Patent Baristas

In IPO arena, things finally seem to be percolating. First, Reliant Pharmaceuticals has filed to raise an IPO worth $300 million in a public offering. The New Jersey company holds rights to four marketed brands, and has three drugs in late-stage clinical trials. Two of its three late-stage compounds have recently received approval from the U.S. Food and Drug Administration. This despite the fact that the company lost $170.8 million in 2004. Reliant relies on both third-party drug testers and third-party manufacturers for its cardiovascular drug portfolio.

Phenomix Corp., a San Diego-based drug company focused on immune disease and metabolic syndrome, has raised $40 million in Series B funding. Phenomix has raised $65.5 million in total VC funding since its 2001 inception.

Genomic Solutions Inc., which makes gene-analysis software and instruments, announced plans to go public in an initial public offering worth as much as $100 million.

In addition, Oxagen, a drug discovery and development company, announced the successful completion of a $59.8 Million (£31.6 Million) Series B round to support its work on anti-inflammatories and respiratory drugs.

In some recent Midwest activity, Advanced Life Sciences Inc., a developer of antibiotics and other drugs, plans to raise up to $86.25 million in an initial public offering. Advanced Life Sciences has no products for sale and has had a cumulative net lost of $41.3 million through the end of March, according to the SEC filing. The company has drugs in earlier-stage development that it hopes could treat cancer and HIV patients and is trying to get approval for an antibiotic cethromycin owned by Abbott Laboratories. The drug is in the final stage of testing generally required for U.S. approval.

Not all is rosy as Swiss biotech company Speedel Pharma AG has pulled its planned initial public offering (IPO) on the SWX Swiss Exchange due to weak market conditions, particularly for biotech stocks. The company claims to be under no pressure to go ahead with the listing and plans to continue with clinical trials with its kidney disease drug SPP301.

This follows the recent listing of Swiss drug development company Arpida Ltd., whose shares were sold at the bottom end of the range and are currently trading lower than their issue price. Arpida is focused on the discovery and development of antibiotic drugs that seek to overcome the growing problem of bacterial resistance.

The IPO market had a weak first quarter, with only eight companies going public. But, of those eight, four companies were biopharmaceuticals and raised a total of $171.8 million. Also, five of the top 10 acquisitions during the first quarter were also biotechs, which sold for $1.75 billion total — keeping in mind that the typical IPO raised $41 million during the first quarter.

While fewer than 40 U.S. biotech companies went public between late 2003 and the end of 2004, overall VC investment in biotech startups dropped 56 percent in the first quarter from the same quarter last year, $656.6 million compared to $1.50 billion.

Noteworthy is that there seems to be optimism in the sector with many predicting some good times ahead for the industry. At Biotech 2005, it was trumpeted that 2005 will be an even bigger year than 2004, as venture capitalists continue to plow more money into the biotech sector.

Cheers!

The U.S. House of Representatives voted today to lift limits on embryonic stem cell research, which could speed cures for diseases. The House approved the Stem Cell Research Enhancement Act by a 238-194 vote, short of the two-thirds majority (290 votes) that would be needed to override a veto by President Bush — who has said he would veto the bill.

Admittedly, the threat comes from someone who has never vetoed a single bill as president. Bush said the legislation would violate his earlier policy in which he allowed federal funding for stem cell research but limited it to 78 stem cell lines that existed as of Aug. 9, 2001. However, only about 20 of those lines proved suitable for basic research and even these cannot be used in people because they were contaminated with mouse feeder cells.

Supporters of the measure said many of the embryos that would be studied would be discarded otherwise rather than implanted anyway. They hope that federal funds could go to research that could lead to cures for diseases like Parkinson’s and Alzheimer’s.

As we posted earlier, this comes after opponents introduced a parallel Stem Cell Therapeutic and Research Act bill (H.R. 2520), introduced by Reps. Chris Smith, R-N.J., and Artur Davis, D-Ala., it would provide $79 million to increase stem cell research using umbilical cord blood and establish a national database for patients looking for matches. It also would clear the way for studies on stem cells derived from adults.

Many members were voting for both measures, saying that together they represented hope for the largest number of people critically ill with diseases that scientists say could be treated or even cured through stem cell research.

But, the two bills address very different procedures. Blood saved from newborns’ umbilical cords is rich in a type of stem cells that produce blood cells and could be used to help treat leukemia and other diseases, even as most are routinely discarded. The Castle-DeGette bill deals with embryonic stem cells, which are the building blocks for every tissue in the body.

However, umbilical and embryonic stem cells are not interchangeable as cord stem cells have only been made to give rise to blood cells, not other tissue types as is the case with embryonic stem cells.

The bill now goes to the Senate where backers of embryonic stem cell research say it is supported by 60 senators, enough to break a filibuster by opponents, and could even get a two-thirds majority to that would be enough to beat a presidential veto.

Last week, the U.S. Court of Appeals for the Federal Circuit ruled that a District Court judge committed a “clear error” when he concluded that Allergan’s patent on Acular was valid because it wasn’t an obvious variation of earlier known compounds. The Fed Circuit, saying there were necessary factors that weren’t considered, ordered him to review the issue.

The ruling gives Canadian generic-drug maker Apotex Inc. a second chance to seek the invalidation of the patent. Acular (ketorolac tromethamine) is Allergan Inc.’s treatment for eye inflammations, first approved by the FDA in 1992 to treat allergies, photophobia, post-surgical pain and post-surgical inflammation. Allergan contends that the patent is valid until 2009.

Apotex, Inc., Apotex Corp. and Novex Pharma (collectively “Apotex”) appealed from the final judgment of the United States District Court for the Northern District of California, which, after a bench trial, held U.S. Patent No. 5,110,493 (the “‘493 patent”) owned by Syntex LLC not invalid, enforceable, and infringed by Apotex’s Abbreviated New Drug Application (“ANDA”).

Allergan, Inc., Syntex’s distributor, has exclusive rights to manufacture the commercial embodiment of the ‘493 patent. The Federal Circuit found that the district court committed legal error in establishing certain factual predicates to its non-obviousness determination and reversed the judgment of validity and remanded for further consideration.

The ‘493 patent, entitled “Ophthalmic NSAID Formulations Containing a Quaternary Ammonium Preservative and a Nonionic Surfactant,” claims a formulation for sterile, preserved eye drops to treat eye inflammation such as that caused by conjunctivitis or eye surgery. The ‘493 patent teaches combining a nonsteroidal anti-inflammatory drug (“NSAID”) such as ketoralac tromethamine (“KT”) and a quaternary ammonium preservative such as benzalkonium chloride (“BAC”) with a surfactant such as octoxynol 40.

The NSAID is the active ingredient for reducing eye inflammation. The quaternary ammonium preservative, in turn, kills any bacteria introduced into the eye during administration of the NSAID. However, quaternary ammonium preservatives, such as BAC, do not always mix well with NSAIDs. Neither ingredient is water soluble plus the two active ingredients may react with each other to form complexes when mixed. These complexes will eventually cause the mixture to look cloudy or lose its antibacterial properties.

On appeal, the critical issue was whether the use of the surfactant octoxynol 40 in the claimed formulations is an obvious alteration of similar formulations taught in the prior art. At trial, Apotex argued that based on the prior art, a person of ordinary skill in the art would expect to succeed in stabilizing a formulation containing an NSAID and BAC with a nonionic surfactant. Contending that the formulation claimed in the ‘493 patent is just such a formulation, Apotex argued that it is legally obvious.

The Federal Circuit found clear error based upon the following observations:

First, the court clearly erred in finding that “[n]o pharmaceutical formulation other than ACULAR has ever included Octoxynol 40.” Second, the court clearly erred in discussing the McCutcheon reference and in finding that each of the Waterbury, Gilbert, and Han references teach away from the use of octoxynol 40 in the claimed formulations. Further, the court was under the impression that, in the absence of evidence that those references teach away from combination, there was a failure of proof that there would have been any motivation by one of ordinary skill in the art to use octoxynol 40 in the claimed formulations. In so concluding, the district court failed to examine the expert testimony of Dr. Mitra on the question of whether one of ordinary skill in the art would have deemed the invention obvious, and as a subset of the overall obviousness question, whether octoxynol 40 produced the unexpected results asserted by Syntex. In addition, we think the district court failed to appreciate that the prosecution history of the relevant patents, while not establishing inequitable conduct, casts some doubt on the final examiner’s conclusion that the claimed surfactant produces unexpected results sufficient to overcome a prima facie case of obviousness. Finally, we feel the district court should reconsider the significance of the commercial success of the patented formulation in light of our recent decision in Merck & Co. v. Teva Pharmaceuticals. USA, Inc., 395 F.3d 1364 (Fed. Cir. 2005).

The Federal Circuit upheld District Court’s interpretation of terms in the patent, but declined to address whether Apotex’s proposed generic version would infringe the patent until the validity issue is resolved.

Allergan’s eye-care business, which includes Acular and Restasis drops for chronic dry eyes, accounted for $999.5 million, or 57%, of Allergan’s sales last year. The Federal Trade Commission had been investigating whether Allergan and Syntex improperly thwarted generic competition by misusing the patent rights. The agency dropped the probe based on the finding of validity by the trial judge. Since Apotex was the first to challenge the Acular patent, it will have six months of exclusive rights to sell the only generic brand on the market.

See more here.

A recent Wall Street Journal article profiled the wrangling between publishers of scientific journal and academics over so-called open-access journals. That is, many researchers would love to abandon expensive journals from publishers in favor of web-based journals and databases that offer free research articles.

The WSJ depicted this as “a raging Internet-era debate about who should control information and what it should cost.” The reality is not quite just a control issue. Faculty members are now trying to compete against publishers with free or inexpensive journals of their own. Two UC scientists even organized a world-wide boycott against a unit of Reed Elsevier, protesting its fees.

For a bit of perspective now. This is a big expense — a $5 billion global market. For just the 10-campus University of California system, this represents a $30 million a year expense on scholarly periodicals. As we wrote about in an earlier post, this issue came to a head last year when the National Institutes of Health proposed that articles resulting from NIH grants be made available free online. That prompted protests from Reed Elsevier, John Wiley & Sons Inc. and several nonprofit publishers such as the American Diabetes Association, which argued such a move would hurt their businesses. The NIH retreated and in February made the program voluntary.

I’m a big fan of Paul Kedrosky’s blog, Infectious Greed, and his “musing about the money culture”. Kedrosky had an interesting post recently on this debate where, from his point of view, this has less to do with a high-minded, “science can only advance when information is freely available” (an open-source mindset) than the less high-minded perspective that cash-strapped universities want to use a wedge issue “to solve a problem that they created.” That is, universities insist that faculty seeking tenure have to publish in top-tier journals, which begat journals ratcheting up subscription prices, knowing that universities had created the requirement that they publish in these top-tier journals. Now, universities would like to cut back on this Frankenstein’s monster.

I think that the reality is somewhere between the two. For publishers, the process of selecting and editing journals is expensive but is a necessary filter to help sort out the wheat from the vast amounts of research chafe. The nonprofit publisher of the prestigious Science magazine makes content available free after 12 months. Other publishers note that with a combination of free abstracts, free distribution to the developing world and public-library subscriptions, much of the globe already has access to what they produce.

But, let’s be honest here — Elsevier’s scholarly journals bring in about $1.6 billion in annual revenue with an operating-profit margin of about 30%. OK, raise your hand if you would like to see your business maintain an operating-profit margin of 30%. Now put them down.

While one could argue that all articles should be published and the public (scientists) can figure out the genius from the quack, it is the vetting of articles through the peer-review system that provides real value. At some journals, less than 10% of submitted articles make it into a publication. This lends real authority to the work and, often, is the only way to gain tenure. But this vetting costs real money. The WSJ notes that Science gets 12,000 submissions and publishes 800 articles a year on a $10 million editorial budget. That averages more than $10,000 per published article, although typical per-article costs are between $3,000 and $4,000. So, what’s the solution? Competition.

Only through innovative business models and Internet-based alternatives can pressure be applied to drive down the costs of publications. For example, Harold Varmus, a Nobel laureate and former NIH director, has co-founded Public Library of Science, offering open-access journals. PLoS charges authors a fee of $1,500 for its first peer-reviewed journal, PLoS Biology, and also distributes its contents free on the Internet. But this battle is not over as publishers are lowering their fees in an attempt to keep universities from revolting – the UC System negotiated a 25% price reduction.

Get ready to rumble!

Jeremy Richey brings us Blawg Review #7 at his Blawg heralding:

“Wisdom is the chief and leader: next follows temperance; and from the union of these two with courage springs justice. These four virtues take precedence in the class of divine goods.” –Plato

Check out the review for a nice summary of this past week’s activities.

On February 2, 2005, NIH Director Elias Zerhouni announced an overhaul of agency ethics guidelines that would restrict all 18,000 NIH employees’ outside consulting activities for pharmaceutical companies, hospitals, insurers and health providers “in an effort to restore luster” to NIH’s “tarnished reputation.”

Under the revised guidelines, about 6,000 high-ranking NIH employees would no longer be allowed to hold stock in pharmaceutical or biotechnology companies, and current stockholders in that group must sell all shares. Other NIH employees “with no control over purse strings or policies” would be subject to a $15,000 limit on “health-related stock holdings.”

The guidelines would also limit awards that scientists may receive to no more than $200, with the exception of the Nobel and Lasker prizes.

The purpose of these revisions was to “codify the reversal of a trend toward liberalized links between NIH researchers and drug and biotechnology companies that began in 1995,” when then-NIH Director Harold Varmus eased consulting restrictions in an effort to speed medical advances to the market.

This shift is policy was originally supported by those on Capitol Hill. Sen. Tom Harkin (D-Iowa) said, “I welcome (NIH’s) decision today,” adding, “NIH’s well-deserved reputation as the world’s premier biomedical research agency was in danger of being tarnished.” Rep. Joe Barton (R-Texas) said, “For [NIH] to do the complex work of thwarting disease and saving lives requires near-absolute public confidence in the people who conduct the research. If the notion that private gain is supplanting public service as the guiding light for health research, NIH’s value to our nation will plummet”.”

Less than a month later, senior National Institutes of Health scientists met with NIH director Elias Zerhouni to discuss concerns that new ethics guidelines were excessive. Zerhouni stood firm on the new rules, while sympathizing with the grievances of the scientists, according to press accounts. Among other provisions, the new rules forbid 6,000 top NIH employees from holding stock in pharmaceutical or biotech companies. This rule, of course, drives the employees crazy and they want it relaxed or eliminated altogether.

These NIH scientists are now demanding the right to invest in the same companies that are affected by their research. Does this bother you as much as it bothers me?
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The Washington Post reported that House backers of legislation that would loosen restrictions imposed by President Bush in 2001 say they have 201 co-sponsors and enough private commitments to put them at or over the 218 votes needed to pass.

See our earlier report here.

The Stem Cell Research Enhancement Act of 2005 would permit federal money to fund research on stem cells taken from days-old embryos stored in freezers at fertility clinics and donated by couples who no longer need them. The cells show great promise in treating a variety of diseases and injuries because they are able to morph into all kinds of tissues, but they are controversial because the embryos must be destroyed to retrieve the cells.

Specifically, the Act states that human embryonic stem cells would be eligible for use in any research using federal support if the cells meet each of the following:

(1) The stem cells were derived from human embryos that have been donated from in vitro fertilization clinics, were created for the purposes of fertility treatment, and were in excess of the clinical need of the individuals seeking such treatment.

(2) Prior to the consideration of embryo donation and through consultation with the individuals seeking fertility treatment, it was determined that the embryos would never be implanted in a woman and would otherwise be discarded.

(3) The individuals seeking fertility treatment donated the embryos with written informed consent and without receiving any financial or other inducements to make the donation.

Opponents, with the support of House Majority Leader Tom DeLay (R-Tex.), are hoping to persuade undecided Republicans to vote instead for a bill sponsored by Rep. Christopher H. Smith (R-N.J.), known as the Cord Blood Stem Cell Act of 2005, that would create a national umbilical cord blood bank. Cord blood cells display some of the same traits as embryonic stem cells but are more limited in the types of tissues they can become. DeLay said that he was “adamantly opposed” to the Castle bill.

You may not have heard but a new Star Wars episode opened today in theatres. Yes, after more than 25 years, “Star Wars: Episode III — Revenge of the Sith” is certainly whipping up a frenzy among the public. ABCNews reported that Die-Hard fans of the epic paid $500 to attend the premiere of Episode III. Those not wanting to end up as fodder for Conan O’Brian’s insult dog, however, should wait to see it later.

Some fanatical fans have taken Star Wars as a religion — some more literally than others — with “The Force” usually linked to ideas from the Chinese religion Taoism. In Taoism, the universe is constructed of energy which one must become in harmony with. Yoda and Obi-wan Kenobi are spiritual mentors, often compared to Hindu gurus and Buddhist monks. But, at least one popular spiritual blog Web site, dickstaub.com, connects Star Wars to Christian themes. Then again, on another site, the author claims to demonstrate that Yoda, a character from the movie “Star Wars” is actually a subliminal symbol of The Devil. I can’t tell if they’re serious.

Like Karlyn, not everyone is so enthralled. There are plenty of detractors, including an “I Hates Lucas” rant at the Bynk Zone where he chastises Lucas for changing the earlier episodes and for making Anakin an angst-filled teen, extolling:

“Thanks to George’s appalling lack of subtlety and talent, one of the great embodiments of screen evil is now the lame embodiment of an over-privileged teen trust kid who had to settle for a stock Benz on their birthday instead of the AMG model.”

Personally, Star Wars lost me with the prequels. As though the Jar Jar fiasco wasn’t bad enough, you find out in Episode II (the fifth movie?) that Anakin’s mother has spent the last decade as a slave — all while the Jedi sit around. So the Jedi are all-powerful in the Universe, can use the force and save planets but no one could get off their butts to go over and GET HIS MOTHER OUT OF SLAVERY? No wonder he turns to the dark side. Although, it could have something to do with what seems to be a galactic-wide shortage of Starbucks. No one could spend all that time flying from planet to planet without a cup o’ java in the spaceship drink holder.

For those interested in the science of Star Wars, Forbes provides an interesting pondering of the chances for success of the science in the movies. Although Forbes gives little chance for a lightsaber, don’t miss this detailed explanation on How Stuff Works outlining how a light saber works, including this Important Safety Information:

“A lightsaber is not a toy! Keep it out of reach of children at all times. Lightsaber locks are required in most states.”

For my son, who’s too young to see the PG-13 flick, he has to be content with the Lego “Revenge of the Block,” which is pretty darn good for adults, too.

We’ll see you at the movies.