We are pleased to present the first of what will become a monthly round-up of patent-related news, developments and insights of special importance to the life sciences sector.

This first report covers a range of hot topics, from a big setback for Allergan at the PTAB and a ground-breaking study of CRISPR patents, to the latest deal-making activity.

Legal radar:

Allergan sovereign immunity strategy rejected – Allergan’s effort to make patents relating to its Restasis dry-eye treatment exempt from Patent Trial and Appeal Board cancellation proceedings by transferring them to the Saint Regis Mohawk Tribe suffered a serious blow last week. The board ruled that the tribe’s sovereign immunity does not extend to inter partes review, and that a Restasis patent should be subject to proceedings initiated by Mylan. This followed months of controversy surrounding the deal, which was seen by some as an attempt to circumvent the patent system and by others as a means of protecting important assets from a problematic administrative proceeding. The St Regis Mohawks have stated they will appeal the PTAB decision.

Landmark damages overturned by Gilead – A US district court judge this month overturned a record-breaking verdict against Gilead, which had been ordered in 2016 to pay an unprecedented $2.54 billion in royalties after its hepatitis C treatments, Sovaldi and Harvoni, were deemed to have infringed Merck’s patent rights. Reversing the initial award, Judge Leonard Stark held that the core Merck patent in question was – contrary to the first finding – invalid, and therefore not infringed. The dispute, which has been ongoing for more than four years now, may not yet be at an end, with Merck vowing to appeal the latest decision.

UK Supreme Court hears pregabalin dispute – As reported in this IAM blog, the UK Supreme Court reviewed a long-running dispute between Warner-Lambert (a subsidiary of Pfizer) and a number of generic pharma companies from 12th to 15th February. Concerning the validity of the former’s second medical use patent for pregabalin, this was the first time that the UK’s highest court had considered the role of ‘plausibility’ as a test of sufficiency in UK law. Sure to be watched by pharma innovators, its final decision could have a significant bearing on the requirements for getting a patent granted, and the chances of having a right invalidated.

Eli Lilly victory grabs attention in Korea – The South Korean patent court has awarded 20 million won in compensation to Lilly Korea, following its dispute with Myungin Pharmaceuticals over mental health treatment Zyprexa. Lilly was seeking compensation on the grounds that the defendant had brought a generic version of the drug to market months before its patent expired in mid-2011, thereby infringing the patent and lowering the price of the treatment. The patent in question had been annulled in 2010 – and so was considered invalid at the time the generic product was launched - but that invalidation was overturned in 2012. Lilly’s win, although small (equivalent to $18,453), has caused a stir among pharma bosses, according to Korean press, because it sets a precedent that may make generic companies liable for damages for infringement of patents which are found invalid at the time of generic launch but subsequently reinstated.

Market watch:

New CRISPR study revealed DowDuPont as surprise patent leader – IAM reported exclusively on the most insightful CRISPR patent study to date. Among other things it found that chemicals giant DowDuPont is the world’s largest CRISPR patent and patent application owner, even though much of the attention in this area has been focused on the high-profile dispute between the Broad Institute and University of California. The study’s author also told IAM that the CRISPR patent situation is “pretty chaotic”, creating the potential for licensing difficulties and more litigation in the future.

Iancu sworn in as USPTO director – Following a months-long wait, Andrei Iancu – President Trump’s nominee for USPTO director and previously managing partner at law firm Irell & Manella – was confirmed by the US Senate in early February and sworn in to the role at the end of the month. We have little idea yet what Iancu’s policies will be while in office, and whether he will undertake the radical changes to the Patent Trial and Appeal Board which many patent owners (see here and here) would like to see. Those keen to learn more about Iancu’s agenda for office cannot afford to miss his key note speech at this year’s IPBC Global in San Francisco in June.

Pharma companies among most prolific defendants – February saw the release of Lex Machina’s annual review of US patent litigation. As reported by IAM, several pharma companies featured more prominently than in previous years on the list of defendants; Teva topped the league table, having the defendant in 49 cases, while a host of other heavyweight generic companies, such as Mylan, Sandoz and Amneal featured in the top 15. The report also showed a dramatic jump in ANDA litigation in 2017 – rising to 411 from 318 in 2016.

US Chamber of Commerce releases innovation index – The Global Innovation Policy Center – part of the US Chamber of Commerce – published its sixth annual international IP index, which scores countries according to 40 distinct measurements of their IP systems. It argued that pro-IP steps have been taken by the majority of countries covered by the study, but identified the US and UK as the “global leaders in IP protection and enforcement”. In terms of pharma patent rights, China was praised for introducing a patent linkage system and expanding data protection – though it was pointed out that significant problems persist for IP-intensive industries in the country - while Canada’s overturning of its Promise Doctrine was also welcomed. The report expressed concern, however, about South Africa’s plans to expand use of compulsory licensing, and Saudi Arabia’s approval of a generic product for a drug with a valid patent was criticised.

Drug pricing white papers allays US pharma patent fears – The US president’s executive office released a white paper on how to reduce the country’s high drug prices – a goal that Donald Trump has repeatedly expressed his commitment to. Rather than suggesting that reforms to the patent system were needed to accomplish this – as some of the President’s and his new health secretary Alex Azar’s previous comments implied – the paper, IAM reported, represented a trenchant defence of patent rights, focusing on a range of other measures to reduce medical costs. This was not a reason, however, for pharma rights holders to become less vigilant; data presented in the paper showed that drug pricing has become a crucial political issue in the US – one which is likely to keep life sciences market exclusivity in the spotlight for years to come.

Deal watch:

January pharma deal-making not all it was cracked up to be – IAM reported that a spate of high-value pharma deals in January had caused prominent commentators to declare a record-breaking start to the year for pharma M&A, and to predict a surge in patent-heavy transactions in 2018 following US tax reforms. But, as I argued at the start of the month, January’s activity was by a number of measures worse than in the opening months of 2016 and 2017 – which went on to be barren years for pharma transactions. While there are good reasons to expect an uptick in IP-driven agreements this year (see my other recent blogs here and here), talk of an annus mirabilis seemed – and still seem – premature.

Glaxo chief puts dampener on transaction prospects – GlaxoSmithKline CEO Emma Walmsley stated in February that mergers and acquisitions were a lower priority for the company than maintaining shareholder dividends. The announcement came after speculation of dividend reductions led to poor share price performance in the preceding months. Transactions were not a “need to do”, she said, because the company was confident that its own R&D pipeline could provide the next wave of treatments to bolster revenue as old drugs went off-patent.

Amgen struggling to find targets for acquisition – Amgen’s CFO David Meline announced that despite acquisitions and investment being the “first priority” for any excess cash, the company was finding it difficult to identify plausible targets because of inflated life sciences valuations. The biotech powerhouse was “looking hard” to part with as much as $27 billion in transactions, but – despite its “financial flexibility” – was struggling to find deals that would create sufficient returnfor its investors.

Bristol-Myers Squibb deal breaks records – The New York-based pharmaceuticals company confirmed midway through February that it had struck a deal to buy a minority share of a development-stage cancer drug from biotech start-up Nektar Therapeutics for a colossal $1.85 billion – described by one senior JP Morgan figure as the biggest, or one of the biggest, partnership payments in the history of the biotech industry. The deal sees Bristol-Myers Squibb acquiring a 35% stake in NKTR-214, as well as the exclusive right to combine the drug with its Opdivo and Yervoy treatments for use in nine cancer types.

Merck to top the 2018 pharma patent licensing table, analysts expect – According to analytics provider GlobalData, Merck will lead the pack this year in terms of value created by strategic licensing and partnership agreements. The pharma innovator narrowly missed out on last year’s top spot, claimed by AstraZeneca, which entered a range of patent-heavy agreements with partners such as Pieris Pharmaceuticals and MedImmune. According to GlobalData figures, Merck has quadrupled its collaboration agreement values since 2016, achieving $9.5 billion worth of deals in 2017; and given the relative stagnation of AstraZeneca, Merck is predicted to top the charts this year.

And finally….

IAM’s second annual biopharma summit – On the 9th February, IAM held its second annual Pharma and Biotech IP Summit – also its first event (of any kind) on UK home turf. Delegates – more than double the number who attended our first summit in Munich last year – engaged with a range of in-house and private practice experts on a broad range of topics, from patentability, US biosimilars litigation and the changing political landscape, to deal-making and supplementary protection certificates. The key themes to emerge from the summit are explored here.

IAM benchmarking survey underway – IAM’s annual deep dive into the trends and issues affecting the IP profession – its IP Benchmarking Survey – got underway in February. If you have yet to have your say on the big questions of the day, please complete the survey before the closing date of 18th March. If you work for an IP-owning company, please click here for your questions; and if you work in private practice, please fill in this survey.