ImClone loses cancer treatment patent fight
Shares slump after federal court rules three scientists associated with Yeda Research are sole inventors of patent.
NEW YORK (Reuters) — Shares of ImClone Systems Inc. fell over 6 percent on Tuesday after a court invalidated the biotechnology company’s ownership of a key cancer drug patent.
Trading volume for ImClone (down $2.02 to $28.50, Charts) shares was heavy Tuesday, with more than 5 million shares changing hands in the first half hour of trading.
A decision by the New York District Court that assigned inventorship of the patent to three scientists represented by Yeda Research and Development Company could hurt sales and benefit a rival product from Amgen Inc. (up $0.06 to $69.82, Charts), which is expected to shortly come to the market, analysts said.
The patent, which ImClone licenses from Sanofi-Aventis (down $0.10 to $43.22, Charts), covers the use of certain monoclonal antibodies in combination with anti-neoplastic agents for the treatment of cancer
ImClone announced the decision late Monday.
The decision comes at a bad time for ImClone, which recently ended a fruitless six-month search for a buyer and is seeking a new, permanent chief executive officer to steer it forward as the company prepares for the expected introduction of Amgen’s rival to its cancer drug Erbitux.
"Last night’s development is the worst possible scenario for ImClone," said Yaron Werber, an analyst at Citigroup, in a report. "Ultimately, we expect that ImClone will pay Yeda additional 2-3 percent royalties to sustain its exclusive rights to this patent."
Bristol-Myers Squibb Co. (down $0.33 to $24.55, Charts) owns roughly 20 percent of ImClone and receives the bulk of Erbitux sales.
"The costs of litigation, potential back royalty settlements and future royalties could limit ImClone’s strategic flexibility as the company attempts to establish a long-term plan as an independent concern," said Steven Harr, an analyst at Morgan Stanley, in a report.
ImClone said it disagrees with the court’s decision and that it believes the former Sanofi-Aventis scientists originally named as inventors are the correct inventors of the patent.
In the short term, ImClone said it does not believe the decision will materially impact its operations, including the sale of Erbitux colon cancer drug in combination with chemotherapy.
Article source: http://money.cnn.com/2006/09/19/news/companies/bc.health.imclone.reut
