In this month’s round-up of life sciences-related patent news, we report on the year’s first pharma mega-merger, the latest developments in a must-watch CRISPR-Cas9 patent dispute, calls from Novartis’ CEO for reform to the US biosimilar patent litigation system and news of imminent IP changes affecting life sciences companies in China.

Legal radar:

CRISPR patent “case of the year” oral arguments heard – The final days of April saw the US Court of Appeals for the Federal Circuit hear oral arguments in a crucial CRISPR-Cas9 patent dispute. As IAM reported, the hearing was the latest episode in a hard-fought dispute, in which the University of California, Berkeley – that developed the foundational CRISPR-Cas9 methods (though only demonstrated their use in bacterial cells) – is seeking to invalidate rights granted to the Broad Institute covering applications of the gene-editing methods for specific use in eukaryotic (animal, plant or human) cells. The Californian entity argues that its counterpart’s discovery was made obvious by its own earlier innovations – an argument rejected by the Patent Trial and Appeal Board, which last year ruled in favour of the institute in interference proceedings. The outcome of the appeal against that decision will not only have a profound impact on the patent landscape surrounding a revolutionary technology, but could set an important precedent for US patent law in general. The former chief judge of the CAFC, Paul Michel, described it as a possible “case of the year” for 2018, because it raises fundamental questions around the concept of obviousness and analytic methodologies relating to it.

Monsanto plant patent invalidated in India – The Delhi High Court ruled in April to invalidate seed giant Monsanto Co’s patent to genetically modified bollworm-resistant Bt cotton seeds. Monsanto had sought to assert its right against a licensee, Nuziveedu Seeds Ltd, which responded by arguing that the patent in question is not valid because it pertains to seeds, which – along with plants and animals – are not patent-eligible subject matter under Indian law. In a ruling last year, Justice RK Gauba sided with Monsanto, finding that the genetically modified traits covered by its patent arose from “laboratory processes and not naturally occurring substances” and were therefore patentable. But, in a big blow for the multinational company, this finding was overturned by the Delhi High Court, which deemed that claims directed towards genetically modified seeds were ineligible for patent protection. Monsanto now has the option of applying to register its Bt cotton seeds with India’s Protection of Plant Varieties and Farmers’ Rights Authority, after which it will be able to charge a ‘benefit sharing’ fee – rather than a royalty – for its use. The news pleased the National Seed Association of India, whose executive director described it is a “landmark judgement…which will bring cheer to millions of Indian farmers”, but it might cause concern among agricultural sciences innovators, who will be increasingly doubtful about the extent to which their inventions can be protected in India. On 7th May, India's Supreme Court agreed to hear a Monsanto appeal againsg the Delhi High Court decision.

Humira settlement provides further proof of AbbVie’s patent strategy’s effectiveness – AbbVie last month announced that it had reached another patent settlement in its disputes with various producers of biosimilar versions of its best-selling drug Humira. The Illinois-based company – whose core patent for Humira expired in 2016, but which has been able to acquire a slew of patents for related follow-on innovations – revealed that it had reached an agreement with Samsung Bioepis, delaying the launch of its Imraldi copycat in the lucrative US market until 30th June 2023, while allowing its sale in European jurisdictions from late-2018. This echoed a similar deal AbbVie reached last year, keeping Amgen’s Humira biosimilar off the US market until 2023. In this IAM blog, I argued that the Samsung settlement is the latest demonstration of the strength of AbbVie’s Humira patent portfolio and the effectiveness of its strategy of acquiring secondary rights to delay loss of exclusivity on a commercially-vital product.

Federal Circuit upholds Vanda’s method-of-treatment claims – The Court of Appeals for the Federal Circuit has issued its first opinion on the patent eligibility of method-of-treatment claims under the Mayo test, ruling that a Vanda Pharmaceuticals’ patent for a method of treating schizophrenia is not directed to patent ineligible subject matter. The standard test for patent subject ineligibility, the Mayo test asks firstly whether patent claims are directed towards patent ineligible concepts, such as laws of nature, and, if so, whether the claims are transformed by some additional elements into an eligible concept. The patent in question – which is directed towards the identification of a liver enzyme mutation and the prescription of a reduced dosage of Vanda’s Fanapt drug for those with that mutation – was previously challenged in Hatch Waxman litigation by West-Ward Pharmaceuticals, and found by a federal district court to be directed towards a law of nature, but nevertheless patentable, because the dosing adjustment was not shown to be routine or conventional. And on the 13th April, the Federal Circuit upheld this ruling, expressing the majority opinion that Vanda’s patent is not directed to patent ineligible subject matter under part one of the Mayo test, because it pertains to a method of treatment, rather than a law of nature per se. According to this recent blog by lawyers at Paul Hastings, this is significant because it is the first time the circuit has opined that patent claims that recite a law of nature, but are directed to a method of treating a specific disease based on knowledge of that law of nature, “constitutes an application of that law of nature, thereby placing the claim within the scope of patentable subject matter”.

Market radar:

Chinese government announces increased patent term extensions and possibility of greater compulsory licensing in medicines shake up – As part of plans to increase the supply and use of cutting-edge drugs in China, the country’s State Council this month laid out a number of proposed regulatory and legal changes that could have a significant impact on the life sciences industry. On the intellectual property front, it announced at an executive meeting on 12th April that, while new drugs will continue to enjoy a six-year data exclusivity period, those launched in China and the rest of the world simultaneously will also be able to get a five-year patent term extension. However, it is not all good news for rights holders: a State Council circular from earlier last month outlined changes including a proposal to expand the use of compulsory patent licensing in the life sciences space.

Orange Book pharma patents more likely to survive PTAB challenges than other rights, finds study – As I reported in early April, a recent study undertaken by the US Patent and Trademark Office gauged the results of administrative validity challenges before the Patent Trial and Appeal Board (PTAB) to patents for regulator-approved drugs listed in the FDA’s Orange Book; comparing these outcomes to those for other types of patent. It showed that, despite having a similar proportion of challenges instituted against them as other types of patents, Orange Book rights have been significantly more likely to survive a PTAB written decision than patents in other industry sectors. To illustrate, 51% of decisions relating to FDA-listed patents found all claims patentable, compared to only 17% of decisions for other types of patent. This, I suggested, brought the characterisation of PTAB as a “death squad” into doubt, at least as far as key pharmaceutical patents are concerned; and Susan Morrison of Fish & Richardson told IAM that the findings contradicted the conventional wisdom seeing the institution of a PTAB complaint as the end of the road for a challenged patent.

Novartis chief suggests patent law, drug regulations need reforming to promote biosimilars – Vas Narasimhan, CEO of Novartis, has criticised the US system of biologics/biosimilar patent litigation, ascribing to it partial blame for the slow uptake of cheaper copycat medicines in the country. In a guest post for Forbes, Narasimhan emphasised the “undeniable opportunity for biosimilars in the US market” to bring about significant cost savings, while providing first-rate medical treatment to American patients. He lamented the fact that that just a handful of biosimilar drugs – only one-third of those which received regulatory approval – have been launched in the US since the Biologics Price Competition and Incentives Act was implemented in 2010. This was partly due to IP issues, Narasimhan said, with a highly complex US biosimilars litigation process making it easier to block copycat medicines from the market. The US, he stated, needs to enact clear-cut regulatory and litigation procedures more similar to those in place in European jurisdictions. He also called for the “rebate wall” – the use of rebate contracting by biologics companies to incentivise the continued use of their drugs, rather than biosimilars – to be torn down. Narasimhan’s comments may be somewhat surprising, given his position at the helm of one of the world’s largest innovative drug companies; however, perhaps they reflect the growing strategic focus of traditional pharma innovators on the development of biosimilar treatments.

Acquiring Indian pharma patents may be even more difficult than it seems, suggests study – Research published in early April shed new light on the Indian Patent Office’s record of applying Section 3(d) of the country’s Patent Act – a hotly-debated provision intended to limit the issue of ‘secondary patents’ for pharmaceutical products. The study – authored by scholars from the London School of Economics and Columbia University – found that Section 3(d) objections to pharma patent applications had increased markedly over time since the provision’s implementation in 2005. Moreover, it discovered that the provision has been widely invoked by Indian examiners as an objection against ‘primary patent’ applications, as well as the follow-on applications it was intended to limit. This, I argued in a recent blog, suggested that obtaining pharma patent in India may present even more difficulties than international observers have thought.

Deal watch:

Mixed Q1 pharma M&A performance revealed – In April, observers were able to take stock of a been a richly-anticipated start to 2018, in which recent US tax reforms were expected to unleash built-up pressures for deal-making in the sector giving rise to a wave of patent-heavy pharma acuisitions. The first three months of the year both lived up to and confounded expectations: it failed to produce a mega-merger of the type predicted by many, and delivered the lowest number of transactions of any first quarter for six years; but it generated $34 billion worth of deals – an impressive sum in the absence of a mega-merger – owing to strikingly high valuations in oncology and immunology. Looking forward, Jonathan Gardner and Edwin Elmhirst of Evaluate Pharma, noted at the start of last month that “the elements of a new round of megamergers seem to be in place. The question is if and when the trigger is pulled”.

$60 billion Takeda takeover of Shire could augur more mega-deals – The first ‘mega acquisition’ of 2018 came late last month when Takeda struck a deal to buy Shire for £46 billion (the equivalent of more than $60 billion), in what is the largest ever acquisition of a foreign company by a Japanese firm, and one of the biggest ever pharmaceutical transactions. The purchase is thought to be driven partly by Takeda’s desire to replenish its fairly barren pipeline in anticipation of an impending patent cliff, by acquiring the IP rights to the Irish company’s valuable rare diseases portfolio. With other large pharma companies under similar pressures, some have suggested that the Takeda deal might precipitate similarly large acquisitions by other industry giants – though more recent pronouncements suggest that Pfizer will not participate in such a takeover.

Novartis splashes $8.7 billion following consumer health sell-off – Novartis agreed to spend $8.7 billion to buy AveXis, a US biotech with a promising portfolio in spinal muscular atrophy. The deal came just days after the headline-grabbing sell-off of the Swiss pharma’s consumer healthcare business, JV, to GlaxoSmithKline, which provided Novartis with an additional $13 billion. The acquisition also reflects the company’s strategic commitment to specialisation in ‘core’ treatment areas, such as oncology, eyecare and – in this case – neuroscience, gene-therapy and precision medicines.