Patent Baristas

The Biotechnology Industry Organization (BIO) held a press conference today to provide an overview of the federal policy landscape and impact of the current financial market environment on the biotech industry.

BIO President and CEO Jim Greenwood addressed the policies expected to be considered by the Obama Administration and the 111th Congress which will impact the biotechnology industry including health care reform, stem cell research, follow-on biologics, comparative effectiveness and energy security.

Following President Obama address to Congress and the nation, Greenwood released a statement saying:

“We share President Obama’s stated goal of expanding access to health care.  We believe biotechnology can play a key role in this quest.  Biotechnology can help bring needed innovation to modernize and add efficiencies to our nation’s health care system.   Innovation in health care, including health care solutions such as new therapies and diagnostics, has always been and will continue to be central to realizing our health care goals.  Further, we believe that market-based reforms provide the best opportunity to achieve the goal of universal access while providing high quality care and incentives for the discovery and development of innovative improvements throughout the health care delivery system.”

Greenwood then discussed the importance of biotech both in the economy and in developing technologies, particularly relating to healthcare and biofuels.  A large part of the discussion focused on the expectation that there will be some kind of follow-on biologics rule proposed and the importance of data exclusivity.  Not to be confused with patents, data exclusivity is the period after the FDA approves a product during which an imitator can’t rely on the innovator’s clinical data for safety and effectiveness. It can run during and longer than the period of patent protection.

President Obama’s budget, released today, is set to remove barriers to creating generic biologics. The administration is expecting to use the money the federal government would save through use of biogenerics to help pay for a major overhaul of the healthcare system.

Unlike traditional chemical drug approval, the Food and Drug Administration currently has no process for approving biogenerics, also called “follow-on biologics” and “biosimilars.” Generally, biotech drugs are more complicated than regular drugs because they are made from living cells or bacteria.

For a generic drug manufacturer to win approval of a generic version of a traditional prescription drug, the product must have the same active ingredient, strength, dosage form and route of administration as the original drug. This means that generic drugs are the exact same chemically as their brand name counterparts and they act the same way in the body.

Such a process is not possible with biologics. Biologics manufacturers must ensure that the manufacturing process remains the same over time by controlling the source and nature of starting materials and controlling the manufacturing process. When a follow-on biologic is created, it requires a new manufacturing process with new starting materials. As a result, it will produce a product that is different from and not therapeutically equivalent with that of the brand name biologic.

The generic industry has proposed letting companies copy biologics after three to five years, similar to rules set for conventional drugs under the 1984 Hatch-Waxman Act. The administration’s proposal suggests the time frame would be consistent with Hatch-Waxman, though administration officials could not confirm that last night.

To give you an idea of the impact of these changes, last year the Congressional Budget Office estimated that the federal government would have saved $6.6 billion over 10 years under proposed legislation that would have provided biotech companies 12 years of market exclusivity for new biologic drugs.

But biotechnology companies have fought to keep a monopoly on their drugs for at least 14 years. They say they need that amount of time in order to ensure a return on the significant investment required to develop biologics. Companies also fear patents will not fully protect biologics since competitors could make a similar molecule that may not be covered by the patent.

Greenwood pointed out that in order to preserve incentives to research, develop and manufacture new innovative therapies and cures, as well as new indications for such products, any statutory pathway for follow-on biologics must include substantial non-patent data exclusivity, during which follow-on manufacturers could not rely on FDA’s prior approval of innovative biologics to support approval of their own products.

BIO supports the notion that the longer period is justifiable stating that such data exclusivity is necessary because a follow-on biologic may be similar enough to an innovative biologic for regulatory approval purposes, but different enough to avoid the innovator’s patents. Thus, non-patent exclusivity is necessary to maintain effective market protection. Further,  the industry’s heavy dependence on significant amounts of investment capital and the high risks and costs involved in the development of new biologic medicines all warrant a substantial period of exclusivity.

Greenwood stressed that any discussion must recognize that the methods used to show that one chemical drug is the same as another are different from and insufficient for biologics. Thus, versions of a biological product made by different manufacturers must be evaluated on a case-by-case basis, because they will differ from each other in certain respects.

Greenwood also pointed out that mandating a data exclusivity period below 14 years in follow-on biologics legislation would save the federal government at most an additional $1.4 billion over 10 years, a “relatively small savings” for the government’s total health budget.  On the other hand, just reducing the exclusivity period from 14 years to 10 years would reduce revenue by 12% for the biotech companies and cause a dramatic drop in R&D spending for biotechs.  BIO claims that the average biotechnology company does not cover its costs of a biologic until 17 years after the initial sales of the product.

Recent legislative proposals vary along several dimensions, including differing durations of data exclusivity. Under any new law, a follow-on biologic applicant will be required to demonstrate that there are no clinically meaningful differences in safety, purity and potency between its product and the brand product in order for the FDA to approve a follow-on biologic as interchangeable. However, the applicant must provide evidence that its product will produce the same clinical result as the brand product in any given patient and that it presents no additional safety risks or diminished efficacy if a patient alternates or is switched between products.  This will be a tough road to travel.

Biotechnology Industry Statistics

• 120 companies (30%) are now trading with less than 6 months of cash on hand. 180 companies (45%)  have less than 1 year of cash remaining.” Only 10% of the 370 public US biotech companies have positive income. (source: BIO)
• By comparison with 2007, funds raised from IPOs in 2008 fell 97% and follow-on/secondary offerings fell 56%.  Total capital raised by the industry in 2008 fell by 55% vs 2007 (source: BioCentury).
• In 2006, 32 life sciences companies raised $1.7 billion through IPOs. In 2007, 41 raised $1.9 billion. In 2008, there was only one IPO in the US, which raised $5.8 million. (source: BioWorld)  There were 19 biotech IPOs withdrawn in 2008.
• 87% of US biotech stocks have lost value in 2008 with 26% of 350 biotech companies currently trading under $1 Billion in market cap now trading below their cash value. That is, they have more cash on hand per share than the market value of their companies. This level has gone up by 3x vs 2007.(source: BIO).

The podcast is available here.

Related: Congressman Waxman Addresses GPhA Meeting on Follow-on Biologics

Earlier, the Supreme Court ruled that MedImmune could sue Genentech for patent infringement even though MedImmune continued to pay licensing fees to Genentech to use disputed technology to develop the drug Synagis®.  At the same time, the U.S. Patent and Trademark Office decided to have a second review of the patents at issue, U.S. Pat. Nos. 4,816,567 and 6,331,415, which relate to antibodies and to non-specific immunoglobulins formed by recombinant techniques using host cell cultures.

The Patent Office has now finished those proceedings dealing with Genentech’s Cabilly patent under concurrent proceedings for an Inter Partes Reexamination (RE Appl. No. 90/007,542) and an Ex Parte Reexamination (RE Appl. No. 90/007,859).  While an earlier ruling by the Office declared the the claims invalid as being anticipated under various earlier patents and references, the Patent Office has now issued a Notice of Intent to Issue a Reexamination Certificate (NIRC) confirming the patentability of all claims of the Cabilly patent.  A fancy way of saying that the claims are good to go.

Note, during the reexamination process, Genentech did amend claims 21 through 32 but claims that there were amended in a way that does not affect the commercial viability of the patent. More importantly, this decision by the Patent Office is final and unappealable.

The Notice set out that the invention is for a method for producing an immunologically functional immunoglobulin molecule or an immunologically functional immunoglobulin fragment by transforming a single host cell with a first DNA sequence encoding immunoglobulin heavy chain and a second DNA sequence encoding immunoglobulin light chain and independently expressing the first DNA sequence and second DNA sequence so that said immunoglobulin heavy chain and light chain are produced as separate molecules in said transformed single host cell.

Based on the prosecution history of the patent at issue, and the interference record from Interference No. 102,572, the Examiner determined that the term “immunoglobulin molecule” in claims 1 and 33 is considered to be an immunologically functional molecule and capable of binding to a known antigen.

The following is an examiner’s statement of reasons for patentability and/or confirmation of the claims found patentable in this reexamination proceeding:

The combination of the Cabilly I patent claims and the teachings of Axel, Rice, Kaplan, Builder, Accolla, Dallas, Moore patent, Deacon and Valle and Ochi references do not suggest or contain an enabling disclosure of a method to produce an immunologically functional immunoglobulin molecule by independently expressing immunoglobulin heavy chain and light chain in a single transformed host cell.

Claims 1-20, 33-36 are confirmed and amended claims 21-32 are allowed.

Genentech’s controversial patent will not expire now until the end of 2018, an expiration date that is over 29 years after the Cabilly I patent issued.  While we don’t know the details of the final settlement, I imagine that MedImmune is probably feeling pretty good right about now that they didn’t breach their license in order to bring their earlier action contesting the patents.

See the Patent Office documents here:

Notice of Intent to Issue a Reexamination Certificate
Notice of Intent to Issue a Reexamination Certificate

Earlier:

MedImmune and Genentech Settle, Lawyers Look For New Topic of Discussion
USPTO Smacks Down Genentech’s Antibody Patent
Supreme Court High-Fives MedImmune

On April 1, the European Patent Office changes the fee structure for filing applications and entering the European regional phase of PCT applications. For most applicants, this will mean an overall increase in fees paid.

What are the changes?

1. There will now be a single designation fee of €500, irrespective of the number of states designated. This replaces the present system of a designation fee of €85 per country up to a maximum of seven countries.
2. The printing fee for all European patent application filings and European regional phase entries will now be due upon filing or entry. The printing fee will be €12 per page over thirty-five (including abstract, description, claims and drawings, but excluding any sequence listing). It is not possible to amend the application on regional phase entry to reduce the fee.
3. The excess claim fee for the fiftieth and each subsequent claim will rise from €200 to €500 per claim.  Currently, excess claims fees are payable at €200 each for claims in excess of fifteen

So, what’s it mean to you?

The new single designation fee is greater than the present combined designation fees for five or fewer states. Therefore, if you are looking to file a European patent application or enter the European regional phase for PCT application and wish to designate five or fewer states, then you want to get it filed prior to April 1.

If you wish to designate six states, then the cost of filing the European patent application or entering the European regional phase of a PCT application will be less before 1 April 2009 if there are thirty-six or more pages. If you wish to designate six states and the application has thirty-five pages or fewer, then the cost of filing the application or entering the European regional phase will be €10 less if you file after April 1.

If you wish to designate all available states, then it will be cheaper to enter the European regional phase before April 1 if the specification contains forty-three or more pages. However, if the specification has forty-two or fewer pages, then you should consider deferring the filing of the European patent application or entering the European regional phase until after April 1.  If you are considering filing a European patent application after April 1, you can try to reduce the length of the specification to reduce the printing fee.

Note, early entry into the European regional phase will not advance the European Patent prosecution (without a specific request to the European Patent Office). Therefore, early entry into the European regional phase will not automatically affect the timing of the prosecution of the application.

(via Forresters)

The U.S. Court of Appeals for the Federal Circuit handed Eli Lilly a victory over that Teva Pharma in upholding an extension of the statutory thirty-month stay under the Hatch-Waxman Act, thus preventing the U.S. Food and Drug Administration from finally approving Teva’s Abbreviated New Drug Application (ANDA).   Eli Lilly & Co. v. Teva Pharma (09-1071).

The Hatch-Waxman Act requires a pioneer drug manufacturer to notify the FDA of all patents that “claim[ ] the drug for which the [NDA] applicant submitted the application.”  The FDA lists the patents in its Approved Drug Products With Therapeutic Equivalence Evaluations (Orange Book).  Under the law, a generic manufacturer infringes a patent by filing an ANDA to obtain approval for a generic drug product claimed by a valid and unexpired patent.

In this case, Lilly holds the approved NDA for raloxifene hydrochloride tablets, which is marketed under the brand name Evista® for the treatment and prevention of postmenopausal osteoporosis.  Lilly lists twelve patents that claim Evista® in the Orange Book.

Teva filed an ANDA with the FDA to get approval to manufacture and market generic raloxifene filing paragraph IV certifications, i.e., a patent is invalid or will not be infringed.  Lilly sued Teva for infringement of four method patents listed in the Orange Book: U.S. Patent Nos. RE38,968, RE39,049, RE39,050, and 6,906,086.  The FDA gave a 30 month stay on approval from the date that Lilly received Teva’s paragraph IV notifications, expiring on November 16, 2008.

Lilly later amended its complaint to assert that Teva infringed three additional Evista® patents—U.S. Patent Nos. 6,458,811, 6,797,719, and 6,894,064—covering raloxifene particle size and formulation.

On July 8, 2008, Teva amended its ANDA to include a new particle-size measuring methodology for the active pharmaceutical ingredient in its proposed raloxifene tablets.    Teva disclosed this amendment to Lilly on July 10, 2008, and provided it three batch samples on July 28, August 19, and September 17, 2008.  The district court, however, previously set a discovery deadline of August 18, 2008.  Teva allegedly began changing its particle-size measuring methodology as early as November 2007 with the goal of avoiding infringement of Lilly’s asserted patents.

Lilly asked the district court to extend the statutory thirty-month stay due to Teva’s alleged discovery violations, which extended the stay from the original November 16, 2008, until the beginning of trial on March 9, 2009.

The U.S. District Court found that Teva had “recast its product more than eighteen months after it provided the original sample to Lilly and only eight months before trial is set to commence.”

Teva appealed.

The Court of Appeals upheld the extension saying that the district court acted within its discretion in this area and it has the discretion to adjust the statutory thirty-month stay of ANDAs if “either party to the action failed to reasonably cooperate in expediting the action.”  Trial courts may shorten or extend the thirty-month statutory period based on the parties’ uncooperative discovery practices.

Take-Home Lesson:  Don’t mess around in turning over materials in discovery.  It will cost you dearly.  Think two weeks is not much to fuss over?  Think again.  Last year, Eli Lilly reported sales of Evista® of $1,075,600,000.  That works out to over $41 million for a mere two weeks of exclusive sales.

—————————-

Note that Circuit Judge Prost, disagreed with the majority saying “[t]he thirty-month stay … may be extended for one reason and one reason only:  “because either party to the action failed to reasonably cooperate in expediting the action.”

Although Teva did not complete production until September 5, 2008, the court did not purport to base any finding that Teva “failed to reasonably cooperate in expediting the action” on this eighteen-day delay. …  Not once in this order did the court indicate, much less unambiguously state, that it found Teva had failed to reasonably cooperate in expediting the action.

The Coalition for Patent Fairness has a new website, new content and a new blog – the Better Mouse Trap Blog – that will follow developments relating to patent reform.  The Coalition for Patent Fairness issued this statement:

“Deficiencies in our patent system are holding our economy back by dampening innovation and job creation. Congress needs to pass a bipartisan and comprehensive patent reform bill to modernize and reduce uncertainty in the current system by addressing the backlog of patent applications in the patent office, ensuring only proper patents are being granted, and creating an environment where small, medium and large companies can innovate and create jobs. Our revised website will communicate that message and serve as a source of information for policy makers, business leaders, consumers and journalists interested in patent reform.”

The Better Mouse Trap Blog is supposed to track legislative and regulatory developments, highlight member company activity, and deliver filter-free pro-patent reform messages to interested audiences, which seems like an oxymoron.  While they have an agenda, we’re certain people will take away what they want.

The Coalition web site states that:

 Companies, both large and small, are being forced to shift their time and resources to responding to questionable patent infringement lawsuits and away from job creation and innovation. Engineers are spending more time in courtrooms than in the labs focusing on good science, new products and imaginative solutions.

The patent system must be modernized to keep pace with today’s global economy. …  New federal legislation is urgently needed to strengthen and reform patent law, both to improve patent quality and to deter abuse of the system.

Ironically, a recent post on the blog site mentions that Microsoft, a CPF member, received its 10,000th patent earlier this month and has risen to the “top 5 among patent recipients.  Microsoft chief patent counsel Bart Eppenauer told CNET News that “Logging the 10,000th patent really is a testament to all of the innovation that has been taking place.”

CNET then goes on to turn this milestone into a reform statement noting that while Microsoft’s patent filings have been up, the  number of patent lawsuits against the company has increased substantially.  According to the article, most of the suits did not come not from other technology companies.  Eppenauer claims that the lawsuits are mostly from the companies who do not make products and whose primary business is acquiring and enforcing patent.

Left unsaid is how much cross-licensing with other large tech companies plays into that result.

See more at the Better Mouse Trap Blog.  Additional comments over at Peter Zura’s 271 Patent Blog.

Other opinions at:

Coalition for 21st Century Patent Reform
Manufacturers Alliance on Patent Policy
Innovation Alliance
Progress & Freedom Foundation

Arguing that there are too many restrictions being placed on biotech crops, 26 leading corn insect scientists working at public research institutions located in 16 corn producing states submitted a statement to the EPA. All of the scientists have been active participants of the Regional Research Projects NCCC-46 “Development, Optimization, and Delivery of Management Strategies for Corn Rootworms and Other Below-ground Insect Pests of Maize” and/or related projects with corn insect pests.

The statement may be applicable to all EPA decisions on plant incorporated protectants (PIPs), not just for the current SAP. The names of the scientists were withheld from the public docket because virtually all of them rely on cooperation from industry at some level to conduct research and they fear retaliation.

The statement:

“Technology/stewardship agreements required for the purchase of genetically modified seed explicitly prohibit research. These agreements inhibit public scientists from pursuing their mandated role on behalf of the public good unless the research is approved by industry. As a result of restricted access, no truly independent research can be legally conducted on many critical questions regarding the technology, its performance, its management implications, IRM, and its interactions with insect biology. Consequently, data flowing to an EPA Scientific Advisory Panel from the public sector is unduly limited.”

The scientists say they are going public now because of building frustration with negotiating rights with seed companies.  The problem they see is that farmers and any other buyers of genetically engineered crop seeds have to sign a technology agreement covering patent rights, environmental regulations and uses of the seeds. However, the agreements also tend to prohibit growing the crops for research purposes.  Consequently, the university scientists cannot just buy seeds and grow them for research experiments.

While the researchers can ask for permission from the seed companies, permission is sometimes denied or the company insists on the right to have an advance review of the studies’ results before they can be published.  Going far beyond the restrictions of patents, where the rights would be exhausted once the seeds we sold, the technology agreements put much tighter restrictions on the patented products even if purchased legally.

These scientists argue that restrictions over research should be void as against public policy.

See an example of Monsanto’s Technology/Stewardship Agreement here. A copy of Monsanto’s 60 page Technology Use Guide (TUG) 2009 is here.

Plant-incorporated protectants are pesticidal substances produced by plants and the genetic material necessary for the plant to produce the substance. For example, scientists can take the gene for a specific Bt pesticidal protein, and introduce the gene into the plant’s genetic material. Then the plant manufactures the pesticidal protein that controls the pest when it feeds on the plant. Both the protein and its genetic material are regulated by EPA; the plant itself is not regulated.

Regulation of genetically engineered foods is divided among three federal agencies.

• USDA oversees GM crop field trials and is responsible for deregulating (i.e., permitting the unregulated cultivation of) GM crops under the Plant Protection Act (PPA).
• The Environmental Protection Agency (EPA) has jurisdiction over the pesticides incorporated in GM insect-resistant plants under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) and the Federal Food, Drug and Cosmetic Act (FDCA); and
• FDA conducts voluntary consultations on other aspects of GM foods with those companies that choose to consult with it, under the FDCA.

Before the EPA can register a pesticide there must be sufficient data demonstrating that it will not pose unreasonable risks to human health or the environment when used according to label directions. When assessing the potential risks of genetically engineered plant-incorporated protectants, the EPA requires extensive studies examining numerous factors, such as risks to human health, nontarget organisms and the environment, potential for gene flow, and the need for insect resistance management plans.

See New York Times article:  Crop Scientists Say Biotechnology Seed Companies Are Thwarting Research

Patent Docs has some additional comments.

The American Bar Association (ABA) Section of Intellectual Property Law has submitted comments to the Senate Judiciary Committee on the section’s policies relating to inequitable conduct before the U.S. Patent and Trademark Office.  The Section believes that the defense should be reformed and retained, rather than eliminated in favor of administrative proceedings in the PTO.

The Section believes that the defense of unenforceability of a patent based on inequitable conduct in the United States Patent and Trademark Office (“PTO”) should be allowed only upon proof, by clear and convincing evidence:

(1)  that a person having a duty of candor and good faith to the PTO in connection with the patent or an application therefor knowingly and willfully misrepresented a material fact or material information to the PTO or omitted a known material fact or known material information from the PTO;

(2)  that, in the absence of such misrepresentation or omission, the PTO, acting reasonably, would not have granted or maintained in force at least one invalid patent claim; and

(3)  that the misrepresentation or omission occurred with a specific intent to deceive the PTO, and that such intent cannot be established by the mere materiality of the misrepresentation or omission.

The Section also indicated that, in considering whether to hold a patent unenforceable based on an applicant’s alleged inequitable conduct, courts should not find information to be material if it would not have been material under statutory and regulatory standards applicable during the prosecution of the application(s) for the patent or its reexamination.

The comments are posted at the section web site at IPL Section of the ABA website.

Eugene Quinn, president and founder of IPWatchdog, put together a list of the top patent blogs as ranked by Technorati, a recognized source of information about popular blogs and those who link to them.

1. Patently-O – Technorati Rank 21,202
2. Patent Baristas – Technorati Rank 61,134
3. IPWatchdog – Technorati Rank 80,245
4. Against Monopoly – Technorati Rank 80,245
5. Patently Silly – Technorati Rank 90,082
6. Chicago IP Litigation Blog – Technorati Rank 117,073
7. PHOSITA – Technorati Rank 101,726
8. Spicy IP – Technorati Rank 129,347
9. PLI Patent Practice Center – Technorati Rank 132,753
10. Duncan Bucknell Company’s IP Think Tank – Technorati Rank 136,348
11. Patent Prospector – Technorati  Rank 152,448
12. Securing Innovation – Technorati Rank 162,007
13. Peter Zura’s 271 Patent Blog – Technorati Rank 163,794
14. The Invent Blog– Technorati Rank 167,214
15. Promote the Progress – Technorati Rank 198,166
16. I/P Updates– Technorati Rank 213,371
17. IP NewsFlash – Technorati Rank 221,777
18. Orange Book Blog – Technorati Rank 221,777
19. The IP Factor – Technorati Rank 250,588
20. Philip Brook’s Patent Infringement Updates– Technorati Rank 273,434
21. Patent Docs – Technorati Rank 300,413
22. Antiticpate This! – Technorati Rank 351,677
23. Patent Fools (now operated by IPWatchdog.com) – Technorati Rank 351,092
24. Patentably Defined – Technorati Rank 614,978
25. Steve van Dulken’s Patent Blog –  Technorati Rank 676,101
26. IP Spotlight – Technorati Rank 752,199

We think you’ll find some good food for thought among this group.  Let us know who else you like to read.