Patent battle over Herceptin

On September 21 2010 GlaxoSmithKline filed a suit against Roche Holding AG in Delaware for infringing a patent when it produces its cancer drug Herceptin. Glaxo said the patents were issued in 2008 and 2010 and cover antibody purification. According to GlaxoSmithKline Roche and Genentech infringe the patent by “making and/or having made therapeutic antibody products, including without limitation Herceptin,” the complaint said. Glaxo is demanding damages to compensate for violations of its patent.

Genentech declined to comment except to say that it was aware of the lawsuit and that a second lawsuit had been filed in the Northern District of California. The California lawsuit was brought by Genentech against Glaxo.

Trimeris, Roche settle patent dispute with Novartis

Trimeris announced on September 27 20910 that it will pay Novartis nearly US$2.5 million to settle patent litigation in the US related to Trimeris’ HIV drug Fuzeon. Novartis had filed suit against Trimeris and marketing partner Roche claiming that the companies had violated one of its patents.

The payment represents Trimeris’ 50-percent share of back royalties on sales of Fuzeon through March 31 of this year. Trimeris will also pay a further US$133 000 to Novartis for its portion of royalties on sales for the second quarter. Under the settlement, Trimeris and Roche will continue to sell Fuzeon under a licence to Novartis, and will pay royalties to Novartis on net sales of Fuzeon.

In other news, Trimeris and Roche announced that they entered into an agreement relieving Trimeris of any obligation to repay certain deferred marketing expenses as part of the companies collaboration for the development and commercialisation of Fuzeon. Under an existing agreement, Trimeris and Roche had agreed to repay certain expenses incurred by Roche in 2004, but the companies have now agreed to cancel those payments. Trimeris had been liable for paying Roche US$18.7 million in connection with this agreement.

Latest research on the top patent lawyers

Silico Research’s analysis of over 40,000 patents and applications filed at the USPTO in the life sciences and selected IT areas between 1995-2007 has shown that the California-based firm Townsend and Townsend and Crew LLP was the leading patent firm when measured by the number of patents and applications filed.

Having filed Cohen and Boyer’s patent for recombinant DNA, the patent that helped found the biotechnology industry in the 1970s, Townsend and Townsend has built up a strong presence in the life sciences sector and electronics and software. Townsend and Townsend and Crew’s largest clients include the University of California, the Californian Institute of Technology, Neuralab Ltd, Yahoo Inc, Rigel Pharmaceuticals Inc and Metabolex Inc.

Other firms in the top ten firms, in order from the largest number of patents and applications filed, were Morrison and Foerster LLP, Finnegan Henderson Farabow Garrett and Dunner LLP, Birch Stewart Kolasch and Birch, Knobbe Martens Olson and Bear LLP, Oblon Spivak McClelland Maier and Newstadt PC, Nixon and Vanderhye PC, Hamilton Brook Smith and Reynolds PC, Sughrue Mion LLC and Jones Day LLC. With the exception of Morrison and Foerster and Jones Day all the firms are intellectual property boutique firms.

Most of the top ten firms have a predominantly American client base. Exceptions were Oblon Spivak McClelland Maier and Newstadt and Nixon and Vanderhye. Oblon Spivak filed a large number of patents for foriegn clients including Ajinomoto Co Inc (Japan), the Institute Pasteur (France), L’Oreal (France), and Kao Corporation (Japan). Nixon and Vanderhye also has a strong presence in the Japanese sector filing a number of patents for clients including Kyowa Hakko Kogyo Co Ltd.

The analysis showed that a number of companies eschew outside counsel and rely on in-house lawyers to file patents and applications. Companies relying on in-house lawyers include the biotechnology companies Human Genome Sciences Inc and Genentech Inc and the pharmaceutical companies Johnson and Johnson Inc, Bristol-Myers Squibb Inc, Novartis and Merck and Co Inc.

Are universities the nation’s scientific powerhouse or little more than costly ivory towers?

American universities are supposed to be becoming the nation’s scientific powerhouse, turning innovative research into the applied science that will drive new products and wealth creation. Well that’s the theory, anyway.

In reality an examination of New Drug Applications filed with the Federal Drug Agency reveals that just 5% of applications were supported by patents that originated in universities. The other 95% were backed by patents protecting the work of scientists employed by companies.

There are success stories to be sure and universities can hit the mother load when they happen to strike it lucky.

Emory is one such university. Emtricitabine is a compound used in the anti-HIV drugs, Emtriva and Truvada. Emtricitabine was discovered by scientists at Emory University. The compound was licensed in 1996 to Triangle Pharmaceuticals, an Emory University start-up company. In 2002, shortly after it had filed an NDA for emtricitabine to the FDA, Triangle Pharmaceuticals was acquired by Gilead Sciences. Emtricitabine received its first approval in the USA and Europe as an HIV drug in 2003. In 2005 Gilead Sciences and Royalty Pharma bought Emory’s interest in the compound for $525 million.

Overall between 1991 and 2006 Emory earned $720 million in revenue from its commercialised research. By 2006 Emory had 16 licensed therapeutic products already in the marketplace and 38 licensed products in various stages of drug discovery, clinical development or regulatory approval and had established 37 companies around the university’s technology, leading to seven publicly traded companies and seven companies marketing products.

Emory’s achievement in turning research into revenue streams is unusual to say the least. Stanford University and the University of California earned just over $200 million in royalties for Boyer and Cohen’s patent for DNA splicing by the time of its expiry in 1997. In 2002 the last year for which we have figures, Harvard University, received a total of just $20 million licensing revenue across all industrial, scientific and technological research areas. These licensing revenues accounted for less than 4% of Harvard’s total research spending of more than $520 billion in the same year. The licensing revenues came from over 550 outstanding licenses so each license generated just over $35,000 a year. In 2002 Harvard was involved in 59 patent applications, granted 89 licenses and options and was involved in 8 startups so it seems likely that a large chunk of the $20 million was swallowed up in legal and administrative costs. Other top universities do little better.

So what is going on here? It may be that university scientists focus on the type of research that gets published in Nature and Science and generates citations rather than research that companies want to license. It could be that the huge spend by the American government in universities skews research away from research that can be turned into products. It may be that universities are not very good at identifying commercialisable research and selling that research to companies. It could be that companies are not very good at recognising promising research in the academic laboratory. Or it may just be that companies prefer to deal with other companies operating on the same profit and loss driven mind-set as themselves.

Churning out scientists who found companies, invent new products and make fortunes is one thing. Keeping a stake in that innovation-driven wealth creation is an altogether more difficult challenge.

Whatever is the case universities have some way to go before they become the nation’s scientific engine of growth.

Yahoo! leads Amazon, Google and eBay, in patents at least

Despite all the noise made by Amazon’s one click patent, Yahoo!, with 707 patents and applications filed, has pursued a far more aggressive patenting strategy than Amazon, eBay or Google. These figures include patents subsequently acquired by the major companies through acquisitions.

Google’s intellectual property estate includes sixteen facial recognition patents assigned to it as a result of the acquisition of Neven Vision Inc and nine patents acquired in late 2005 from the Disney-owned Infoseek Corporation.

The largest external portfolios acquired by Google were a group of 26 patents and applications acquired from Dmarc Broadcasting Inc, a developer of digital audio systems and related services for radio broadcasters acquired by Google in 2006, and thirty patents acquired as the result of the purchase of Adscape Media Inc from The Wall Street Journal. Adscape sold software that integrates ad placement in games.

Curiously, Jeffrey Bezos, Amazon’s founder is listed as the sole or a joint investor on 17 of Amazon’s 121 patents. Google’s founders Sergey Brin and Larry Page, by comparison are listed as inventors on six and two respectively of Google’s 536 patents.

Cross-sector collaboration set to grow

Cross-sector partnering and licensing looks like being one of the faster growing collaboration areas over the next few years as companies look to leverage their intellectual property investments beyond core markets. We believe that as large companies struggle to find attractive new partners in their own sectors and increasingly get bogged down in anti-trust issues and the conundrum of collaborating with competitors, then looking outside their own sector for licensing and intellectual property-based collaboration is going to become a more and more attractive proposition.

Hewlett Packard is trying to position itself at the head of the cross-sector collaboration pack. In January 2004 HP established a separate IP licensing organisation which centralised the thousands of patents originally managed by the company’s various product divisions. The goal of the new licensing organisation was to leverage HP’s patent portfolio to promote technical collaborations with partners and improve the company’s revenue stream. HP’s patent licensing portfolio, which is one of the largest in the information technology industry, consists of over 30,000 patents worldwide and covers a wide range of inventions, including imaging and printing, personal computers, software, storage, servers, display devices, mobile devices, information technology services, networking and other emerging technologies such as nanotechnology.

Led by Joe Beyers, an electrical engineer by training, the IP licensing group is actively seeking opportunities where HP’s patents can be used to win business in new sectors. In the last four years HP’s licensing group has been involved in at least 150 projects and has entered a number of cross-sector licensing agreements. This includes a five year agreement with Flextronics, a Singapore-based contract manufacturer, signed in in November 2006, which involved the licensing of HP’s digital imaging technology, originally designed by HP for its Photosmart digital cameras, to improve the quality of cell phone cameras. HP is to be paid royalties from any products developed through the agreement. Another agreement was signed in May 2007 with Nanolithosolutions Inc, a Californian based start-up nanotechnology company that HP has an equity stake in, allowing the use of HP’s nanoimprint lithography technology to develop mask aligners, a machine used in semiconductor wafer processing.

The cultural and technical challenges for executives used to a particular way of looking at problems will be immense. But then so will be the potential payoff. Either way, watch this space.

HP’s latest ventures are taking it into the healthcare sector. Exploring new ways to apply HP’s Singapore-developed thermal inkjet technology, originally patented for inkjet cartridges, HP’s central research laboratory has began to investigate how inkjet technology can be deployed for medical devices. One of the first products to emerge from this research has been a skin patch to deliver drugs. The advantages of the device over other drug delivery platforms on the market is that it is less painful than most drug delivery systems which rely on hypodermic needles and it can deliver several drugs at the same time. Using hundreds of microneedles that barely penetrate the skin and microscopic wells that store the drugs, the device is controlled by a microprocessor that can be programmed with a patient’s dosage history and protocols to prevent adverse drug interactions.

Keen to find a partner to promote the device, HP contacted Enterprise Ireland, the Irish government body responsible for promoting indigenous business in Ireland. In September 2007 HP signed a licensing agreement with Crospon, an Irish start-up medical device company founded in Galway in 2006, to manufacture and market the skin patch in return for royalty payments. At the time of signing the agreement with HP Crospon had just received Euro2.3 million in seed financing, which included funding from Enterprise Ireland. The founder and chief executive officer of Crospon is John O’Dea, who helped found Caradyne, an Irish-based respiratory products company acquired by Respironics Inc in 2004. Aiming to get a product on to the market in 3 to 4 years, HP and Crospon believe the device could eventually be used for the delivery of insulin to diabetic patients or multiple drugs to heart or AIDS patients. Crospon is hoping to raise Euro3 million to Euro5 million over the next 18 months to help it bring the product to market.

The financial market has already recognised the lucrative potential of HP’s cross sector collaboration with Crospon. Within a day of announcing its deal with Crospon, HP’s shares rose 87 cents to $49.87, its stock having already risen by 21% in 2007. HP aims to license its inkjet technology soon for other medical purposes. HP’s central research laboratory has devised ways to use the technology for the purposes of pulmonary inhalers, and was issued with a patent by the USPTO in February 2004. The technology allows the precise delivery of droplets or powder of medicine through the mouth or nose and, like the skin patch, has the ability to administer multiple drugs at the same time as well as control the dose and prevent overdose (patent number US 20040107961). The laboratory is also using the technology to devise new methods to apply coatings to medical implants.

So we may well see a wave of life science companies exploring the licensing of intellectual property to large technology companies and telecommunications companies or vice versa over the next few years. We may see drug development patents applied to disk storage or disk storage patents applied to drug development. The cultural and technical challenges for executives used to a particular way of looking at problems will be immense. But then so will be the potential payoff. Either way, watch this space.

Takeda flexes its partnering muscles

Are the Japanese healthcare majors emerging as serious competitors to the largest North American and European pharmaceutical companies for the most partners for fast growing biotechnology companies? Japan’s largest pharmaceutical company, Takeda Pharmaceutical, the sixteenth largest pharmaceutical company in the world, certainly believes so.

Over the past two years Takeda has moved away from its previous strategy of focusing on partnering with smaller Japanese companies towards alliances with international partners to boost its development pipeline.

International alliances are seen as particularly important at a time when two of the company’s most important drugs are coming off patent. Takeda’s gastrointestinal drug lansoprazole came off patent at the USPTO in February 2007, and its USPTO patent for pioglitazone, used for the treatment of diabetes type II, is due to expire in 2011.

Takeda has not been able to fill the pipeline with drugs from other Japanese companies and so it is now forced to focus on alliances, partnerships and acquisitions outside Japan. In order to make it a more attractive partner Takeda has established a streamlined decision making process and a Global Licensing and Business Development Department that reports directly to the company’s President. Takeda now has alliance specialists in all the three key geographical regions: Japan, North American and Europe.

The volume of deals signed by Takeda over the past three years has been impressive. The company has signed a number of cancer-based alliances. For example, in late 2004 it signed a deal with BioNumerik Pharmaceuticals around the chemotherapeutic agent Tavocept. As part of the deal Takeda made a $52 million equity investment in BioNumerick. Takeda signed a three year alliance in April 2006 with Arius Research Inc to research antibodies for anti-cancer treatments and in July 2006 it signed a four year development and marketing agreement with Galaxy Biotech for a humanized anti-Hepatocyte Growth Factor monoclonal antibody.

Takeda has signed a number of deals in the CNS area including a co-development and co-promotion with H. Lundbeck A/S signed in September 2007 for compounds for the treatment of mood and anxiety disorders. Takeda made an upfront payment of $40 million to Lundbeck and will pay up to $345 million in milestone payments over the life of the partnership.

In the field of cardiovascular diseases Takeda has entered alliances aimed at several disease targets. In November 2006 it signed a deal worth up to $230 million with Xoma Ltd to jointly discover, develop and produce therapeutic monoclonal antibodies. In June 2007 it signed a three target agreement with Archemix Corporation focusing on the discovery, development and commercialization of aptamer-based therapeutics.

As well as signing co-development licenses Takeda has in-licensed a number of compounds from companies ranging from Merck KGaA through to Santhera Pharmaceuticals and Sucampo Pharmaceuticals.

In addition to partnerships Takeda is exploring equity based and risk finance driven relationships. A venture capital subsidiary, Takeda Research Investment, was set up in 2002 located in Palo Alto and tasked with looking for cardiovascular, cancer, urological, central nervous system and gastrointestinal research collaborations.

So far, TRI has invested in seven companies. Investments have included Serenex, a chemoproteomics-oriented drug discovery company focused on the discovery and development of novel therapeutics targeting cancer, and Receptor Biologix, a biotechnology company founded on the discovery of a new class of endogenous regulatory proteins.

Can Takeda succeed in its strategy? Maybe. It has a number of factors going for it. Access to the wealthy, rapidly aging Japanese market and Asian markets is a big selling point for companies interested in age-related conditions. Takeda also has a lot of cash to invest. With $16 billion in cash and short term investments, Takeda’s investment capacity is not significantly less than Pfizer’s, which has $22.75 billion in cash. Finally but, possibly most crucially, biotechnology investors fed up with quarterly results driven decision-making, may see real advantages in having a partner with the long-term perspective that Japanese companies famously bring to investments. Together these factors could be a winning combination in the battle for the partnerships that are going to shape the future of the pharmaceutical industry.

Novartis switching planned research investments from India to China

Novartis is reported to be switching hundreds of millions of dollars in planned research investments from India in the next few years in response to a court ruling rejecting it’s challenge to a section of the country’s Patents Act that aims to restrict certain kinds of patents. Novartis is planning to move the investments to China.

India’s patent law, which took effect in January 2005, allows patents for products that are new inventions developed after 1995, when India joined the World Trade Organization, or for an updated drug that exhibits improved efficacy. Novartis bought a civil lawsuit against the Indian government after it rejected the company’s attempt to patent a new version of its leukemia drug Gleevec in January 2006.

The patent was rejected on the basis that the drug is a new formulation of an existing drug developed before 1995. Novartis argued that that it is an improved drug. The ruling said that the court does not have jurisdiction over whether Indian patent laws complied with the WTO’s intellectual property laws.

Joint-ownership of patents inhibits licensing deals

Joint ownership of patents can be a major stumbling block to licensing deals being negotiated across international borders. In most countries the joint ownership of intellectual property legally prevents any of the joint owners licensing their interest in the jointly owned patent without the consent of the others (Japan: Article 73(3) The Patent Law; UK: Section 36(3) Patents Act 1977; Australia: Section 16(2) Patents Act 1990), Canada: Forget v. Specialty Tools of Canada Inc (1995) 62 CPR (3d) 537). A joint patent owner, however, does not need consent to exploit the invention themselves and does not need to account for any profits it makes from it. By contrast, in the United States an owner of a joint patent can license their interest in a patent without the consent of the other owners and do not have to account to them for any royalties or payments received as a result of the license (Schnack v. Applied Arts Corporation 278 N.W. 117 Mich 434). In the US neither party can grant an exclusive license to the joint patent without the consent of the other. With no standard set of rules on joint ownership of patents, it is easy to see how negotiations for licensing deals taking place on a global scale can become long and protracted.

Biotechnology beyond the US

US inventors have continued to dominate biotechnology innovation since the first commercialisation of biotechnology in the USA in the mid-1980s. Material analysed from Silico Research’s database of 22,000 biotechnology-related patents filed at the USPTO indicates that the USA continues to dominate the biotechnology space. In 2006 67 per cent of the inventors filing biotechnology-related patents at the USPTO were based in the USA. The percentage of American based inventors has been steadily rising since 1980 when they made up 52 per cent of the total. By comparison the number of non-US inventors has been decreasing, falling from 48 per cent in 1980 to 33 per cent in 2006.

While American inventors are continuing to dominate the space, the number of countries filing biotechnology-related patents at the USPTO has been increasing, rising from 10 in 1980 to a peak of 44 in 2002. Cross border collaborations have also been steadily increasing over time, rising from 1 country per patent in 1980 to 1.18 countries per patent in 2006.

Outside of the USA, inventors filing biotechnology-related patents are highly concentrated in Tokyo in Japan. The number of inventors from Tokyo listed in the patents rose from 352 in the period 1972-95 to 635 in 2000-06. Tokyo comes highest for the number of inventors filing patents for monoclonal antibody technology and stem cells. Many of the Tokyo based inventors are assigning their patents to pharmaceutical companies such as Kyowa Hakko Kogyo, Sankyo Pharmaceuticals, Teijin Ltd and Daiichi Pharmaceuticals. Inventors based in Osaka come second in the league table of number of inventors per town, numbering 242 in 2000-06. The Japanese city, Ibaraki, which is within communting distance of Osaka and Kyoto, follows closely numbering 225 inventors. As is the case for Tokyo the bulk of the inventors filing at he USPTO are assigning their patents to pharmaceutical companies, including Takeda Pharmaceuticals.

Vancouver in Canada had the third highest number of inventors listed by town for all biotechnology-related patents for the years 2000-06, totalling 228. The majority of these inventors assigned their patents to the University of British Columbia. Inventors based in Vancouver ranked second after Tokyo for patents relating to stell cell technology, many assigning their patents to biotechnology companies such as Stemcel Technologies Inc. The high profile of Vancouver in recent years might reflect the fact that in 2004 British Columbia enabled companies to receive a tax refund based on revenue generated from life sciences patents (75%, up to $8 million/year).