The proceedings at the US Patent and Trademark Office (USPTO) Patent Trial and Appeal Board (PTAB), to determine who is entitled to foundational patent rights relating to CRISPR/Cas9 ‘gene editing’ technology, have been steadily progressing since my last update back in January. As a reminder, the parties vying for ownership of these rights are a group led by Berkeley Professor of Chemistry Jennifer Doudna and her collaborator Emmanuelle Charpentier, and a group led by Feng Zhang at the Broad Institute, Inc and MIT. Although a little reductive, it is convenient for me to refer to these two groups as ‘team Doudna’ and ‘team Zhang’ respectively. In a very recent development, on 11 April 2016, the ‘senior party’ in the proceedings (team Doudna) filed a notice stating that ‘in accordance with Standing Order ¶ 126, Senior Party hereby notifies the Board that the parties have discussed settlement, and have made a good faith effort to settle the interference, but no agreement has been reached at this time.’ It was necessary for the notice to be filed on or before this date, because the PTAB encourages parties to settle priority disputes between themselves where possible, and the referenced paragraph of the Standing Order in fact makes it compulsory for settlement discussions to be initiated by the ‘last named party’ (which, again, happens to be team Doudna in this case) within three months of an interference being declared. The CRISPR interference was declared on 11 January 2016.
Interestingly, however, when the PTAB judges raised the matter of settlement discussions during a telephone conference on 10 March 2016, counsel for team Zhang stated that ‘we have not had that opportunity one way or the other to discuss settlement’ while counsel for team Doudna confirmed his understanding that ‘there has not been any formal discussions between the parties’.
So up until two months after the interference was officially declared there had been no discussions about a possible settlement. Then, during the final month of the period for commencing mandatory discussions, suddenly ‘a good faith effort’ was made to settle the dispute, but no agreement was reached. Pardon my cynicism, but if you believe that the timing of these events reflects a genuine effort at settlement, then perhaps I can interest you in the purchase of a nice bridge! On the contrary, it seems pretty clear that at least team Doudna (whose obligation it was to initiate mandatory settlement discussions, and file the notice) has no desire to settle the interference. In fact, it is quite likely that neither party has any real interest in settlement.
Although I have previously expressed the opinion that a settlement agreement may provide a better outcome for all concerned, I no longer believe that this is a viable option. I now think it likely that the technology is just too valuable for either party to give ground, particularly at this early stage. In all likelihood, these interference proceedings are going to run their full course. Yes, they will be incredibly expensive, but the cost is just a drop in the ocean compared to what is at stake in the main game of commercialising CRISPR/Cas9 technology.
‘Team Doudna’ Associated Companies Proliferate
Caribou Biosciences is a company co-founded by Jennifer Doudna ‘to drive the commercialization of applications based on the remarkable nucleic acid modification capabilities found in prokaryotic CRISPR systems.’In November 2014 Caribou, along with Atlas Venture, co-founded Intellia Therapeutics to develop curative medicines using its CRISPR-Cas9 platform. According to Caribou, ‘Intellia has exclusive access to the platform for the development of new human gene and cell therapies as well as anti-viral therapies.’ At that time, Intellia received US$15 million in series A funding, led by Atlas and Switzerland-based global healthcare giant Novartis. Less than a year later, in September 2015, Intellia secured a further US$70 million in series B financing, bringing in a number of new investors.
In the meantime, Caribou itself had received US$11 million in series A funding in April 2015.
Most recently, on 11 April 2016, Intellia announced a licensing and collaboration agreement with NASDAQ-listed Regeneron Pharmaceuticals, Inc., under which Intellia will receive a US$75 million upfront payment, along with milestone and royalty payments on potential Regeneron products. Under the terms of the agreement, Regeneron gains the exclusive right to discover and develop CRISPR-based products against up to 10 targets. Regeneron has also agreed to invest up to $50 million in Intellia’s next equity financing.
Meanwhile, Doudna’s collaborator Emmanuelle Charpentier has co-founded, and acts as a Scientific Advisory Board member to, CRISPR Therapeutics, a company with offices in Switzerland, the United Kingdom, and Cambridge, Massachusetts. In April 2014, the company announced that it had raised US$25 million in series A investment from Versant Ventures. A year later, it announced an additional US$64 million in combined series A and series B financing, led by SR One (GlaxoSmithKline's independent corporate healthcare venture capital fund) and biopharmaceutical company Celgene Corporation.
Conservatively, therefore, I count investments and other cash input to date of at least US$260 million in companies associated with team Doudna.
Meanwhile ‘Team Zhang’ Company Goes Public
On the side of team Zhang, there is Editas Medicine, a company founded in 2013 by Feng Zhang along with four of his collaborators, with US$43 million in series A financing led by Flagship Ventures, Polaris Partners and Third Rock Ventures. In August 2015 Editas raised a further US$120 million in series B funding.In February 2016, Editas raised nearly US$110 million through an initial public offering (IPO) on the NASDAQ exchange. At the time of writing, Editas (NASDAQ:EDIT) shares are trading at around US$40, up from their pricing of US$16 at IPO, giving the company a market capitalisation of just over US$1.5 billion.
Conclusion – Settlement Unlikely
The CRISPR/Cas9 patent rights at issue in the USPTO interference proceedings are not the be-all and end-all for any of the companies discussed above. Each scientific team brings much more to the companies with which they are associated than just the (disputed) inventorship of a few early patents. All of the companies involved in the commercialisation of CRISPR gene editing technologies speak in terms of ‘platforms’. Here they are talking not just about current and future patented processes, but also about the skills, know-how, equipment and other tangible and intangible assets that each group of researchers brings to the table.Nobody invests a quarter of a billion dollars in companies whose success or failure hinges on the fate of a single patent. Ultimately, the foundational patents in dispute may turn out to be relatively unimportant, in and of themselves, to the successful commercialisation of CRISPR/Cas9 technology. This does not necessarily mean that anybody using the technology will not require a licence. But it is likely that the follow-on patents and other IP resulting from continuing development and commercialisation will be at least as important to any practical application of the technology. It is highly unlikely that any one party will own all of the necessary rights, and therefore licensing and cross-licensing programs – perhaps even patent pooling – will be essential for every company to achieve commercial success.
In this context, not only will the parties actually involved in the patent interference proceedings not settle the dispute, they quite probably have no business doing so! A settlement would, to some degree or another, affect every company and investor which ultimately has ties back to the patent rights at issue, all of which may consider that they therefore have some right to a say in any terms of settlement. This includes publicly listed Editas, which is additionally answerable to the market. The only practical approach may be to let the matter play out at the PTAB (and then, perhaps, on appeal to the Federal Circuit and beyond).
It will certainly be interesting to see how events in the interference proceedings affect the Editas share price. While this will not necessarily tell us how much the patents are worth, it will at least tell us how much the market thinks they are worth.
Note: For those interested in following along with the PTAB proceedings, materials relating to the dispute can be accessed via the USPTO online records for interference no. 106048. These records include documents filed by the parties, orders of the judges hearing the dispute, and transcripts of formal hearings and conferences.
0 comments:
Post a Comment