1. Commercializing the First Biotech Blockbuster drug
Amgen Inc.’s _______
Epogen
Commercializing the First Biotech Blockbuster drug
Presented by:
Faryn Kapala
October 26th, 2010
What is their blockbuster drug? Epogen
What does it do (in a few words)? AMGen (Applied Molecular Genetics)
When was it founded? – 1980
Amgen is the largest employer in Thousand Oaks and second only to the United States Navy in terms of number of people employed in Ventura County.

2. Brief History of Key Players 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
Presentation Outline

3. 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

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

5. 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.

6. 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
The primary role of the kidneys is to filter the blood and to excrete metabolic side products, along with water, as urine. The body's entire blood volume passes through the kidneys every five minutes

7. 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

8. 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

9. So what did Amgen discover?
Not the protein
Not 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)

10. Protecting Their Intellectual Property
3 requirements for a biotech patent:
NOVEL
Nobody ever made the product before
NONOBVIOUS in light of prior art
Prior Art: Publications, other patents
Ex.) Pencil & Eraser
UTILITY
It has to somehow be useful
Product or Process

11. 3 Types of Patents Product Patent Process Patent
Patent the Starting Materials

12. 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

13. 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 Resistance
SAME PROCESS

14. 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…”

15. 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

16. October 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!

17. 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

18. 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

19. 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 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

20. 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
When did Amgen go public?

21. 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!

22. Let’s Change Directions

23. 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.

24.
Patent Searching
EPOGEN

25.
Patent Searching
EPOGEN

26. 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

27. 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

28. 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.

29. 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

30. Organizational Changes See Ch.2 – Page 65 in YOUR MIS BOOK!
Amgen’s IT Department
Organizational Changes
See Ch.2 – Page 65 in YOUR MIS BOOK!

31. 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

32. A.) IT within each functional area

33. Early 1990’s Didn’t scale well as the company grew
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

34. 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

35. B.) Separate IT departments under central control

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

37. Late 1990’s Scaled better Resources could be pooled and shared
Advantages
Disadvantages
Scaled better
Resources could be pooled and shared
End users received excellent support
Compatible 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

38. 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 and MS Office Suite
Numerous teleworkers

39. Amgen Today PC based Numerous rooms dedicated to video conferencing
Windows Servers, Unix servers (LINUX and Solaris)
Research has a few hefty parallel computers

40. 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.)

41. Special Thanks 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

42. References
Amgen. (2010). Epogen. Retrieved October 24, 2010, from
Andrews, E. L. (1991, March 7). The New York Times. Retrieved October 26, 2010, from Amgen Wins Fight Over Drug:
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,
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:
WikiInvest. (2009). WikiInvest. Retrieved October 24, 2010, from Stock: Amgen: