In our previous three columns, we’ve discussed the steps of establishing a Target Product Profile; when and how to coordinate meeting with the Food and Drug Administration; and developing a business plan in order to secure funding. In this column, we will discuss considerations surrounding intellectual property, or IP, within the context of establishing and protecting market share for the target product.
Beginning with the end in mind, one must take care to consider 1) how the target product market share will be protected and 2) whether there is third-party IP that would block the intended manufacture, use, distribution or sale of the target product in the target market. Provided that the target product is well-differentiated by its performance (e.g., efficacy and safety) when compared to substitute products, the most often considered way to achieve market share or exclusivity is through the limited monopoly provided by a granted patent. While outside the scope of this column, it should also be noted that several layers and/or combinations of IP strategies exist for protecting products or services. In addition, a product may be eligible for exclusivity depending on the regulatory pathway followed.
Trade-secret protection may also be used to protect product and service elements where patent protection is not possible or where trade-secret protection is a better choice. Companies will often maintain details of a manufacturing process, formulation know-how, a clinical model or methodology, scales and the like as trade secrets. Effective trade-secret protection strategy requires careful planning and customization depending on the technology and the context in which it is used, including diligent use of confidentiality agreements; a plan within your organization on how information will be shared (or not) and used; and thorough tracking and enforcement. With the proper protection, trade secrets can provide indefinite protection.
Patents provide the holder with the right to exclude others from making, selling, using and importing the patented drug, device or method for a period of 20 years from filing. The types of patents relevant to this discussion are: 1) Composition of Matter or Device patent, which claims the compound/biologic or device itself; 2) Method of Use patent, which covers the use of compound/biologic or class of the same to treat a disease; 3) Formulation patent, which covers the pharmaceutical dosage form; and 4) Manufacturing patent, which covers the manufacturing process. Many view composition of matter and device patents as the preferred type of patent and it is usually the first type of patent filed for a product. However, it should be strongly noted that one can easily create market share by leveraging the other types of patents, which can extend patent protection beyond the life of a soon-to-expire composition of matter or device patent. In the context of drug rescue or drug repurposing, new method of use patents can sometimes open the door to exclusivity for using a known compound for treating a different disease. This is often seen with ophthalmic therapeutics that are repurposed actives into new topical or locally delivered products, for example antibiotics, anti-inflammatories, anti-allergics and anti-neovascular agents that were previously used for non-ocular indications. Likewise, new formulations of existing compounds can dramatically enhance the safety and efficacy of a chemical entity. Finally, manufacturing patents can be valuable by preventing competitors from utilizing the most cost-effective method for the target product. Once the type of subject matter has been defined, one must look to see if it is patentable.
The two main requirements for being granted a patent are that the invention must be novel and non-obvious. Novelty is a straightforward test that looks to published papers, granted patents, patent applications and other references, collectively referred to as “prior art,” to determine whether or not the invention has been described in its entirety in a single publicly accessible prior art reference before the filing date of the relevant patent application. Non-obviousness, on the other hand, is a much more complex test that can be thought of as the next hurdle following a finding of novelty. An invention is deemed to be obvious by the United States Patent and Trademark Office if all of the various portions of the invention are described or suggested in two or more prior art references. Note that while simplified here, application of the obviousness standard can be very complex. With the basics of the standards of patentability in mind, one can get a basic lay of the land, so to speak, by conducting a first-pass prior art or patentability search on PubMed and the USPTO website (or Google under the patents subsection). Sound IP protection will be key in the efforts to raise funds from venture capital or otherwise convince potential partners to invest time and money in commercializing the target product.
Depending on the parameters of your patentability search, one will probably need a freedom to operate search.
While patentability speaks to meeting the novelty and non-obviousness standards to obtain one or more patent claims, FTO refers to an analysis of the third-party patent landscape relevant to the target product you wish to bring to market. For example, you may feel comfortable that a new method of use and related formulation is patentable after conducting a patentability search. Such a patentability search would likely not uncover that one or more third-party patents may block the only cost-effective way to manufacture the new formulation on a large scale. A solid FTO analysis is one way to avoid a momentum-destroying surprise later.
The defining features of how the product will be used and manufactured are employed to create search terms for identifying third-party IP, which may preclude selling of your target product in the market. Broadly crafted search terms are well-advised. A good patent attorney will be able to help identify the defining features of your target product, create appropriate search terms and evaluate whether the references in question may preclude you from selling your target product absent a license from the relevant third-party patent holder. In the event that a third-party patent or patent application is deemed to be different but still close to your target product and it is owned by a large, litigious company, the reality is that weakly supported lawsuits brought by deep pockets can create real problems for entrepreneurs at the point the target product becomes profitable. Moreover, problems can be created at the fundraising stage if the potential investor discovers an FTO issue during due diligence and considers the risk of lawsuit to substantially affect the value proposition for your target product. FTO searches can range in price from several thousand dollars to tens of thousands of dollars depending on the complexity of the target product, how crowded the patent landscape is, and how many references are close to the target product.
The first questions to ask before embarking on a mission to bring a product (whether from scratch or by repurposing) to market are: “Do I have, or is there room for, ample IP protection to establish market share for the target product? And do I have, or is there a path to, freedom to operate in the market as intended?” The answer to these questions will substantially affect your ability to attract suitable investment and partners for development and commercialization of the target product. The importance of understanding the value of your patent estate cannot be underscored enough if you wish to begin with the end in mind.
The strategy for global filings also needs to be considered with the end partner/investor in mind. Large pharmaceutical partners will generally want and expect worldwide patent filings in the largest eye-care markets, including the United States, Japan, and Europe (at least the big five in the EU), Latin America and other large markets that respect IP. A common issue in the early stage of development is the IP budget, and generally the entrepreneur will need to prioritize the most lucrative markets based on commercial value. Early discussions with potential exit partners are invaluable in this regard.
Consider the scenario in which a pharmaceutical company owns a patent covering, or claiming, the chemical structure of a small molecule that has expired. The company also owns patents claiming methods of using the small molecule to systemically treat various diseases, and those patents will be in force for another 10 years. The method of use patents do not disclose eyedrop formulations of the compound for use in treating ophthalmic diseases, because previous research had suggested it to be non-fruitful due to formulation issues. However, in an inventive moment, an ophthalmologist entrepreneur formulates the compound successfully for animal experiments. The formulation work and experimentation generates surprising results that an eyedrop formulation of the compound is possible (i.e., stable) and that it likely will be efficacious in treating the disease, thus yielding potentially patentable formulation, method of use and possibly manufacturing claims.
Despite the apparent simplicity of the foregoing example, it is important to note that the patent law Doctrine of Inherency is often relevant within the context of repurposing drugs. For example, a patent applicant might not be entitled to a new method of use claim directed to the use of a new compound to treat glaucoma if a prior art reference describes an existing patented compound that is in the same class as the new compound and that operates by the same mechanism of action as the new compound. The reason is that because the existing compound is in the same class and has the same MOA as the new compound, it is inherent that the existing would also treat glaucoma. Therefore, the prior art reference would anticipate (render non-novel) the claim directed to the use of the new compound to treat glaucoma. A formulation claim may still be available in our example as the prior art suggests that formulation challenges exist and that there is room for invention in solving these challenges, provided that the non-obviousness bar to patentability can be overcome.
While the preceding hypothetical purports to open the doors of potential opportunity, be cautioned that (just as with all issues surrounding the complexity of patent law) a competent patent attorney should be consulted at the appropriate inflection points along the way.
Again, it is important to define the target product profile early, identifying how the product will be protected from competition, and to have early discussions with potential partners to define how the IP strategy will impact the value of the product.
The authors comprise the Corporate Development Team at Ora Inc. They thank Andrew Warner, counsel at Ora, for his assistance and input on this column. They welcome comments; for further information, please contact