Tyler Dylan has been working to make gene therapy a reality for a long time, eight years and eleven months to be exact. In 1998 he left his partnership in the IP practice at Morrison & Foerster to join three-year-old biotech start-up Collateral Therapeutics, Inc. He helped the company license promising gene therapy research from the University of California, San Diego, that could improve the function of an ailing heart by inducing the growth of new blood vessels. The research was right out of science fiction, and Dylan, who has a Ph.D. in biology from UCSD and was a researcher at its Center on Molecular Genetics before becoming a lawyer, couldn't help but be impressed. "Instead of just simply treating the symptom or providing short-term relief," he recalls, "it had the opportunity to really change the physiology of the heart."
Gene therapy then seemed the promising cutting edge of a medical revolution, but researchers soon found themselves bloodied by the sharp end of the knife. Like most companies focusing on gene therapy treatments at the time, Collateral's effort to commercialize its research got derailed after a number of high profile setbacks, including the death at the University of Pennsylvania of teenage clinical trial volunteer Jesse Gelsinger in 1999 and the news in 2002 that three out of 11 French children being treated for a rare immune disorder developed a leukemia-like condition as a result of gene therapies that mutated their DNA in unintended ways. U.S. regulators halted similar experiments and tightened rules on clinical trials. Investors abandoned the sector. Established biotech and pharmaceutical companies that had been dabbling in gene therapy research shelved their projects. Collateral had to sell itself to German-based Schering AG in 2002 to continue with its research.
Dylan remembers that bleak time. "Our stock got whacked, and we couldn't get any money," he says. "A lot of companies were hanging on by their fingernails."
But the years of tension may finally dissolve into celebration. In 2005, with the help of private equity funding, Dylan and Cardium CEO Christopher Reinhard were able to buy back Collateral's cardiovascular gene therapy research from Schering and install it in a new San Diego-based company, Cardium Therapeutics, Inc. Now Cardium is progressing toward obtaining regulatory approval for Generx, its novel treatment for heart disease. Last December the Food and Drug Administration gave Cardium permission to perform phase 3 clinical trials for its gene therapy. The history of biotech is littered with products that failed in late-stage trials, so nothing is a sure thing. But the product could receive approval in the next two years or so, and Generx may be the first gene therapy product available in the United States.
The premise for gene therapy at its inception in the early 1990s was simple. Healthy genes are inserted into malfunctioning cells in order to correct them. Cardium's therapy was pioneered by practicing cardiologist Dr. Kirk Hammond, who is also a professor at UCSD. It requires an infusion into the heart via a catheter of a virus engineered to carry the gene FGF-4, which promotes the development of new blood vessels. The therapy has yielded positive results-the growth of new helpful blood vessels-in women suffering from painful angina caused by insufficient blood flow into the heart. (For reasons that are not totally understood, the drug helps women more than men.) "The therapy can turn around the function of the heart completely," Dylan says.
Cardium is not the only gene therapy company that might be close to a payoff. The Journal of Gene Medicine estimates that there are now 1,145 gene therapy products in clinical trials, with 714 in phase one, 407 in phase two, and 24 in phase three. About 675 of these trials are being conducted in the U.S. "What we need is just one approved therapy, and others will follow," says Dylan, who serves as Cardium's general counsel and chief business officer.
Recent success stories in clinics and labs are fueling investors' optimism in this once out-of-favor sector. In 2004 venture capitalists invested $32 million in San Diego-based Ceregene, Inc., which is zeroing in on a treatment for Parkinson's. In 2005 Colgate-Palmolive Co. invested $20 million in Austin-based Introgen Therapeutics, Inc., which is pursuing a gene-based therapy for head and neck cancer. Cardium tapped into its $30 million in private equity money to acquire another promising gene therapy start-up, Tissue Repair Company, in 2006.
The revival in the gene therapy sector has also been good to patent attorneys, who are now getting varied and interesting work beyond filing patent applications. Foley & Lardner Washington, D.C., partner Stephen Bent, founder and cochair of the firm's life sciences practice, has seen his gene therapy-related work increase in the double digits in the last year. "There is every sign that the industry is maturing," Bent says. The firm's client base has expanded from universities and research centers to pure-play gene therapy companies and companies that assist in the discovery and development of new therapies, such as German-American biotech firm MediGene AG. It owns valuable patent rights covering the herpes simplex virus, which is widely used as a gene delivery agent.
Patent licensing, acquisition, and due diligence accounts for much of the new work. Matthew Vincent, a partner at Ropes & Gray in Boston, says the sheer number of gene-related patents poses a challenge to companies and investors venturing into the space. From 1980 to 2003, there have been an estimated 5,000 gene patents issued worldwide, about 4,000 of those in the U.S., according to a study at the University of Sussex in England. Each of those patents contains hundreds of claims. "There's a tremendous amount of redundancy in many of these patent applications, and there's a lot of overlap," Vincent says. "That's exacerbated by the number of different companies that have filed on the same gene, or genes that are closely related." He estimates that patent claims covering DNA sequences filed since 2000 run in the millions.
What's more, the complexity of the gene therapy treatment process makes those who operate in this space particularly vulnerable to infringement claims. In most cases, multiple patents cover one gene therapy treatment, and clearing those rights is essential in getting funded. "It's not just the gene you have to worry about," Vincent says. "Investors are not just looking at how strong your patents are, but also other litigation risks." Companies have to make sure that the technologies they are using in their experimentation and testing are all licensed, or risk patent suits later.
IP due diligence could cost a company anywhere from $100,000 to $3 million, depending on how exhaustive the study is, according to Dale Hunt, biotech partner at Sonnenschein Nath & Rosenthal in San Francisco. "Some people just give up, because it costs too much to wade through all the patents," Hunt says. "And even if you do find a technology you want to license, there's no guarantee you can even obtain a license to it."
Cardium's Dylan personally experienced the perils of navigating the biotech patent thicket. In 1995, when he was still doing patent prosecution work for Collateral at Morrison & Foerester, the company's attempt to obtain fresh funding from investors hit a snag. The start-up found that Chiron Corp. had an exclusive license to the cloned gene FGF-5, the gene that the Collateral's scientists were using in their experiments. Investors insisted that the company find a new gene that worked and obtain a license to it-or lose further funding. That meant going back to the laboratory. In the end, the additional research work served the company well, as its scientists found that most angiogenic genes worked just fine. The company obtained a license on two of the genes it tested from two other research institutions. "It made for a difficult time, but in the long run it was good, because it gave our patents a broad scope," Dylan says.
Interference practice is another area of patent lawyering that is flourishing in the gene therapy revival. This arcane area of U.S. patent law is designed to settle inventorship disputes where two patent applicants are claiming the same invention. Though the rules may change if the current patent bill becomes law, the United States still follows the first-to-invent rule instead of the first-to-file system adopted in many parts of the world, including Europe and Japan. In the U.S., companies can use the complex interference proceedings as a way to knock out a competitor's rival patent. It can cost each party as much as $1 million to participate in interference proceedings.
"These cases can be very contentious, and they can involve multiple parties that are fighting over the same gene," says Oliver Ashe, a patent interference veteran who opened his own six-lawyer firm in Reston, Virginia a year ago to capitalize on the boom. (Ashe had been a partner at Northern Virginia's Greenblum & Bernstein.) His firm currently handles ten of the approximately 90 or so interference proceedings at the patent office this year, the majority of which involve genes. Ashe has represented biotech giants Genentech, Inc. and Affymetrix, Inc., as well as the University of California.
Cardium is grateful to Ashe. In 2006 he won an interference proceeding on behalf of Cardium against Boston Scientific Corp. That medical device giant was a licensee of an arm of the University of Chicago, and it pursued patent claims similar to those licensed to Cardium by the University of California. After five years of bitter fighting, the patent office sided with Cardium and rejected Boston Scientific's patent application.
Similar battles are happening in Europe. Ian Armitage, a patent opposition specialist at Mewburn Ellis in London, is seeing a surge of cases where biotech companies are using Europe's postgrant patent opposition proceedings to knock out newly issued gene patents. Five percent of patents issued in Europe in 2006 have been opposed-the majority gene-related. Armitage successfully represented Cardium in opposing a similar patent filed by Boston Scientific in Europe. "In biotech it's not unusual to have a lot of people oppose your patents," Armitage says. And the more significant the invention is, the bigger and longer the fight, he adds. "These cases can sit for two years, and by the time you get to the hearing and the appeal, the patent has expired" or has little patent life left, Armitage says.
Six separate companies, including Basel, Switzerland-based F. Hoffmann-La Roche, for example, opposed Chiron's gene-based HIV-1 clinical diagnostic patent in 1998. All six eventually took a license from Chiron after the European Patent Office upheld the company's patent in 2002. The patent expired in 2005.
Soon, however, more of the patent fights will be in the courtroom, says Fish & Richardson partner Jonathan Singer in Minneapolis. The veteran patent litigator recently won a settlement of $65 million on behalf of the Massachusetts Institute of Technology and its licensee Repligen Corp. against ImClone Systems Inc. The university accused ImClone of using its patented recombinant protein in manufacturing its blockbuster cancer drug Erbitux. Repligen's recombinant Protein A is widely used by the pharmaceutical industry to produce monoclonal antibodies, proteins that home in on specific biological targets.
Cloned genes and new molecules that are pure enough to use for research experiments have become valuable commodities, and companies that have patented the method of manufacturing them in an efficient manner have guarded their intellectual property jealously. Currently the law gives safe harbor to scientists and researchers who use a method patented by others to develop and test new drugs. But once these products hit the market, Singer predicts, the lawsuits will come. "No one is suing right now because everything is still in clinical trials and under safe harbor," Singer notes. "It is not always easy to nail every patent down when you're making a biologic drug, and I think a lot of smaller companies have decided to defer the litigation risk rather than spend the money to do a thorough due diligence."
Competition from foreign countries like China, where gene therapy treatments are already approved, also opens up a serious new battleground for legal fights [see "Watch Out for Asian Counterfeits."
But for today, Chinese rivals are just a far-off concern for Cardium's founders. "Any big product is likely to entice competition," Dylan says. "It would just be great to see something come out of years of research."
Patent attorneys are optimistic. They liken the course of gene therapy to that of monoclonal antibodies-discovered in Cambridge in the 1970s, these antibodies went through their own troubled times in the lab but have since proven their worth in a number of revolutionary and successful drugs, including Herceptin for breast cancer treatment and Remicade for arthritis. "The road to practical therapies will be a tortuous one," says Stephen Bent of Foley & Lardner, "but gene therapy represents a treatment rationale so compelling as to be all but inevitable."
