Amgen Inc.’s _______

1. Amgen Inc.’s _______ Epogen Commercializing the First Biotech Blockbuster drug Presented by: FarynKapala October 26th, 2010

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

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

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 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!

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

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. www.uspto.gov EPOGEN • Patent Searching

25. www.google.com/patents EPOGEN • Patent Searching

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

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. 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 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 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 e-mail 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 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)