TARRYTOWN, N.Y., April 26 /PRNewswire-FirstCall/ -- Emisphere Technologies, Inc. announced today that the United States Federal District Court in Indianapolis has granted Emisphere’s application and ordered Eli Lilly and Company to assign to Emisphere the patent application filed by Lilly in February 2002 for a patent on the use of Emisphere’s proprietary technology with GLP molecules. The court re-affirmed its January 2006 ruling, stating that the GLP patent application belonged to Emisphere under the terms of the agreements in effect between Lilly and Emisphere at the time the application was filed. The Court held that "[i]t would be highly unfair to leave Lilly in control of the oral GLP patent application and to relegate Emisphere to a mere damages remedy as it watches from the sidelines while Lilly controls and exploits inventions the parties agreed would be “Emisphere Technology”.” In rejecting Lilly’s arguments against the requested order, the Court stated that it “cannot say that Lilly was acting in good faith” and that denial of Emisphere’s request for equitable relief “would further compound Lilly’s breaches” of the agreements. The order signed by the Court today will take effect on May 5, unless Lilly files a notice of appeal by May 3, 2006, in which case the Court’s decision will be automatically stayed until the completion of the appeal. The Court added the following statement: “On the merits, the Court believes Lilly’s likelihood of success on appeal is not high.”
“We are pleased that the Court has ruled that Lilly must turn over misappropriated intellectual property to Emisphere,” commented Michael M. Goldberg, M.D., Chairman and Chief Executive Officer of Emisphere Technologies. “Patents are the life blood of our business; Lilly’s broad based misuse of Emisphere’s technology and their violation of our agreements should have serious consequences for Lilly. We will continue to pursue all available remedies in order to compensate Emisphere for the damage caused by Lilly’s actions. Emisphere believes that oral GLP1 can be an important product for patients suffering from diabetes and obesity.”
About the Lilly Litigation
In September of 2003, Emisphere became aware of a published patent that claimed the use of Emisphere delivery agent compounds with GLP-1 molecules. Emisphere delivered a notice to Lilly declaring that Lilly was in material breach of certain research and collaboration agreements with respect to the development of oral formulations of PTH 1-34. Following receipt of the notice, Lilly filed a complaint seeking a declaratory judgment declaring that Lilly is not in breach of its agreements with Emisphere concerning oral formulations of PTH 1-34, and an order preliminarily and permanently enjoining Emisphere from terminating those agreements. On February 12, 2004, Emisphere served Lilly with an amended counterclaim, alleging that Lilly filed certain patent applications relating to the use of our proprietary technology in combination with another drug, in violation of our agreements with Lilly. A trial was held in Indianapolis in 2005. The litigation addressed whether Emisphere was entitled to terminate its license and collaboration agreements with Lilly as of August 2004. Emisphere contended that it had three independent reasons to terminate its relationship with Lilly: (1) Lilly’s admitted use of Emisphere’s patented technology and confidential know-how outside of the licensed field of PTH (including use of Emisphere’s technology with GLP1s, insulin, human growth hormone, interferon follicle stimulating hormone and other compounds addressing obesity, atherosclerosis and inflammation); (2) Lilly’s refusal to assign to Emisphere a patent application filed by Lilly for GLP-1 molecules, which related to the use of Emisphere’s technology outside of the PTH field; and (3) Lilly’s disclosure to Lilly personnel not involved in the PTH collaboration of confidential information provided by Emisphere and/or developed by the collaboration that related to the use of Emisphere’s technology. On January 6, 2006, an opinion was handed down by the U.S. District Court in Indianapolis that agreed with all three Emisphere contentions, finding that “Lilly did not act in good faith and did not deal fairly with Emisphere. The breach of trust went to the root of the parties’ agreement, and it was serious enough to support termination of the all contracts.” The Court’s full decision may be accessed at http://www.insd.uscourts.gov.
About Emisphere Technologies, Inc.
Emisphere Technologies, Inc. is a biopharmaceutical company pioneering the oral delivery of otherwise injectable drugs. Emisphere’s business strategy is to develop oral forms of injectable drugs, either alone or with corporate partners, by applying its proprietary eligen(R) technology to those drugs or licensing its eligen(R) technology to partners who typically apply it directly to their marketed drugs. Emisphere’s eligen(R) technology has enabled the oral delivery of proteins, peptides, macromolecules and charged organics. Emisphere and its partners have advanced oral formulations or prototypes of salmon calcitonin, heparin, insulin, parathyroid hormone, human growth hormone and cromolyn sodium into clinical trials. Emisphere has strategic alliances with world-leading pharmaceutical companies. For further information, please visit www.emisphere.com.
Safe Harbor Statement Regarding Forward-looking Statements
The statements in this release and oral statements made by representatives of Emisphere relating to matters that are not historical facts (including without limitation those regarding the timing or potential outcomes of research collaborations or clinical trials, any market that might develop for any of Emisphere’s product candidates and the sufficiency of Emisphere’s cash and other capital resources) are forward-looking statements that involve risks and uncertainties, including, but not limited to, the likelihood that future research will prove successful, the likelihood that any product in the research pipeline will receive regulatory approval in the United States or abroad, the ability of Emisphere and/or its partners to develop, manufacture and commercialize products using Emisphere’s drug delivery technology, Emisphere’s ability to fund such efforts with or without partners, and other risks and uncertainties detailed in Emisphere’s filings with the Securities and Exchange Commission (the “SEC”), including those factors discussed under the caption “Risk Factors” in Emisphere’s Annual Report on Form 10-K (file no. 1-10615) filed on March 16, 2006.
Emisphere Technologies, Inc.
CONTACT: Investor Relations: Elliot Maza of Emisphere, +1-914-785-4703,emaza@emisphere.com; Media: Dan Budwick of BMC Communications forEmisphere, +1-212-477-9007, ext.14
Web site: http://www.emisphere.com/
