Natural Products – Part 3: Ensuring Patentability for Novel Diagnostics and Therapies

This is a guest post from Susan K Finston, President of Finston Consulting. Do you have a response to Susan’s post? Respond in the comments section below.

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Resurgence of natural products development relating to both environmental biomes and the microbiome captures the imagination. Beyond the headlines, substantial private sector investment and material support is critical to transform Gee Whiz science into practical tools to improve the human condition.

Of course ‘industry’ is not a monolith: bigger companies generally look to biotech start-ups for promising technologies, and emerging companies may have few assets beyond intellectual property  – patents and trade secrets.   When investors perceive increasing risk to patents, funders move on and start-up activity dries up. That is why increasing patent uncertainty for broad classes of biotech inventions is troubling.

Science without management is a hollow promise and patent protection remains critical for natural products development by industry.

The Supreme Court decision in Association for Molecular Pathology v. USPTO/Myriad Genetics (2013) explicitly recognized and sought to preserve patent incentives needed for continuing investment in cancer diagnostic tests and therapeutic treatments. Unfortunately, the Court’s reasoning in Myriad generated confusion and uncertainty that has been further extrapolated by the lower Federal Courts and operationalized through US PTO patent examination practices.

Before Myriad, a “product of nature” was typically understood to be something found in nature and removed from its environment for immediate use without significant alteration. (Think of aloe cut from a plant and applied to the skin to treat sunburn.) These natural resources cannot be patented because they are not invented. The Supreme Court’s Myriad opinion expanding the traditional definition of products of nature  demonstrates incomplete understanding of the science (as acknowledged by Justice Scalia in his concurrence).

In fact, Myriad’s claimed human BRCA DNA sequences had been painstakingly cloned, amplified, sub-cloned, and sequenced in a herculean multi-year scientific race involving at least five different major research teams. Over the course of patent litigation, the magnitude of the achievements and complexity of the science were given short shrift, and the record is replete with simplistic descriptions of ‘gene snipping’ and false comparisons to attempted patenting of gold or coal. With limited science literacy, the Court struggled with how to identify and distinguish patentable inventions from products of nature.

The Myriad case also raised emotional issues relating to access to diagnostic testing to predict likelihood of aggressive breast and ovarian cancer in high-risk patients. So the Supreme Court sought to balance access to medical technologies and patent exclusivity needed for continued research and development of new cancer diagnostics and therapies, determining that cDNA can be patentable if its nucleotide sequence is reconfigured due to the elimination of intronic sequences, but that DNA molecules having native sequences are not patentable as products of nature.

In the wake of Myriad, lower courts have demonstrated their own science limitations – especially relating to diagnostic testing. Most recently, in Ariosa Diagnostics, Inc. v. Sequenom, Inc., the Court of Appeals for the Federal Circuit invalidated Sequenom’s patent for a highly innovative and important pre-natal test.  This was predicted by Professor Rebecca Eisenberg, as “[T]he essential problem for diagnostic method claims under the Court’s analysis: because the Court codes the heart of the diagnostic method – the determination of when it is appropriate to modify treatment for a particular patient – as belonging to the realm of natural laws, it does not recognize any application of those laws (whether “inventive” or “conventional”) in the claim at all.” 

In parallel, USPTO examiners began to wonder why the Supreme Court’s decision should stop at human DNA. After all, if human DNA is not patentable subject matter, why not the DNA of an obscure new fungus? Why not the novel antibiotic that is extracted from the same fungus, or anticancer substances first identified in plants, or fermentation products derived from bacteria, and so on? So in 2014 the USPTO began to routinely reject patent applications for biotechnology inventions including novel antibiotics, antibodies, vaccines, crop protection products and industrial enzymes.

Instability of the US patent system comes at a very real cost for biotech start-ups.  Given opportunities for high returns from other high tech sectors, not surprisingly VC’s have reduced investment in early stage biotech companies, even in the context of high funding levels for later stage biotech. As in the past, the constrained rate of company creation in recent years translates into “far fewer later stage biotechs in a couple years: birth rates define demographic trends and the same holds for biotech startups.”

With the immense promise of new therapies and cures from natural products development, major pharmaceutical and nutritional companies are investing in commercialization of promising technologies by startups launched 5 – 10 years ago (pre-Myriad).  Given the judicial origins of uncertainty for biotech patents, the best way forward rests with the Congress to provide a statutory solution to rebalance the Product of Nature doctrine. We stand at a cross-roads for commercial development of natural products where immediate action is needed encourage continuing start-up company formation for future innovation.

About the author:

President of Finston Consulting LLC since 2005, Susan works with innovative biotechnology and other clients ranging from start-up to Fortune-100, providing support for legal, transactional, policy and “doing business” issues in the US and globally. She also is CEO and Managing Director of Amrita Therapeutics Ltd., an emerging biopharmaceutical company based in India commercializing oncology peptides. Previous experience includes 11 years in the U.S Foreign Service with overseas tours in London, Tel Aviv, and Manila and at the Department of State in Washington DC. For more information on latest presentations and publications please visit finstonconsulting.com.


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