I often think that the gladiator battles of ancient Rome are a good analogy for the biotech industry. With a variety of tactful opponents armed with a myriad of weapons, the fight for survival takes place on many different levels. The arena is not a place where you can hide for very long.
But that's just what global biotech giant Genzyme (NASDAQ:GENZ) has accomplished with its monopoly on the only approved therapy for Gaucher disease, a progressive genetic condition. Gaucher patients have a deficiency of an enzyme that's critical to the breakdown of certain fat molecules in the liver, spleen, and bone marrow.
Genzyme won approval for Ceredase, the first drug for the disease, in 1991, and the current standard of care, Cerezyme, has been used since 1994. The drug mimics the naturally occurring enzyme glucocerebrosidase to break down the fat molecules that have accumulated in a patient's "Gaucher" cells. The use of Cerezyme is classified as enzyme replacement therapy (ERT).
The U.S. Food and Drug Administration originally approved Cerezyme as an Orphan Drug, meaning Genzyme had exclusive marketing rights for seven years -- a protective moat, so to speak. That status expired in May 2001, but no competitive drug for the most common form of the disease has emerged, and Genzyme has enjoyed a monopoly of the market for almost 15 years. Cerezyme revenues for 2004 are estimated at more than $800 million.
Now the sleeping giant has been forced to awaken in order to challenge Motley Fool Hidden Gems biotech pick Transkaryotic Therapies (NASDAQ:TKTX), which is currently in phase I trials with its gene-activated glucocerebrosidase (GA-GCB) treatment for Gaucher disease.
Although Orphan Drug status has ended, Genzyme still has patents pertaining to the manufacturing of Cerezyme until 2010. Now Genzyme is suing Transkaryotic in an Israeli court. Its claim is that Transkaryotic's treatment is being imported into Israel for use in its clinical trials and that the processes used for production of the drug infringe on Genzyme's patent.
But why is Genzyme only trying to prevent the import of Transkaryotic's GA-GCB into Israel, when it could go back to the source of the problem and try to stop manufacturing of this non-FDA-approved treatment directly? First, we have to look back a few years to the competition between the two companies for approval of their Fabry disease therapies.
The deficient enzyme in Fabry's patients is alpha-galactosidase A (alpha-Gal A). In 2001, Genzyme sued Transkaryotic for patent infringement on the method of production of alpha-Gal A, but the case was thrown out. Transkaryotic has its own proprietary approach to the development of therapeutic proteins such as alpha-Gal A, using gene activation, which they claim should reduce the frequency of adverse reactions in humans. The drug itself is called Replagel, ERT for long-term treatment of Fabry's disease.
But winning the case wasn't enough. Transkaryotic did not win FDA approval for Replagal. So the only therapy available in the U.S. is Genzyme's Fabrazyme, which made more than $200 million from worldwide sales in 2004. Replagal was approved in the European Union and several other countries, and it produced an estimated $90 million to $100 million for Transkaryotic in 2004.
Genzyme seems to be taking a slightly different approach to its argument in hopes that the new judges will be convinced. The company claims Transkaryotic is infringing on its patent for the production of an enzyme, albeit in a different arena. The success or failure of Transkaryotic's Gaucher disease treatment GA-GCB will probably be more important for Genzyme than it is for Transkaryotic. After all, Cerezyme accounted for 43% of Genzyme's product revenue in the first nine months of 2004.
Transkaryotic's GA-GCB is only in phase I of clinical trials and has many hurdles to jump before any approval, but its progress bears a watchful eye for both Genzyme and Transkaryotic shareholders.
Fool contributor John Bluis owns shares of Transkaryotic Therapies but none of the other companies mentioned.
