bioentrepreneurship: intellectual property: what do investors look for?

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Dr. Andre UddinVP Strategic Development

Transition Therapeutics Inc.

Intellectual Property

What Do Investors Look For?

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! Excellent Management

! Strong Balance Sheet (2 years of cash)

! Products Targeting Large or Untapped Markets

! Strong Pipeline of Products

! Solid Intellectual Property

Criteria for

Biotech Investment

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! Clinical Data

! Clinical Trials

! Competitors

! Product Development program

! Diseases

! Health Care Savings

! Manufacturing

! Technology Platform

Other

Considerations

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Time

Disruptive forces

Business declines

Value

Creation

Business goes onto

new heights

When the balance of forces shifts from the old structure, from the old ways of

doing business and the old ways of competing, to the new.

- Andrew S. Grove

“ “

Only the Paranoid Survive

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1820~1880 Natural Products have active principles

1880~1930 Isolation of chemicals from plants, dyes and organic chemistry

1930~1960 Large scale synthesis

1960~1980 Determination of Mechanisms of ActionChemical TransmittersBiological Receptors

1980~2000 Advent of Molecular BiologyMonoclonal AntibodiesDrug DeliveryGenomics

2000~Present Convergence of Pharmaceuticals/Medical DevicesRNA interference (RNAi)

The Pharmaceutical Industry

Strategic Inflection Points 1820 to

present

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Patent Expiration

Sales

GenericsLaunch

Pharmaceutical

Life Cycle

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Building

A Patent Estate

High

NCE Patents

Mechanism of Action Patents

Method of Treatment Patents

Formulation Patents

NCE Salt/Solvate/Polymorph/Crystalline habit Patents

Process Patents

Gene Patents

Low

Source: GlaxoSmithKline

VA

LU

E

Typical Pharma Patent Portfolio

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Typical Modern Pharma

R&D Process

Source: GlaxoSmithKline

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BMS Taxol Cancer > $1B/yr (peak)

GSK AZT AIDS $700M/yr (peak)

Astellas Adenocard (adenosine) Cardiac $285M/yr (2004)

Celgene Thalidomide Cancer $418M/yr (current annual run rate)

Company Drug Use Sales (USD)

KOS Pharma Niaspan (niacin) Cholesterol $441M/yr (2005)

Successful Pharmaceuticals

with Exclusivity/Method of Use Patents

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A fixed period of time within which a regulatory authority will not allow approvalof a generic abbreviated/abridged application of an approved drug

Regulatory

Exclusivity

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““Missed ChancesMissed Chances”” Goldie Goldie BlumenstvkBlumenstvk, Chronicle of Higher Education, Chronicle of Higher Education

A Cautionary Tale

In science the credit goes to the man who

convinces the world, not to the man to whom the

idea first occurs.

- Sir William Osler

“ “

! Dr. Horwitz, synthesized AZT in 1964 as a potential anticancer agent -didn’t work

! Developed and sold under a patent once owned by GlaxoSmithKline

! AZT became a highly successful anti-HIV drug (peak sales of US$700M)

! Dr. Horwitz nor his university ever saw a penny

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! 1983 Dr. Kary Mullis at Cetus Corporation conceives of Polymerase Chain Reaction(PCR). PCR is a simple yet elegant process that enables the production of virtuallyunlimited copies of genetic material in the laboratory.

! 1985 Cetus files first PCR patent application. First publication of PCR by Cetusappears in Science.

! 1987 Cetus is awarded fundamental patents for PCR.

! 1989 Cetus agree to begin joint development of diagnostic applications for PCR.

! 1991 PCR patent and related technology sold by Cetus to Roche for US$300M

! 1993 Dr. Kary Mullis shares Nobel Prize in Chemistry for conceiving PCR technology

Case Study: PCR

Anything is Possible

Highly Valued Patents

It is hard to exaggerate the impact of PCR…

actually deserves timeworn superlatives like

"revolutionary" and "breakthrough.”

- Tabitha M. Powledge

“

“

Source: Roche

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! 2005 Sirna Therapeutics first company to advance RNAi compoundinto human trials

! April 3, 2006 Sirna Therapeutics Granted First Broad siRNA Patentfor a Gene Target in the United States

! Present - Sirna has 52 issued patents and more than 270 pendingpatents in the area of RNAi

! October 30, 2006 Merck purchases Sirna for US$1.1 BN



Case Study: RNAi

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A man had better have anything happen to him in this world

short of losing all his family by influenza, than have a dispute

about a patent.

- 1892 Quote from Master of the Rolls (Head of English C of A)

“

“

Patent

Enforcement

I have come to regard the law courts not as a cathedral but

rather as a casino.

- 1977 Quote from Editor of Private Eye

“ “

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! 1998 Angiotech licenses paclitaxel-coated stents toCook/Boston Scientific

! 2004 Angiotech/Boston Scientific launched TAXUS in US- peak sales of US$2.6BN

Angiotech/Boston Scientific’s Paclitaxel coated stent

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! 1999 Conor founded to develop stents which have drug reservoirs in their struts

! February 1, 2005 BSX/Angiotech sues Conor for patent infringement

! February 18, 2005 Conor Medsystems Files lawsuit to revoke Angiotech patent

! February 17, 2006 Conor receives CE mark for its CoStar paclitaxel Drug-Eluting Stent

! February 24, 2006 U.K. High Court of Justice ruling invalidates Angiotech Patent onPaclitaxel Coated Stents

! November 16, 2006 JNJ announces the purchase of Conor Medsystems forUS$1.4BN



Case Study: Getting around Angiotech’s

Paclitaxel coated stent patents

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1. Avoid early public disclosure. File first, then disclose.

2. Do not publish interim results

3. Research the market and technical novelty of an invention before patent filing

4. If you cannot protect the patent from infringement, don’t file

5. File in the US first

Key Rules

for Patenting