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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
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For the fiscal year ended December 31, 2004 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period
from to |
Commission file number: 0-19311
Biogen Idec Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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33-0112644 |
(State or other jurisdiction of
incorporation or organization) |
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(I.R.S. Employer
Identification No.) |
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14 Cambridge Center, Cambridge,
Massachusetts
(Address of principal executive offices)
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02142
(Zip code) |
(Registrant’s telephone number, including area code)
(617) 679-2000
Securities registered pursuant to Section 12(b) of the
Act:
None
Securities registered pursuant to Section 12(g) of the
Act:
Common Stock, $0.0005 par value and Series X Junior
Participating Preferred Stock Purchase Rights
(Title of class)
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days. Yes þ No o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of the
Registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this
Form 10-K. o
Indicate by check mark whether the Registrant is an accelerated
filer (as defined in Exchange Act
Rule 12b-2). Yes þ No o
The aggregate market value of the Registrant’s Common Stock
held by non-affiliates of the Registrant (without admitting that
any person whose shares are not included in such calculation is
an affiliate) computed by reference to the price at which the
common stock was last sold as of the last business day of the
Registrant’s most recently completed second fiscal quarter
was $21,197,833,965.
As of March 10, 2005, the Registrant had
344,027,240 shares of Common Stock, $0.0005 par value,
issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for our 2005 Annual
Meeting of Stockholders are incorporated by reference into
Part III of this Report.
BIOGEN IDEC INC.
ANNUAL REPORT ON FORM 10-K
For the Fiscal Year Ended December 31, 2004
TABLE OF CONTENTS
PART I
Overview
Biogen Idec creates new standards of care in oncology and
immunology. As a global leader in the development,
manufacturing, and commercialization of novel therapies, we
transform scientific discoveries into advances in human
healthcare. We currently have five products:
AVONEX® (interferon beta-1a). AVONEX is
approved for the treatment of relapsing forms of multiple
sclerosis, or MS, and is the most prescribed therapeutic product
in MS worldwide. Globally over 130,000 patients have chosen
AVONEX as their treatment of choice. In 2004, sales of AVONEX
generated worldwide revenues of $1.42 billion as compared
to worldwide sales of $1.17 billion in 2003.
RITUXAN® (rituximab). RITUXAN is approved
worldwide for the treatment of certain B-cell non-Hodgkin’s
lymphomas, or B-cell NHLs. We market RITUXAN in the U.S. in
collaboration with Genentech, Inc., or Genentech. All
U.S. sales of RITUXAN are recognized by Genentech and we
record our share of the pretax copromotion profits on a
quarterly basis. In 2004, RITUXAN generated U.S. net sales
of $1.57 billion of which we recorded $469.5 million
as our share of copromotion profits as compared to U.S. net
sales of $1.36 billion in 2003 of which we recorded
$419.2 million as our share of copromotion profits. F.
Hoffmann-La Roche Ltd., or Roche, sells rituximab outside
the U.S., except in Japan where it co-markets RITUXAN in
collaboration with Zenyaku Kogyo Co. Ltd., or Zenyaku. We
received royalties through Genentech on sales of rituximab
outside of the U.S. of $121.0 million in 2004 as
compared to $67.9 million in 2003. We are working with
Genentech and Roche on the development of RITUXAN in additional
oncology indications and rheumatoid arthritis, or RA. RITUXAN is
the trade name for the compound rituximab in the U.S., Canada
and Japan. MabThera is the tradename for rituximab in the EU. In
this Form 10-K, we refer to rituximab, RITUXAN, and
MabThera collectively as RITUXAN, except where we have otherwise
indicated.
TYSABRI® (natalizumab), formerly known as
ANTEGREN®. TYSABRI was approved by the United States
Food and Drug Administration, or FDA, in November 2004 to treat
relapsing forms of MS to reduce the frequency of clinical
relapses. In February 2005, in consultation with the FDA, we and
Elan Corporation, plc, or Elan, voluntarily suspended the
marketing and commercial distribution of TYSABRI, and informed
physicians that they should suspend dosing of TYSABRI until
further notification. In addition, we suspended dosing in
clinical studies of TYSABRI in MS, Crohn’s disease and RA.
These decisions were based on reports of two serious adverse
events that occurred in patients treated with TYSABRI in
combination with AVONEX in MS clinical studies. These events
involved two cases of progressive multifocal
leukoencephalopathy, or PML, a rare and frequently fatal,
demyelinating disease of the central nervous system. Both
patients received more than two years of TYSABRI in combination
with AVONEX. In light of the two reports of PML, the companies
initiated a systematic review of the TYSABRI safety database. On
March 30, 2005, we and Elan announced that the review of
the safety database led a serious adverse event previously
reported by a clinical investigator in a clinical study of
TYSABRI in Crohn’s disease to be reassessed as PML. The
case was originally reported by the investigator as malignant
astrocytoma in July 2003. The patient died in December 2003. The
patient had received 8 doses of TYSABRI over an
18 month period and prior medication history included
multiple courses of immunosuppressant agents. We and Elan are
working with clinical investigators to evaluate patients treated
with TYSABRI in clinical studies and are consulting with leading
experts to better understand the possible risk of PML. The
outcome of these evaluations will be used to determine possible
re-initiation of dosing in clinical studies and future
commercial availability.
ZEVALIN® (ibritumomab tiuxetan). ZEVALIN was
the first radioimmunotherapy approved by the FDA for the
treatment of cancer. ZEVALIN, as part of the ZEVALIN therapeutic
regimen, is approved in the U.S. as a treatment for
relapsed or refractory low-grade, follicular, or transformed
B-cell NHL including patients with RITUXAN refractory follicular
non-Hodgkin’s lymphoma. In 2004, sales of ZEVALIN in the
U.S. generated revenues of $18.7 million as compared
to revenues of $19.6 million in 2003. Outside the U.S., we
have licensed our marketing rights in ZEVALIN to Schering AG. In
January 2004, the European Medicines Agency, or EMEA, granted
marketing approval of ZEVALIN in the EU for the treatment of
adult
patients with CD20+ follicular B-cell NHL who are refractory to
or have relapsed following RITUXAN therapy. Rest of world
product sales for ZEVALIN for the year ended December 31,
2004 were $4.3 million. The $4.3 million relates to
ZEVALIN sold to Schering AG in 2003 and 2004, recognition of
which had been deferred.
AMEVIVE® (alefacept). AMEVIVE is approved in
the U.S. for the treatment of adult patients with
moderate-to-severe chronic plaque psoriasis who are candidates
for systemic therapy or phototherapy. In 2004, AMEVIVE was
approved for the same indication in Argentina, Australia,
Canada, Israel, Kuwait and Switzerland. In 2004, sales of
AMEVIVE generated worldwide revenues of $43.0 million,
substantially all of which were generated from sales in the
U.S., as compared to sales of $40.4 million in 2003.
We also receive royalty revenues on sales by our licensees of a
number of products covered under patents that we control. In
addition, we have a pipeline of research and development
products in our core therapeutic areas and in other areas of
interest.
We devote significant resources to research and development
programs. Our research and development efforts are primarily
focused on finding therapeutics in our focus areas of oncology,
neurobiology and immunology. These efforts include our
collaboration with Elan on the development of TYSABRI as a
potential treatment for Crohn’s disease and RA, our work
with Genentech and Roche on the development of RITUXAN in
additional oncology indications and RA, and our collaboration
with Fumapharm AG, or Fumapharm, on development of an oral
therapy as a potential treatment for psoriasis and MS. We
supplement our internal research efforts to find novel
therapeutics in these areas and in other areas of interest with
genomics tools and other innovative technologies. We also seek
to advance our research and development efforts through
collaborations.
Merger. On November 12, 2003, Bridges Merger
Corporation, a wholly owned subsidiary of IDEC Pharmaceuticals
Corporation, was merged with and into Biogen, Inc. with Biogen,
Inc. continuing as the surviving corporation and a wholly owned
subsidiary of IDEC Pharmaceuticals Corporation. At the same
time, IDEC Pharmaceuticals Corporation changed its name to
Biogen Idec Inc. The merger and name change were made under an
Agreement and Plan of Merger dated as of June 20, 2003. As
a result of the merger, each issued and outstanding share of
Biogen, Inc. common stock was converted into the right to
receive 1.15 shares of Biogen Idec common stock. Our stock
trades on the Nasdaq National Market under the symbol
“BIIB.” The results of Biogen, Inc.’s operations
from November 13, 2003, the day after the effective date of
the merger, to December 31, 2003 have been included in the
2003 consolidated financial statements filed in this Annual
Report on Form 10-K.
Available Information. We are a Delaware corporation with
principal executive offices located at 14 Cambridge Center,
Cambridge, Massachusetts 02142. Our telephone number is
(617) 679-2000 and our website address is
www.biogenidec.com. We make available free of charge through the
Investor Relations section of our website our Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and all amendments to those reports as
soon as reasonably practicable after such material is
electronically filed with or furnished to the Securities and
Exchange Commission, or the SEC. We include our website address
in this Annual Report on Form 10-K only as an inactive
textual reference and do not intend it to be an active link to
our website.
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Our Products — Approved Indications and Ongoing
Development
Our products are targeted to address a variety of key medical
needs in the areas of oncology, neurology, dermatology and
rheumatology. They are as follows:
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Development and/or |
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Product Indications |
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Marketing Collaborators |
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AVONEX |
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Certain forms of MS |
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Approved worldwide |
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None |
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Chronic Inflammatory Demyelinating Polyradioneuropathy |
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Phase 2b — enrollment |
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RITUXAN |
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Certain B-cell NHLs |
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Approved worldwide |
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U.S. — Genentech
Outside U.S. and Japan — Roche
Japan — Roche and Zenyaku |
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Relapsed chronic lymphocytic leukemia |
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Phase 3 |
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U.S. — Genentech
Outside U.S. and Japan — Roche
Japan — Roche and Zenyaku |
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RA |
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Phase 3 — TNF failures
Phase 2b — DMARD failures |
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U.S. — Genentech
Outside U.S. and Japan — Roche
Japan — Roche and Zenyaku |
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Lupus/MS |
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Phase 2 |
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U.S. — Genentech
Outside U.S. and Japan — Roche
Japan — Roche and Zenyaku |
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ZEVALIN |
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Certain B-cell NHLs (radioimmunotherapy) |
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Approved — U.S. and EU |
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Outside U.S. — Schering AG |
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AMEVIVE |
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Moderate-to-severe chronic plaque psoriasis |
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Approved — U.S., Argentina, Australia, Canada, Israel,
Kuwait and Switzerland Under regulatory review — New
Zealand
Application withdrawn — EU |
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None |
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TYSABRI |
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MS |
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Approved — U.S.; marketing, commercial distribution
and dosing in clinical studies suspended in February 2005
Under regulatory review — EU |
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Elan |
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Crohn’s disease |
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Phase 3 — two Phase 3 trials completed;
dosing in all clinical studies, including additional Phase 3
induction trial, suspended in February 2005
Under regulatory review — EU |
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Elan |
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RA |
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Phase 2; dosing in all clinical studies suspended in
February 2005 |
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Elan |
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We currently market and sell AVONEX worldwide for the treatment
of relapsing MS. In 2004, sales of AVONEX generated worldwide
revenues of $1.42 billion as compared to worldwide sales of
$1.17 billion in 2003. AVONEX was sold by Biogen, Inc.
until November 12, 2003. Our consolidated financial
statements include only the results of operations of Biogen,
Inc. since November 13, 2003. Our revenues from AVONEX
during the period from November 13, 2003 to
December 31, 2003 were $142.6 million.
MS is a progressive neurological disease in which the body loses
the ability to transmit messages along nerve cells, leading to a
loss of muscle control, paralysis and, in some cases, death.
Patients with active relapsing MS experience an uneven pattern
of disease progression characterized by periods of stability
interrupted by flare-ups of the disease after which the patient
returns to a new baseline of functioning. AVONEX is a
recombinant form of a protein produced in the body by fibroblast
cells in response to viral infection. AVONEX has been shown in
clinical trials in relapsing forms of MS both to slow the
accumulation of disability and to reduce the frequency of
flare-ups. AVONEX is approved to treat relapsing forms of MS,
including MS patients with a first clinical episode and MRI
features consistent with MS. Biogen, Inc. began selling AVONEX
in the U.S. in 1996, and in the EU in 1997. AVONEX is on
the market in more than 60 countries. Based on data from an
independent third party research organization, information for
our distributors and internal analysis, we believe that AVONEX
is the most prescribed therapeutic product for the treatment of
MS worldwide. Globally, over 130,000 patients have selected
AVONEX as their treatment of choice.
As part of our commitment to AVONEX, we work to make treatment
and delivery more convenient. For example, AVONEX is now
available in a pre-filled syringe formulation as well as a dry
powder form. A syringe grip device to aid patients with
compromised manual dexterity in injecting AVONEX was approved by
the FDA in 2004.
We also continue to work to expand the data available about
AVONEX. We have extended the Controlled High Risk AVONEX
Multiple Sclerosis Prevention Study In Ongoing Neurological
Surveillance, or CHAMPIONS. CHAMPIONS was originally designed to
determine whether the effect of early treatment with AVONEX in
delaying relapses and reducing the accumulation of MS brain
lesions could be sustained for up to five years. The study
results showed that AVONEX altered the long-term course of MS in
patients who began treatment immediately after their initial MS
attack compared to initiation of treatment more than two years
after onset of symptoms. The five-year study extension is
intended to determine if the effects of early treatment with
AVONEX can be sustained for up to 10 years. We are
conducting a study with Surromed, Inc. to investigate the
biologic markers and phenotype of MS patients with and without
AVONEX treatment. We also continue to support Phase 4
investigator-run studies evaluating AVONEX in combination with
other therapies. In addition, we recently initiated enrollment
into a Phase 2b study of AVONEX as a treatment for Chronic
Inflammatory Demyelinating Polyradioneuropathy.
In February 2005, in consultation with the FDA, we and Elan
voluntarily suspended the marketing and commercial distribution
of our other MS drug TYSABRI and suspended dosing in all
clinical studies of TYSABRI, including clinical studies of
TYSABRI in combination with AVONEX. These decisions were based
on reports of two serious adverse events that have occurred in
patients treated with TYSABRI in combination with AVONEX. These
events involved two cases of PML, a rare and frequently fatal,
demyelinating disease of the central nervous system. Both
patients received more than two years of TYSABRI in combination
with AVONEX. For additional information related to TYSABRI and
PML, see “Our Products – Approved Indications
and Ongoing Development — TYSABRI.”
Overview. RITUXAN is approved worldwide for the treatment
of certain B-cell NHLs. We market RITUXAN in the U.S. in
collaboration with Genentech. All U.S. sales of RITUXAN are
recognized by Genentech and we record our share of the pretax
copromotion profits on a quarterly basis. In 2004, RITUXAN
generated U.S. net sales of $1.57 billion of which we
recorded $469.5 million as our share of copromotion profits
as compared to U.S. net sales of $1.36 billion in 2003
of which we recorded $419.2 million
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as our share of copromotion profits. Roche sells RITUXAN outside
the U.S., except in Japan where it co-markets RITUXAN in
collaboration with Zenyaku. We received royalties through
Genentech on sales of RITUXAN outside of the U.S. of
$121.0 million in 2004 as compared to $67.9 million in
2003.
In the U.S., we copromote RITUXAN with Genentech and share
responsibility with Genentech for continued development. Such
continued development includes conducting supportive research
and post-approval clinical studies and seeking potential
approval for additional indications. Genentech provides the
support functions for the commercialization of RITUXAN in the
U.S. and has worldwide manufacturing responsibilities. See
“Sales, Marketing and Distribution — RITUXAN and
ZEVALIN” and “Manufacturing and Raw Materials.”
We also have the right to collaborate with Genentech on the
development of other humanized anti-CD20 antibodies targeting
B-cell disorders for a broad range of indications, and to
copromote with Genentech any new products resulting from such
development in the U.S.
RITUXAN is approved in the U.S. for single agent use in
relapsed or refractory, low grade or follicular CD20-positive
B-cell NHL, which comprise approximately half of the B-cell NHLs
diagnosed in the U.S. RITUXAN is administered as outpatient
therapy by personnel trained in administering chemotherapies or
biologics. A standard course of RITUXAN therapy consists of four
intravenous infusions given on days one, eight, 15 and 22,
unlike chemotherapy which is given typically in repeating cycles
for up to four to eight months. RITUXAN is also approved to be
administered as an 8-dose regimen, for retreatment of patients
with B-cell NHL who have previously responded to RITUXAN and for
use in patients who have bulky tumors. RITUXAN is unique in the
treatment of B-cell NHLs due to its specificity for the antigen
CD20, which is expressed only on the surface of normal B cells
and malignant B cells. Stem cells (including B-cell progenitors
or precursor B-cells) in bone marrow lack the CD20 antigen. This
allows healthy B-cells to regenerate after treatment with
RITUXAN and to return to normal levels within several months.
RITUXAN’s mechanism of action utilizes the body’s own
immune system as compared to conventional lymphoma therapies.
RITUXAN in Oncology. In an effort to identify expanded
applications for RITUXAN, we, in conjunction with Genentech and
Roche, continue to support RITUXAN post-marketing studies.
Ongoing and completed Phase 2 and 3 studies suggest that
RITUXAN may have promise as a front-line therapy in combination
with various chemotherapies in indolent and aggressive
non-Hodgkin’s lymphoma, as a single agent in the treatment
of aggressive B-cell NHLs and relapsed chronic lymphocytic
leukemia, or CLL, and as maintenance therapy in indolent B-cell
NHLs. These studies include:
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A randomized Phase 3 study of the addition of RITUXAN to a
chemotherapy regimen of cyclophosphamide, vincristine and
prednisone, also known as CVP, in previously untreated, or front
line patients with indolent non- Hodgkin’s lymphoma. In
this investigator-run study, 321 patients who had not
received previous treatment for CD20 positive follicular or
indolent non-Hodgkin’s lymphoma were randomized to receive
either CVP alone or CVP with RITUXAN. The initial results of the
study indicated that the addition of RITUXAN to CVP prolonged
time to treatment failure, the primary endpoint of the study, to
26 months compared to seven months for patients treated
with CVP alone. Based on the results from this study, in August
2004, MabThera was approved by the EMEA as a first line
treatment for indolent non-Hodgkin’s lymphoma in
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A randomized Phase 3 study, known as E4494, of patients
age 60 or older with newly diagnosed, diffuse, large
B-cell, or aggressive non-Hodgkin’s lymphoma, comparing a
chemotherapy regimen consisting of cyclophosphamide,
doxorubicin, vincristine and prednisone, also known as CHOP,
alone to a regimen of RITUXAN plus CHOP, also known as R-CHOP,
as a front-line or induction therapy followed by RITUXAN
maintenance therapy or observation for those patients who
responded positively to either R-CHOP or CHOP alone. The study
is a U.S. Intergroup study led by the Eastern Cooperative
Oncology Group, or ECOG. The primary endpoint of the induction
and maintenance phases of the study was time to treatment
failure. Due to the observed interaction between RITUXAN
maintenance and induction therapy, additional analyses were
performed to compare induction therapy with R-CHOP versus CHOP
alone, removing the effects of subsequent RITUXAN maintenance
therapy. Based on these additional analyses, the investigators
concluded that patients who received R-CHOP induction therapy
experienced prolonged time to treatment failure and overall
survival |
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compared to patients who received induction therapy with CHOP
alone. In the maintenance phase of the study, patients treated
with RITUXAN maintenance therapy for up to an additional two
years after completing induction therapy had a statistically
significant delay in time to treatment failure compared to
patients who did not receive RITUXAN maintenance therapy
following induction. At the time of the interim analysis, this
advantage appears predominantly confined to patients who
received CHOP alone during the induction phase. |
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A multi-center, randomized Phase 2 study of
114 patients with relapsed indolent non-Hodgkin’s
lymphoma designed to compare the efficacy of RITUXAN maintenance
therapy to retreatment with RITUXAN. Maintenance therapy was
defined as treatment with RITUXAN every six months for two years
with the objective of keeping lymphoma from returning or
progressing. Retreatment was defined as waiting until the
disease progressed prior to administering another course of
RITUXAN. The initial results of this investigator-run study
showed that patients who received RITUXAN maintenance therapy
experienced 31 months of progression-free survival as
compared to eight months of progression-free survival for those
patients who received retreatment. |
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A large Phase 3 randomized study of 824 patients,
known as MinT, designed to evaluate RITUXAN in combination with
chemotherapy as a front-line treatment for aggressive large,
B-cell NHL in patients age 18 to 60. This study, which was
conducted by an international cooperative group and sponsored by
Roche, met its pre-specified primary efficacy endpoint early.
Positive results from the study were announced in June 2004. The
study authors concluded that data from the study demonstrated a
significant improvement in time to treatment failure, the
primary endpoint of the study. At two years, 81% of patients who
received RITUXAN and chemotherapy did not experience treatment
failure compared to 58% of patients who received chemotherapy
alone. |
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A Phase 3 study, known as E1496, designed to compare
RITUXAN maintenance therapy versus observation in patients with
previously untreated indolent non-Hodgkin’s lymphoma who
achieved stable disease or better after induction therapy with
CVP. The study, which was led by ECOG, met its pre-specified
primary efficacy endpoint early. Positive results from the study
were announced in June 2004. The study authors concluded that
there was a significant improvement in progression free
survival, the primary endpoint of the study. The authors
estimated that 73% of patients who received RITUXAN maintenance
therapy were free of disease progression and alive at two years
compared to 43% of patients who received no further treatment.
In this trial, maintenance therapy began four weeks after the
last cycle of chemotherapy and was defined as four doses of
RITUXAN every six months for two years. |
We, along with Genentech and Roche, are also conducting a
multi-center global Phase 3 registrational study in
patients with relapsed CLL comparing the use of fludarabine,
cyclophosphamide and RITUXAN together, known as FCR, versus
fludarabine and cyclophosphamide alone. This study is open at
multiple sites worldwide. Additional clinical studies are
ongoing in other B-cell malignancies such as lymphoproliferative
disorders associated with solid organ transplant therapies,
relapsed aggressive non-Hodgkin’s lymphoma and mantle cell
non-Hodgkin’s lymphoma.
RITUXAN in RA. The positive results from a Phase 2a
study of 161 patients with moderate-to-severe, active,
long-standing RA who had previously failed one to five
disease-modifying anti-rheumatic drugs (DMARDs) were announced
in October 2003 and published in the New England Journal of
Medicine in June 2004. The study was a four arm, placebo
controlled trial in which patients were randomized to receive
RITUXAN alone, RITUXAN in combination with cyclophosphamide,
RITUXAN in combination with methotrexate, or methotrexate alone.
All patients also received a brief course of corticosteroids.
The study showed that two doses of RITUXAN, administered two
weeks apart, improved symptoms for up to 48 weeks in all
arms in which it was administered. Investigators followed-up
with patients at 48 weeks in order to assess duration of
response beyond the primary endpoint of 24 weeks. At
24 weeks, investigators found that patients receiving the
combination of RITUXAN and methotrexate had the greatest
improvement in symptoms as assessed by the American College of
Rheumatology (ACR) response criteria: 73% of patients
showed at least a 20% improvement, 43% showed at least a 50%
improvement and 23% showed at least a 70% improvement.
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At 48 weeks, 65% of the patients in the RITUXAN and
methotrexate combination arm of the trial showed at least a 20%
improvement, 35% showed at least a 50% improvement and 15%
showed at least a 70% improvement.
Based on results from the Phase 2a study, we, along with
Genentech and Roche, initiated additional studies evaluating
RITUXAN in the treatment of RA. One of these studies is a
Phase 3 study known as REFLEX, studying the use of RITUXAN
in treating patients who have had an inadequate response to
tumor necrosis factor (TNF) inhibitor therapies. Data from
REFLEX is expected to be available in the first half of 2005.
The other study, a multi-center, randomized, double-blind,
placebo-controlled, Phase 2b dose optimization study, known
as DANCER, is evaluating the efficacy and safety of varying
doses of both RITUXAN and corticosteroids in combination with a
stable dose of methotrexate in patients who have failed one to
five DMARDs and are inadequately responding to methotrexate. In
DANCER, a total of 465 patients were randomized to receive
a stable dose of methotrexate and a varying dose of RITUXAN and
corticosteroids. In November 2004, we, along with Genentech and
Roche, announced that DANCER met its primary endpoint of a
greater proportion of RITUXAN-treated patients achieving an ACR
20 response at week 24, compared to placebo, in patients
who were also treated with methotrexate. Further analyses of the
data from DANCER are ongoing.
RITUXAN in Other Immunology Indications. Based on results
from the Phase 2a study of RITUXAN in RA, as well as other
small investigator-sponsored studies in various
autoimmune-mediated diseases, we, along with Genentech, have
initiated early-stage clinical trials studying RITUXAN in MS and
lupus.
Overview. The FDA granted accelerated approval for
TYSABRI in November 2004 to treat relapsing forms of MS to
reduce the frequency of clinical relapses. The approval was
based on one-year data from two Phase 3 clinical studies:
AFFIRM (natalizumab safety and efficacy in relapsing-remitting
MS) and SENTINEL (safety and efficacy of natalizumab in
combination with AVONEX), each a two-year, randomized
multi-center, placebo-controlled and double blinded study. In
February 2005, in consultation with the FDA, we and Elan
voluntarily suspended the marketing and commercial distribution
of TYSABRI, and informed physicians that they should suspend
dosing of TYSABRI until further notification. In addition, we
suspended dosing in clinical studies of TYSABRI in MS,
Crohn’s disease and RA. These decisions were based on
reports of two serious adverse events that occurred in patients
treated with TYSABRI in combination with AVONEX in MS clinical
studies. These events involved two cases (one confirmed and one
suspected at the time of the decisions) of PML, a rare and
frequently fatal, demyelinating disease of the central nervous
system. The suspected case of PML was subsequently confirmed.
Both patients received more than two years of TYSABRI therapy in
combination with AVONEX. In light of the two reports of PML, the
companies initiated a systematic review of the TYSABRI safety
database. On March 30, 2005, we and Elan announced that the
review of the safety database led a serious adverse event
previously reported by a clinical investigator in a clinical
study of TYSABRI in Crohn’s disease to be reassessed as
PML. The case was originally reported by the investigator as
malignant astrocytoma in July 2003. The patient died in December
2003. The patient had received 8 doses of TYSABRI over an
18 month period and prior medication history included
multiple courses of immunosuppressant agents. We and Elan are
working with clinical investigators to evaluate patients treated
with TYSABRI in clinical trials and are consulting with leading
experts to better understand the possible risk of PML. The
outcome of these evaluations will be used to determine possible
re-initiation of dosing in clinical studies and future
commercial availability. We cannot predict the outcome of these
evaluations. See “Forward-Looking Information and Risk
Factors That May Affect Future Results — Safety Issues
with TYSABRI Could Significantly Affect our Growth.”
In June 2004, Elan submitted a Marketing Authorisation
Application, or MAA, to the EMEA for approval of TYSABRI in MS.
We are working closely with the EMEA in order to provide them
with information regarding the status of our evaluation of the
possible risk of PML with TYSABRI and any additional information
that they may request so that they can conduct a risk/benefit
assessment in accordance with regulatory requirements. See
“Forward-Looking Information and Risk Factors That May
Affect Future Results — Safety Issues with TYSABRI
Could Significantly Affect our Growth.”
7
TYSABRI binds to adhesion molecules on the immune cell surface
known as alpha-4 integrin. Adhesion molecules on the surface of
the immune cells play an important role in the migration of the
immune cells in the inflammatory process. Research suggests that
by binding to alpha-4 integrin, TYSABRI prevents immune cells
from migrating from the bloodstream into tissue where they can
cause inflammation and potentially damage nerve fibers and their
insulation.
PHASE 3 Studies of TYSABRI in MS. Prior to the suspension
of dosing in clinical studies of TYSABRI we, along with Elan,
had completed the AFFIRM study and had substantially completed
the SENTINEL study. The AFFIRM study was designed to evaluate
the ability of natalizumab to slow the progression of disability
in MS and reduce the rate of clinical relapses. The SENTINEL
study was designed to evaluate the effect of the combination of
natalizumab and AVONEX compared to treatment with AVONEX alone
in slowing progression of disability and reducing the rate of
clinical relapses. Both studies have protocols that included a
one-year analysis of the data. The one-year data from the AFFIRM
study showed that TYSABRI reduced the rate of clinical relapses
by 66% relative to placebo, the primary endpoint at one year.
AFFIRM also met all one-year secondary endpoints, including MRI
measures. In the TYSABRI treated group, 60% of patients
developed no new or newly enlarging T2 hyperintense lesions
compared to 22% of placebo treated patients. On the one-year MRI
scan, 96% of TYSABRI treated patients had no gadolinium
enhancing lesions compared to 68% of placebo treated patients.
The proportion of patients who remained relapse free was 76% in
the TYSABRI treated group compared to 53% in the placebo treated
group. The one-year data from the SENTINEL combination study
also showed that the study achieved its one-year primary
endpoint. The addition of TYSABRI to AVONEX resulted in a 54%
reduction in the rate of clinical relapses over the effect of
AVONEX alone. The annualized relapse rate was 0.36 for patients
receiving TYSABRI when added to AVONEX versus 0.78 with AVONEX
plus placebo. SENTINEL also met all secondary endpoints,
including MRI measures. In the group treated with TYSABRI plus
AVONEX, 67% of the patients developed no new or newly enlarging
T2 hyperintense lesions compared to 40% in the AVONEX plus
placebo group. On the one-year MRI scan, 96% of TYSABRI plus
AVONEX treated patients had no gadolinium enhancing lesions
compared to 76% of AVONEX plus placebo treated patients. The
proportion of patients who remained relapse free was 67% in the
TYSABRI plus AVONEX treated group compared to 46% in the AVONEX
plus placebo treated group. In February 2005, we and Elan
announced that the AFFIRM study also achieved the two-year
primary endpoint of slowing the progression of disability in
patients with relapsing forms of MS. In the TYSABRI treated
group, there was a 42% reduction in the risk of disability
progression relative to placebo, and a 67% reduction in the rate
of clinical relapses over two years, which was sustained and
consistent with the one-year results.
TYSABRI in Crohn’s Disease. We, along with Elan,
have completed two Phase 3 studies of TYSABRI in
Crohn’s disease. In February 2005, we suspended dosing in
an additional fully enrolled Phase 3 induction study of
TYSABRI in Crohn’s disease until we complete our evaluation
of the possible risk of PML in patients treated with TYSABRI. On
March 30, 2005, we and Elan announced that the review of
the safety database led a serious adverse event previously
reported by a clinical investigator in a clinical study of
TYSABRI in Crohn’s disease to be reassessed as PML. The
case was originally reported as malignant astrocytoma. The two
completed Phase 3 studies are known as ENACT-2 (Evaluation
of Natalizumab as Continuous Therapy-2) and ENACT-1 (Evaluation
of Natalizumab as Continuous Therapy-1). In the double-blinded,
placebo controlled ENACT-2, 428 patients who were
responders in ENACT-1, the Phase 3 induction study, were
re-randomized to one of two treatment groups, TYSABRI or
placebo, both administered monthly for a total of
12 months. In ENACT-1, the primary endpoint of
“response,” as defined by a 70-point decrease in the
Crohn’s Disease Activity Index, or CDAI, at week 10,
was not met. In ENACT-2, the primary endpoint of
“maintenance of response,” as defined by a sustained
CDAI score of less than 220 as well as no use of rescue
intervention throughout six months of the study, was met. The
primary endpoint of ENACT-2 looked at results through month six.
Through month six, there was a significant treatment difference
of greater than 30% in favor of patients taking TYSABRI compared
to those taking placebo. In September 2004, we and Elan
announced new 12-month data from ENACT-2 showing a sustained and
clinically significant response throughout 12 months of
extended TYSABRI infusion therapy, confirming findings in
patients who had previously shown a sustained response
throughout six months. Maintenance of response was defined by a
CDAI score of less than 220, and less than 70-point increase
from baseline, in the
8
absence of rescue intervention throughout the study. Response
was maintained by 54% of patients treated with natalizumab
compared to 20% of those treated with placebo. In addition, 39%
of patients on TYSABRI maintained clinical remission during the
study period, versus 15% of those on placebo. By the end of
month 12, 49% of patients treated with TYSABRI who had
previously been treated with corticosteroids were able to
withdraw from steroid therapy compared to 20% of placebo-treated
patients. In September 2004, Elan submitted an MAA to the EMEA
for approval of TYSABRI as a treatment for Crohn’s disease.
This application is at an earlier stage than the MS application.
However, as with the MAA for MS, we are working closely with the
EMEA in order to provide them with information regarding the
status of our evaluation of the possible risk of PML with
TYSABRI and any additional information that they may request.
See “Forward-Looking Information and Risk Factors That May
Affect Future Results — Safety Issues with TYSABRI
Could Significantly Affect our Growth.”
TYSABRI in RA. In February 2005, we, along with Elan,
suspended dosing in a recently fully enrolled Phase 2 study
of TYSABRI in RA until we complete our evaluation of the
possible risk of PML in patients treated with TYSABRI. The study
is a multi-center, double-blind, placebo-controlled study of the
efficacy, safety and tolerability of intravenous TYSABRI in
patients with moderate-to-severe RA receiving concomitant
treatment with methotrexate.
ZEVALIN was the first radioimmunotherapy approved by the FDA for
the treatment of cancer. ZEVALIN, as part of the ZEVALIN
therapeutic regimen, is indicated for the treatment of patients
with relapsed or refractory low-grade, follicular, or
transformed B-cell non-Hodgkin’s lymphoma, including
patients with RITUXAN relapsed or refractory non-Hodgkin’s
lymphoma. In 2004, sales of ZEVALIN in the U.S. generated
revenues of $18.7 million as compared to revenues of
$19.6 million in 2003. In January 2004, the EMEA granted
marketing approval of ZEVALIN in the EU for the treatment of
adult patients with CD20+ follicular B-cell NHL who are
refractory to or have relapsed following RITUXAN therapy. We
sell ZEVALIN to Schering AG for distribution in the EU, and
receive royalty revenues from Schering AG on sales of ZEVALIN in
the EU. Rest of world product sales for ZEVALIN for the year
ended December 31, 2004 were $4.3 million. The
$4.3 million relates to ZEVALIN sold to Schering AG in 2003
and 2004, recognition of which had been deferred.
Radiation therapy plays an important role in the management of
B-cell lymphomas due to the sensitivity of B-cell tumors to
radiation. Traditional radiation therapy consists of an external
beam of radiation focused on isolated areas of the body or areas
with high tumor burden. The ZEVALIN therapeutic regimen combines
a monoclonal antibody with a radioisotope. Following intravenous
infusion, the monoclonal antibody recognizes and attaches to the
CD20 antigen. This allows ZEVALIN to specifically target
B-cells, destroying the malignant NHL B-cells and also normal
B-cells.
ZEVALIN therapy consists of two kits: an imaging kit for use
with indium-111 and a therapeutic kit for use with yttrium-90.
The ZEVALIN therapeutic regimen can be completed on an
outpatient basis in approximately 7 to 9 days and includes:
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administration of one dose of RITUXAN to deplete peripheral
blood B cells and improve ZEVALIN biodistribution; |
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imaging with the ZEVALIN imaging kit using indium-111, followed
by gamma camera images at two to 24 hours, 48 to
72 hours, and an optional image at 90 to 120 hours, to
confirm biodistribution of ZEVALIN; |
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if acceptable biodistribution of ZEVALIN is demonstrated,
another dose of RITUXAN is administered; and |
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infusion of the ZEVALIN therapeutic kit using yttrium-90. |
We are working with third party investigators to expand the
quality and quantity of data available about ZEVALIN. ZEVALIN is
being investigated in a variety of lymphoma subtypes including
diffuse B cell
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lymphoma. ZEVALIN is also being studied in a number of different
treatment strategies including combinations with front-line and
salvage chemotherapy regimens and as part of autologous and
allogeneic stem cell transplantation in both indolent and
aggressive lymphoma subtypes. For example, in June 2004, we
announced positive results from a Phase 2 study showing
that the ZEVALIN therapeutic regimen may produce high complete
remission rates in previously untreated patients with low-grade
follicular lymphoma when used following RITUXAN and a short
course of CHOP.
In February 2003, Biogen, Inc. began marketing and selling
AMEVIVE in the U.S. for the treatment of patients with
moderate-to-severe chronic plaque psoriasis who are candidates
for systemic therapy or phototherapy. In 2004, AMEVIVE was
approved for the same indication in Argentina, Australia,
Canada, Israel, Kuwait and Switzerland. Our filing for approval
in New Zealand is currently being reviewed. Our application for
approval in the EU was withdrawn in February 2003.
In 2004, sales of AMEVIVE generated worldwide revenues of
$43.0 million, substantially all of which were generated
from sales in the U.S., as compared to sales of
$40.4 million in 2003. AMEVIVE was sold by Biogen, Inc.
until November 12, 2003. Our consolidated financial
statements include only the results of operations of Biogen,
Inc. since November 13, 2003. Our revenues from AMEVIVE
during the period from November 13, 2003 to
December 13, 2003 were $9.4 million.
Psoriasis is an autoimmune skin disease in which skin cells
multiply 10 times faster than the normal rate. The excess cells
pile up on the skin’s surface, forming red, raised, scaly
plaques that can be painful and disfiguring. AMEVIVE is a
systemic therapy that works by helping to rebalance the
overactive cells in the immune system that cause psoriasis.
These cells, called T-cells, are central to the immune response
when working properly, but are directed inappropriately against
the body’s own tissues in psoriasis and other autoimmune
disorders. AMEVIVE has a dual mechanism of action that is
designed to interfere with T-cell activation and to reduce the
number of so-called memory T-cells.
We continue to conduct clinical studies of AMEVIVE. We are
investigating AMEVIVE in combination with other systemic
therapies. We are conducting open label studies of AMEVIVE in
combination with common psoriasis treatments, including topical
steroids, methotrexate, cyclosporine and phototherapy. Interim
analyses of these studies indicate that AMEVIVE in combination
with common psoriasis treatments is well tolerated for patients
with moderate-to-severe chronic plaque psoriasis. In February
2005, we announced preliminary results from a double-blind,
placebo-controlled Phase 2 study of 185 patients with
active psoriatic arthritis who were randomized to receive either
methotrexate and AMEVIVE or methotrexate. Patients in the
AMEVIVE group received 15 mg of AMEVIVE by intramuscular
injection once a week for 12 weeks, followed by a 12-week
observation period. In the study, 54% of patients who received
AMEVIVE for 12 weeks achieved an ACR 20 response, or at
least a 20 percent improvement in the signs and symptoms of
psoriatic arthritis, at 24 weeks, in contrast to 23% of
patients achieving at least a 20 percent improvement in the
methotrexate alone group. As part of our post marketing
commitments to the FDA, we have completed a Phase 3b
international study designed to provide further safety data
regarding the use of AMEVIVE and which also measured the
efficacy of AMEVIVE over multiple courses.
Our Other Research and Development Programs
We focus our research and development efforts on finding novel
therapeutics in areas of high unmet medical need. Our focus
areas are in oncology, neurobiology and autoimmune disease.
Below is a brief summary of some of our research and development
product candidates.
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an adenoviral vector encoding the human IFN-β gene,
designed to deliver high local concentrations of IFN-β to
tumors |
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an anti-lymphotoxin beta receptor monoclonal antibody, which has
shown activity in inhibiting tumor growth in animal models |
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an antibody to tumor antigen TAG72, designed to deliver
radioimmunotherapy to carcinomas that carry the antigen while
minimizing the radiation to normal tissues such as bone marrow |
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anti-CD80 and anti-CD23 antibodies using our Primatized®
antibody technology |
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a monoclonal antibody directed against Cripto, a novel cell
surface signaling molecule that is over-expressed in solid tumors |
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an oral fumarate that is a second-generation fumarate derivative
with an immunomodulatory mechanism of action which we licensed
from Fumapharm AG. A first-generation product is currently
marketed by Fumapharm as FUMADERM® in Germany, where it is
the most prescribed oral systemic treatment for severe
psoriasis. Fumapharm has completed a small Phase 3
double-blind, multi-center clinical study of the
second-generation product in psoriasis and plans to seek
approval in Germany based on the results of the Phase 3
study, and is currently conducting a safety extension study in
psoriasis in the EU. We began a Phase 2b clinical study of
the second generation product in patients with
relapsing-remitting MS in November 2004 |
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in separate collaborations with Genentech, a new humanized
anti-CD20 antibody targeting B-cell disorders for a broad range
of indications, and a BR3 protein therapeutic as a potential
treatment for disorders associated with abnormal B-lymphocyte
activity, such as RA and lupus |
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a monoclonal antibody directed against alpha-1/beta-1 integrin
(VLA-1). VLA-1 is found on a variety of cells associated with
tissue inflammation and fibrosis, including activated T-cells,
macrophages and myofibroblasts. Reduction of VLA-1 activity is
associated with sharply reduced inflammation and fibrosis in
experimental models of disease |
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in collaboration with Vernalis plc, V2006, the lead compound in
Vernalis’ adenosine A2A receptor antagonist program, which
targets Parkinson’s disease and other central nervous
system disorders |
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neublastin, a protein therapeutic that appears to maintains the
viability and physiology of peripheral sensory neurons.
Neublastin has shown activity in animal models of neuropathic
pain |
Except as otherwise noted, all of these product candidates are
in pre-clinical or earlier stage of development.
We supplement our internal research and development efforts to
find novel therapeutics in these areas and in other areas of
interest with genomics tools and other innovative technologies.
We also seek to advance our research and development efforts
through collaborations.
Research and Development Costs
For the years ended December 31, 2004, 2003 and 2002, our
research and development costs were approximately
$686.7 million, $233.3 million and
$100.9 million, respectively. Research and development
costs in 2003 include the results of operations of Biogen, Inc.
only for the period from November 13, 2003, the day after
the effective date of the merger, through December 31, 2003.
Principal Licensed Products
As described above, we receive royalties on sales of RITUXAN
outside the U.S. as part of our collaboration with
Genentech and royalties on sales of ZEVALIN in the EU from
Schering AG. We also
11
receive royalties from sales by our licensees of a number of
other products covered under patents that we control. For
example:
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We receive royalties from Schering-Plough Corporation on sales
of its alpha interferon products in the U.S. and Italy under an
exclusive license to our alpha interferon patents and patent
applications. Schering-Plough sells its INTRON® A
(interferon alfa-2b) brand of alpha interferon in the
U.S. for a number of indications, including the treatment
of chronic hepatitis B and hepatitis C. Schering-Plough
also sells other alpha interferon products for the treatment of
hepatitis C, including REBETRON® Combination Therapy
containing INTRON A and REBETOL® (ribavirin, USP),
PEG-INTRON® (peginterferon alfa-2b), a pegylated form of
alpha interferon, and PEG-INTRON in combination with REBETOL.
See “Patents and Other Proprietary Rights —
Recombinant Alpha Interferon.” |
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We hold several important patents related to hepatitis B
antigens produced by genetic engineering techniques. See
“Patents and Other Proprietary Rights —
Recombinant Hepatitis B Antigens.” These antigens are used
in recombinant hepatitis B vaccines and in diagnostic test kits
used to detect hepatitis B infection. We receive royalties from
sales of hepatitis B vaccines in several countries, including
the U.S., from GlaxoSmithKline plc and Merck and Co. Inc. We
have also licensed our proprietary hepatitis B rights, on an
antigen-by-antigen and nonexclusive basis, to several diagnostic
kit manufacturers, including Abbott Laboratories, the major
worldwide marketer of hepatitis B diagnostic kits. For a
discussion of the length of the royalty obligation of
GlaxoSmithKline and Merck on sales of hepatitis B vaccines and
the obligation of our other licensees on sales of hepatitis
B-related diagnostic products, see “Patents and Other
Proprietary Rights — Recombinant Hepatitis B
Antigens.” |
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We also receive ongoing royalties on sales of
ANGIOMAX®(bivalirudin) by The Medicines Company, also
known as TMC. TMC sells ANGIOMAX in the U.S., Europe, Canada and
Latin America for use as an anticoagulant in combination with
aspirin in patients with unstable angina undergoing percutaneous
transluminal coronary angioplasty. |
Patents and Other Proprietary Rights
We have filed numerous patent applications in the U.S. and
various other countries seeking protection of inventions
originating from our research and development, including a
number of our processes and products. Patents have been issued
on many of these applications. We have also obtained rights to
various patents and patent applications under licenses with
third parties, which provide for the payment of royalties by us.
The ultimate degree of patent protection that will be afforded
to biotechnology products and processes, including ours, in the
U.S. and in other important markets remains uncertain and is
dependent upon the scope of protection decided upon by the
patent offices, courts and lawmakers in these countries. There
is no certainty that our existing patents or others, if
obtained, will afford us substantial protection or commercial
benefit. Similarly, there is no assurance that our pending
patent applications or patent applications licensed from third
parties will ultimately be granted as patents or that those
patents that have been issued or are issued in the future will
prevail if they are challenged in court.
A substantial number of patents have already been issued to
other biotechnology and biopharmaceutical companies. Competitors
may have filed applications for, or have been issued patents and
may obtain additional patents and proprietary rights that may
relate to products or processes competitive with or similar to
our products and processes. Moreover, the patent laws of the
U.S. and foreign countries are distinct and decisions as to
patenting, validity of patents and infringement of patents may
be resolved differently in different countries. In general, we
try to obtain licenses to third party patents which we deem
necessary or desirable for the manufacture, use and sale of our
products. We are currently unable to assess the extent to which
we may wish to or may be required to acquire rights under such
patents and the availability and cost of acquiring such rights,
or whether a license to such patents will be available on
acceptable terms or at all. There may be patents in the
U.S. or in foreign countries or patents issued in the
future that are unavailable to license on acceptable terms. Our
inability to obtain such licenses may hinder our ability to
market our products.
We are aware that others, including various universities and
companies working in the biotechnology field, have filed patent
applications and have been granted patents in the U.S. and in
other countries claiming
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subject matter potentially useful to our business. Some of those
patents and patent applications claim only specific products or
methods of making such products, while others claim more general
processes or techniques useful or now used in the biotechnology
industry. There is considerable uncertainty within the
biotechnology industry about the validity, scope and
enforceability of many issued patents in the U.S. and elsewhere
in the world, and, to date, there is no consistent policy
regarding the breadth of claims allowed in biotechnology
patents. We cannot currently determine the ultimate scope and
validity of patents which may be granted to third parties in the
future or which patents might be asserted to be infringed by the
manufacture, use and sale of our products.
There has been, and we expect that there may continue to be,
significant litigation in the industry regarding patents and
other intellectual property rights. We expect that litigation
may be necessary in some instances to determine the validity and
scope of certain of our proprietary rights. Conversely,
litigation may be necessary in some instances to determine the
validity, scope and/or noninfringement of certain patent rights
claimed by third parties to be pertinent to the manufacture, use
or sale of our products. Intellectual property litigation could
therefore create business uncertainty and consume substantial
financial and human resources. Ultimately, the outcome of such
litigation could adversely affect the validity and scope of our
patent or other proprietary rights, or, conversely, hinder our
ability to market our products. See
“Item 3 — Legal Proceedings” for a
description of our patent litigation.
Our trademarks RITUXAN, AVONEX, AMEVIVE, ZEVALIN and TYSABRI are
important to us and are generally covered by trademark
applications or registrations owned or controlled by us in the
U.S. Patent and Trademark Office and in other countries.
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Recombinant Beta Interferon |
Third parties have pending patent applications or issued patents
in the U.S., Europe and other countries with claims to key
intermediates in the production of beta interferon. These are
known as the Taniguchi patents. Third parties also have pending
patent applications or issued patents with claims to beta
interferon itself. These are known as the Roche patents and the
Rentschler patents, respectively. We have obtained non-exclusive
rights in various countries of the world, including the U.S.,
Japan and Europe, to manufacture, use and sell AVONEX, our brand
of recombinant beta interferon, under the Taniguchi, Roche and
Rentschler issued patents. The last of the Taniguchi patents
expire in the U.S. in May, 2013 and have expired already in
other countries of the world. The Roche patents expire in the
U.S. in May, 2008 and also have generally expired elsewhere
in the world. The Rentschler EU patent expires in July, 2012.
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RITUXAN, ZEVALIN and Anti-CD20 Antibodies |
We have several issued U.S. patents and U.S. patent
applications, and numerous corresponding foreign counterparts
directed to anti-CD20 antibody technology, including RITUXAN and
ZEVALIN. We have also been granted patents covering RITUXAN and
ZEVALIN by the European and Japanese Patent Offices. In the
U.S. our principal patents covering the drugs or their uses
expire between 2015 and 2018. With regard to the rest of the
world, our principal patents covering the drug products expire
in 2013 subject to potential patent term extensions in countries
where such extensions are available. In addition Genentech, our
collaborative partner for RITUXAN, has secured an exclusive
license to five U.S. patents and counterpart U.S. and
foreign patent applications assigned to Xoma Corporation that
relate to chimeric antibodies against the CD20 antigen. These
patents expire between 2006 and 2014. Genentech has granted us a
non-exclusive sublicense to make, have made, use and sell
RITUXAN under these patents and patent applications. We, along
with Genentech, share the cost of any royalties due to Xoma in
the Genentech/ Biogen Idec copromotion territory on sales of
RITUXAN.
AMEVIVE is presently claimed in a number of patents granted in
the U.S. and the EU which cover LFA-3 polypeptides and DNA,
LFA-3 fusion proteins and DNA, host cells, manufacturing methods
and pharmaceutical compositions. We have obtained composition of
matter patent coverage for the commercial
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product and important intermediates in the manufacturing
process. Our patent portfolio also includes patents granted in
the U.S. and the EU, which cover the use of LFA-3 polypeptides
and LFA-3 fusion proteins in methods to inhibit T cell responses
and use of LFA-3 polypeptides and fusion proteins to treat skin
diseases, specifically including psoriasis. Our patent portfolio
further includes pending patent applications, which seek
coverage for the use of LFA-3 polypeptides and fusion proteins
in the treatment of other indications of possible future
interest as well for certain combination therapy treatments of
potential interest and utility. Patents issued or which may be
issued on these various patent applications expire between 2007
(for patents relating to manufacturing intermediates) and 2021
(in the case of recently filed patent applications). Our
principal patents covering the drug product expire in 2013
subject to potential patent term extensions in countries where
such extensions are available and by supplemental protection
certificates in countries of the EU where such certificates may
be obtained if and when approval of the product in the EU is
obtained. Method of use patent protection for the product to
treat skin diseases, including psoriasis, extends until 2017 in
the U.S. and generally until 2015 in the rest of the world.
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Recombinant Alpha Interferon |
In 1979, we granted an exclusive worldwide license to
Schering-Plough under our alpha interferon patents. Most of our
alpha interferon patents have since expired, including
expiration of patents in the U.S., Japan and all countries of
Europe other than Italy. We have obtained a supplementary
protection certificate in Italy extending the coverage until
2007, although the Italian Legislature intends to implement
legislation that may shorten this period to December 31,
2005. Schering-Plough pays us royalty payments on
U.S. sales of alpha interferon products under an
interference settlement entered into in 1998. Under the terms of
the interference settlement, Schering-Plough agreed to pay us
royalties under certain patents to be issued to Roche and
Genentech in consideration of our assignment to Schering-Plough
of the alpha interferon patent application that had been the
subject of a settled interference with respect to a Roche/
Genentech patent. Schering-Plough entered into an agreement with
Roche as part of settlement of the interference. The first of
the Roche/ Genentech patents was issued on November 19,
2002 and has a seventeen-year term.
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Recombinant Hepatitis B Antigens |
We have obtained numerous patents in countries around the world,
including in the U.S. and in European countries, covering the
recombinant production of hepatitis B surface, core and
“e” antigens. We have licensed our recombinant
hepatitis B antigen patent rights to manufacturers and marketers
of hepatitis B vaccines and diagnostic test kits, and receive
royalties on sales of the vaccines and test kits by our
licensees. See “Principal Licensed Products.” The
obligation of GlaxoSmithKline and Merck to pay royalties on
sales of hepatitis B vaccines and the obligation of our other
licensees under our hepatitis B patents to pay royalties on
sales of diagnostic products will terminate upon expiration of
our hepatitis B patents in each licensed country. Following the
conclusion of a successful interference proceeding in the U.S.,
we were granted patents in the U.S. expiring in 2018. These
patents claim hepatitis B virus polypeptides and vaccines and
diagnostics containing such polypeptides. Our European hepatitis
B patents expired at the end of 1999, except in those countries
in which we have obtained supplementary protection certificates.
Coverage under supplementary protection certificates still
exists in France, Italy and Sweden. The additional coverage
afforded by the supplementary protection certificates ranges
from one to five years. See “Item 3 — Legal
Proceedings” for a description of our litigation with
Classen Immunotherapies, Inc.
We are developing TYSABRI with Elan. TYSABRI is presently
claimed in a number of pending patent applications and issued
patents held by both companies in the U.S. and abroad. These
patent applications and patents cover the protein, DNA encoding
the protein, manufacturing methods and pharmaceutical
compositions, as well as various methods of treatment using the
product. In the U.S. the principal patents covering the
product and methods of manufacturing the product generally
expire between 2015 and 2020, subject to any available patent
term extensions. In the remainder of the world patents on the
product and methods of manufacturing the product generally
expire between 2014 and 2016, subject to any supplemental
protection
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certificates that may be obtained. Both companies have method of
treatment patents for a variety of indications including the
treatment of MS and Crohn’s disease and treatments of
inflammation. These patents expire in the U.S. generally
between 2012 and 2020 and outside the U.S. generally
between 2010 and 2016, subject to any available patent term
extensions and/or supplemental protection certificates extending
such terms.
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Trade Secrets and Confidential Know-How |
We also rely upon unpatented trade secrets, and we cannot assure
that others will not independently develop substantially
equivalent proprietary information and techniques or otherwise
gain access to our trade secrets or disclose such technology, or
that we can meaningfully protect such rights. We require our
employees, consultants, outside scientific collaborators,
scientists whose research we sponsor and other advisers to
execute confidentiality agreements upon the commencement of
employment or consulting relationships with us. These agreements
provide that all confidential information developed or made
known to the individual during the course of the
individual’s relationship with us is to be kept
confidential and not disclosed to third parties except in
specific circumstances. In the case of our employees, the
agreement provides that all inventions conceived by such
employees shall be our exclusive property. These agreements may
not provide meaningful protection or adequate remedies for our
trade secrets in the event of unauthorized use or disclosure of
such information.
Sales, Marketing and Distribution
Our sales and marketing efforts are generally focused on
specialist physicians in private practice or at major medical
centers. We utilize common pharmaceutical company practices to
market our products and to educate physicians, including sales
representatives calling on individual physicians and
distributors, advertisements, professional symposia, direct
mail, selling initiatives, public relations and other methods.
We provide certain customer service and other related programs
for our products, such as disease and product-specific websites,
insurance research services and order, delivery and fulfillment
services. We have also established programs in the
U.S. which provide qualified uninsured or underinsured
patients with commercial products at no charge. Specifics
concerning the sales, marketing and distribution of each of our
commercialized products are as follows:
We continue to focus our marketing and sales activities on
maximizing the potential of AVONEX in the U.S. and the EU in the
face of increased competition. In the U.S., Canada, Australia
and most of the major countries of the EU, we use our own sales
forces and marketing groups to market and sell AVONEX. In these
countries, we distribute AVONEX principally through wholesale
distributors of pharmaceutical products, mail order specialty
distributors or shipping service providers. In countries outside
the U.S., Canada, Australia and the major countries of the EU,
we sell AVONEX to distribution partners who are then responsible
for most marketing and distribution activities.
In February 2005, in consultation with the FDA, we and Elan
voluntarily suspended the marketing and commercial distribution
of TYSABRI, and informed physicians that they should suspend
dosing of TYSABRI until further notification. See “Our
Products – Approved Indications and Ongoing
Development – TYSABRI.” Prior to suspension of
marketing and distribution of TYSABRI, we used our own sales
force and marketing group to market TYSABRI in the U.S., and
Elan distributed TYSABRI in the U.S.
RITUXAN and ZEVALIN are complementary products for the
management of B-cell NHLs. Most B-cell NHLs are treated today in
community-based group oncology practices. RITUXAN fits well into
the
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