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Archive for May, 2007

Another Look at MedImmune v. Genentech

Written by on Wednesday, May 30th, 2007

The Medimmune v. Genentech case has received extensive media coverage since the Supreme Court decision earlier this year, but if you still have questions about the case and its anticipated impact, you should check out the recap published on IP Frontline by attorney Dennis Fernandez and college student Brian Bensch.

In their article "The Impact of MedImmune v. Genentech," the authors describe the potential implications of MedImmune as follows:

The major implication of MedImmune is that potential and current licensees will find it incredibly easier to file a declaratory judgment action. . . . After MedImmune, licensees will be able to recklessly challenge contracts knowing that the worst possible consequence is that the contract is upheld. . . .

[T]he implications of MedImmune are already taking shape. Since the MedImmune ruling only four months ago, the Federal Circuit Court of Appeals has begun to clarify the impact of MedImmune by dropping the "reasonable apprehension" clause of its subject matter jurisdiction test in its decision in SanDisk Corporation v. STMicroelectronics, Inc. . . .

 [I]n its decision on March 26 of this year, the CAFC established a new test that "holds that "where a patentee asserts rights under a patent based on certain identified ongoing or planned activity of another party, and where that party contends that it has the right to engage in the accused activity without license," the party may bring a declaratory judgment action."

In the end, the authors conclude that the impact of the ruling will be as follows:

[T]he Supreme Court’s MedImmune decision weakened the stability of both future and current licensing agreements. While the federal circuit’s precedent had been rather unambiguous, the Supreme Court accepted the circularly reasoning and exaggerated risk claimed by MedImmune and allowed it to file for declaratory judgment relief against its licensor without first ending their licensing agreement. The decision gives a blank check to licensees to challenge their licensor on patent invalidity charges if they feel they have any chance at success.

As a licensing attorney looking at this case and the subsequent San Disk ruling, I can’t help but wonder if the impact of these decisions is really going to be as severe as legal commentators are predicting.  While certainly this line of cases enables licensees to challenge licenses more easily, I question whether this will really happen with the kind of frequency you might expect from the commentary.  Is it possible that they are looking at these cases from litigator’s perspective rather than considering the business realities that would often caution against souring an otherwise cordial business relationship?

The vast majority of licensing negotiations are not done at the end of a big stick, and that there are generally sound business reasons to maintain a good relationship with the other side of the negotiating table.  While it is true that these cases make it easier for licensees to challenge a licensing relationship, I question whether it will make good business sense for licensees to do so as frequently as it has been suggested they will do.  Will licensors really want to do deals with licensees who have challenged other licensing agreements with third parties?  Will licensors really want to develop relationships with licensees who have challenged  other licensing arrangements with prior licensors? 

In the end, I suspect that the application of these cases will depend largely on the realities of the business world.  I find it hard to believe that regularly challenging license agreements will ultimately prove to be a good business strategy as the dust settles on these decisions.  I anticipate that in the end declaratory judgments will be used a little more judiciously to challenge relationships that have already soured, in much the same way that litigation and the threat of litigation have been used prior to the MedImmune ruling.  When a relationship can be managed outside of the courtroom, I continue to believe that, despite the hype to the contrary, the average licensee is going to stick with negotiation and stay away from the courts. 

 

 

 

 

 

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Another New Investor Jumps on the Biotech Bandwagon

Written by on Monday, May 28th, 2007

In case you missed it, Google is not the only company making news for investing in biotech.  Pfizer has announced that it will be setting aside $10 million to invest in biotech companies. 

Terri Somers of Bend Weekly reported:

In a modern, tile-and-glass building on its campus on the San Diego coast, the pharmaceutical giant is planning to spend $10 million annually for at least the next five years, incubating promising innovations or ideas as they germinate into startup companies. The incubator’s board met for the first time in April and reviewed the initial applications from interested entrepreneurs. The incubator is set up to operate as a separate and distinct business unit from the drug company. But Pfizer expects to favor innovation that may one day help it strategically, either by providing new drug candidates or technologies that make finding drugs more efficient, said Catherine Mackey, a senior vice president of Pfizer Global Research & Development and head of the laboratories.

Tenants will have to agree to an upfront equity-share agreement with Pfizer. When research is done, Pfizer will have an option to acquire rights at a fair market price. Or the incubator could spin out the company as an independent businesss.

There has been significant commentary in recent years about the failure of big pharma to generate a pipeline of new products.  Evidently, this new move by Pfizer is an attempt to secure a pipeline.

Is Pfizer’s new strategy good for biotech? 

Obviously, it does provide some benefits to start-ups who want to get up and running, but based on the article, it appears that the strategy will tie the hands of those start-ups as they go forward, since Pfizer will have the first option to acquire the rights.  As a transactional attorney, I wince at the idea of giving up your bargaining ability before you even get off the ground.  I can only imagine representing such a client down the road and trying to negotiate the deal with Pfizer to transfer the rights.  No doubt it would be a frustrating experience at best.

Does Pfizer’s move signal the launching of a new trend in the biotech world, and if so, what will be the industry impact of such a trend?   Could it ultimately result in a stifling of innovation?  Only time will tell for certain.  Those of us in the industry will be watching to see.

 

 

 

 

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Key Issues to Consider in Biotech Licensing

Written by on Monday, May 28th, 2007

I happened across an article this weekend on biotech licensing, which I would recommend to any readers who are contemplating licensing negotiations in the near future.

The article, "Biotech Patent Licensing: Key Considerations in Deal Negotiations," was written by Jeffrey P. Somers, an attorney at the Massachusetts firm of Morse Barnes-Pendleton, PC.  I thought Jeffrey did did an excellent job of capturing the essence of biotech licensing and the issues that must be considered in drafting and negotiating a biotech license. 

Jeffrey’s article addresses five topics of interest: (i) field of use restrictions; (ii) the multi-purpose compound; (iii) special issues related to non-exclusive licenses; (iv) the payment term; and (v) rights to the drug master file upon early termination of the license.  His article also provides practice tips related to each of the topics. 

While Jeffrey issues a disclaimer in his article that his background is in representing the pharmaceutical company and that he is therefore biased toward that perspective, this article should be informative to both sides of the negotiating table. 

 

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Category: Biotech Deals, Practical Tips  |  Comments Off on Key Issues to Consider in Biotech Licensing

New Report Says Outsourcing on the Rise in the Life Sciences Industry

Written by on Wednesday, May 23rd, 2007

To follow up an earlier posting from April 2, 2007 on  Outsourcing Trends in the Biotech Industry, a new report is out which provides more evidence that outsourcing is on the rise in across all of the life sciences industries.

Drugs-about.com News reported:

In EquaTerra’s newly-released Pulse Survey report covering the first quarter of 2007, the firm’s advisors cited pharmaceuticals as the leading vertical industry segment in terms of outsourcing demand. The report also found that outsourcing demand in the pharma industry has increased since the first quarter of 2006. . . .

The report also disclosed that there is far higher interest among pharmaceutical, life science, and biotech companies than among companies in general in expanding their current use of outsourcing. In this industry, 44 percent said they planned to expand outsourcing into new process areas – compared with 28 percent of companies overall. Also, 39 percent said they planned to expand outsourcing into new geographies or business units, compared with 30 percent of companies overall.

This report further bolsters the argument that outsourcing is going to become as widespread and important to the biotech and life sciences industries as it already is in the high tech world.   

Will outsourcing leave even more of a mark on the life sciences landscape than what we previously anticipated?  One can’t help but wonder if it will ultimately result in at the very least  the  modification of the current practices of certain companies, which current run early clinical trials in some of the same countries to which they are now outsourcing.  

 

 

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Google’s New Interest in Biotech

Written by on Wednesday, May 23rd, 2007

The biotech world is buzzing about Google’s newfound interest in biotechnology. 

Of course, if you pay attention at all to Bay Area news, you are likely aware of the fact that Google co-founder Sergey Brin just got married this past month to biotech entrepreneur Anne Wojcicki.  However, the latest news is that Google has now decided to invest in his wife’s start-up.

The New York Times reported:

Google said Tuesday that it invested $3.9 million this month in 23andMe, the biotech company co-founded last year by Ms. Wojcicki, a former health care industry analyst.

Google’s investment was disclosed in a regulatory filing, which also officially confirmed that Mr. Brin, 33, and Ms. Wojcicki are married. . . .

The filing with the Securities and Exchange Commission also stated that Mr. Brin had provided $2.6 million in interim debt financing to 23andMe and that his loan was being repaid as part of the financing of 23andMe.

“Our audit committee requested that we disclose this in order to be completely transparent with our investors about the facts underlying this investment,” said Jon Murchinson, a Google spokesman.

Mr. Murchinson said the search giant, which has invested in other start-ups, made the investment in 23andMe because it furthered Google’s goal of organizing the world’s information. “They are developing new ways for people to make sense of their genetic information,” Mr. Murchinson said.

Needless to say, Google’s new investment in biotechnology has caught the attention of the media as well as the blog world, and there is speculation that this step by Google signals a change in focus by the company. 

Blogger Mark McQueen writes in the  Seeking Alpha blog:

For all of the biotech entrepreneurs out there having a hard time raising an early financing round, Google might be your next roadshow stop.

According to the New York Times, Google invested US$3.9 million in 23andme. 23andme is in the genetics information business, which may well indicate that Google’s cookies are about to get dramatically more invasive into your personal affairs and web habits.

I can see the next generation of the permission form now: “By using Google’s web search technology, you agree and consent to provide a sample of your DNA to us for our own use.”

It will be interesting to see what Google has up its sleeve with this latest move.  Does this action signal a new focus by the company in biotechnology?  Or is this just a case of a company co-founder wanting to help get his new wife’s business off to a good start?  Those of us who follow news over at Google are watching with interest for the answer to those questions.

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Category: Biotech Industry News  |  1 Comment

Industry Group Sends Letter to Congress on Patent Reform

Written by on Thursday, May 17th, 2007

Patent Baristas and Peter Zura’s 271 patent blog reported today on the industry group letter that went out today to Congress on patent reform.  Sent by the Innovation Alliance group,  comprised of a number of California biotech companies, venture capitalists, and universities, the Letter to Congress was addressed to House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid, House Minority Leader , and Senate Minority Leader Mitch McConnell. 

An excerpt from the Letter to Congress states as follows:

[We] support The Innovation Agenda’s call to improve intellectual property protections, strengthen the patent system, and end the diversion of patent fees. . . . However, we strongly believe that certain provisions, such as those dealing with apportionment of monetary damages for patent infringement, expansive PTO rule making authority, an open-ended post grant opposition system, and a narrow grace period will not strengthen our patent system but instead will fundamentally undermine patent certainty, discourage investment in innovative technologies, and reduce publication and collaborative activities among academic scientists.

For companies (directly, and as university licensees) in industries such as ours, the consequences – greater bureaucracy, inability to rely on valid patents, weakened protections against infringement and a decreased access to capital — would be devastating. The harm to investment in tomorrow’s technologies would be felt immediately, and would hurt U.S. competitiveness for years to come. As the U.S. presses for strong patent protections abroad, Congress should preserve strong protections at home, so that we retain our competitive edge in the global economy.
It is too early to see what kind of an impact this letter made on Congress, but speaking on behalf of the California biotech industry, I am pleased to see that we are putting our voice into the debate and making our position known. We need to continue being so vocal as the debate goes forward.

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Stem Cell Suits Dismissed By California Supreme Court

Written by on Wednesday, May 16th, 2007

California scored a final victory today in the ongoing legal battle over stem cell research, when the state’s Supreme Court affirmed a lower court ruling that Proposition 71 is constitutional and dismissed the two remaining suits. 

The San Jose Mercury News reported:

The 2005 suits – backed by the California Family Bioethics Council, People’s Advocate and the National Tax Limitation Foundation – had claimed the institute lacks adequate state supervision and is riddled with conflicts of interest.

Alameda County Superior Court Judge Bonnie Sabraw rejected those assertions in April last year. And the 1st District Court of Appeal in San Francisco reinforced her conclusion on Feb. 26 finding that "Proposition 71 suffers from no constitutional or other legal infirmity."

Now that the suits are dismissed, California can finally move forward with funding the California Institute for Regenerative Medicine.   The last obstacle to state-funded stem cell research has fallen by the wayside. 

So, what’s next for stem cell research in this state?  I personally am hoping for a $3 billion breakthrough. 

 

 

 

 

 

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New Study Urges Caution in Anticipating Stem Cell Research Payoff

Written by on Tuesday, May 15th, 2007

A new study by Nature Biotechnology urges caution with respect to anticipating the payoff of California’s $3 billion dollar investment in stem cell research, reports the San Jose Mercury News.

The San Jose Mercury News reported that the study warned that "assessing the benefits of stem cell research is likely to be a complex undertaking."  Moreover, any treatments that come out of the research could prove to be only "marginally useful or too costly for many patients to afford."

On the other hand, the up-side of the research could be tremendous.  The San Jose Mercury News reported:

[E]ven if the institute makes just one treatment – say, for juvenile onset diabetes mellitus, which strikes about 13,000 children every year in the United States – the economic implications could be enormous, the study concluded.

Assuming the treatment halves that ailment’s impact by about 2030, the study estimated, health care expenditures among diabetes sufferers might be reduced by $319 million in today’s dollars, and the patients’ productivity boosted by $4.5 billion.

An even bigger benefit might result from the patients’ improved quality of life, the study said. Assuming that each year of a patient’s improved life would be worth $50,000 – a figure sometimes used to assess the value of new drugs – the authors calculated an additional benefit of $10 billion.

Did California make a good investment when it allocated so much money to stem cell research?  Certainly, it was a boost to the biotech industry, but was it a good use of limited state resources?  Only time will tell.  I think I speak for most Californians when I say that I am hoping for the big payoff.

 

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The Neurotechnology Industry Investing and Partnering Conference

Written by on Monday, May 7th, 2007

The event The Neurotechnology Industry Investing and Partnering Conference will be held on May 17-18, 2007 at the Westin, San Francisco Airport in Millbrae, CA.  This event is the premier partnering and investing conference for the neurotechnology industry including pharmaceuticals, medical devices and diagnostics. The event will provide a first-hand glimpse of What’s in the Pipeline

  • Find out about new product licensing and partnering opportunities;
  • Learn what venture and strategic investors are looking for;
  • Discover emerging technologies and companies; and 
  • Learn about cutting edge translational research and funding opportunities.

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RX Drug Pricing Boot Camp

Written by on Monday, May 7th, 2007

The event RX Drug Pricing Boot Camp on Thursday, May 17, 2007-Friday, May 18, 2007 at the Crowne Plaza Hotel in San Francisco, CA.  The event has been designed to give notices and  experienced practitioners alike a complete understanding of core pricing competencies and applicable changes in the reimbursement structures of key payor programs under recently enacted legislation.  The event will highlight the following:

  • The Deficit Reduction Act and its impact on pricing methodologies relative to Medicaid and other payor programs.
  • The role of the National Rebate Agreement in various payor programs.
  • AWP: what is it, when is it still used, and what is its relationship to WAC?
  • 340B entities: how are they defined and how is 340B pricing set?
  • The essentials of Medicare Part B pricing, including the interrelation of ASP, CAP, and WAMP
  • The ins and outs of government contracting relative to GSA FSS, VA/DOD, and Tricare
  • Pricing concepts and reimbursement challenges relative to Medicare Part D, including: fraud and abuse risk areas — PAPs, off-label use, and Part D marketing guidelines; LTC pharmacies and PBMs; the position of CMS on legal issues affecting the drug benefit; formulary negotiations; and policy concerns.

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