule has been approved for rheumatoid arthritis in 2002, IL-1ra (Kineret®), and the other remains in clinical trials and formulation development, TNF binding protein over a 10-year period. A calcimimetic family of compounds was licensed in from NPS company, a small biotechnology company in Salt Lake City, Utah, in 1996 with an initial focus on hyper-parathyroidism. The first molecule from the company was already in phase 2 trials but failed to be continued in its development due to excessive drug interactions found with further clinical work. Fortunately, another molecule in the family was available for clinical trials, which were done successfully culminating in product approval as Cincalcet® in 2003 for secondary hyperparathyroidism.

A potentially major acquisition was made in 1995, which hit the front pages of the science literature and public press, regarding the molecule leptin for obesity. The competition for the molecule was intense between Amgen, Pfizer, and other major players, because of the exceptionally huge market in the many billions of dollars (obesity) and the molecule's specificity for obesity mechanisms. Rockefeller University and the scientist received a $20 million up-front payment and funding of their laboratory. Amgen pursued the leptin mechanism for obesity further with licensing of the leptin receptor from a biotechnology company. This molecule failed to produce sufficient weight loss in most patients.

Licensing activity around a new disease mechanism or target is an optimal approach to ideally protect an acquisition from future competition; a company will acquire the target molecule, related molecules, receptors for the molecule, and related mechanisms of actions and their targets. Another neu-rogenic molecule acquisition was done by Amgen with Guilford for a family of molecules, called neuroimmunophilins, but in the ensuing years, they proved to possess insufficient activity for Amgen to continue the research. The collaboration was terminated. In the late 1990s, Amgen licensed in a late-stage product, Abarelix, from Praecis company for prostate cancer as an alternative to existing treatment with a new mechanism of action. Phase 3 work needed to be done, and the work was a collaboration between the two companies. This area was a whole new market for Amgen in urology, requiring building a clinical research team and a marketing team for the molecule. The product worked well in its phase 3 work but was judged by Amgen to be not sufficiently greater in activity versus already marketed products, and the product agreement was terminated, and the molecule was returned to Praecis. The cost of further research and marketing (and sales) build-up was too much for Amgen, given their other pipeline and marketed products and needs versus the return (sales) on the investment for abarelix. However, Praecis continued the research and NDA filing resulting in a successful product approval. The benefit versus expense profile was favorable for a young new company needing their first product approval. In the oncology area, Amgen licensed in a monoclonal antibody (Mab) from Immunomedics company for lymphoma with a novel cell target, CD22 antigen. The research area was compatible for Amgen, that is, oncology, although they had no specific expertise in Mabs, but they were moving favorably into another mechanism for cancer therapy. The product did not perform as well as expected and did not move forward as hoped. In 2002, Amgen made its biggest product acquisition in the future blockbuster, Enbrel, from Immunex, by acquiring the whole company. Besides the product revenue being brought to Amgen, this company acquisition had many potential benefits for Amgen, because the lead research and marketing areas of Immunex were highly symbiotic to Amgen's in inflammation and oncology, adding more pipeline molecules, and adding substantial scientific expertise and marketing savvy in the personnel acquisition [40, 41, 46-47].

A patent is a critical success outcome for any company to protect future revenue from any molecule. The intellectual property through patents must be protected by a company to be successful in sales for the longest time possible and minimize competitive products from becoming available. In biotechnology, given the complexity of the discovery research, the newness of these types of molecules and processes, and the complexity of manufacturing, patents are just being adjudicated now and over the past 10 years, even though thousands of patents are issued each year by patent offices around the world. What is the next major advance in science for a product area by competing companies in their research? This will remain the key question for the courts to decide. Figure 3.24 lists the five main questions to address in establishing a new patent in the USA; subject matter, utility, novelty, obviousness, and disclosure. Products can be patented if they are not a naturally occurring compound. In the drug world, relatively minor chemical modification creates a new patentable compound. In biotechnology, the process to create the molecule, and possibly the molecule as well, are major patentable outcomes. Amgen patent for epoietin alfa is the process to create the molecule, recombinant DNA process, as well as other patents. Amgen won a patent suit against a potential competitor who had isolated erythropoietin from urine, based on novelty and utility for its recombinant process [48-50].

Mergers and acquisitions are commonplace in the pharmaceutical and biotechnology industries over the past 20 years. Figure 3.25 gives six sets of mergers. In the Pfizer example, Upjohn and Pharmacia merged separately as did Warner/ Lambert and Parke/Davis. Pfizer acquired first W/L-P/D and then acquired U/P. In these consolidations in the industry, they are intended to create the critical mass of expert scientists, number of quality pipeline products, and research dollars for development of blockbuster products, especially in the face of exceptionally high and rising costs of R&D and the high risks of failure in the industry. A company looks for compatibility in their product lines, along with the scientific and marketing expertise of the two staffs, either to complement an existing business and clinical focus or move into a whole new therapeutic area with the acquisition. Efficiencies in operations are an expected outcome with less costs to operate (e.g., one sales force can handle the combined products with small additions or minor reorganization). Also, the human resources, law, and finance divisions are often downsized in the combined company. A merger is very rarely a combination of two equals; one company predominates or is the acquirer and

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