Emisphere Considering Additional Claims for Damages Based on Lilly's Lack
of Good Faith
TARRYTOWN, N.Y., April 26 /PRNewswire-FirstCall/ -- Emisphere
Technologies, Inc. (Nasdaq: EMIS) 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 http://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.
SOURCE Emisphere Technologies, Inc.
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Related links:
http://www.emisphere.com
CONTACT:
Investor Relations: Elliot Maza of Emisphere,
+1-914-785-4703, emaza@emisphere.com; Media: Dan Budwick of BMC
Communications for Emisphere, +1-212-477-9007, ext.14
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