Does it make sense to patent university drug discovery targets?
To start a discussion, I am sharing my thoughts as UCSF's tech. transfer director about whether it makes sense to patent university drug discovery targets and their associated screening technologies:
The real commercial value in drug discovery targets and related screening methods lies not in the target/method itself but in the novel compounds companies develop against these targets. Companies do not compete in the marketplace on the basis their targets but rather on the basis of their proprietary new compositions-of-matter. Thus, for targets identified in university labs that get rapidly published because of their scientific interest, companies will at best license the target non-exclusively but only if it has been validated and only under certain conditions, or in most cases, not at all.
Companies view targets and screening methods as tools that have a short useful life. Their value only exists while the screening methods are covered by issued patent claims and are being used. However, the use normally ends once the lead compound is identified. Because these tools are not critical to a company’s competitive position, companies won’t pay much to license them, if they do take a license at all.
The reason a company would not take a license is because under certain circumstances one is not necessary. Specifically, if a university files a patent application on a new target and related screening technology that the inventor publishes, it will take several years before the patent issues. During that time any company is free to exploit the target and related screening technology to discover compounds and develop leads based on the inventor’s scientific publication because patent protection is not in force. Naturally, a company will not pay to license rights to a technology if its competitors can get it for free from the scientific literature. By the time the patent on the target does issue, the company already has its lead compound and has moved well beyond the discovery/screening phase. Thus it does not need a license to the patented screening technology because it no longer needs this tool for its R&D program.
In addition, the courts have made it clear that it is not possible to obtain broad, valid claims to a method of treating a disease by modulating the activity of a target, if no compounds have been identified that act on the specific target and that can provide for the desired activity. In addition, where there are compounds that modulate the activity, the patentability of method-of-treatment claims often requires data showing in vivo effects in an accepted animal model. Even where the in vivo data in such an animal model are available, the claims must be limited to a more narrow scope around the compound used. A single example based on one compound will not support a broad claim directed to use of any and all compounds that might act on the same target.
There are two instances under which a company would consider taking a license:
1) the target has been validated and the company can get access to it well in advance of any public disclosure by the inventor and in this way has a suitable lead-time over its competition. Regrettably, in our experience, most UCSF investigators do not disclose their targets to us sufficiently in advance of public disclosure to enable us to license them to a company with the lead time it needs to justify paying for the license. Also almost all of the targets we see have not been validated and, from the companies’ standpoint, are unlicensable.
2) a company does not contemplate getting involved with the validated target until relatively late, i.e. after the patent issues several years after the publication of the target. The company would thus in theory need a license to avoid infringing the patent rights. However, enforcing these rights against companies requires that we be able to present clear evidence based on publicly available information that the company is using our patented technology which can often be quite difficult to obtain given that companies carefully control what information they publicly disclose. Moreover, in confronting the presumed infringer about taking a license, the university is at risk for the company filing a declaratory judgment and taking the dispute to court. Thus the university may find itself in a lawsuit it never wanted. Also, some companies might not want to start a drug discovery program after the patent issues because doing so would give them a late start relative to their competition which could put them in an unfavorable market position.
Under (1) or (2) the company only needs freedom-to-operate under the IP rights, and such licenses would be for non-exclusive use (which bring less money to the university than exclusive use), are invariably royalty-free, and typically afford no direct reimbursement of patent costs, which for worldwide coverage can run to six-figures and be as high as $500,000 (or more) over the life of the patent rights.
The only time we would consider patenting a target is if: 1) it is validated, 2) it addresses a major medical need, and 3) we can give a prospective licensee a head start over its competition by completing a license well in advance of a public disclosure by the inventor. Targets that do not meet these criteria are unlicensable which means that we would take a financial loss on the invention were we to file a patent application because we would have no license income from which to recoup our patent costs. Thus we would have lost money on a bad business decision that could have been better spent on research and education.
Lastly, the federal Hatch-Waxman Act provides a safe harbor under which one party can use another party’s patented drug technology without taking a license if the purpose of this otherwise infringing activity is to generate data to support a regulatory filing. Recent case law has established that this safe harbor not only applies to the clinical development phase but also to the preclinical phase of drug R&D. However the ruling court was silent about whether this safe-harbor also applies to the tools a company might use for drug discovery, such as drug targets and screening methods. Thus a company might infringe a university’s drug target patent but argue its activities fall under its interpretation of the Hatch-Waxman Act. In such a case, the university would have to choose between taking no action to defend its patent rights against the company or being drawn into an expensive court case of uncertain outcome to get a ruling on whether tools fall under the Act or not. Even if the court were to side with the university in this instance, it is not clear that the resulting damages (or settlement) would justify the time and expense of the lawsuit. In other words the decision to sue another party for infringement is largely a business decision based on the likelihood of prevailing and the financial return expected on the millions of dollars invested in pursuing the infringer. If this return on investment is meager or negative, the university cannot justify entering the suit.
The real commercial value in drug discovery targets and related screening methods lies not in the target/method itself but in the novel compounds companies develop against these targets. Companies do not compete in the marketplace on the basis their targets but rather on the basis of their proprietary new compositions-of-matter. Thus, for targets identified in university labs that get rapidly published because of their scientific interest, companies will at best license the target non-exclusively but only if it has been validated and only under certain conditions, or in most cases, not at all.
Companies view targets and screening methods as tools that have a short useful life. Their value only exists while the screening methods are covered by issued patent claims and are being used. However, the use normally ends once the lead compound is identified. Because these tools are not critical to a company’s competitive position, companies won’t pay much to license them, if they do take a license at all.
The reason a company would not take a license is because under certain circumstances one is not necessary. Specifically, if a university files a patent application on a new target and related screening technology that the inventor publishes, it will take several years before the patent issues. During that time any company is free to exploit the target and related screening technology to discover compounds and develop leads based on the inventor’s scientific publication because patent protection is not in force. Naturally, a company will not pay to license rights to a technology if its competitors can get it for free from the scientific literature. By the time the patent on the target does issue, the company already has its lead compound and has moved well beyond the discovery/screening phase. Thus it does not need a license to the patented screening technology because it no longer needs this tool for its R&D program.
In addition, the courts have made it clear that it is not possible to obtain broad, valid claims to a method of treating a disease by modulating the activity of a target, if no compounds have been identified that act on the specific target and that can provide for the desired activity. In addition, where there are compounds that modulate the activity, the patentability of method-of-treatment claims often requires data showing in vivo effects in an accepted animal model. Even where the in vivo data in such an animal model are available, the claims must be limited to a more narrow scope around the compound used. A single example based on one compound will not support a broad claim directed to use of any and all compounds that might act on the same target.
There are two instances under which a company would consider taking a license:
1) the target has been validated and the company can get access to it well in advance of any public disclosure by the inventor and in this way has a suitable lead-time over its competition. Regrettably, in our experience, most UCSF investigators do not disclose their targets to us sufficiently in advance of public disclosure to enable us to license them to a company with the lead time it needs to justify paying for the license. Also almost all of the targets we see have not been validated and, from the companies’ standpoint, are unlicensable.
2) a company does not contemplate getting involved with the validated target until relatively late, i.e. after the patent issues several years after the publication of the target. The company would thus in theory need a license to avoid infringing the patent rights. However, enforcing these rights against companies requires that we be able to present clear evidence based on publicly available information that the company is using our patented technology which can often be quite difficult to obtain given that companies carefully control what information they publicly disclose. Moreover, in confronting the presumed infringer about taking a license, the university is at risk for the company filing a declaratory judgment and taking the dispute to court. Thus the university may find itself in a lawsuit it never wanted. Also, some companies might not want to start a drug discovery program after the patent issues because doing so would give them a late start relative to their competition which could put them in an unfavorable market position.
Under (1) or (2) the company only needs freedom-to-operate under the IP rights, and such licenses would be for non-exclusive use (which bring less money to the university than exclusive use), are invariably royalty-free, and typically afford no direct reimbursement of patent costs, which for worldwide coverage can run to six-figures and be as high as $500,000 (or more) over the life of the patent rights.
The only time we would consider patenting a target is if: 1) it is validated, 2) it addresses a major medical need, and 3) we can give a prospective licensee a head start over its competition by completing a license well in advance of a public disclosure by the inventor. Targets that do not meet these criteria are unlicensable which means that we would take a financial loss on the invention were we to file a patent application because we would have no license income from which to recoup our patent costs. Thus we would have lost money on a bad business decision that could have been better spent on research and education.
Lastly, the federal Hatch-Waxman Act provides a safe harbor under which one party can use another party’s patented drug technology without taking a license if the purpose of this otherwise infringing activity is to generate data to support a regulatory filing. Recent case law has established that this safe harbor not only applies to the clinical development phase but also to the preclinical phase of drug R&D. However the ruling court was silent about whether this safe-harbor also applies to the tools a company might use for drug discovery, such as drug targets and screening methods. Thus a company might infringe a university’s drug target patent but argue its activities fall under its interpretation of the Hatch-Waxman Act. In such a case, the university would have to choose between taking no action to defend its patent rights against the company or being drawn into an expensive court case of uncertain outcome to get a ruling on whether tools fall under the Act or not. Even if the court were to side with the university in this instance, it is not clear that the resulting damages (or settlement) would justify the time and expense of the lawsuit. In other words the decision to sue another party for infringement is largely a business decision based on the likelihood of prevailing and the financial return expected on the millions of dollars invested in pursuing the infringer. If this return on investment is meager or negative, the university cannot justify entering the suit.
Views: 10
Replies to This Discussion
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Permalink Reply by Ken Jenkins on -
Joel, thanks for sharing your thoughts and strategies regarding patenting novel drug targets. I agree that it does not make much sense for a university to invest resources in a screening patent based only on the discovery of novel targets.
Have universities contemplated leveraging their early knowledge of the novel targets to develop more valuable downstream patent positions? Perhaps a target discovery development program would be useful in which the novel target discoverers are encouraged to promptly transfer their knowledge to university chemists, structural biologists, and clinical investigators. Such a program might successfully provide sufficient data for provisional patent filings on focused composition, method, and/or biomarker claims. -
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Permalink Reply by Joel B. Kirschbaum on -
Ken -
Universities are very much at the mercy of what their investigators want to do with their time as academic scientists and their ability to get funded. My position is that the real commercial value in a drug discovery target/screening method is not in the target/method per se but in the resulitng novel compositions-of-matter that could be first-in-class drugs. At UCSF we have a Small Molecule Discovery Center that will partner with UCSF investigators who have a novel target to help identify hits and leads. The limiting steps are: a) bandwidth of the Center, b) funding, and c) the desire of the person who discovered the target to want to pursue drug discovery and engage the Center. For every academic researcher who discovers a target and is interested in drug discovery there are probably several who are not interested because they view drug discovery as a distraction from their core research program and not well suited for generating publications in scholarly basic science journals which are critical for getting grants, tenure, post-docs, students and winning the respect of their academic peers. Some universities may encourage their faculty to pursue drug discovery should the opportunity arise while others may not on that grounds that this kind of work does not belong in a university and is better left to industry. Also, I see generational differences across faculty and university administrators in that the younger ones seem more interested in pursuing commercial opportunities. Then too, the NIH is promoting translational science through its grants program and the Kauffman Foundation is encouraging universities to develop proof of concept centers for advancing early stage discoveries to the point of licensability.
It is one thing for a discovery to be patentable and another for it to be licensable and enter a commercial development program. Although one can patent targets and biomarkers as early stage scientific discoveries, companies will not license them and further develop them without the target or biomarker having first been validated to commercial standards. Thus, part of the challenge university investigators face is doing the requisite validation to prove to a company's standards that the biomarker or target they discovered is well grounded and worth the risk to pursue. At one point, the largest single category of inventions we saw at UCSF was drug discovery targets almost all of which were never validated and to this day remain a lost opportunity. The atmosphere for biomarkers is slightly better and we are seeing some biomarker inventions supported by clinical data as a result of the discovering basic researcher partnering with a clinical scientist. -
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