Advancis deadline nears to fix name

Germantown firm has until Monday to satisfy trademark ruling won by Sanofi-Aventis

Friday, Oct. 20, 2006

Advancis Pharmaceutical Corp. has until Monday to find the right words to end its trademark battle with Sanofi-Aventis and ‘‘put the whole thing finally behind them on their own terms,” according to one analyst.

By choosing the name Advancis in 2001, the then-Gaithersburg company was ‘‘at least negligent” and has threatened the marketing value of the French company Sanofi-Aventis, formerly Aventis Pharmaceuticals, a judge ruled on September 26.

The judge also ordered Advancis to change its name.

But Jay Everitt of the Ridgeland, Miss., investment firm Knobias Inc. said the company should be encouraged that Chief Judge Sue L. Robinson of the U.S. District Court of Delaware did not immediately order an injunction to make Advancis remove its products from pharmacy shelves that are labeled with the name.

Robert Bannon, Advancis’ senior director of investor relations said his company has been in negotiations with Sanofi, also ordered by Robinson, to come up with wording of a final injunction by October 23. Marc Greene, U.S. media relations director for Sanofi, said the company is not commenting at all on the case, adding, ‘‘We are pleased with the court’s ruling. The protection of our trademarks is very important to us.”

‘‘They will hammer something out together,” said Everitt. ‘‘If they have to pull product that will be pretty costly.” Everitt said he thinks things are still going well for Advancis. He would not say the future is bright for it, but that the right name change will help.

During a weeklong trial in May, Advancis lost every argument to convince the judge that its name is not an infringement on Sanofi-Aventis.

Yet Bannon remains optimistic that Robinson will not make Advancis remove its Keflex 750 antibiotic from the shelves of 20,000 pharmacies, which it stocked in July in 75 different geographic area. ‘‘If she does, we will,” he said. ‘‘But for the name change, we will take our time and make sure we don’t fall into this situation again. Our attorneys don’t expect us to have to remove product.”

Last week, Advancis also announced that its retail stocking of Keflex 750 was lower than expected, causing the company to reissue a more modest financial guidance for 2006. Edward Rudnic, Advancis president and CEO said, ‘‘We do not believe that this delay will have a material effect on our performance next year or impact the long-term potential of Keflex 750.”

Advancis 2006 revenue is to be several million dollars short of expectations because fewer pharmacies than expected stocked its recently approved antibiotic Keflex 750, a 750-milligram version of Keflex. Keflex sales will be between $7 million and $10 million, down from the anticipated $16 million to $17 million. Consequently, the biotech firm expects an annual loss of as much as $40 million, compared with the previous loss prediction of $37 million.

In the court ruling, Robinson stated that the ‘‘totality of circumstances” make marketplace confusion between the two company names likely. She wrote, ‘‘this court finds that the defendant was at least negligent in selecting Advancis” but did not deliberately cause the confusion.

The two names would be confused by consumers and perhaps harm patients because they appear similar and are pronounced similarly, she said. Robinson added that even doctors would not be immune to mistake. ‘‘The court concludes that the defendant’s use of Advancis is likely to create confusion concerning the origin of goods and service.”

When the ruling was made public, Bannon said Advancis executives were amazed. ‘‘There has been no confusion between the two companies, especially since they changed their name,” he said. ‘‘In May [in court] they could show no examples.” That was because at that time, Advancis had no product on the market yet, Robinson said.

The company, which moved to Germantown in 2003, began as Advanced Pharmaceutical Systems Inc. and considered other names before settling on Advancis Pharmaceutical Inc.

Sanofi-Aventis Inc. is a French company that changed its name from Aventis Pharmaceuticals Inc. in 2004 after it merged with Sanofi-Synthelabo. The company retained the name Aventis Pharmaceuticals Inc for its principal business in the United States.

The judge ruled that confusion over the name was unavoidable. Both Advancis Pharmaceutical Inc. and Aventis Pharmaceuticals Inc. based in Bridgewater, N.J. are Delaware corporations. Both companies specialize in researching, developing and manufacturing anti-infection medications. They market antibiotic products with similar names: Keflex by Advancis and Ketek by Aventis. The companies also use similar advertising and marketing campaigns and target their sales to the same consumers.

Bannon said he does not know if the confusion regarding the names of the respective companies’ antibiotics added to Sanofi’s interest in pursuing the case even after the French company changed its name from Aventis. ‘‘We purchased Keflex from Eli Lilly after they filed suit,” he explained.

The judge pointed to the familiarity between the two company managers. Aventis was a limited partner in a fund that invested in Advancis when it was called Advanced Pharma. Then, the two company executives in 2001 considered a business partnership with Aventis possibly licensing the primary drug manufacturing technology, Pulsys. They signed an agreement but in September Aventis informed Advancis that their ‘‘scientists were unimpressed with the data [from Advancis]” but might be interested later.

On December 1, 2003, the two companies filed suit against each other for trademark infringement.