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Ariad Pharmaceuticals Wins First Round Over Eli Lilly, Patents on Methods Can Be Far-reaching
The case looked like a slam dunk for Eli Lilly, which was being sued for patent infringement by the tiny biotech company Ariad Pharmaceuticals. The question at hand was the small firm's patent, which Indianapolis-based Lilly contended was so broad that it was like owning the rights to gravity. Most industry watchers agreed, especially the patent attorneys who monitor these issues.
That's why many in the industry were so surprised when on May 4 a Federal District Court jury in Boston upheld Ariad's patent on a fundamental system that affects drug development in areas as diverse as inflammation, osteoporosis, and cancer. Opponents have already tried to roll back the Cambridge, Mass., company's patent, and Lilly says that it will appeal the verdict. Now many people wonder if the ruling protecting this broad biological claim will stand and, if it does, how the case might affect wider drug discovery and development.
The patent itself deals not with a specific drug composition but with methods for modulating nuclear factor kappa B (NF-
B), a group of proteins that regulate RNA's copying of DNA inside cells. NF-B influences many genes that control many typical cellular activities.
"Pathway or mechanism patents are the kind that raise the most troubling issues," says patent attorney Ned Israelsen of Knobbe, Martens, Olson & Bear in San Diego. "And that's just what this [patent] is. I was somewhat surprised to see the court enforcing a broad ‘mechanism of action’ patent."
But Ariad founder and CEO Harvey Berger says his company made its case. "We heard clearly from the jury after the trial," he said. "They wanted clarity, and they really felt they understood many of the experts."
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The Legendary Discovery
The original research comes from such powerhouse scientists as Nobel Laureates Phillip Sharp of the Massachusetts Institute of Technology and David Baltimore, now president of the California Institute of Technology but formerly of the Whitehead Institute for Biomedical Research, and Thomas Maniatis of Harvard University. At the time of the discovery in the early- to mid-1980s, these scientists and their colleagues uncovered a group of genes that express proteins they dubbed NF-B and its inhibitor, I kappa B (I-B). NF-B has since been associated with such wide-ranging cell activities as growth, development, and apoptosis, as well as inflammatory and immune reactions. Hence it's not surprising that so many diseases, including cancers, could be tied to its activity. The original investigators came to regard NF-B as a "biological switch" that could be turned off to treat disorders, such as inflammation, sepsis, rheumatoid arthritis, asthma, osteoporosis, and cancer.
Currently, Ariad has an exclusive license to four issued patents surrounding NF-B, including the methods patent 6,410,516, referred to as the "516 patent." The 516 patent was issued in 2002 after waiting at the Patent and Trademark Office for nearly 11 years. Soon afterward Ariad, along with MIT, Whitehead, and Harvard, sued Lilly for patent infringement.
Although Ariad's business is cancer drug development, it brought its claim against Lilly for two noncancer drugs, raloxifene (Evista) for osteoporosis and drotrecogin alfa (Xigris) for severe sepsis, two drugs with combined revenue of $772 million in 2005.
If the 516 patent were upheld, Ariad would own a major franchise on many drugs affecting NF-B activity, which could mean a big payout for the small company. Indeed, just on the basis of the two drugs in the suit, the jury ordered Lilly to pay Ariad $65.2 million in back royalties and 2.3% of future drug revenue. The sense is that a lot of companies could owe Ariad money.
"We don't think our individual claims are broad at all. They represent very specific methods of reducing NF-B activity. There are specific steps involved," said Berger, citing the patent's 203 claims. "And it just happens that NF-B is important in medicine."
But Israelsen says that the patent is too wide reaching. "While [the patent's claims] may not cover every conceivable NF-B inhibitor, they are not limited to any particular compound." Instead, he says, they cover every compound that performs the method described by the patent's 203 claims. Israelsen admits that some of his firm's clients could be affected by this case.
Ariad is by no means the winner yet. Lilly has asked the Patent and Trademark Office to reexamine the patent. If it is found to be invalid, then the jury verdict wouldn't matter anyway. Lilly has also said that it would appeal the case to the Federal Circuit. What's more, the judge from the jury trial, Rya W. Zobel, could still make an unfavorable ruling against Ariad.
Drug developers are most concerned because the patent covers a natural phenomenon. Ariad's patent is for methods of manipulating a protein that influences the expression of more than 175 genes. During the trial, Lilly attempted to make the patent appear overreaching by pointing to such NF-B inhibitors as aspirin and red wine.
"I just don't see that," Berger said. "Just because something inhibits NF-B doesn't mean by definition that it's covered under our method of treatment claims. Virtually every major pharmaceutical company, including Lilly, has many issued patents that include claims that sound like, look like, and appear no different from the claims we've asserted against Lilly. It's not fair to just focus on us."
Small Companies Win?
But if the patent is ultimately upheld, who in the industry wins and who loses?
"I think it benefits mainly the nonprofits and the small biotech companies who are the first in line to have these broader-type patents," says William Christiansen, a patent attorney at Seattle-based SEED Intellectual Property Law Group. That means that it could hurt the larger biotech and pharmaceutical companies who have full pipelines of drugs that may infringe on a patent filed by an inventor at a university or research institute. You don't need to know how a drug works to obtain a composition patent, and many drugs still aren't completely understood. "But now [the larger companies] are going to be left wondering if their drugs affect this mechanism or pathway," he said.
Illustrating Christiansen's point is rituximab (Rituxan), an NF-B inhibitor for non-Hodgkin lymphoma. "Actually understanding how rituximab works has been a big problem," says UCLA molecular immunologist Benjamin Bonavida, who has been working with the drug, a monoclonal antibody. The response rate in the disease is 95% when rituximab is used with chemotherapy, and he has high hopes that it can be used for other diseases as well, including more cancer therapies.
There is no indication that rituximab is in the crosshairs of Ariad's legal team; however, it is one of the world's biggest selling cancer drugs, with $1.8 billion in U.S. sales alone in 2005. On February 28, the FDA approved it to treat rheumatoid arthritis. On March 1, J.P. Morgan analyst Geoffrey Mecham told the New York Times that this new approval for rheumatoid arthritis could add another $1.44 billion per year to the total. With the stakes so high it's not difficult to see why the drug's comarketers—San Francisco-based Genentech and the product's developer, Cambridge, Mass.-based Biogen-Idec—won't speak publicly about the 516 patent.
Others have taken early steps to stop Ariad. Before the Ariad-versus-Lilly jury trial was even over, Amgen of Thousand Oaks, Calif. petitioned the U.S. District Court in Delaware to invalidate Ariad's patent to avert an infringement suit for two rheumatoid arthritis drugs, etanercept (Enbrel) and anakinra (Kineret). Ariad's Berger said only that the suit is "without merit."
A Long List
These are just a few of the drugs linked to the NF-B pathway. Molecular biologist Thomas Gilmore of Boston University maintains an extensive NF-B Web site (www.nf-kB.com) with a "long list" of substances related to the protein or its pathway, some of which are drugs that inhibit either NF-B or activation of its pathway. This is not a list of drugs that would be inevitably affected by the 516 patent, but it does include some interesting names in the cancer world.
One is bortezomib, a proteasome inhibitor marketed as Velcade for treating multiple myeloma. This drug has not been mentioned publicly as a target of Ariad, but in 2005 it generated $192.1 million in revenue, representing a 35% increase over the prior year. Bortezomib was developed and is marketed by Millennium Pharmaceuticals of Cambridge, Mass.
Another is CHS 828, which has shown antitumor effects in preclinical studies. It is currently in clinical trials sponsored by the European Organization for Research and Treatment of Cancer. Brian Juel Pedersen, head of library and patents at Ballerup, Denmark-based LEO Pharma, the drug's developer, says that CHS 828 and EB 1627, which was developed with enhanced properties for improved absorption, have been "outlicensed globally" to another company but would not comment further.
With the exception of Lilly's raloxifene and drotrecogin alfa, Harvey Berger would not talk about which drugs on the market or in development might infringe on his firm's patent. However, he says Ariad did send letters "to many, many companies, around 50 of them," to invite licensing discussions, but as of yet there have been no takers. "We haven't really done a rigorous analysis on which drugs actually infringe the claim," he says.
Patent attorney Lisa Haile of DLA Piper Rudnick Gray Cary in San Diego worries about two specific issues. First is the principle of inherency: Patients who take Evista and Xigris are inherently inhibiting NF-B, even if Lilly didn't understand that mechanism when it obtained its original composition patent.
"How can you come along later and basically cover other people's drugs with your patent claims?" she said. "The courts don't like taking things out of the public domain, and the patent office doesn't like to grant patents for mechanisms of action that are merely inherent within a known drug."
She also is concerned that the ruling will make companies uncertain about developing their businesses because of patent laws that "may not seem consistent." She cites a similar case that went a different way, University of Rochester versus G.D. Searle & Co. Rochester researchers' discovery led to drug makers targeting the COX-2 enzyme—rather than COX-1—to produce a new kind of anti-inflammatory drug. Searle had developed celecoxib (Celebrex), which functions by inhibiting COX-2. In March 2003, the court denied Rochester its patent because the inventors had not described clearly how to identify COX-2 inhibitors or any compounds that are COX-2 inhibitors.
The difference between the two cases may be that Ariad had a jury trial, whereas Rochester's was decided by a judge. "It probably helped Ariad to have Nobel Prize winners sit before the jury and discuss their groundbreaking science, regardless of the patent law implications," Haile said.
Christiansen agrees. "Basically this case should not have gone to the jury. The job of the jury is to discern findings of fact, not findings of law."
This could be where Lilly has its best chance. "I think there's a lot of leeway on Lilly's appeal for the Federal Circuit to come in and say the jury didn't have the appropriate legal background to decide this," Christiansen said. "I would be really surprised, frankly, if it was upheld on appeal."
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