m&c biotech report 06 - marks & clerks/… · patenting human embryos.” indeed,...

BiotechnologyReport 2006

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 1

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 2

Stem cells . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 3

Overview

A realistic assessment

The legal position

Developments within the industry

Conclusions

Genetic diagnostic testing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 11

The market

The patenting landscape

The key players

Lessons for the future

RNA interference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 18

The market

The patent landscape

The key players

Conclusions

The future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 22

Marks & Clerk contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 23

CONTENTS

For us all to derive the significant benefits that should arise from the explosive growth of our basic

scientific knowledge an enormous investment is required from both governments and companies in

many industries over many years. In order for this investment to be viable, commercial and academic

organisations need a framework that supports and encourages openness and innovation; namely a

robust patent system, openly acknowledging the contract between governments and patentees of a

limited market exclusivity for innovations that are fully disclosed to all; and a fair playing field in terms

of regulation.

Over the past year, we have seen growing concern about the ethical aspects of biotechnology research: stem cell therapies raise

profound ethical issues; genetic diagnostic testing continues to raise issues over the appropriate use of genetic test results; and

the spread of H5N1 influenza ('bird flu') has moved governmental use of patented technologies further into the spotlight.

These issues serve to highlight that openness of and investment into biotechnology research and drug development are vital and

should continue to be priorities for governments, and academic and commercial organisations worldwide. They can no longer be

considered just national issues, or solely the concern of industry. Technology must move forward together with the ethical debate,

otherwise we risk stagnation while these questions are settled. The UK has been a good example of this approach working over

the past few years, although Europe as a whole has not.

This report provides an interesting and useful insight into worldwide patenting activity in three of the most cutting edge areas of

biotechnology - stem cell research, genetic diagnostic testing and RNA interference. We can draw a significant amount of optimism

from the report, not least in the rapid growth of patents in the field of RNAi since its discovery in 1998. It is an exciting new area

which could help to cure or treat a wide array of diseases, from HIV to cancer to diabetes.

No less important, but more controversial, are the areas of stem cell research and genetic diagnostic testing. In stem cell research,

the report notes reluctance from commercial companies to invest in R&D, perhaps due to the ethically based opposition to

embryonic stem cell research, continued uncertainty about what is patentable within Europe, and the lack of a clear regulatory

path to product approval.

Regulatory uncertainty can only serve to undermine investment into drug development. Historically the US has been the driver of

innovation; it therefore comes as no surprise that US companies are filing vastly more patents in all three areas of research, and

that the US Patent Office is far ahead in the number of patents granted. With growing competition from China, research and

development in the UK and Europe can not afford to linger in regulatory confusion for much longer.

The interests of industry, academia, and most importantly the public are not served by lack of clarity over ethical and regulatory

issues, nor by a lack of openness such as would result from a drive away from patent protection and hence publication with regard

to sensitive technologies. It is therefore essential that investment and the ethical debate move forward together, and that a

strong and open patent system exists. This report confirms that the patent system is a key driver for innovation leading to

improvements in our health and general economic well-being that we can all look forward to.

Dr. David Chiswell Chairman of Sosei Co. Ltd

FOREWORD

page 1

In 2005, Marks & Clerk published the first Biotechnology Report, in which we investigated patent filing trends in several areas of

biotechnology. This year we are pleased to present the second Marks & Clerk Biotechnology Report.

Once again, we have selected three areas of current interest in the biotechnology field, and have conducted detailed patent

searching in order to identify how many applications are being filed, by whom, and where.

Stem cell technology is perhaps more controversial than when we published the 2005 report, with evidence of scientific

misconduct, controversy over patenting the technology, and calls for aspects of the technology to be outlawed all coming to the

fore. At the same time, promising clinical results are pointing towards practical therapies being available in the immediate future.

Genetic diagnostic testing has the potential to be equally contentious, with outcries over patenting the genome and concerns over

the use and availability of patented tests. Previous studies have considered the patenting of genes per se, but this more specific

field is of considerable interest.

Finally, we also consider RNA interference, a relatively novel technology which has the potential to treat a wide range of disorders.

RNAi is likely to be one of the key therapeutic methods in the near future. As the technology is young, the fundamental patents

in the field are only now being granted, but already there has been considerable market activity as companies seek to establish

their position.

This report was compiled using, in part, patent searching performed on our behalf by CPA Analytics.

page 2

INTRODUCTION

The Marks & Clerk Biotechnology Report 2005 reviewed

patent filing and grant trends in the stem cell field. For

2006, we have decided to revisit and update the data from

last year, to investigate more deeply the stem cell area.

OverviewIn the short time since the 2005 report, stem cell

technologies and controversies have rarely been out of the

public eye. In his State of the Union address in 2006, US

President Bush called for “legislation to prohibit the most

egregious abuses of medical research - human cloning in all

its forms - creating or implanting embryos for experiments -

creating human-animal hybrids - and buying, selling, or

patenting human embryos.”

Indeed, relatively few countries at present specifically permit

the creation of human embryos for research purposes. Within

Europe, the Oviedo convention1 prohibits such activities; the

UK and Belgium have not acceded to this convention, and are

the only EU countries to permit human cloning in this form.

Outside Europe, countries with similarly permissive laws

include India, Israel, Japan, Singapore, and South Korea.

In the UK, the Human Fertilization and Embryology Authority

(HFEA) is actively granting licences for creating cloned

human embryos, and for deriving novel embryonic stem cell

lines from such clones. Perhaps surprisingly, a survey

conducted for the HFEA found that the UK public on the

whole trusted the Authority to be involved in regulating

embryo research, while relatively few trusted politicians or

religious leaders to play a role2. The UK Government is also

reviewing the law in this area, and in particular has called for

a review as to whether the creation of human-animal

chimeras should be permitted3, although even this may be

too late as research groups in the UK are reported as wishing

to carry out such research.

These scenarios are still generally at the level of basic

research, and we are a long way from viable treatments

based on the use of human embryonic stem cells.

A realistic assessmentIn contrast to the general media hype, some notes of realism

have been creeping into the assessment of stem cell

technology, and the likely benefits from such research. A

recent UK report4 contained an upbeat assessment of the

state of stem cell technology, but warned that, globally,

“investment from the venture capitalist community and major

pharmaceutical and healthcare companies will not be readily

forthcoming for stem cell research”, primarily due to the

uncertainties surrounding a return on the investment and the

uncertain reception of such research by the public. For this

reason, much current stem cell research investment is

directed by public bodies, whether national, as in the UK, or

subnational, as in California or New Jersey. However,

recognising the long term nature of these investments, the

report also called for “at least some of the UK's investment in

stem cell research [to be] strategically directed to more

conventional areas of medicine”; that is, investment should

recognise that key returns from the technology are likely to

be in areas other than human cloning or curing genetic

disorders. In particular, the potential of adult stem cell

technology and its application to neural disorders, bone and

cartilage disorders, cardiovascular disease, and lung

disorders, is clearly noted. A trite observation, perhaps, but

evidence that some reality is beginning to appear in the

assessment of the potential of stem cells.

The warnings of the UK Stem Cell Initiative were echoed by

industry leaders at the Reuters Biotechnology Summit in

February 20065. The lack of US federal funding for embryonic

stem cell research was said to be holding back US research,

while venture capitalists are reluctant to invest due to the

political uncertainty. The chief losers from the funding

STEM CELLS

page 3

1 Full title : Convention for the Protection of Human Rights and Dignity of theHuman Being with regard to the Application of Biology and Medicine:Convention on Human Rights and Biomedicine

2 Scientists must be engaged with the public if the UK is to stay a leader instem cell science, regulator warns:http://www.hfea.gov.uk/PressOffice/Archive/1132051010

3 Fifth report of the House of Commons select committee on science andtechnology http://www.publications.parliament.uk/pa/cm200405/cmselect/cmsctech/7/702.htm

4 Report and Recommendations of the UK Stem Cell Initiative, November 2005

5 http://today.reuters.com/summit/SummitInfo.aspx?name=BiotechnologySummit06

restrictions at present, however, are likely to be academics

rather than industry, due to the deterrent effect on

collaborations. In the long term, it is clear that industry needs

the academic research to be carried out, while academics

need industry support to commercialise their research.

Further unwelcome reality has come from the meteoric rise

and downfall of Hwang Woo-Suk, evidence that scientists are

by no means immune to the hype surrounding stem cell

research. Hwang's ongoing story has been told elsewhere, so

need not be repeated here. An interesting twist, however,

comes from the patent application relating to the fraudulent

work6: publication of the application may well limit the scope

for subsequent patents in the same field, despite the lack of

experimental data supporting the application. Furthermore, it

has been suggested that the patentability of the invention in

the European Patent Office (EPO) at least will not be affected

by the fraud, as there is no duty of candour to the EPO, unlike

the position in the US Patent Office (USPTO).

The legal positionThe scientific community is calling for more clarity and

consistency in the legal status of stem cell research. A joint

statement issued by the Hinxton Group7 in February 2006

called for consensus on the ethical framework for research. In

particular, the group expressed concern that legal restrictions

on human embryonic stem cell research in one country should

not affect collaboration with groups based in or travel to

another country with less restrictive laws.

In terms of the patent position, the main development since

the 2005 report has been the referral of the question of

patentability of human embryonic stem cells to the Enlarged

Board of Appeal of the EPO8. This simply switches

uncertainty at one level within the EPO to uncertainty at

another level. Until the Enlarged Board issue their decision,

which could be several years, the prosecution and grant of

European Patents which claim such stem cells, and perhaps

even those that rely on use of such cells for implementing

the invention, will be suspended. In the meantime, industry

will have to continue filing patent applications, without

knowing whether the invention is patentable. The Enlarged

Board decision also has consequences for the patent position

in national patent offices within Europe, although the UK

Patent Office continues to diverge from EPO practice in being

willing to grant patents to pluripotent human stem cells.

The patentability of stem cells in the USPTO is well-

established. Human embryonic stem cells may be patented,

while patents encompassing human embryos9 are not

granted by the USPTO - a practice which seems to be based

on the XIII Amendment to the US Constitution.

Developments within the industryWith these issues in mind, how is the industry reacting to the

concerns surrounding stem cell technology? Figure 1 gives a

summary of the number of stem cell patents10 granted each

year between 2000 and 2005. It is apparent that the USPTO is

by far the biggest granter of patents, reflecting both the

commercial importance of this market, and perhaps the relative

speed with which US patents are granted, particularly when

compared with the EPO. Of the various territories, only the US,

Australia, Europe, and Canada have granted sufficient numbers

of patents to register separately on this figure; the remaining

countries are grouped together as 'other', and in general have

granted as many patents as AU, EP and CA combined for each

year. The trend is consistently that more patents are granted

each year; a slight drop is seen in the 2005 data, but it is likely

that this is simply an artefact due to full 2005 data not yet

being available.

Of course, patent grant activity is only a part of the story, and

while it may highlight key markets (in particular the US), is

equally likely only to reflect the speed of patent prosecution

page 4

6 WO2005/063972

7 http://www.hopkinsmedicine.org/bioethics/

8 Board of Appeal case T1374/04, on EP 0 770 125 to Wisconsin AlumniResearch Foundation

9 The debate as to when a hESC is to be considered a human embryo doesnot yet appear to have taken place, at least publicly.

10 The search strategy was intended to identify patents relating to stem cellsper se, as well as uses, methods, and reagents relevant to the technology.The initial data set was taken through quality assurance procedures toremove any erroneous records based upon IPC outliers as well as obviousnon-relevant patent applicants.

Figure 1: Patent grants by year

Source: Computer Patent Annuities Limited Partnership/Marks & Clerk ©2006

in some jurisdictions, and the effect of uncertainty as to

patentability of some inventions (in particular, in Europe).

Accordingly, it is instructive to look at the numbers of patent

applications. The number of stem cell related patent

applications published each year is consistently around three

times the number of patents granted, although the ratios in

each country vary considerably. The US publishes only

slightly more applications each year than it grants, while

European published applications represent around five times

more than the number of granted patents. A large proportion

of the application figures are made up of published PCT

applications, which of course do not directly mature into

granted patents, but which may later become national

patents in numerous territories.

Further information regarding the stem cell industry can be

found in the location of priority filings. These may represent,

for example, the location of key research or of key companies,

although many non-US applicants will file first in the US purely

for commercial reasons. Figure 2 shows the number of priority

filings made in each country over the period 2000 - 2005.

As expected, the US dominates; although countries of the

Asia-Pacific region (China, Japan, Australia) all show significant

levels of priority applications. Europe as a whole is comparable

with China, although priority filings are split between

countries. Canada shows relatively few priority filings

considering its strength in stem cell research, which is likely to

be simply a result of Canadian applicants filing priority

applications directly in the US; such a practice appears to be

less common for European companies.

From the concerns noted earlier with regard to investment in

the industry, it would be expected that government or public

bodies will be key players within the industry. Indeed, the

patent filing data supports this. Figure 3 gives an indication

of those organisations which have filed significant numbers

of patent families in the period 2000 - 200511. Universities

and public bodies dominate the list, although a number of

specialist stem cell companies are present.

11 Note that these data are revised and updated from the data presented inthe 2005 Biotechnology Report; in particular, the identity of the applicanthas been normalised to take account of mergers, assignments, and patentapplications being held by different, but related, entities.

The current predominance of public bodies is also supported

by the UK Stem Cell Initiative Report12, which highlighted

patents considered to be “influential”; of sixteen patents,

seven were held by research institutes, universities, or other

non-profit entities. There are of course also many publicly-

funded stem cell institutes or other bodies in the process of

being established around the world. It is perhaps too soon for

these to have had any real effect on the patent landscape,

but future patent filings are likely to be more heavily

dominated by public bodies, at least until investors feel more

confident that stem cell technology will provide the returns

they seek.

This confidence is likely to be boosted by positive progress

being made by a number of private companies. For example,

Athersys is currently investigating use of their MultiStem™

technology (a non-ES cell technology) primarily for

cardiovascular conditions, and “anticipates the filing of

page 6

Figure 2: Location of priority filings


12 See footnote 4.

multiple Investigational New Drug (IND) applications likely in

the cardiovascular area and possibly involving an orphan

disease” in 200613. Stem Cell Therapeutics of Canada are

currently planning phase II clinical trials of their test

compound NTx(TM)-265, intended to promote growth of

neuronal stem cells in patients for treatment of

neurodegenerative conditions14.

In addition to the data given in Figure 3 regarding key patent

applicants, analysis of the rate of patent filing gives an

indication of the “fastest growing” companies in the field.

Figure 4 shows this analysis15.

Several of the emerging players also appear on the list of top

patent applicants, while others although growing rapidly

have not yet built a large enough patent estate to appear on

the list. The companies shown in this figure represent a wide

range of technologies and companies. ES Cell International

are a Singapore company focused on human embryonic stem

cell technology, with patent filings directed to cell lines

page 7

Figure 3: Top patent holders


13 http://www.athersys.com/products/regenesys.php

14 http://www.stemcellthera.com

15 The chart is based on a moving average of patent publications limited to1998-2003 comparing the filing rate of selected applicants with the globalaverage for all stem cell applicants.

themselves, and growth, maintenance and differentiation of

hES cells. Japan Science and Technology Agency is a

governmental body; while Monash University is an Australian

research institute. Lexicon Genetics are a US company, who

hold the rights to technology relating to transgenic mouse

knockout ES cell lines. Among other partnerships, Lexicon

have received a $35m contract from the Texas Enterprise

Fund to develop a knockout mouse ES cell library for the

Texas Institute of Genomic Medicine16. Stem Cell

Therapeutics have already been mentioned, while Advanced

Cell Technology, whose technology is intended to produce

pluripotent cell lines compatible with patients, have recently

relocated their headquarters from Massachusetts to

California; an early indication that California's stance on stem

cell research is achieving results. In addition to their own

patent applications, Advanced Cell Technology license in a

broad range of technologies from third parties; an illustration

of the range of technologies which involve stem cell research

is that several of ACT's patents are licensed by Genzyme

Transgenics Corporation (now GTC Biotherapeutics), whose

page 8

Figure 4: Patent portfolio growth rates


16 http://www.lexicon-genetics.com/alliances/other.htm

core technology itself relates to expression of proteins in the

milk of transgenic mammals.

Other companies are also relocating: Stem Cell Sciences,

originally founded to commercialise research from Monash

University and the University of Edinburgh, have announced

that they will shortly be moving their headquarters from

Edinburgh to Cambridge, UK, in part to gain access to the

technology available in the Cambridge area. Jeff Solomon,

CEO of ERBI (the regional biotech membership organisation

for Cambridge and the East of England) comments: “In the UK,

a significant number of stem cell and regenerative medicine

companies have set up in the Cambridge area recently. The

area is home to the Cambridge Stem Cell Institute, the UK

Stem Cell Bank and Bourn Hall; there seems to be a clear link

between this concentration of excellence in all areas of stem

cell expertise and the attractiveness of the region to new

and existing companies working in this field. I believe that

this trend will continue over the next few years, as

companies become concentrated in a relatively small number

of areas of excellence worldwide.”

A further illustration of the range of stem cell related

technologies is given by Figure 5. This shows the most-cited

patents against those identified in our research as being

stem cell related patents17. The data have not been

normalised, so patents granted in 2005 have been cited

fewer times than those granted in 2000. Nonetheless, the

data indicate a number of patents of potential significance to

the industry, and also provide a useful snapshot of the range

of technologies under study.

The table on page 10 shows the top five cited US patents.

The two Abgenix patents relate to methods for producing

humanised antibodies from transgenic mice; the mice are

produced by modifying ES cells before allowing them to grow

into an embryo. These two patents are members of the same

large family, which includes eight granted US patents.

Similarly, the NeuroSpheres patent is also a member of a

family having eight granted US patents, as well as six granted

and five pending European filings. This patent family relates

to the culture and proliferation of neural stem cells. SRI's

technology is used in the modification of ES cells for

generation of transgenic organisms, while the ThermoLase

patent covers a wide range of potential treatments for hair

conditions. Of relevance to the stem cell market, the patent

describes the grafting of autologous hair stem cells to treat

alopecia; perhaps an indication that in stem cell technology,

as with many other medical technologies, a key commercial

driver is cosmetic rather than purely therapeutic treatments.

ConclusionsThe sector is still very active, with a prominent role being

played by government and public bodies. This role is likely to

increase in the near future as national and state

governments rush to set up various stem cell institutes and

other research centres of excellence. While private

investment is still nervous of the returns to be made from the

technology, this is likely to continue. However, encouraging

results coming from private companies at present, particularly

in non-ES cell related technologies, should help to reassure

investors and promote the use of stem cell technology.

Consideration of individual companies and specific patents

shows that, at least for now, non-ES technology is likely to

provide best returns for direct patient treatment, while ES

technologies are more likely to be limited to roles in animal

cloning and generation of transgenic lines, at least for the

short term. Growth in the sector shows no signs of falling.

page 9

17 note that the data relates to US citations against US patents only

Figure 5: Citation rates by year


Patent Number Title Assignee

US6075181 Human antibodies derived from immunized xenomice Abgenix, Inc.

US6150584 Human antibodies derived from immunized xenomice Abgenix, Inc.

US6071889 In vivo genetic modification of growth factor-responsive NeuroSpheres neural precursor cells Holdings Ltd.

US6074853 Sequence alterations using homologous recombination SRI

US6050990 Methods and devices for inhibiting hair growth and related skin treatments ThermoLase Corporation

Top 5 cited US patents

page 10

"Genetic diagnostic testing will pervade all aspects of

our daily lives in the decades to come. Not only will it

bring diagnostics for debilitating human diseases and

encourage the development of personalised

therapeutics, but it will also service forensic science,

veterinary and sports medicine, paternity and

ancestry tracing and offer a potential antidote to

identity theft".

Professor Christopher. R. Lowe, Director of the Institute of

Biotechnology and Professor of Biotechnology at the University of

Cambridge

The marketThe Human Genome Project, together with spin-offs from

that project such as the SNP Consortium, the International

HapMap Project and the Protein Structure Initiative, have

instigated a new era in medicine. Gene-based diagnostics are

expected to become of increasing importance in healthcare

by enabling early diagnosis of disease, guiding drug

development and testing, and enabling tailoring of

therapeutic interventions based on genetic factors predictive

of drug efficacy and safety.

Along with deepening knowledge of the working of the

human genome, has come development of new techniques

for detecting genetic information. These include DNA “chip”

or microarray technology, and techniques for analysing and

comparing large amounts of sequence information

(bioinformatics). The fusion of technologies underpinning the

pharmacogenomics revolution is reflected by the diverse

range of companies spearheading the commercial utilisation

of pharmacogenomics from specialist genomics and “chip”

companies to major pharmaceutical and electronics

companies. Major universities, including most notably the

University of California, have steadily fed, and continue to

feed, much basic research in the genomics field into the

commercial world with growing associated IP portfolios.

However, application of genomics is quickly moving out from

the university laboratories and specialist companies into the

big providers of diagnostics and therapeutics.

The acquisition in 2005 of Genaissance Pharmaceuticals by

Clinical Data along with an important IP portfolio covering

various genetic tests illustrates well how pharmacogenomics

is moving from being a new field to an increasingly prominent

and necessary part of the business of any company seeking

to be, or remain, a key commercial player in healthcare in the

21st Century.

The patenting landscapeRecent patenting analysis in relation to genomics has been

very much driven by concerns over the issue of ownership of

genes. The effect of such ownership on freedom of academic

researchers to further build publicly available knowledge on

the working of the human genome is a key issue. Such

analysis reported in Science in October 200518, and more

recently in a report by a committee of the National Academy

of Sciences in the US19, has shown that almost 20% of human

genes (4382 of the 23,685 genes logged in the NCBI's gene

database by mid 2005) are the subject of US patent claims.

However, it is also clear that much of the deluge of early DNA

sequence filings made with no firm evidence of function, e.g.

relying on extrapolation of function from homology with

previously available sequence information, has already

languished or may well not survive scrutiny by patent offices.

A major contributor to sequence filings in this category was

Incyte Genomics which has metamorphosed into Incyte

Pharmaceuticals. Such filings are unlikely to comply with the

utility requirement applied at the US Patent Office and face

equally difficult hurdles in Europe as illustrated by Biotech

Appeal Board Decision T1329/04 at the EPO. That decision,

which concerns a Johns Hopkins University patent

application covering a new member of the growth

GENETIC DIAGNOSTIC TESTING

page 11

18 Article entitled “Intellectual property Landscape of the Human Genome”,Kyle Jensen and Fiona Murray, Science, 14th October 2005, 310, 239-240.

19 Report of the Committee On Intellectual Property Rights In Genomic AndProtein Research And Innovation organised under the auspices of theScience, Technology and Economic Policy Board and the Committee onScience, Technology and Law of the US National Academy of Sciences:“Reaping The Benefits of Genomic And Proteomic Research: IntellectualProperty Rights, Innovation, and Public Health” (2006), available on-line fromThe National Academies Press (www.nap.edu).

differentiation factor gene family, highlights that claims to

isolated sequences assigned a function on the basis of mere

extrapolation will be caught at the EPO on the horns of a

dilemma. Either the isolated sequence is obvious, or if post-

published evidence is required to reasonably confirm

function, the attack arises that there was no solution of a

technical problem at the filing date (which the EPO also take

as meaning that the claimed gene sequence fails to meet

the requirement of inventive step).

With a view to getting behind the figures on gene-related

patent application filings and determining the IP activity and

key holders of IP which in 2006 are driving forward

commercialisation of genetic diagnostic testing, we

conducted research to identify relevant patents and patent

application publications on or after January 1st 1998. As for

previous studies of DNA-related US patent claims, the data

not unexpectedly shows that US-originating IP dominates

the genetic diagnostic testing field. This is shown most

graphically by the country mapping of priority data for each

family in the complete dataset of publications (Figure 6).

Outside the US, the UK and Japan are the next biggest

contributors of IP, but the US exceeds the UK and Japan by

around 14 times.

Previous investigation of DNA-related US patents reported

accelerating numbers from the early 1990s, peaking in 2001.

By focusing more specifically on publication of patent

page 12

Figure 6: Location of priority applications


applications in relation to genetic diagnostic testing both by

the US Patent Office and elsewhere (Figure 7), particularly

fast growth in the number of publications is seen from 2000

onwards, peaking in 2002. However, the numbers for 2003

are not substantially lower and while complete figures are

not yet obtainable for 2004-2005 they can be anticipated to

reflect a continuing active area of innovation.

Analysis of the grant data (Figure 8) emphasises the

dominance of the US as regards both generation and grant of

relevant IP. Grants peaked in 2001 but after then have

continued at a fairly steady although slightly lower level.

However, the best indicator of innovation activity in the

genetic diagnostic testing field comes from looking at

earliest priority year data of relevant published specification

families.

Figure 9 shows earliest priority year data for all published

families in the dataset. Once again, we see a peak in 2001

which has accompanied maturing of the field and perhaps a

lowering of speculative filing in relation to sequence data.

However, analysis of assignee data reveals a very different

profile from that obtained from previous studies focusing on

who owns what genes.

The key playersFigure 10 shows the top 20 patent assignees in terms of

number of patent families. The University of California

emerges as a key IP holder whether one looks at claims of

DNA-related US patents or one chooses to focus more closely

on published patent specifications relating to genetic

diagnostics and extend the jurisdictions covered. However, in

acquiring Genaissance Pharmaceuticals, Clinical Data also

acquired the highest identified concentration of published

patent families relating specifically to genetic diagnostics.

Much of that portfolio would appear to arise from a

substantial filing programme over a short period of time and

publishing in 2000-2001, although Genaissance's portfolio

of published IP continued to grow subsequently. Genaissance

is joined in the top 10 IP holders by other specialist genomics

companies: Millennium (no. 3), Avalon (no. 4), Genset (no. 8)

and Curagen (no. 9). However, the appearance of Bayer at no.

10 reflects that major pharmaceutical companies are

acquiring relevant IP both internally and through alliances.

Extending the listing to the top 20 IP holders brings in

additionally Novartis, Merck and GlaxoSmithKline.

While there is a high dominance of key players in the US, two

European specialist genomics companies on the basis of

Figure 7: Published patent applications


page 13

Figure 8: Granted patent applications


Figure 9: Earliest priority year for patent families


patent application filings appear to be significant emerging

players in the genetic testing field, the German company

Epigenomics and the French company Genodyssee. Figure 11

shows the 'emerging players' in the field20 and indicates that

Europe is not being left behind.

The undoubted importance of microarray technology in the

growth of genetic diagnostics is reflected by the presence of

Affymetrix in the top 10. Extension of the listing to the top

20 highlights involvement of the major electronics company

Hitachi, a partner with Roche for the development of clinical

diagnostic systems. Four out of the top five cited US patents

20 The chart is based on a moving average of patent publications limited to1998-2003 comparing the filing rate of selected applicants with the globalaverage for all genetic diagnostic testing applicants.

Figure 10: Top patent assignees


in the dataset relate to detection methodology. This reflects

that in parallel with growth of gene sequence IP has come

significant developments in detection of sequences and that

both streams of innovation have been important to the

growth of genetic testing. The top five cited US patents are

listed in the table on page 17 (these relate only to US patents

cited against US patents).

Lessons for the futureIt is notable that while Myriad Genetics have attracted much

controversy in Europe over their licensed European patents

relating to BRCA1 and BRCA2 gene diagnosis of breast cancer

(assignees University Of Utah et al.), others have been far

more prolific developers of IP relating to genetic tests and yet

have not attracted the same adverse attention. The business

model of Myriad Genetics has clearly been a factor in bringing

the company into conflict with both government bodies and

diagnostic laboratories in Europe and elsewhere.

From the patenting perspective, the saga of the Myriad-

licensed patents provides a number of other lessons. Firstly,

the major issue in the oppositions to the BRCA1 gene

European patents (EP0699754, EP0705902 and

EP0705903) was a priority issue arising from the problem

that consensus sequences for diagnostically important genes

are liable to mature with time. The US priority application

filing programme for the Myriad-licensed BRCA1 gene

patents failed to take account of such maturation of the

initial sequence information for the BRCA1 gene such that

the same information deposited in GenBank by the inventors

was citable prior art at the EPO. This resulted in the broad

diagnosis claims of EP0699754 being held invalid for lack of

inventive step.

Equally of note is that Myriad have retained coverage in

Europe via both their licensed BRCA1 and BRCA2 gene

patents for mutations having high prevalence amongst

Ashkenazi Jewish women. This illustrates that commercially

page 15

Figure 11: Emerging companies


significant IP relating to genetic diagnosis may be achieved

by identifying key mutations.

Indeed, as also revealed by a previous investigation of gene

patents, others have filed on such findings, including in

relation to the BRCA1 gene21. All of the Myriad-licensed

BRCA1 European Patents are currently the subject of appeal

proceedings and it may be some years yet before their final

fate is known. The Myriad-licensed BRCA2 European Patent

was restricted to testing for the 6974delT mutation in the

Ashkenazi population after opposition but with a related

divisional pending covering detection of various mutations.

This again means that uncertainty over eventual patent

coverage is likely to continue for a considerable time.

However, identification of ethnic differences in genetic

variation looks set to be a fruitful, although sometimes

controversial, source of IP which will have an important

influence on application of genetic testing.

The problem of patent thickets in relation to genetic testing

has been voiced. It is evidently an issue that has the potential

to become more prominent in the future with the growth of

desire for microarray systems able to detect multiple

sequences simultaneously. However, it remains to be seen

whether in practice IP rights will commonly be so widespread

that a real problem arises. It is notable that the second

highest cited patent in the dataset is a US patent entitled

“Biomarkers and targets for diagnosis, prognosis and

page 16

21 Verbeue et al., 'Analysing DNA patents in relation with diagnostic testing',European Journal of Human Genetics (2006) 14, 26-33

management of prostate disease”. The owner, Urocor Inc., is a

company which has chosen to focus on diagnostics relating

to prostate cancer, bladder cancer, kidney stones and other

urological disorders. Other companies in the genomics field

are also choosing to focus on specific disease states.

The effects of genetic testing patents on the healthcare

industry will be profound. In the US, there will inevitably be

pressure from health maintenance organisations (HMOs) to

reduce costs; perhaps by encouraging service providers to

screen for susceptibility to diseases or responses to

treatment. However, the patchwork of different HMOs may

reduce their negotiating power, and service providers may be

able to resist the drive to use patented technology.

In Europe, state-provided healthcare services add complexity

to the commercialisation picture and we predict that health

service bodies in Europe will increasingly be generators of IP

in the genetic testing field. This will be driven in part by the

wish to secure freedom to use, and in part by the desirability

of provision of genetic tests at minimal cost as a basis for

prescribing decisions on expensive drugs. However, we can

also expect that health service bodies in Europe will come

under pressure to offer their patented tests to patients who

they are not set up to help. This will raise interesting

dilemmas if as must be predicted such outreach is seen as a

means of revenue generation.

A strong prediction must be that health service providers in

both the US and Europe will be forced to respect IP rights of

others in the genetic testing field as they themselves seek to

commercialise genetic tests. While some may continue to

decry the licensing fees sought by those companies seeking

to leverage value out of genetic testing IP, such protest may

become increasingly difficult to sustain.

Furthermore, in relation to certain diseases it may well arise

that testing has to be against a set of key mutations. This can

be anticipated to be a driver for patent pooling if patent

rights cannot otherwise be readily utilised to achieve

commercial value. There will undoubtedly be many more

changes in the ownership of IP underpinning the genetic

diagnostics revolution as companies re-position themselves

to take commercial advantage.

We predict that lessons will be learned from the saga of the

early patent filers, such that future IP protection will be more

specifically targeted, and IP holders themselves will be more

willing to license others to perform the tests rather than

carrying out testing in-house. This will both encourage the

use of patented technology, and will be an engine against

patent thickets; both of which effects will benefit patients

and the industry.

Patent Number Title Assignee

US5784162 Spectral bio-imaging methods for biological research, medical diagnostics Applied Spectral and therapy Imaging, Ltd

US5972615 Biomarkers and targets for diagnosis, prognosis and management of Urocor, Incprostate disease

US5795976 Detection of nucleic acid heteroduplex molecules by denaturing Stanford Universityhigh-performance liquid chromatography and methods for comparative sequencing

US5981180 Multiplexed analysis of clinical specimens apparatus and methods Luminex Corporation

US6013431 Method for determining specific nucleotide variations by primer extension Molecular Tool, Incin the presence of mixture of labelled nucleotides and terminators

Top 5 cited US patents

RNA INTERFERENCE

The market RNA interference (RNAi) has been hailed as one of the most

important recent discoveries in biology. The process was

originally identified in plants and invertebrates although the

usefulness of the technique as a potential therapy for

treating mammalian disease was first proposed in the late

1990s.

RNAi is a process by which short interfering molecules of

RNA (siRNA) are used to silence gene expression. siRNA

molecules induce the sequence-specific degradation of

complementary mRNA, or will specifically interfere with the

translation of such mRNA, and thereby inhibit expression of

the protein encoded by the mRNA. The technique is

considered to be of huge potential because it is possible to

design specific siRNA molecules that will target transcripts of

a selected gene and thereby modulate the expression of the

chosen gene. In principle, it should be possible to design

siRNA constructs to combat almost any known disease of

plant or animal, that is characterised by pathological over-

expression of a protein.

In contrast with other gene silencing techniques, results of

pre-clinical trials have been very encouraging and

consistently suggest that RNAi will be of significant clinical

utility. In May 2005, the US company, Sirna Therapeutics,

published results of clinical trials for an siRNA molecule that

shows promise for treating age-related macular

degeneration. Furthermore, in December 2005, Alnylam

Pharmaceuticals initiated Phase I clinical trials for siRNA

directed against Respiratory Syncytial Virus and

interestingly, in view of the current concerns with avian

influenza, also has siRNA molecules for treating pandemic flu,

in advanced stages of development.

It is anticipated that 2006 will see the publication of the

results of a number of other trials from these companies and

other leaders. Over the next few years, the industry expects

to see a serious race to complete efficacy trials and

ultimately to secure regulatory approval for the use of RNAi

in the clinic.

The patent landscapeRNAi was first published in the literature in 1998 with some

of the platform patent applications filed shortly before this

date. It will therefore be appreciated that the number of

patent applications filed, and in particular, patents granted,

will be somewhat limited compared to more mature technical

fields. Accordingly, it is not surprising that Figure 12

illustrates that only a few patent documents relating to RNAi

were published in the late 1990s, whereas the number of

published cases in 2003 had reached more than 700

published applications. There was nearly a threefold increase

in published applications between 2001 and 2002, followed

by a further trebling in numbers of publications between

2002 and 2003. We envisage that this exponential trend will

continue in the foreseeable future and it will be interesting to

monitor the number of RNAi patent publications that become

available over the next few years.

Figure 13 illustrates the number of patents that have been

granted in this technical field. It is worth noting that it was

only in 2005 that the numbers of applications proceeding to

grant began to gather pace. 2006 appears as if it will be a

busy year for grants in this area. We have already seen the

Notice of Allowance issue in respect of one of the

fundamental patents in the US (US 10/832,248 - the so

called “Tuschl II” patent). This patent is likely to issue soon

after this report goes to press (March 2006) and it is

anticipated that this patent will be a key patent for the Max

Planck Society and its exclusive licencee, Alnylam

Pharmaceuticals. As this and other key patents begin to

issue, and given the commercial interest in this area, it will be

interesting to monitor to what extent competitors will start

to file post-grant oppositions and/or file actions in the courts

against each others patents. It appears that such “patent

wars” have already been initiated. A total of seven opponents

filed oppositions against one of Alnylam's key European

patents (EP-B-1144623 - the “Kreutzer-Limmer” patent). The

Decision of the Opposition Division of the EPO is eagerly

awaited and should issue shortly after the oral proceedings

that are scheduled for June 2006.

page 18

The key playersFigure 14 identifies 30 of the most active patent applicants

in the RNAi field. Many of them are seeking to protect the

platform technologies that underlie RNAi and it is not

surprising to see that many such applicants are academic

institutions (e.g. University of Massachusetts, Max Planck

Society or Cold Spring Harbor) although supply and

development companies such as Dharmacon also feature in

this category. Other applicants are pursuing protection for

treating specified medical conditions with carefully designed

siRNA molecules (e.g. Sirna). It is interesting to note that at

least some of the applicants identified in our analysis

represent those astute patentees that ensure RNAi is

encompassed by their therapeutic patent applications - even

if their main focus does not necessarily relate to developing

siRNA molecules per se (e.g. Rigel Pharmaceuticals Inc).

Sirna Therapeutics, based in California, is clearly one of the

front-runners in this field. It has a significant number of

patents in its own name; has licenced IP from the University

of Massachusetts; and has formed a number of strategic large

pharma partnerships (e.g. with Eli Lilly & Company).

Our investigations identified a number of patents and patent

applications in the name of Alnylam Pharmaceuticals

although the company was not included in the top 30

applicants identified by our search strategy. However, its

position in the market should not be underestimated on the

basis of patent applications standing in its own name.

Alnylam has skilfully acquired rights from many of the key

patentees identified in Figure 14. This has been achieved by

acquisition (e.g. of Ribopharma AG in 2003); through

exclusive licence deals (e.g. with Max Planck or Isis

Pharmaceuticals) and also by means of a number of

partnership deals (e.g. with Novartis).

Intradigm Corporation also feature in the key players list and

would appear to be a company to monitor for the future. It is

actively developing therapeutic siRNA molecules in a number

of areas. One of its lead programmes relates to the use of

siRNA for inhibiting angiogenesis.

page 19

Figure 12: Published patent applications


Figure 13: Patent grants over time


ConclusionsRNAi is a rapidly developing technical area and there is huge

optimism that efficacious siRNA molecules will be marketed

as therapeutics in the medium or even short term.

The technology promises much and we fully expect to count

the numbers of patent applications in their thousands in the

coming years. Many of the platform applications may already

have been filed and we anticipate the biggest growth to be

seen in patent applications that include siRNA molecules

within an arsenal of agents that may be directed against a

therapeutic target.

Many companies, in the race to file first, choose to file patent

applications based on the recognition that a particular protein

may have implications for a disease state following the

scientific discovery of an unknown physiological effect of

such a protein. Under these circumstances a medical use-type

application may be lodged that is somewhat speculative. One

of the dangers of filing such speculative applications is that

the application may be weak on the grounds of

sufficiency/enablement because the applicant may not be

able to fully describe the therapeutic agents they would like

to use. For example, the limit of their knowledge may be that

it would be desirable to utilise an inhibitor of the protein in

therapy but unfortunately no commercially viable inhibitor is

known. Many observers of the patent system may argue that

such applications are filed too early.

A number of tactics may be employed to overcome

sufficiency objections from patent offices. It would appear

that RNAi may represent a further way of overcoming

sufficiency objections. After all, if an inventor has the

sequence of the protein available to him or her they should

then be able to design and fully describe a siRNA molecule

for inhibiting expression of that protein and which may be

included in their patent specification.

Furthermore, it is relatively easy to test the effects of such

siRNA molecules on protein expression in a cell-line model

and thereby also fulfil the requirements of providing

supporting data in a patent specification. It therefore seems,

in the case of newly identified medical indications, that RNAi

may well represent a mechanism of rapidly providing a

disclosure that is both sufficient and supported and thereby

accelerating the rate at which a company can file to protect

its latest research.

Figure 14: Top patent applicants


This has to be balanced against the danger that simply

suggesting use of RNAi to suppress expression of a particular

gene may be considered obvious by some patent offices,

particularly as the design of effective siRNA molecules

becomes essentially routine as the technology matures.

Accordingly, any patent application covering RNAi in this

fashion should also ensure that the concept of inhibiting the

protein in question should be considered to be a new and

inventive therapeutic proposal. If this is not in itself

inventive, it may prove difficult to obtain protection for

anything other than very specific siRNA fragments which are

shown to be particularly effective.

It is our view that there will be a significant increase in the

number of filings that contemplate therapeutic uses of siRNA

molecules. We predict that the next few years will see

thousands of applications being placed on file that relate to

the use of RNAi for modulating the expression of proteins

that have been discovered to contribute to a disease state.

The very pace of change on the RNAi field will make it an

intriguing exercise to monitor patent activity over the next

few years and to see how the quickly developing patent

landscape evolves.

THE FUTURE

Despite the continued controversies over stem cell therapeutics and genetic diagnostic testing, there is clear evidence that

the patent position remains strong, and that there is significant growth and activity in the market. We predict that this

trend will continue, and that the number of patent filings will increase. However, until the EPO issue their ruling on

patentability of human embryonic stem cells, uncertainty will persist in this particular area. It is difficult to predict on which

side the EPO will rule. Nonetheless, the promising results from non-embryonic stem cell therapies are likely to encourage

industry regardless of the EPO's position, while strong government investment in the technology can only help the

industry. Government bodies are likely to continue to be important players in the field for some time to come.

Recent moves to restrict the scope of allowable gene patents at the EPO are likely to help the industry in the long term,

as patent thickets and broad dominating patents are less likely to occur. The necessity for applicants to demonstrate a clear

utility for a gene before it can be patented will discourage very early stage filings.

RNA interference technology is about to come of age, and there is likely to be considerable movement and consolidation

within this field as the complex overlapping patchwork of IP rights is clarified. There are clear signs that the main players

are willing to license their rights to others, so avoiding the patent thicket problem in this industry as well. As the

development of useful siRNA sequences for specific genes becomes almost routine, we expect that patents will perhaps

become harder to obtain, but the industry itself will flourish.

page 22

If you have any questions about this report, or would like more information, contact one of the authors from our

Bioscience Group:

Dr. Gareth Williams

UK & European Patent Attorney

66-68 Hills Road,

Cambridge, CB2 1LA, UK

T: +44 (0)1223 345520

E: [email protected]

Dr. Claire Irvine


4220 Nash Court, Oxford Business Park South,

Oxford, OX4 2RU, UK

T: +44 (0)1865 397900


Dr. Paul Banford


Sussex House, 83-85 Mosley Street

Manchester, M2 3LG, UK

T: +44 (0)161 233 5800


About Marks & ClerkMarks & Clerk is recognised internationally as one of the leading firms of patent and trade mark attorneys. Our highly

qualified attorneys advise clients in all sectors on acquiring, securing and registering IP rights and managing IP portfolios.

They have notable expertise and experience in both traditional and cutting edge technologies from biotechnology and

nanotechnology to electronics and engineering.

With a network of offices in the UK (12 locations), Europe, North America and the Far East and long-established

relationships with other leading IP firms worldwide, Marks & Clerk is well placed to meet clients' IP requirements locally

and globally.

Winner of the Managing Intellectual Property Global Award for Leading Firm in Europe for Patents 2006

Ranked the no.1 firm in the UK for patents in the Managing Intellectual Property World IP Annual Survey 1997-2006

www.marks-clerk.com

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