“Danger, Will Robinson!” These immortal words uttered by the Robot in the 1960s television series “Lost in Space” are now part of our pop culture lexicon when warning of an impending, and sometimes unseen, threat. It’s too bad the Robot is just a fictional character, because as we’ve seen with recent economic and legislative happenings, there are times we could all use someone or something to give us an early warning.

Given the recent turbulence in the markets, imagine how prescient it would have been to have someone yell “Danger, Danger” last spring as you moved all your investment dollars, including the kids’ college money, from the relative safety of that conservative bond fund to the aggressive stock fund when it seemed like the right thing to do. After all, you were only following the advice of CNBC, the leaders in financial news. Oil stocks looked particularly good, and when the experts said stocks can only go up, who were you to second guess them. As you clicked to make that online trade, your warning Robot would have yelled “Danger, Danger! Stock Market Crash ahead!”

Similar warnings might also have been appreciated by many organizations as the Obama administration and a new Congress amends and creates new legislation and regulations. This “Danger” warning certainly would have been appreciated by those major biotechnology companies with local operations when the Patent Reform Act of 2009 was introduced in the Senate in March. The proposed bill provided a statutory methodology to be used in the calculation of damages in patent infringement suits. The methodology would limit damages valuation to the amount of value added by the invention’s improvements over the prior art. The invention’s entire market value would only be considered where the improvements alone constitute the “predominant basis” for market demand. This change, favored by large IT firms who rely on market dominance and not on patents, would severely diminish the value of patent protection. Limiting damages takes the teeth our of patent protection and, while it benefits a few select industries, industries that rely on strong patents to encourage innovation and investment, like the life sciences, would be severely impacted.

Two weeks ago the Senate Judiciary Committee’s approved a modified version of the reform bill that added a “gatekeeper” provision, giving judges more …Next Page »

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For months and months, we heard the mantra of “Obama: the change we need; change we can believe in.” The election is finally over. The people have spoken. Now that Senator Barack Obama is president-elect, it is my hope that certain “changes” supported by the president-elect will help jump-start two areas of focus in the Boston life sciences community: embryonic stem cell research and “personalized medicine.”

Since 1996, a law has banned federal spending on research that harms human embryos. In August 2001, President George W. Bush issued an executive order that loosed this restriction slightly by allowing federal funding for embryonic stem cell research that used one of the few then-existing stem cell lines. Now, seven years later, President-elect Obama is reviewing President Bush’s order and may reverse or amend the decision made in 2001. Expectations are high for a change. In a 2007 news release supporting legislation to loosen restrictions on stem cell research, Mr. Obama said:

I am frustrated … that we are preventing the advancement of important science that could potentially impact millions of suffering Americans … My hope, and the hope of so many in this country, is to provide our researchers with the means to explore the uses of embryonic stem cells so that we can begin to turn the tide on the devastating diseases affecting our nation and our world.

Some have asked why, given the advances in stem cell research with the federal prohibitions in place, particularly the dramatic results seen in the last few years with making stem cell-like cells from skin cells (also known as reprogrammed or induced pluripointent stem cells (iPS)), any change is needed. But there are a number of reasons why removing limitations on embryonic stem cell research is “change we need.”

Research in reprogrammed cells, while dramatic, is still in its infancy. In fact, the first reprogrammed cells were reported just a few short years ago. As a result, many issues need to be worked out. iPS cells are currently produced, at least in part, through the introduction of genes associated with cancer, using a virus that could lead to cancer-causing mutations. Needless to say, more research is needed before this methodology reaches the clinic.

Another important issue is the equivalence of iPS and other types of stem cells. Are the cells the same? Do certain types of stem cells have properties that might provide clinical advantages? Some scientists believe that iPS cells will never be suitable for cell therapy. Time and research will tell. Relaxing the ban would allow scientists in the field to use equipment and facilities funded with federal research dollars, potentially accelerating research while, at the same time, reducing research costs.

Relaxing the ban could provide another important dividend. For ethical and political reasons, many pharmaceutical and biotechnology companies have stayed away from stem cell research. It is hoped that federal support of stem cell research will encourage commercial investment, resulting in what we all hope for: clinical treatments.

Will the Obama administration change the federal position on embryonic stem cell research? …Next Page »

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If you have been following the news in the last month or so, you’ve probably watched in amazement as Congress tackles one of our country’s most pressing issues. I’m not talking about the war in Iraq or the failing economy or even high energy costs. I’m talking about steroids in baseball—a blight on our national pastime. While others at the water cooler expressed disbelief that our elected officials called Roger Clemens to testify, I cheered. I’m thrilled Congress is dealing with this issue. Do I really care about juiced-up pitchers? No, not really. I’m just happy Congress is focusing their energy on baseball and getting their minds off something they can really mess up, like “reforming” the patent system.

While the current patent system is not perfect, and I have no doubt that some changes will be made in the next few years, I am concerned that those who value patents as important for commercializing early-stage technology are not part of the discussion. The loudest voices are those who see patents not as essential for investment and commercialization, but as a nuisance.

These anti-patent forces—mainly those in the IT industry, like Microsoft—are working under names like the Coalition for Patent Fairness and have been looking to “reform” or fix what they perceive to be a broken system; a system they feel mires industry in patent disputes, hurting the U.S. economy by diverting investment away from creating jobs and developing innovations.

What are these reformers looking to do? The Patent Reform Act of 2007 has essentially three major goals:

• Make patents harder to obtain by allowing submission of prior art by third parties and requiring applicants to do their own patent searches;
• Make patents harder to maintain by introducing a procedure that allows third parties to more easily challenge patents after they are granted; and
• Make patents less valuable by, among other things, changing the standard for assessing damages in the case of a patent infringement from one that looks at a range of factors that affect the patent’s market value to one that looks at only the novel feature(s) the patent is directed to.

Together, these and other sections of the legislation significantly diminish the value of patents.

This is the closest that we have gotten to a major overhaul of the patent system since the current Patent Act was passed in 1952. How did this happen? It’s easy. Anti-patent forces lobbied hard while pharma, bio, and university factions remained quiet. Why the silence? Some say the bio industry was focusing efforts on follow-on (generic) biologics legislation (still pending). It might also be that opponents of the legislation didn’t believe that the legislation would ever gain traction. However, there were some warnings about what could happen if it did. As Daphne Zohar, a fellow Xconomist, wrote in her July 22, 2007, column: “The proposed patent reform act would stifle innovation.” Daphne argued that “to arbitrarily limit damages and to make it easier to challenge patents shifts the balance further in favor of large companies and lowers the incentive of innovators and technology licensing offices at universities to file and support patents that could have an impact on healthcare, the environment and quality of life.”

Daphne hit it right on the head. The proposed legislation, by lowering the value of patents, is bad for anyone that relies on patent protection to promote innovation, including the biotechnology industry, universities, and non-profit research institutes. It hurts investment in early stage technology, an important part of the Massachusetts economy.

Unlike in past years, patent reform now does have real traction. The House passed a version of the bill (HR 1908) on September 9, 2007. The Senate bill (S 1145) is still pending. While there are some serious differences between the bills, compromise could be reached.

I recently received an e-mail from a colleague stating that the Senate Patent Reform Bill (S 1145) was delayed until April, and that an agreement on the “complex legislation remains elusive.” I cheered, thinking once again that the bill had stalled. I passed the e-mail on to my colleagues and expressed my delight that patent reform was looking unlikely this legislative session. Ron Eisenstein, my law partner who has been closely following the legislation, shot back the following message: “In view of how accurate all predictions have been, I wouldn’t count on anything. This may be a ploy to get those opposed to the bill to relax. Given the statements made by the proponents of the bill, paranoia is probably helpful.”

Ron’s right. A little paranoia is a good thing. Congress can’t deal with two wars, the lack of an energy policy, or a failing economy, but the patent system is something they can “fix.”

It’s not too late to let your position be known. Speak up. Be part of the debate. Let industry trade groups like the Massachusetts Biotechnology Counsel, BIO, and AUTM know how you feel. Contact the offices of Senators Kennedy and Kerry, and let them know that that passage of Senate bill No.1145 in its current form is bad for the Massachusetts economy. While you’re at it, ask them to redouble their efforts on performance enhancing drugs in baseball. If they have had enough of that, suggest that they call in Bill Belichick and look at spying in football. It’s better than patent reform!

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It has long been known that different individuals react to the same drug differently. Matching the right therapy with the right individual, commonly know as “personalized medicine,” could improve treatment, reduce side effects, and ultimately save healthcare dollars.

This idea has captured the attention of not only research scientists, but also healthcare providers, the pharmaceutical industry, pharmacy benefits managers, venture capitalists, and the FDA. Progress is being made in this area, and a number of personalized medicine products are already on the market. Though sales numbers are still quite small, diagnostic tests and targeted treatments aimed at enabling personalized medicine are expected to become part of mainstream medical practice within 10 years. Yet, passage of pending legislation that is purported to promote medical advances will likely have the opposite effect, hindering much-needed venture capital investment in this emerging field.

At the heart of personalized medicine are diagnostics tests that reveal, for example, a patient’s risk of a particular disease or likelihood of responding well or poorly to a particular drug—often based on gene expression or gene mutations. But there are many hurdles that a diagnostic company must overcome before bringing a diagnostic to market. It is estimated, for instance, that it could cost as much as $100 million to bring a broad-based screening test successfully to market. Who will fund such work remains uncertain.

There are other uncertainties. Costs and volatility could increase even more if proposed FDA regulations are enacted. Questions still remain as to who will pay for this technology when it reaches the clinic. Will it be the patient? Will it be insurance companies? Will such technology even be accepted by healthcare professionals?

As with any emerging technology, if risk and uncertainly are outweighed by the potential for profits, investment and development will continue. And as with any emerging technology, the potential for profit in the diagnostics and personalized medicine space is protected by strong patents. However, recent congressional action would prevent patent protection on inventions critical to personalized medicine.

On February 9, 2007, Representative Xavier Becerra introduced the Genomic Research and Accessibility Act, a bill that, once enacted, is purported to put an immediate end to the practice of patenting any and all portions of the human genome. The legislation proposes to amend chapter 10 of title 35, United States code, by adding the following new section:

“Notwithstanding any other provision of law, no patent may be obtained from nucleotide sequence, or its functions or correlations, or the naturally occurring products it specifies.”

According to a press release from Congressman Becerra’s office, “The practice of gene patenting is preventing critical research from advancing because scientists are wary of trespassing patent laws.” Congressman Becerra adds that “enacting the Genomic Research and Accessibility act does not hamper innovation, indeed, it encourages it. The proliferation of scientific prowess, medical innovation, and economic advancement will all occur if the study of genes is allowed to happen unabated. Incredible manifestations of intellectual property will result: medicines, machines, processes—most deserving of recognition, some potentially life-saving, and all worthy of a patent.”

While Representative Becerra’s statements promise innovation, enactment of his simple bill into law will have the opposite effect with respect to personalized medicine. Enactment of the bill would not just prevent patenting DNA, which itself is harmful to the biotechnology industry. It would also prevent patents on gene correlations, e.g., the association of gene mutations with risk of disease or response to treatment—associations that form the basis for personalized medicine’s diagnostic tests.

While Congressman Becerra and others argue with few facts that gene patents stifle scientific research, the inability to obtain intellectual property protection in the field of diagnostics and personalized medicine will stifle a nascent industry.

Becerra’s bill, a political move in response to popular press attacks on gene patenting, appeared likely to fail, but like other aspects of patent reform, the subject is still alive in Congress.

On October 30, 2007, the House Judiciary Committee held a hearing on “Stifling or Stimulating—The Role of Gene Patents in Research and Genetic Testing.” It was no surprise that not all witnesses spoke in favor of patenting DNA-based inventions. What was surprising and encouraging was that representatives of the Biotechnology Industry Organization (BIO) and the Association of University Technology Managers (AUTM) testified that the Becerra bill or similar legislation altering patent rights in nucleic acid inventions would harm commercialization of genetic medicine.

As discussed at the October 11th conference “Personalized Medicine: Breaking Down the Barriers and Achieving Results” that my firm, Nixon Peabody, cosponsored, companies looking to invest in nucleic acid inventions and personalized medicine need to realize that the public relations battle may affect future legislation. And as such, all stakeholders in the personalized medicine industry should be planning and implementing their public outreach now to decrease the risk of legislation that may threaten the future of personalized medicine. Failure to act may result in erosion of IP protection and a commensurate decline in investment in biotechnology and diagnostics.

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…is coming soon.

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