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Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 cted for public/non-client distribution cted for public/non-client distribution

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Page 1: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

Confidential1

Patent Filing Strategies for Pharmaceutical Products

Robert Silverman Concert Pharmaceuticals

NJIPLADecember 2008

*Redacted for public/non-client distribution*Redacted for public/non-client distribution

Page 2: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

2Confidential

Reality of the Future: Success in the Biopharmaceutical Industry

300 – 400Public

4,000 – 5,000New Biotech

20 – 30Product

10 – 20Profitable

4 – 6Growth

Leading Biopharmaceutical

Companies3-4

Page 3: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

3Confidential

Global Filing Strategy – Considerations

• Need to protect a broad geographic market• 2007 worldwide sales about $675 billion

• Most companies file in 50-70 countries for promising drug candidate

• Long development time before commercialization• Discovery to market = 12-15 years

• Uncertainty in getting to market• 1 in 5 compounds in Phase I obtain FDA approval

• Lengthy patent applications can be over 100 pages

Page 4: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

4Confidential

Patent Timelines

Years 0 1 2.5 6 21

File US Provisional Application

File PCT Application

PCT National Stage - $$$

Patent Expiration

Patent Grant

EP Validation Phase - $$$

Page 5: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

5Confidential

Patent and Drug Development Timelines

Years 0 1 2.5 6 11 21

PCT National Stage - $$$

FDA Approval

Patent Expiration

EP Validation Phase - $$$

Phase

Preclinical 2 3 FDA Review1

Page 6: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

6Confidential

Global Filing Strategy – Basic Approaches

• Follow conventional wisdom (?)

• Largest markets approach • Disregard cost of filing

• Relative Cost-Benefit approach• Cover the most market per filing dollar

• Valuation approach

Page 7: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

7Confidential

Top Ten Pharmaceutical Markets

+ IMS Health Services

* Based on a 100 page application with 25 claims

2005 Rank 2002 Rank Country%World Market

(2005)+

PCT National Stage Costs (US Dollars)*

1 1 U.S.A. 44.40% 3,323

2 2 EPO 29.13% 9,857

3 3 Japan 10.61% 15,605

4 4 Canada 2.38% 2,353

5 6 China 1.64% 8,700

6 5 Mexico 1.32% 8,406

7 8 South Korea 1.30% 10,762

8 7 Brazil 1.23% 6,985

9 10 Australia 1.12% 3,398

10 9 India 0.88% 2,640

Page 8: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

8Confidential

Second Ten Pharmaceutical Markets

+ IMS Health Services

* Based on a 100 page application with 25 claims

2005 Rank 2002 Rank Country %World Market (2005)PCT National Stage

Costs (US Dollars)*

11 14 Russia 0.66% 7,413

12 11 Taiwan (non-PCT) 0.53% 6,725

13 16 Argentina (non-PCT) 0.36% 3,834

14 15 Indonesia 0.35% 5,628

15 13 Venezuela (non-PCT) 0.33% 3,905

16 23 South Africa 0.33% 2,180

17 19 Norway 0.28% 15,691

18 18 Philippines 0.26% 2,220

19 21 Thailand (non-PCT) 0.24% 7,142

20 17 Colombia 0.22% 3,023

Page 9: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

9Confidential

Small Pharmaceutical Markets: 21st and Beyond

2005 Rank 2002 Rank Country %World Market (2005)+

PCT National Stage Costs (US Dollars)*

21 12 Saudi Arabia (non-PCT) 0.20% 7,468

22 20 Pakistan (non-PCT) 0.20% 2,334

23 NA Algeria 0.18% 8,970

24 22 Egypt 0.15% 4,799

25 25 Chile (non-PCT) 0.15% 2,985

26 29 New Zealand 0.13% 1,894

27 NA Ukraine 0.11% 9,077

28 27 Morocco 0.10% 10,052

29 30 Hong Kong 0.08% 1,755

30 26 Ecuador 0.08% 2,313

31 31 Bangladesh (non-PCT) 0.07% 1,607

32 33 Malaysia (non-PCT) 0.06% 1,854

33 32 Peru (non-PCT) 0.06% 4,696

34 24 Israel 0.06% 1,930

35 NA Lebanon (non-PCT) 0.06% 7,450

36 36 Singapore 0.05% 1,693

+ IMS Health Services

* Based on a 100 page application with 25 claims

Page 10: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

10Confidential

Relative Cost – Benefit Analysis: Methodology

• Calculate Return Value Score for each country at PCT national

stage and for non-PCT countries

• RVS = (Pharma Sales in Country) (Patent costs)

• Normalize scores based on Japan = 100

• Use RVS to select groups of countries

Page 11: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

11Confidential

Cost – Benefit Analysis: Information Resources

• World Pharmaceutical Market ($ Sales) • IMS Health Services

• www.imshealth.com

• Patent Costs• IP Global Estimator

• www.globalip.com

• 100 page patent application, 25 claims

Page 12: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

12Confidential

Relative Cost Benefit Ranking Based on RVS

2005Rank Country

Return Value Score

(normalized)

1 U.S.A. 1964.8

2 EPO 434.5

3 Canada 148.7

4 Japan 100.0

5 India 48.8

6 Australia 48.7

7 China 27.7

8 Brazil 25.9

9 Mexico 23.0

10 South Africa 22.4

11 South Korea 17.8

12 Philippines 16.9

13 Argentina (non-PCT) 13.8

14 Russia 13.1

15 Venezuela (non-PCT) 12.6

2005 Rank Country

Return Value Score

(normalized)

16 Pakistan (non-PCT) 12.4

17 Taiwan (non-PCT) 11.7

18 Colombia 10.7

19 New Zealand 10.1

20 Indonesia 9.3

21 Chile (non-PCT) 7.2

22 Hong Kong (non-PCT) 6.9

23 Bangladesh (non-PCT) 6.5

24 Ecuador (non-PCT) 5.1

25 Malaysia (non-PCT) 4.9

26 Thailand (non-PCT) 4.9

27 Egypt 4.7

28 Israel 4.5

29 Singapore 4.3

30 Saudi Arabia (non-PCT) 4.0

Page 13: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

13Confidential

40%

50%

60%

70%

80%

90%

100%

0 50,000 100,000 150,000 200,000 250,000

Cost (US Dollars)

US, Europe, Canada and Japan

Plus India, Australia, Brazil, Mexico and China

Cost vs Market Coverage for Non-PCT National Stage

Page 14: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

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Impact of Translation Costs

• Translations account for 46-72% of filing costs for 100 page patent application

• Translation savings do not greatly improve low RVS scores

• Thailand RVS = 4.9

• Thailand RVS (with 50% lower translation costs) = 7.7

• Norway RVS = 2.6

• Norway RVS (with 50% lower translation costs) = 4.1

Page 15: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

D C B A

Country Groups

% M

ark

et

Co

vera

ge

$0

$50

$100

$150

$200

$250

$300

(th

ou

sa

nd

s)

% Market Coverage

PCT National Stage Cost

PCT Filing Costs vs Market Coverage

Page 16: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

16Confidential

Millennium’s “A” List in 2005

• US, Europe, Japan, Canada, China, Brazil, Mexico, South Korea, India, Australia, Russia, the Philippines, South Africa, Israel, Norway, Taiwan and Argentina

• “A” List represented 94.5% of 2002 world pharma market

• Country list is flexible

Page 17: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

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0

10

20

30

40

50

60

70

80

90

100

Benchmark MarketCoverage

Millennium MarketCoverage

Millennium Costs as % ofIndustry Costs

2003 MPI Study. For important A patent applications, the benchmark group filed in countries representing 97.2% of the world pharma market, while Millennium filed in 94.5% of the world market. At the PCT national phase, MPI’s costs were 60% of the benchmark group costs, which was about $83,000 less per application.

% Millennium Market Coverage and Costs vs Industry Average

Page 18: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

18Confidential

Where should we protect in Europe?

• European Union expansion from 15 to 25 countries (May 2004)

• Central and Eastern European Countries: Poland, Hungary, Czech Republic, Slovakia, Slovenia, Bulgaria, Ukraine, Lithuania, Belarus, Latvia and Estonia

• Combined market of 11 CEE countries < Spain

• Parallel imports and interdependence of markets

• 10 years marketing exclusivity in EU

Page 19: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

19Confidential

Country 2005 Rank % World MarketEP Validation

Cost

Return Value Score

(normalized)

France 3 5.76% 9,238 92

Germany 4 5.50% 9,969 81

Italy 5 3.45% 9,506 53

United Kingdom 6 3.42% 1,122 449

Spain 7 2.64% 10,380 37

Turkey 13 1.22% 8,416 21

Belgium 16 0.80% 1,309 90

Poland 17 0.78% 8,594 13

Netherlands 19 0.65% 13,289 7

Greece 20 0.62% 8,222 11

Switzerland 21 0.59% 1,365 64

Sweden 22 0.57% 17,314 5

Austria 24 0.53% 3,237 24

Portugal 25 0.51% 10,329 7

Hungary 26 0.40% 11,758 5

EP Countries with Largest Market Size

Page 20: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

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Country 2005 Rank% World

MarketEP Validation

Cost

Return Value Score

(normalized)

Finland 27 0.37% 15,036 4

Denmark 32 0.31% 14,602 3

Czech Republic 33 0.29% 7,280 6

Ireland 38 0.23% 1,454 24

Slovak Republic 47 0.12% 6,987 3

Bulgaria 49 0.10% 1,653 9

Slovenia 51 0.09% 1,508 9

Lithuania 55 0.07% 1,880 6

Latvia 65 0.03% 1,253 4

Luxembourg 66 0.03% 986 5

Estonia 68 0.03% 8,353 <1

No market data for Cyprus, Iceland, Liechtenstein, Monaco and Romania

No market data for Albania, Bosnia and Herzegovina, Croatia, Serbia and Montenegro

Small Market EP Countries

Page 21: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

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Small Market Countries in the EU:Does Membership in the EU Matter?

• Parallel Trade within the EU• No evidence that patent protection affects parallel trade

• Economic Growth

• Patent protection may be required to protect a growing market

• EU Pharma Legislation

• Less need for patent protection because EU pharma law requires 10 years of market exclusivity

Page 22: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

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Using Net Present Value (NPV)

PV = Ct

(1 + rt)t

PV is present value

Ct is the cash flow in year t

rt is the discount rate for year t

NPV = PV – Patent Cost

Page 23: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

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NPV Inputs

• Drug sales during window of patent-only exclusivity• Window begins after regulatory exclusivity

• Country sales estimated from projected worldwide sales

• % Royalty (or margin) on sales

• Probability of success

• % Loss in sales due to generic competition

• Cost at EP Validation Phase

Page 24: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

24Confidential

Window of Patent-Only Exclusivity in the EU

Patent Expiration and End of Marketing Exclusivity are independent events, but roughly coincide

Years 0 6 11 21

European Marketing Authorization

Patent ExpirationEP Validation Phase - $$$

26

End of Marketing Exclusivity

Supplementary Protection

Page 25: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

25Confidential

Conservative Assumptions for NPV Analysis

• 5-Year window of patent-only exclusivity starting at year 15 after EP validation phase

• Annual worldwide sales = $1 billion

• 3% Probability of success (POS)

• 20% Royalty on Sales

• 80% Loss of sales due to generic competition

• Discount rate = 12%

Page 26: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

26Confidential

-10

-5

0

5

10

15

20

Poland

Hunga

ry

Finlan

d

Czech

Rep

.

Denm

ark

Slovak

ia

Sloven

ia

Bulgar

ia

Lithu

ania

Latvi

a

Estonia

NPV (in $ thousands) of patent investment at the EP validation phase for a worldwide billion dollar drug

NPV for Small European Markets

Page 27: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

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-4,000 -2,000 0 2,000 4,000 6,000 8,000 10,000

Base case

2% POS

4% POS

10% POS

10% royalty

30% royalty

3-year period

6-year period

7-year period

Net Present Value (Dollars)

Sensitivity Analysis for NPV of EP Patent in Slovakia

Page 28: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

28Confidential

Other Considerations

• Projecting Future Sales• New drug will not reach market for many years

• Specific Disease Indications• Market size varies depending on disease

• Obesity market not the same as HIV market

• Enforceability• Difficult to factor

• Other Patents Covering the Product

• Interdependence of Some Markets• Free trade may effect value of patent in some EU countries

Page 29: Confidential 1 Patent Filing Strategies for Pharmaceutical Products Robert Silverman Concert Pharmaceuticals NJIPLA December 2008 *Redacted for public/non-client

29Confidential

Robert Silverman

Concert Pharmaceuticals

99 Hayden Ave, Suite 500

Lexington, MA 02421

[email protected]

Thanks!

Certain information has been redacted from this presentation to make it suitable for distribution to the public.

Clients may obtain an unredacted copy on request.