BIOGEN/SMITHKLINE HEPATITIS B LICENSING AGREEMENT

Executive Summary

BIOGEN/SMITHKLINE HEPATITIS B LICENSING AGREEMENT could bring the biotech firm $ 20-$ 40 mil. through 1990, according to an estimate by Biogen Chairman James Vincent. "The agreement with SmithKline is a key element in Biogen's worldwide hepatitis (vaccine and diagnostics) licensing program which should yield $ 20-$ 40 mil. in revenue over the next three years," Vincent said. Announced April 4, the agreement grants SmithKline rights to manufacture and sell recombinant hepatitis B vaccine products in the U.S. and all other countries except Japan. Specifically, SmithKline has rights under the Biogen patents to make recombinant hepatitis B antigens for use in vaccine and diagnostic products. Biogen's choice of SmithKline over Merck as a U.S. licensing partner suggests the possibility of an eventual cross-licensing agreement. Merck markets the only approved hepatitis vaccine in the U.S.: Recombivax HB, a product that Biogen maintains is covered by its patent. SmithKline has the right to negotiate sublicensing agreements in exchange for product royalties to Biogen. Biogen said that prior to granting the patent rights to SmithKline, the firm had been in discussions with Merck. SmithKline currently markets a recombinant hepatitis B vaccine, Engerix-B, in more than 60 countries, and has had a product license application pending in the U.S. since late 1987. Biogen estimates the worldwide hepatitis B product market, including diagnostics, is estimated at $ 300 mil., of which about $ 200 mil. is from blood-derived and recombinant vaccines. "Biogen is pleased to link its strong patent position with the excellent product development and aggressive marketing efforts of SmithKline," Vincent commented. Issued by the U.S. Patent and Trademark Office in December 1987, the Biogen patent covers "the manufacture of all hepatitis B surface and core antigens produced by genetic engineering techniques," according to the company. The patent is based on research conducted in the 1970's under the leadership of Biogen Supervisory Director Kenneth Murray, PhD, at the University of Edinburgh. The U.S. patent complements a similar one issued by the European Patent Office in March 1987, providing protection in the 11 member countries of the European Patent Convention.