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Oct. 25 — A hedge fund coalition established a “reasonable likelihood” of succeeding in its challenge to claims covering the short bowel syndrome treatment Gattex, the patent board ruled Oct. 23 in allowing the challenge to go forward.
The Coalition for Affordable Drugs, which was co-founded by hedge manager Kyle Bass, had filed two petitions to the Patent Trial and Appeal Board (PTAB) for inter partes reviews (IPR) for different claims of NPS Pharmaceuticals' patent. Shire Plc acquired NPS this year for $5.2 billion.
NPS had offered counters to the coalition's arguments that the claims-at-issue in U.S. Patent No. 7,056,886 are unpatentable as obvious by prior patents and publications and had also contended that the hedge fund's planned use of the IPR proceedings was an abuse of process.
The board accepted most of the coalition's arguments and concluded that at this point, the coalition had offered sufficient evidence to proceed to trial.
As it had in its denial of Celgene's motion for sanctions and denial of review for the coalition's challenge of Celgene's blood cancer patents, the court didn't find that the petitions constituted abuses of process.
The coalition has more than two dozen IPR petitions pending that challenge drug patents. Of the eight the PTAB has reviewed to date, it has denied five and granted three—the two NPS challenges and a challenge to claims in Shire's patent on the colitis treatment drug Lialda.
The IPR is a process created by the America Invents Act (AIA) that allows third-party challenges to existing patents on the grounds that the claims are either anticipated or rendered obvious by prior art, which is defined as published patents or publications.
Shire said in a statement that it will continue to pursue all legal options, that the PTAB's trial process is expected to take more than a year, and that Shire will have the opportunity to present arguments in support of validity of a subset of the claims of the '886 patent, which expires in 2022.
The way the coalition and other hedge fund-related entities use the IPR process has prompted calls for Congress to revise the AIA to clarify the proper use of IPRs.
In its first petition, the coalition challenged claims 36 to 52 and 61 to 75 of the '886 patent. The patent discloses L-histidine stabilized drug formulations of glucagon-like peptide-2 (GLP-2) and GLP-2 analogs and that the GLP-2/GLP-2 analog formulations of the invention exhibit “superior stability following storage and/or exposure to elevated temperatures.” The formulations further comprise a phosphate buffer, L-histidine, as a stabilizing amino acid and mannitol or sucrose as a bulking agent. The GLP-2 analogs may be agonists or antagonists.
The coalition cited this prior art that rendered the claims-at-issue obvious: U.S. Patent Nos. 65,789,379; 5,652,216; and 5,496,801; an international patent; and two studies as reported in journal articles.
The '379 patent discloses pharmaceutical compositions comprising a therapeutically effective amount of a GLP-2 analog. The '216 patent discloses stabilized pharmaceutical compositions comprising glucagon and a stabilizing amount of a pharmaceutically acceptable ampholyte, such as histidine. The international patent discloses a package or kit containing GLP-2 or a GLP-2 analog in lyophilized form and “suitable for reconstitution in a suitable carrier, such as phosphate-buffered saline,” and the '801 patent relates freeze-dried preparations containing parathyroid hormone that has been stabilized with an excipient and buffering agent.
One of the journal articles discloses an assay for the screening and identification of GLP-2 analogs that uses a cell line that expresses the GLP-2 receptor. The other discloses that protein drugs are generally chemically and physically unstable in solution, and freeze-drying is frequently used to obtain an acceptable shelf life.
The coalition argued that the claims-at-issue were rendered obvious by this prior art and are therefore unpatentable.
NPS responded that the petition didn't adequately address the differences between glucagon and GLP-2 and, thus, “it would not be predictable that each could interact similarly or could be stabilized in formulation by L-histidine.”
In a decision authored by Administrative Patent Judge Sheridan K. Snedden, the board said that it did note the differences between glucagon and GLP-2 but still found that the coalition had offered sufficient evidence to institute trial.
“The information relied upon in the Petition tends to suggest that L-histidine has a stabilizing effect on peptide drugs generally, indicating that properties of peptides affecting L-histidine association (and, therefore, peptide stabilization) are relevant in a manner distinct from properties of peptides affecting biological activity of the peptides,” Snedden wrote.
The board also rejected NPS's arguments that the secondary considerations of the long-felt need addressed by the drug and its commercial success justified a finding of non-obviousness. Snedden wrote that there was insufficient information to establish sufficient nexus between the commercial success of the product and any novel element recited in the claims and whether the drug satisfied a long-felt need.
Accordingly, the board granted the coalition's petition, which moves the challenge to trial.
In the coalition's second petition, which challenged claims 1 to 45 of the '886 patent, the coalition cited the same prior art as the first petition and contended that combinations of them rendered the claims-at-issue unpatentable as obvious.
In its second decision, the PTAB concluded that the coalition had provided sufficient evidence to institute an IPR proceeding for claims 1 to 27, 31 to 40 and 44 to 45 of the '886 patent. The board also ruled that the coalition hadn't provided sufficient evidence for claims 28 to 30 and 41 to 43 of the patent, which deal with lyophilized formulation and which the coalition had alleged had been made obvious by the '379 and '261 patents and one of the journal articles.
NPS argued that both petitions represented an abuse of the IPR process because their motive was commercial profit through the short-selling of stock. Snedden wrote in both decisions that the board took no position on the merits of short-selling stock as an investment strategy, that NPS didn't argued that the strategy is either illegal or unregulated and that the petitions' arguments that their goals are to improve patent quality is in keeping with the purpose of the AIA.
Both petitions were heard before APJs Snedden, Jacqueline Wright Bonilla and Lora M. Green.
The coalition was represented for both petitions by Merchant & Gould P.C., Atlanta and Alexandria, Va., and NPS by Troutman Sanders LLP, New York and Atlanta.
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