Genentech announced yesterday the U.S. Patent and Trademark Office rejected the patentability claims of the Cabilly, '415 patent. This was great news for licensees including MedImmune, Abbott Laboratories, Johnson & Johnson and ImClone Systems, but the millions of dollars of savings on royalty payments might have to wait since Genentech says it plans to appeal. In a brief statement, Genentech reports "the '415 patent remains valid and enforceable through the appeals process," which it says could take one to two years, or longer. A Sanford Bernstein analyst says the impact of the decision "is greater for the companies paying royalties on Cabilly than it is for Genentech." There have been a number of accusations, all of which Genentech denies, including one that Cabilly II represented a double patenting of the same invention, potentially providing Genentech with unlawful protection until 2018. Genentech shares royalties with former research partner City of Hope medical center, and says it earned $0.06/share or $105 million in 2006 pre-tax income from the Cabilly patent, which was supposed to expire last year. Genentech earned $2.23/share last year.
Sources: Press release, The New York Times
Commentary: Biotech Generics: Who Stands Where? - Barron's • Genentech's Beat and Raise Quarter Wows Analysts • MedImmune vs. Genentech: Supreme Court Ruling Facilitates Patent Challenges
Stocks/ETFs to watch: Genentech (DNA), MedImmune (MEDI), Abbott Laboratories (ABT), Johnson & Johnson (JNJ), ImClone Systems (IMCL). Competitors: Bristol-Myers Squibb (BMY), Novo Nordisk (NVO), Amgen (AMGN). ETFs: Biotech HOLDRs (BBH), PowerShares Dynamic Biotech & Genome (PBE), SPDR S&P Biotech (XBI)
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