The experimental hepatitis C treatment that BioCryst Pharmaceuticals (NASDAQ:BCRX) wants to take into clinical trials this year has run into an unexpected hitch: a patent for the compound was awarded to another pharmaceutical company.
Biota was granted the patent in “an apparent error,” BioCryst said in a March 12 securities filing. The Feb. 21 patent awarded to Biota covers the molecular structure for the hepatitis C drug that the Australian company is developing. Rob Bennett, BioCryst’s executive director for investor relations and communications, said both companies claim the same molecular structure in their patent applications. But Durham, North Carolina-based BioCryst believes it was the first to invent that molecular structure.
BioCryst says BCX 5191 is a compound that was discovered within its labs. Being the first to discover the compound matters because patents in the United States are currently awarded to whoever is the first to invent. In most of the world, patents are awarded to the party that is the first to file the patent application. Next March, the United States will change to a first-to-file system, a change introduced under the “America Invents Act” patent reform legislation passed last year.
Under a first-to-file system, it’s much easier to determine which party can claim the patent rights — whoever files first, wins. The first-to-invent system leaves more ambiguity, said Nathan Letts, a life sciences patent attorney at The Eclipse Group, an intellectual property law firm. To challenge Biota’s patent, BioCryst must first pursue with the USPTO a procedure called an interference, a proceeding to determine priority among competing patents. If the patent office declares an interference, the companies must then produce documents establishing the time lines for their inventions.
BioCryst’s patent for BCX 5191 is still pending. Biota’s patent shows that the company filed its application on July 1, 2009. Biota also filed a provisional application nearly a year earlier. It’s unclear whether the intellectual property in dispute is referenced in the 2009 filing or the 2008 provisional application. Under a first-to-file standard, BioCryst would easily claim rights to the compound over Biota. BioCryst said that it filed its patent application 18 months before Biota’s filing, which would put the BCX 5191 patent application ahead of both Biota filings. But under the current first-to-invent system, it will be up to the USPTO to determine which company invented the disputed molecular compound first.
At one point, USPTO documents stated that less than 1 percent of patent applications became involved in interferences, Letts said. He is not sure how common these disputes are now but he added that the patent office does make mistakes. Resolving an interference is neither quick nor cheap. USPTO statistics show the process can take up to two years. BioCryst has hired Washington, D.C.-area law firm Finnegan to represent the company. The median cost in 2011 for a two-party patent interference in Washington was $750,000, according to the American Intellectual Property Law Association.
BioCryst has high expectations for BCX 5191, which the company aims to develop into a drug with once-a-day dosing and fewer side effects compared to existing hepatitis C treatments. When BioCryst discussed 2011 financial results last month, the company also released results of preclinical studies, which showed that BCX 5191 has the potential to be superior to a hepatitis C compound from Gilead Sciences (NASDAQ:GILD). Gilead acquired that compound and its developer, Pharmasset, for nearly $11 billion.
Hepatitis C represents a global market of more than 170 million patients. In light of the Pharmasset acquisition and pharma’s interest in the hepatitis C space, BioCryst hopes another pharmaceutical company will strike a deal with BioCryst to develop and commercialize BCX 5191. First, BioCryst needs to take its drug candidate into human trials.
Bennett said that the patent dispute has not altered plans to file an investigational new drug application with the U.S. Food and Drug Administration in the fourth quarter of this year. Beyond that, chances are that pharmaceutical companies looking at BioCryst and BCX 5191 will hold off on any possible partnership deal until it’s clear which company holds the rights to the molecule.