IP issues in life science transactions

1. IP Issues In Business
Transactions
Marta E. Delsignore, Ph.D.
Keith A. Zullow
January 9, 2018

2. 1
• Are there any third party patents? – Freedom
To Operate (FTO)
• What is the product exclusivity period for my
pharmaceutical product?
IP Analysis For Pharmaceutical Products

3. Freedom To Operate
2
• Are there any problematic 3rd party
patents/published patent applications?
- Identify major competitor patents
- Is design around an option?
- Validity investigation
• Are there any government rights or rights
claimed by another institution (or party) that
need to be considered?

4. 3
Market exclusivity obtained by:
• Patent protection
• FDA exclusivities
The Impact Of Exclusivities
And Patent Protection

5. 4
• Patent protection, including patent term
extensions and patent term adjustment
• Patent term: 20 years from filing or 17 years
from issuance if filed before June 1995
• Extended by USPTO - patent term adjustment
• Extended by FDA - maximum 5 years
• Pediatric exclusivity - additional 6 months if
patent listed in FDA’s Orange Book
Patent Protection

6. 5
• Patents covering product and method of using
product listed in FDA Orange Book
• Lawsuit by patent owner triggers
- 30 month stay of FDA approval of a generic
product
• Coverage by a patent in Orange Book can
provide 7.5 years of protection from product
approval by FDA
Patents Covering Pharmaceutical Product And
Method Of Use Listed In FDA Orange Book

7. 6
• FDA exclusivities: new chemical entity (NCE);
orphan drug; new indication
• NCE - 5 year exclusivity
• Orphan Drug - 7 year exclusivity
• New clinical investigations - 3 year exclusivity
FDA Exclusivities

8. FTO And Ownership Considerations
7
• Can off-label uses be an issue?
• Are there multiple indications on a product
label?

9. FTO And Ownership Considerations
8
• Assess ownership issues
- Ensure that patent/patent application
assignments are in order
- Review agreements covering ownership of IP
- Who has the right to prosecute applications and
enforce patents?
- Any tax transfer issues?

10. FTO And Ownership Considerations
9
• Check for pending litigation challenging or
asserting patents, including post-grant review
proceedings
• Evaluate the scope of patents
- Do they cover the product?
- Is design around possible?
• Evaluate the strength of patents

11. FTO And Ownership Considerations
10
• Do any licenses/in-licenses impact the
potential field of use?
• Contract research organization
• Synthesis/manufacturing
• Supply and purchase agreement can be an on-
sale bar

12. FTO And Ownership Considerations
11
Helsinn v. Teva
• Helsinn agreements with MGI:
(1) license agreement with MGI
(2) supply and purchase agreement with MGI
• Agreement (1): MGI pays $11 M in initial
payments to Helsinn plus additional future
royalties upon product distribution in US
• If FDA did not approve product, Helsinn could
terminate agreement (1) which automatically
would terminate agreement (2)

13. FTO And Ownership Considerations
12
• Academic Institutions
- BYU (Celebrex®)
- Vanderbilt (Cialis®)

14. FTO And Ownership Considerations:
Academic Institutions (BYU)
13
• Dr. Simmons of BYU discovered COX-2 enzyme/gene
which allows for screening COX-2 inhibitors
• BYU and Simmons entered a research agreement with
Monsanto (later Pfizer) relating to development of COX-2
inhibitors
• Pfizer ended the agreement
• Pfizer later developed and patented numerous COX-2
inhibitors
- Over 100 patents
- Commercial products, including Celebrex®, Bextra®,
Deramaxx®

15. FTO And Ownership Considerations:
Academic Institutions (BYU)
14
• BYU alleged
- Dr. Simmons should have been named an inventor
- BYU had rights to Pfizer COX-2 inhibitor patents
and products based on original research agreement
• Six year litigation ensues in which BYU sought
billions in damages
• Settlement
- BYU receives $450 million
- BYU establishes Dan Simmons Chair at BYU

16. FTO And Ownership Considerations:
Academic Institutions (Vanderbilt)
15
• Dr. Corbin and others at Vanderbilt University
were among first to discover PDE5 and were
actively researching cGMP analogs
• Dr. Corbin and Glaxo entered a three year
research agreement
- Glaxo underwrites Vanderbilt cGMP analog
research
- Vanderbilt retains ownership of IP
- Glaxo granted license to any discoveries

17. FTO And Ownership Considerations:
Academic Institutions (Vanderbilt)
16
• Dr. Corbin made additional proposals to Glaxo
regarding PDE5 inhibitors, which included
potential inhibitors
• Around the same time, Glaxo researchers
identified PDE5 inhibitors
• Glaxo later seeks and obtains patents,
including the Cialis® patent

18. FTO And Ownership Considerations:
Academic Institutions (Vanderbilt)
17
• Vanderbilt files suit and contends that:
- Glaxo used Vanderbilt information to identify
lead compound
- Glaxo’s patented compounds use the structure
provided by Vanderbilt
- Glaxo could not have identified Cialis® without
reliance on Vanderbilt work
- Dr. Corbin and other Vanderbilt scientists
should be named as inventors

19. FTO And Ownership Considerations:
Academic Institutions (Vanderbilt)
18
• Glaxo contends:
- Work on PDE5 inhibitors was conducted
independently of information from Vanderbilt
- Work on PDE5 inhibitors conducted in France
without use of information from Vanderbilt
• Court concludes that Vanderbilt does not have
any rights to Cialis®

20. FTO And Ownership Considerations:
Academic Institutions (Vanderbilt)
19
• Exemplifies potential issues that arise when
one party obtains information from another
party and seeks patents on alleged
refinements
- Sponsored research
- Licenses
- Contract/supplier discussions
- Other business relationships

21. Enforcement Considerations:
Divided Infringement
20
• Is divided infringement an issue?
- Impacts proof of infringement
- Patent has little value if there is no infringement
• Arises where claim requires multiple actors
- Doctor assesses / patient ingests drug
- Lab assesses / doctor prescribes
- More than one drug; doctor administers one,
patient self-administers the other

22. Enforcement Considerations:
Divided Infringement Standard
21
• Direct infringement requires all claim steps
performed by or attributable to a single entity
• If more than one actor, are acts of one
attributable to the other such that one entity is
responsible?
• One entity responsible for acts of other where:
- Entity directs or controls others’ performance
- Actors form a joint enterprise

23. Enforcement Considerations:
Divided Infringement Standard
22
• Consider traditional agency and contractual
concepts
• Liability also arises where alleged infringer
- Conditions participation in activity/receipt of
benefit on performance of step(s)
▪ Mere guidance or instruction not enough
- Establishes manner or timing of performance

24. Enforcement Considerations:
Divided Infringement Example
23
Eli Lilly v. Teva
• The claims had three steps
- Administer folic acid prior to first administration
of pemetrexed [patient]
- Administer vitamin B12 prior to first
administration of pemetrexed [doctor]
- Administer pemetrexed [doctor]
• Issue was whether the acts of the patient were
directed or controlled by the doctor

25. Enforcement Considerations:
Divided Infringement Example
24
Eli Lilly v. Teva
• Infringement liability found
• Physicians condition pemetrexed treatment on
administration of folic acid and Vitamin B12
- Prescribing information provided support
- Experts provided support
- If patient does not take folic acid as directed,
doctor need not provide pemetrexed
- Verification not required
- Legal obligation not required

26. Enforcement Considerations:
Companion Diagnostics
25
• FDA definition of companion diagnostic: In
vitro diagnostic device that provides
information essential for safe and effective use
of corresponding therapeutic product
• Could be essential to:
- Identify patients most likely to benefit from drug
- Identify patients likely to be at increased risk
- Monitor response so adjustments (e.g.,
schedule, dose) can be made to improve
safety/effectiveness
- Identify patients for whom the therapeutic
product has been adequately studied

27. Enforcement Considerations:
Companion Diagnostics
26
• Companion diagnostic could impact potential
for generic competition
- Generic labeling must reference use of
companion diagnostic
- Carve-out not permitted
• Patents that claim diagnostics often face
validity challenges based on patent eligibility

28. Enforcement Considerations:
Companion Diagnostics – Patentability
27
35 U.S.C. § 101 - Inventions patentable.
Whoever invents or discovers any new and useful
process, machine, manufacture, or composition of
matter, or any new and useful improvement
thereof, may obtain a patent therefor, subject to
the conditions and requirements of this title.
Two part test:
• Step 1: Is the claim directed to a law of nature,
natural phenomenon, or abstract idea?
• Step 2: If yes, does the claim as a whole recite
significantly more than the ineligible subject
matter?

29. Enforcement Considerations:
Companion Diagnostics – Patentability
28
• Trend is for Supreme Court and Federal Circuit
to invalidate patents claiming companion
diagnostics
• Companion diagnostics claims are not per se
invalid
• More likely valid if claiming
- New diagnostic tool
- New combination of old tools that provides an
improvement

30. Enforcement Considerations:
Companion Diagnostics – Patentability
29
Things to look for when considering a patent that
claims a companion diagnostic
• Claims that merely instruct “applying” a newly
discovered correlation
• Characterization of invention in claims and
specification as a method of treatment
• Statements that techniques employed for
diagnostic purposes are “well-known” or
conventional
• Problematic prior art

31. Biologics
30
• Humira is top selling drug worldwide ($17.6B)
• 7 of top 10 selling drugs worldwide are
biologics
• Numerous biologic/biosimilar deals in 2017
- Aurobindo acquired four biosimilar products
from TL Biopharmaceutical
- Fresenius Kabi acquired Merck KGaA’s
biosimilars business
- Catalent agreed to purchase Cook Pharmica
- Agreements established marketing partners

32. Biologics
31
• 4 years of data exclusivity after approval
- No aBLA (biosimilars application) can be
submitted
• 12 years of marketing exclusivity after approval
- No aBLA can be approved
• Additional protection based on patent portfolios
covering antibodies, processes, methods of
use, and other things

33. Biologics – Due Diligence
32
• Broad patent protection
• Litigation is expensive and takes several years
- IPRs/PGRs at PTAB
- 1st wave biosimilars litigation
- 2nd wave biosimilars litigation
• RPS victory or settlement can impact
- When product can be launched
- Uses for which product can be launched
• Due diligence to predict end of exclusivity can
be extensive

34. Biologics – Example
Abbvie v. Amgen (Adalimumab)
33
• Approved 2002 (Abbvie)
• Amgen aBLA accepted by FDA: January 2016
• 1st wave biosimilars litigation
- August 2016
- 10 patents
• Potential 2nd wave biosimilars litigation: 51
additional patents identified
• 13 patents involved in IPR proceedings

35. Biologics – Example
Abbvie v. Amgen (Adalimumab)
34
• Settlement announced: September 2017
- Abbvie grants worldwide licenses on
country-by-country basis
- European launch: October 2018
- US launch: January 2023

36. Questions?
Marta E. Delsignore
Keith A. Zullow
Goodwin Procter LLP
The New York Times Building
620 Eighth Avenue
New York, NY 10018-1405
(212) 813-8800
MDelsignore@goodwinlaw.com
KZullow@goodwinlaw.com
January 9, 2018