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| The Valley of Death was not a nice place |
This is the fifth post in a series of six on biotech.
This post is focused on financing and protecting research into new therapies, which is what this Kat knows most about. Clearly there are other areas of biotech which are also commercially important, such as industrial biotech, agricultural innovation and the increasingly important bioinformatics sector.
The changing biotech finance landscape
Commercial biotech has different risks depending on the stage of the research. The risk that the technology simply wont work is always there, and is something that might only be discovered 10 years into a project. Failure rates of around 85% are quoted for biotech research into new therapies. At the early stage there is also a finance risk, the so-called valley of death, where there is a danger that the small amounts of seed funding that are available will not be enough to do the initial research to validate the technology. Until the technology is validated there will be little interest from potential commercial partners or investors.
Until a few years ago many early stage biotech companies would aim to sell themselves to large pharmaceutical companies (big pharma) or launch on the stock market as soon as possible, given the assumption that the science would be likely to fail at some point, i.e. it was about exiting quickly. However investors and big pharma are now wiser. Instead of buying biotech companies big pharma now prefers to fund long-term research collaborations, making funding conditional on milestones being achieved, and in the process spreading the risk. So biotech companies have been forced to change their short-term thinking to a strategy of going long. That means having belief in their science and taking a long-term view when making decisions.
The new collaborative way of doing biotech research
Collaborative research is increasingly being seen as a better way of approaching difficult problems. Big pharma now has closer ties to academic research and is developing new ways of sharing data. In general in the biotech sector many more strategic partnerships are happening between companies. Open innovation models are coming into existence in the biotech research ecosystem.
This Kat believes that within such collaborative research patent rights have a different role. It is less about taking advantage of a monopoly and more about defining what a party is bringing to the research ecosystem. Having specific patent rights as the basis of collaboration negotiations certainly helps to better define each partys position, allowing the discussion to be more focussed.
Why are the claims so important in defining the invention in biotech?
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| One must listen very carefully in negotiations about what the contribution is |
As discussed in the latest post in this series (see the T cell example), for biotech the way we understand and define the contribution will determine claim scope. In the engineering field if we set out to make an antigravity machine, and we succeed, then the invention concerns an anti-gravity machine, and it will normally be apparent what the scope of the claims should be. However in biotech we often have data to which we bring inventor insight, and that is an important part of the extrapolation that is used to define claim scope. That extrapolation will allow us to see what technology areas the invention can be applied to. Crucially, research companies will often not perform this analysis until they are drafting a patent application. So it is not until they decide to file a patent application that they really know what the invention is, and what its value might be. The drafting of claims is therefore important in allowing the research company to itself see and define the contribution it is making, and so what it is bringing to the negotiating table.
Ideally patent applications should be filed for all significant data, applying inventor insight to define the contribution. That will assist the company in deciding which patent rights to give to others, or sell or keep to themselves within the ecosystem.
What does the patent application need to achieve in biotech?
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| Always consider the entire ecosystem when deciding on what to file |
The development of a new therapy can take 10 to 15 years. Patent applications will be filed for significant data generated during that time. The claim scope of each case will need to contribute to somehow protecting a therapy which is not yet developed, and so a certain level of predicting is going to be required. Before a product has been developed most of the value of a small biotech company can be in its patent portfolio. In previous times, when a quick exit was the intention, filing many patent applications was important, with less thought being given to how difficult examination would be and the realistic claim scope that would be granted. However, now that going long is the new strategy it is more important to consider whether useful protection will actually be obtained, and perhaps be more selective on filing new cases.
What does the patent portfolio need to achieve?
Each patent application will have a place within a portfolio that covers the commercial area of interest, preferably providing several layers of patent protection in important areas. Later cases will normally be more valuable because they are focused on the eventual commercial product and being filed later will protect the product when it is generating most revenue. However earlier cases in the portfolio will be prior art for these later cases, and that must be borne in mind when reviewing the contents of each case. The portfolio also needs to be built at a rate where it is affordable, bearing in mind that patent costs increase with time on a patent case.
Changing patent strategy
In many companies the filing of patent applications is inventor-driven. The inventors decide which experimental findings are important enough to be brought to the attention of the rest of the company for consideration of a new filing. That will depend on their understanding of the purpose of the research, which might not fully recognise the worth of each finding to other players in the ecosystem.
This Kat believes that collaborative strategies will help to change that situation. If knowledge exchange continues to become a more important part of biotech research, then data will start to be assessed based on its value to the ecosystem as a whole. That means that decisions on which data to file on will increasingly need input from those that understand what might be important to other players in the ecosystem.
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