The USPTO has rejected the patent claims by the Wisconsin Alumni Research Foundation (“WARF”) on three broad patents related to embryonic stem cells.

The Business Journal of Milwaukee reported:

The Foundation for Taxpayer and Consumer Rights, Santa Monica, Calif., and the Public Patent Foundation, of New York, challenged the WARF patents in July. The two groups said they brought the challenge because the three WARF patents were “impeding scientific progress and driving vital stem cell research overseas.”

The two groups challenging the patents argued that the work done by University of Wisconsin researcher James Thomson to isolate stem cell lines was obvious in the light of previous scientific research, making his work unpatentable. To receive a patent, something must be new, useful and non-obvious. The Patent and Trademark office agreed with the groups in a decision issued March 30, but received Monday.

The patents at issue are widely viewed as the most significant patents on stem cells.  The New York Times identified the patents as follows:

The patents in contention are 5,843,780, which covers primate embryonic stem cells and was issued in 1998; 6,200,806, which covers human and primate embryonic stem cells and was issued in 2001; and 7,029,913, which covers cultures of human or primate embryonic stem cells and was issued in 2006.

According to the Patent Baristas, the USPTO’s decision was based on two main prior art references:

(a) U.S. Pat. No. 5,166,065 (Williams et al.), which relates to the use of leukaemia inhibitory factor (LIF) in the maintenance and derivation of embryonic stem (ES) cells in culture. The ES cells are maintained and/or derived from animal embryos by culturing said cells or embryos in a culture medium containing an effective amount of LIF for a time and under conditions sufficient to maintain and/or derive said ES cells.

(b) U.S. Pat. No. 5,690,926 (Hogan), directed towards non-murine pluripotential cells that have the ability to be passaged in vitro for at least 20 passages and which differentiate in culture into a variety of tissues. The scope of the claimed cells includes any non-murine ES cells and particular claims are drawn to human pluripotential cells.

However, Patent Baristas go on to say the following:

I don’t think anyone should go out and throw a party just yet. The patent office grants over 90 percent of the requests for reexamination and many of those patents are issued with substantially the same claim(s) as before reexamination. WARF, a nonprofit group that acts as UW’s tech transfer office, will have a chance to prove the cells are novel. And, if the claims are ultimately rejected, it can still appeal or narrow the claims.  This could take years to resolve.

In their commentary on the decision, Patent Docs raised the following issue:

An interesting aspect of the inter partes re-examination concerns Dr. Loring’s declaration.  In her declaration, Dr. Loring opined not only on the prior art but on the legal conclusions regarding the art (i.e., that it rendered the claims obvious) as well as the “public injury” occasioned by the Thomson patents.  This declaration produced a patina of expertise for the requestors’ public statements regarding the basis for their re-examination requests.  In addition, it provided a public-interest rationale for the attempt to garner great economic benefit for at least some of the requestors by eliminating the royalties required by WARF for the type of commercial activity contemplated by California and others.  The Examiner handling the inter partes re-examination explicitly condemned this declaration as being improper in a re-examination, which is limited by statute to prior art publications.  Such an affidavit can be used to “explain the contents or pertinent dates” of a reference, but does not provide a basis for rejecting a claim during re-examination, according to the Examiner.  While undoubtedly true, the Loring affidavit no doubt raised the temperature of the considerations in the Patent Office concerning the original re-examination requests, and thus most likely served its intended purpose.

So, while this issue is getting sorted out, Geron Corporation, a Menlo Park biotechnology company which has an exclusive license on some of the stem cell technology, will continue to pay royalties.  As The Business Journal of Milwaukee noted:

If the patents are ultimately rejected in a final ruling, Geron would not have to pay for licensing the technology, but it would lose its exclusive rights to the stem cell technology.

For more ongoing coverage on this issue and its likely impact, check out the California Stem Cell Report, which is following the issue.

In case you missed its radio broadcast, Marketplace Money recorded a podcast of its story last week on biologics: "Making Speciality Drugs Cheaper," which explored both sides of the ongoing biologics debate. 

The program first presented the human side of the issue through an interview with Darren Baker, a chemist at Biogen Idec. in Cambridge, Massachusetts, who was diagnosed with  B-cell Non-Hodgkins Lymphoma in 2003 and took one of the biologics his company developed, Rituxan.  Three years later, Mr. Baker is cancer free.

The program then addressed the cost side of the debate and explored the difficulties in developing generic biologics, interviewing Matthew Connell, director of pharmacy services at Blue Cross Blue Shield, the largest insurer in Massachusetts, and Biogen Idec spokesman Tim Hunt.

The program did a really good job of capturing the essence of this debate and conveying why there are no easy answers.   On one hand, we want biologics to be developed that will save lives, but on the other hand, society wants those same biologics to cost as little as possible.  It goes without saying that it will be difficult–if not impossible–to fully reconcile the two opposing societal goals, particularly in the case of biologics. 

This month’s Bioscience Forum event, Community-Based Approach to Neglected Infectious Disease Research, will be held on Wed., April 18, 2007 from 6 to 9 p.m. at The Clarion Hotel, San Francisco Airport, 401 E. Millbrae Ave., Millbrae, CA  94030.  The featured speaker will be Dr. Barry Bunin, CEO & President of Collaborative Drug Discovery Inc.  His presentation will provide perspectives on a new type of web-database to help scientists more effectively develop new drug candidates from commercial and humanitarian academic drug discovery research.

The sfAWIS April Networking Social will be held on Wednesday, April 11, 2007 in San Francisco, CA.  The event will be sponsored by Genentech and will take place at The Pub at UCSF, Mission Bay, 1675 Owens St., San Francisco, CA.

Outsourcing has been a heavily debated topic  in the high tech industry over the past few years, particularly given the ups and downs of the Silicon Valley economy; however, outsourcing trends in the biotech industry have not received much attention.  According to blogger Nishith Srivastava, though, outsourcing is becoming commonplace in the biotech world as well.

Why is the popularity of outsourcing growing in the biotech industry?  Srivastava suggests that biotech companies are outsourcing for the same reasons that high tech companies are, writing that:

The increasingly global nature of the pharmaceutical/biotech industry endorses Outsourcing, as most companies tend to exploit the market by gaining competitive advantage. Pharmaceutical companies with little or no experience have realized that mastering the entire skill range within an industry is not viable. Moreover, flexibility is becoming increasingly important within the industry. As a result, companies have started focusing on their core competencies in which they can add greatest value. The growth of the pharmaceutical contract service industry in recent years has led to a significant increase in the number of services and functions available for outsourcing. The cost pressures have led to pharmaceutical manufacturers reassessing their financial situation and, in the wake of the resulting downsizing trend, to the development of a contract service industry specifically targeted at the pharmaceutical industry.

How big an impact is outsourcing anticipated to have on the biotech industry in the future?  Srivastava anticipates that outsourcing will continue to have some role in the biotech world, but he does not anticipate it to have quite the same impact as outsourcing has had on the high tech industry.  Srivastava writes:

[M]any challenges exist for the successful implementation of outsourcing within the pharmaceutical industry. The industry is characterized by inherently high risk; only one in 5,000 compounds actually becomes a product, commercial drugs cost $300 million to develop, and less than 50% of new products return the development cost. Tight governmental regulations compound this risk. Unlike other industries, there have been no transformational developments to drive outsourcing—even marginal performers can succeed. An immature contractor segment also characterizes this marketplace.

Srivastava raises some interesting points, and certainly the high tech and biotech industries have their differences, but it is difficult to see why outsourcing would not continue to play a larger role in biotech in the future.  Outsourcing is being embraced increasingly by even the conservative world of lawyers and law firms–I was just at a dinner where a colleague from out of town spoke of how his large firm is starting to outsource legal work to India, and I hear stories on a daily basis about how law firms are starting to embrace this new form of labor.  If the legal world is integrating outsourcing into its business model , I can only imagine that other industries will not be far behind.  My prediction is that the popularity of outsourcing will continue to grow in biotech, as well as in most other industries, which each share in the need to provide goods and services at a lower cost.

The event Clinical Quality Assurance and Management Policy: Two Case Histories will be held on Wednesday, April 18, 2007 from 10 to 11:30 a.m. by audio conference.  The event will look at two different case studies on clinical trials and what went wrong and how to avoid it, addressing the following:

• What corporate decisions occurred?

• Why did one site close down in response to the FDA enforcement action?

• Why does corporate management not share the clinical research or the regulatory perspective?

• What is the required corporate management CQA interface?

• Where and why did it fail?

• FDA sponsor obligations – what are they?

• What is the sponsor’s liability and exposure for FDA enforcement action?

• How do the concepts of misconduct, fraud, and sponsor due diligence impact the FDA application of enforcement actions?

• How can CQA enable corporate management to empower the CQA function?

• What is the role of clinical project management and regulatory affairs in ensuring FDA compliant sponsor corporate management decisions?

The event Entrepreneurship and Building a Sustainable Organization will be held on Wednesday, April 18, 2007 from 7:15 to 8:30 a.m. at the University of San Diego, Institute for Peace & Justice. The speakers will include Michael Gallegos, CEO of American Property Management Corporation; John Kontopuls, CEO of Elite Show Services; and Tina Nova, Ph.D., CEO of Genoptix Inc.

The event CEOSummit 2007 Presents: From Startup to Sustainability will be held Tuesday, April 17, 2007 from 11:30 to 5:00 p.m. at the Joan Kroc Center at the University of San Diego, 5998 Alacala Park, San Diego, CA  92110.   This event is by invitation only and will provide over 100 life science Chief Officers (CEOs and CFOs) and the BIOCOM Board of Directors with the opportunity to discuss issuees pertinent to their companies and to interact with one-another on a peer to peer level.

The event Third Annual Venture Capital Awards will be held at the Computer History Museum in Mountain View on April 12, 2007 from 6 to 8 p.m.  The event will recognize and honor investments in women made in 2006, including the following: 

      •   Largest Percentage of Investments in Women CEOs
      •   Highest Number of Investments in Companies with a Woman CEO
             – current fund greater than $250M
      •   Highest Number of Investments in Companies with a Woman CEO
             – current fund smaller than $250M.

The sfAWIS April Networking Social will be held on Wednesday, April 11, 2007 in San Francisco, CA.  The event will be sponsored by Genentech and will take place at The Pub at UCSF, Mission Bay, 1675 Owens St., San Francisco, CA.