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.

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

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

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

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.

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

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

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

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)

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

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

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

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

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…”

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

October 1987 - 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!

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

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

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

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?

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!

Let’s Change Directions

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.

www.uspto.gov Patent Searching EPOGEN

www.google.com/patents Patent Searching EPOGEN

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

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 http://www.ncbi.nlm.nih.gov/genbank/

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.

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

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!

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

A.) IT within each functional area

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

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

B.) Separate IT departments under central control

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

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

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 e-mail and MS Office Suite Numerous teleworkers

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

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.)

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

References 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-fight-over-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-dialysis-patients/883323 WikiInvest. (2009). WikiInvest. Retrieved October 24, 2010, from Stock: Amgen: http://www.wikinvest.com/stock/Amgen_(AMGN)