West Coast Editor

An 11th-hour settlement of the patent fight over Erbitux cost ImClone Systems Inc. $65 million in cash but no royalties on sales, and word of the deal sent plaintiff Repligen Corp.'s stock (NASDAQ:RGEN) into a tailspin, losing 17.8 percent Monday to close at $4.12, down 85 cents.

Still, Elemer Piros of Rodman & Renshaw hailed the outcome as a success for Repligen, of Waltham, Mass., which walks away with about $40 million after providing a share of New York-based ImClone's payment to the Massachusetts Institute of Technology, the other plaintiff in the case slated for trial this week.

ImClone gets not only royalty-free rights to disputed U.S. Patent No. 4,663,281, but the same for U.S. Patent No. 5,665,578, which is owned by Abbott, of Abbott Park, Ill., which sued ImClone for patent infringement earlier this year. Under a previous agreement between Abbott and Repligen, the latter has the power to sublicense the patent.

Shares of ImClone (NASDAQ:IMCL) closed Monday at $37.93, up $1.19.

The deal leaves ImClone with an Erbitux case to settle with Rehovot, Israel-based Yeda Research and Development Co., pending ImClone's appeal of a decision related to U.S. Patent No. 6,217,866.

Analyst Han Li with Stanford Group wrote in a research report Monday that the worst-case scenario for ImClone is a 1 percent to 2 percent royalty payment. (See BioWorld Today, Sept. 25, 2006.)

Erbitux (cetuximab), cleared by the FDA for colorectal and head and neck cancer, is jostling for market space with Vectibix (panitumumab), from Amgen Inc., of Thousand Oaks, Calif., for colorectal cancer, and with South San Francisco-based Genentech's VEGF inhibitor Avastin (bevacizumab), cleared for colorectal and NSCLC.

Li described the Repligen settlement as a "savvy legal maneuver" by ImClone, which during the next six months to a year is expected to file a supplemental new drug application for first-line and second-line colorectal cancer, and disclose top-line data from the Phase III trial in non-small cell lung cancer known as FLEX.

Last year's global sales of Erbitux - partnered with Merck KGaA, of Darmstadt, Germany, in Europe - totaled $1.1 billion, and ImClone with U.S. collaborator Bristol-Myers Squibb Co. said late last month that they would expand the collaboration by "several hundred million dollars" to get a broader label for the product. (See BioWorld Today, July 31, 2007.)

Repligen, after the settlement, has more than $60 million in cash to boost a pipeline that includes uridine for bipolar depression, with Phase II data expected next month. The firm also makes Protein A products, used in the production of monoclonal antibodies and SecreFlo, a synthetic form of secretin, used as an aid in diagnosing pancreatic abnormalities.

Piros pointed out in a research note that when Repligen's CEO Walter Herlihy came aboard in 1996, the firm had only $3 million in the bank, a small product used to make antibodies (Protein A), and a license to CTLA4-Ig for autoimmune diseases.

"Today, Repligen has a pair of small products on the market, two drugs in Phase II testing and additional candidates in preclinical screening for at least four different indications," Piros wrote.

As of June 30, the company had about $6.7 million in cash and cash equivalents, and about $13.3 million in marketable securities.