Patent Case Has Potential to Give Apple the Upper Hand

But if a final ruling in a case against Samsung goes Apple’s way on Friday, Apple would clearly hold the momentum in the patent disputes engulfing the mobile market.

The federal International Trade Commission is expected to say on Friday whether it will uphold a preliminary finding that Samsung mobile products violated a handful of Apple patents. A decision against Samsung by the commission could result in an import ban on some of the company’s mobile devices.

A decision for Apple would be its second major legal win against Samsung in less than a week. On Saturday, the Obama administration vetoed the federal commission’s ban on Apple mobile products in a separate case brought by Samsung.

That rare move — the first time for such a veto since 1987 — was a major victory for Apple and other companies that had argued that disputes over a class of patents known as standards-essential patents should not lead to import bans by the trade commission.

Carolina Milanesi, a Gartner analyst, said that if Apple were to score a second victory with the International Trade Commission this week, the company would climb to a significant position of power in patent feuds — not just against Samsung, but against other companies as well.

“Apple can use that as a warning and say, ‘Look, if it hasn’t worked with Samsung, why would it work with you?’ ” she said. “It’s not real power. It’s more like a mind game.”

The patent disputes have led to a possible political skirmish between the United States and South Korea, where Samsung is a celebrated hometown legend. The decision on Saturday vexed the South Korean government, which issued a statement expressing concern that the ruling may have violated Samsung’s patent rights. The government pledged to watch the commission’s ruling on Friday in the separate case for fairness.

Essential patents, like those at the center of the dispute in Saturday’s veto, cover basic technologies that companies have to support in their products to comply with industry standards. In the case between Apple and Samsung, the standard involved wireless communications. The Obama administration said it overruled the decision on Saturday partly because it feared essential patents, which holders agree to license on reasonable terms, were being used in ways that could hurt competition and consumers. Apple and Samsung disagreed on whether Samsung was offering to license it essential patents on reasonable terms.

The decision on Friday is not over essential patents. But if the commission hands Apple another victory, Robert P. Merges, a law professor at the University of California, Berkeley, said the Obama administration could again overrule any import ban the commission puts in place, as part of a strategy to diminish the power of patent litigation as an industry weapon.

“I think there are a lot of political implications,” he said, referring to the possible reaction by other governments. “You’ll have the obvious favoring-the-home-team problem. But I would be shocked if they didn’t think this through carefully.”

Kristin Huguet, an Apple spokeswoman, declined to comment on the case before the commission’s decision. David Steel, an executive vice president for Samsung, declined to comment.

Already, Apple has scored the biggest legal victory by far, by winning against Samsung in a federal court last year. In that case, a jury awarded Apple $1 billion in damages for violations of mobile patents related to the iPhone and iPad. That award was later reduced to $599 million by a judge, though the figure could go back up as the case drags on in court.

Although the case was a decisive win for Apple, the judge overseeing it denied a request by Apple for a permanent injunction against the sale of some Samsung mobile products. A Federal Appeals Court is expected to hear arguments on Friday from Apple about why such an injunction should be granted.

In another positive development for Apple, a Federal Appeals Court sent a patent case that Apple brought against Motorola Mobility, which is owned by Google, back to the trade commission this week. The ruling gives Apple another shot at winning an important ban on Motorola mobile products after the commission dismissed Apple’s complaint.

Apple has long argued that companies making smartphones based on Google’s operating system, especially Samsung, are copycats that have swiped many of the technical innovations that, at one point, gave the iPhone and iPad a huge edge.

But the wheels of justice grind along slowly, and as Apple’s suits have snaked their way through the courts in the last several years, the popularity of Android phones has continued to grow, swallowing much of the mobile market. In the second quarter of the year, Android phones accounted for almost 80 percent of global smartphone shipments, up from just under 70 percent the year before, according to IDC, the research firm.

The iPhone accounted for 13.2 percent of smartphone shipments in that same period, while Samsung’s share was 30.4 percent, IDC estimated.

It is unclear whether a series of legal setbacks would be more than a speed bump for Samsung, now the world’s largest mobile phone maker. Samsung has argued that it can modify the software in its phones so they steer clear of Apple’s patents, which could allow it to dodge sales bans.

Still, if the tide of legal battles begins to shift decisively in Apple’s favor, the company could extract a juicy financial settlement from Samsung and put the distraction of fighting its biggest rival behind it.

DealBook: Potential for Deals Drives a Big Surge in the Biotech Sector

Dominic ChavezMichael Thomenius of Epizyme, a new biopharmaceutical company in Cambridge, Mass., thought to be a prime takeover target.

8:28 p.m. | Updated

When Onyx Pharmaceuticals, a cancer drug developer, turned down a $10 billion acquisition bid by Amgen last month and put itself up for sale, its share price soared more than 50 percent, touching off an investor frenzy in biotechnology.

Among the beneficiaries was Epizyme, a newly public Massachusetts company that some Wall Street analysts predict could also become a takeover target. Shares of Epizyme, which is working on drugs to treat types of leukemia and lymphoma, have risen 20 percent since July 1, and they have more than doubled since the company’s initial public offering on May 31.

Six other biotechnology companies completed I.P.O.’s in June, and five or so are lined up behind them — an incredible run considering the window for biotech offerings had been all but slammed shut since the 2008 financial crisis. The hot streak has been driven largely by the potential for deal-making in the industry, investors and analysts said.

The feared “patent cliff” for brand-name drugs has caused billion-dollar blockbusters like Pfizer’s cholesterol drug Lipitor and Bristol-Myers Squibb’s blood thinner Plavix to lose ground to generic competition, so the pharmaceutical industry has been hunting for innovation among small biotechnology companies, as both takeover targets and licensing partners. There were five acquisitions of venture capital-backed biotech companies in the second quarter alone, according to data from Thomson Reuters and the National Venture Capital Association.

“I think the big pharma companies are going to continue to look outside to find the next wave of innovative therapies,” said Dennis Purcell, senior managing partner of Aisling Capital, a life sciences venture capital firm based in New York. On June 17, an Aisling portfolio company in San Diego, Aragon Pharmaceuticals, which has a prostate cancer treatment in midstage human trials, was bought by Johnson & Johnson for $650 million up front, plus the potential for an additional $350 million in payments tied to research milestones.

Still, biotechnology is more prone to disappointments than perhaps any other industry — a risk that came to light not long before this recent run of I.P.O.’s. In May, shares of a former high flyer, Aveo Pharmaceuticals, fell nearly 50 percent when an advisory panel to the Food and Drug Administration urged the agency to reject the company’s kidney cancer drug because of questions about its efficacy.

That so many investors have been able to overlook such uncertainty and jump into a new class of companies with unproved science shows a new tolerance for risk on the public market, some experts say. The robust deal-making environment helps.

“People are hungry for growth,” said Erik Gordon, a professor specializing in life sciences entrepreneurship at the University of Michigan’s business school. “When you see something like Onyx telling Amgen” its offering price is too low, “you have to ask, what’s the downside? The downside is bad news, but if that doesn’t happen, the company you’ve invested in could be taken out at a huge gain.”

The 16 biotechnology companies that have gone public this year are up 48 percent on average from their offering prices, according to data provided by Nasdaq. As of Tuesday, four of the top 10 performing companies on the Nasdaq year-to-date were biotechs: Stemline Therapeutics, Bluebird Bio, Epizyme and Prosensa Holding.

“The fact that these companies can get out reloads the capacity of the venture funders” to turn to the public markets, said Samuel Isaly, managing partner of OrbiMed Advisors, which manages the Eaton Vance Worldwide Health Sciences Fund in addition to private equity and hedge funds. “We’re back to the good old days of before the financial crash.”

The biotechnology I.P.O. market is so frothy, in fact, that some companies are not waiting to take advantage of it. Hans Schikan, the chief executive of the Dutch biotech company Prosensa, said he and his management team originally planned their I.P.O. for a week or so after the Fourth of July holiday, but when they saw the positive investor response to Epizyme and others, they rushed out on June 28 instead. “When the window’s open, you’d better use it,” Mr. Schikan said. Prosensa’s shares opened $7 above its $13 offering price and are up 102 percent so far. It closed up 1.1 percent in trading Thursday on the Nasdaq, closing at $26.26.

One gateway for acquisitions in the biotech sector is research partnerships, and those are increasing as well.

Epizyme did not start human testing of its lead drug until late last year, but it attracted plenty of interest from big pharmaceutical companies long before that. The company formed research partnerships with GlaxoSmithKline, Celgene and Eisai, which together were worth $125 million in nonequity financing.

Simos Simeonidis, an analyst at Cowen & Company, predicts that if one of Epizyme’s two leading cancer drugs shows even a hint of success in clinical trials, “a lot of big pharmas or big biotechs are going to want to own the platform. The possibility of an acquisition in my mind would be very high,” he said.

Several other members of this year’s biotech I.P.O. class have rich partnerships. Bluebird Bio of Massachusetts signed a three-year oncology research deal with Celgene in March, which included a $75 million upfront payment. Bluebird’s I.P.O. was on June 19, and its stock has climbed 78 percent.

PTC Therapeutics, a New Jersey company that went public the next day and raised $114 million, has a $30 million deal with Roche to study treatments for spinal muscular atrophy, and an oncology partnership with AstraZeneca that included an undisclosed upfront payment. Both deals included the potential for milestone bonuses. Its shares have risen 9 percent. On Thursday, they rose 3.4 percent to close at $16.34.

Robert J. Gould, the chief executive of Epizyme, said he was aware that research partnerships often blossomed into full-blown buyout offers. But “we have no intention of positioning ourselves to be acquired,” he said. Bluebird and PTC, both still in post-offering quiet periods, declined to comment.

Venture capitalists in life sciences predict that both the pace and the value of licensing deals will accelerate. “Pharma certainly is evaluating every single asset of every single company that’s out there and acting on it,” said Noubar Afeyan, managing partner and chief executive of Flagship Ventures, an investor in Agios Pharmaceuticals of Massachusetts, which announced its intention on June 10 to raise $86 million in an I.P.O. Agios has a $150 million cancer drug development deal with Celgene.

It is not just cancer treatment that is generating excitement among investors. Prosensa is developing drugs to treat Duchenne muscular dystrophy and other muscle disorders. PTC has its own treatment for muscular dystrophy and is also developing drugs to fight cystic fibrosis and infectious disease. The one unifying theme in all the companies that have generated excitement on Wall Street is the rise of personalized medicine, said Christoph Westphal, a longtime biotechnology entrepreneur and a founder and partner of the Longwood Fund. “Many companies that have done well recently have a specific molecular-medicine approach to a serious disorder that has no other therapies,” he said.

Prosensa’s two lead drugs for muscular dystrophy, for example, are being tested in small groups of patients whose disease is caused by specific genetic mutations, which can be detected with diagnostic devices that the company is using with the drugs.

Another factor in the biotech industry’s favor is that regulators have become more supportive of drugs that address high unmet medical needs. In July 2012, the Food and Drug Administration Safety and Innovation Act established the “breakthrough therapy” designation, which gave the agency the authority to speed its review of drugs to treat life-threatening ailments.

“The regulators, notably the F.D.A., have been particularly willing to come up with new strategies to enable the rapid development of drugs for which there is a dramatic effect in a defined patient population,” said Robert Tepper, a partner at Third Rock Ventures, an investor in both Bluebird and Agios. “If you can stratify the patient population you want to treat through genetic analysis, for example, you can move quite quickly through early-stage trials.”