With the U.S. Appeals court deciding to reconsider its decision of tossing Ariad Pharmaceuticals Inc.'s (ARIA) 'drug pathway patent' claims against Eli Lilly & Co.'s (LLY) osteoporosis drug Evista and sepsis medicine Xigris, the long-standing patent spat between the two companies has taken another turn. The news was greeted by investors, who sent Ariad stock up over 9% in after-hours trading on Friday.
The patent suit dates back to June 2002 when Ariad sued Lilly alleging that two of Lilly's products, Evista and Xigris, were infringing the patent on its experimental drug pathway, NFkB and sought royalties on past and future sales of Lilly's two drugs.
NFkB, or Nuclear Factor Kappa B, is a cell-signaling molecule that plays an important role in several aspects of human health and its dysregulation is associated with inflammation and diseases like cancer. The patent covering the NF-kB cell-signaling activity was licensed to Ariad in 2002 by Massachusetts Institute of Technology, the Whitehead Institute for Biomedical Research and the Fellows of Harvard College.
Critics had then questioned the validity of Ariad's patent claim because the patent was not related to the drug's chemical composition but was related to the way a drug works in the body, which according to them is quite broad. In addition, the patent in question covering the drug pathway was related only to Ariad's experimental drug and not related to any developed drug of the company and critics were hoping Lilly to win the lawsuit.
However, contrary to what some had expected, a federal jury on May 4, 2006 ruled in favor of Ariad and ordered Lilly to pay $65.2 million in back royalties and in addition pay a 2.3% royalty on future sales of Evista and Xigris until Ariad's patent expires in 2019. Lilly strongly disputed the jury's decision on the grounds that claiming a patent on something that occurs in nature is not allowed under the U.S. patent law.
Early this year, in February 2009, Lilly appealed the decision to the Court of Appeals for the Federal Circuit and sought to have the jury's verdict overturned. On April 3, 2009, the Appeals Court overturned the 2006, $62.5 million, jury verdict against Lilly saying that Ariad's claims were not valid as it failed to provide adequate written description about the methods of treating human disease by regulating NF-kB cell-signaling activity.
Now, with the Appeals Court considering Ariad's petition for rehearing, it appears that the next round in the patent fight is all set to begin. Ariad could reap a windfall if the $62.5 million plus future royalties verdict is re-instated. For the full-year of 2008, Evista logged sales of $1.075 billion.
Ariad has three investigational drugs -- Ridaforolimus, AP24534 and AP26113 under development.
AP24534 is currently being evaluated in a phase I clinical study for the treatment of patients with hematological (blood-based) cancers while AP26113 has just entered the company's early-stage pipeline.
Ridaforolimus, a novel small-molecule inhibitor of the protein mTOR, a "master switch" in cancer cells, is under phase I, phase II and phase III studies for different cancer indications.
Ariad is developing Ridaforolimus in partnership with Merck & Co. Inc. (MRK), under a collaboration agreement signed in July 2007. The collaboration agreement provides for an up-front payment of $75 million which was paid to Ariad in July 2007; sharing of the costs of development; up to $652 million in milestone payments based on successful development and achievement of specific sales thresholds related to Ridaforolimus.
Merck had also agreed to pay up to $200 million of repayable advances to fund ongoing development upon obtaining regulatory approval to market Ridaforolimus after Ariad has paid $150 million in global development costs and has obtained regulatory approval to market Ridaforolimus from the FDA in the United States or similar regulatory authorities in Europe or Japan.
The collaboration agreement also provides for profit-sharing and royalties upon successful commercialization of Ridaforolimus.
According to Ariad, through December 31, 2008, in addition to the up-front payment of $75 million, Merck had paid Ariad $31 million in milestone payments related to the start of phase II and phase III clinical trials.
In the six-month period ended June 30, 2009, Merck paid Ariad an additional milestone payment of $12.5 million related to the start of a phase II clinical trial in patients with advanced prostate cancer, and a milestone payment of $10 million related to the initiation of a phase II clinical trial in patients with metastatic non-small-cell lung cancer.
In a phase III study, Ridaforolimus is being evaluated for sarcomas, a type of cancer that usually occurs in the bone, muscle or other soft tissues. According to the company, the late-stage trial of Ridaforolimus, dubbed SUCCEED, which was initiated in the fourth-quarter of 2007, is well on track.
A report on the first interim efficacy analysis from the independent Data Safety Monitoring Board is expected in the coming weeks.
The company expects full enrollment of patients in the SUCCEED trial in late 2009. A report on the second interim efficacy analysis is expected by the end of the first quarter of 2010.
Ridaforolimus is also tested as a potential treatment for breast, endometrial, lung and prostate cancers under phase II studies. Ridaforolimus is also under phase I studies in combination with other anti-cancer agents.
ARIA, which has thus far hit a 52-week low of $0.72 and 52-week high of $3.48, closed Friday's trading session at $2.12. In after-hours, the stock gained 9.43% and was at $2.32.
Will the interim results of Ridaforolimus in sarcoma be positive? Will the $62.5 million plus future royalties verdict be re-instated? Stay tuned...
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.