Another WSJ article on biotech (HGSI discovery and patent claim).
March 16, 2000
AIDS Discovery Spurs Some to Challenge
A Patent Filing That Boosted HGS Stock
By MICHAEL WALDHOLZ
Staff Reporter of THE WALL STREET JOURNAL
At 8:13 a.m. on Feb. 16, a news release from Human Genome Sciences Inc.
crossed the news wires, and instantly its shares began soaring in premarket
trading. The company said it had just received a U.S. patent giving it
commercial ownership of a gene that HIV, the AIDS virus, exploits when it
infects a cell.
The news excited a hyperbolic Wall Street already powering biotech shares to
unprecedented highs, and within two days, HGS shares had leapt 41%, adding
$3.8 billion to the little company's value. The news release also got the attention
of a lot of big drug companies and academic scientists. They feared that HGS's
commercial custody of the gene meant it could conceivably block important
research into AIDS, or more likely demand a slice of a rich market that may
someday arise from drugs blocking HIV's access to the gene.
The company's claim has since set off a furious
debate questioning the validity and value of the
patent. That, coupled with a biotech-stock fall
this week set off by an ambiguous statement on
gene patenting from President Clinton and British
Prime Minister Tony Blair, has taken a little of
the steam out of HGS's stock, although it
remains far above its year-ago level.
But more important, both events have thrown into sharp focus a critical
question -- legal and, some would say, moral -- of the biotech age, one that will
affect drug development for years: Who exactly owns the genome, the
collection of all 100,000 or so human genes? And more specifically, can
companies using new computerized gene-sleuthing technologies make an
exclusionary patent claim to stretches of DNA without knowing their precise
function in the body?
After examining HGS's patent, some drug makers and intellectual-property
lawyers say its proprietary gene claim is far less valuable than the company
indicates. They note that, contrary to what the investing public naturally
surmised from the news release, the patent says nothing about AIDS. A close
look at the release and the patent shows that the announcement -- tossed into a
superheated climate for biotech stocks -- was at the least confusing. "I thought
the press release was misleading," says Sharon Seiler, a biotech analyst at
Punk, Ziegel & Co., New York. "I think the value of the patent in regard to
HIV is pretty close to zero." HGS says the news release was accurate.
As Dr. Seiler and others point out -- and as HGS's hard-charging chief
executive, William Haseltine, acknowledges -- when HGS uncovered the gene
and filed for a patent in 1995, it had no idea the gene was the long-sought
biochemical gateway used by HIV to infect cells. That was discovered about
six months later, without help from HGS, by four independent research teams,
all of which had been searching for the HIV gateway gene for years. The four
teams subsequently applied for their own patents, none of them yet issued.
These teams, whose collaborators include competing gene-hunting companies,
argue that identifying the gene's function in HIV makes their patent declarations
at least as valuable as HGS's and maybe more so. "The press release would
lead you to believe that HGS appreciated the role the gene plays in HIV, and
that simply is not true," says Mark Boshar, a lawyer at Millennium
Pharmaceuticals Inc., a Cambridge, Mass., HGS rival.
Besides the broad issue of gene ownership, the patent battle is important
because the gene is central to promising new HIV medicines now being
developed by Schering-Plough Corp., Pfizer Inc. and several other drug
companies.
The debate is one of the first glimmers of the legal quagmire that awaits gene
researchers in trying to protect years of costly work. Each of the several
hundred gene patents issued to date could face a similar challenge from
researchers who someday will find out more about the medical usefulness of
those genes than the patent holders themselves know.
Academic and corporate scientists are racing to decode the entire sequence of
DNA, the molecule that contains the chemical recipe of all human genes and,
therefore, the entire physical blueprint for all human life. The race entails a
major spat between the Human Genome Project, an international public-private
consortium, and publicly owned DNA-sequencing companies.
This AIDS-gene saga has enough twists and turns to fill its own book. And
Human Genome Sciences' role would probably be only a chapter, and a small
one at that, if not for the current fracas over gene ownership. The story
involves the labs of such HIV luminaries as Robert Gallo and David Ho and the
solving of a long-held AIDS mystery as to why a small fraction of people
exposed to the virus don't get sick.
One of its plots begins in the early 1990s with an especially clever
gene-isolating invention by J. Craig Venter, at the time a relatively obscure
scientist at the U.S. National Institutes of Health and now president of Celera
Genomics Group. Dr. Venter figured out that he could quickly sift out a gene
from the indecipherable jumble of DNA by identifying specific chemical
fingerprints left behind in cells by genes when they are turned on by the body.
Cells switch on genes to make proteins, which carry out the
moment-to-moment functions of life. Disease often arises when genes are
defective and fail to properly produce their assigned proteins. Drug makers
want to know the identity of such disease-related genes because this can
provide a guide to attacking an illness at its underlying biological cause, and
targets for new kinds of powerful medicines.
In 1993, venture capitalists lured Dr. Venter from NIH to help form HGS,
whose business plan was to use the invention to find previously unknown
genes, patent them and sell the commercial rights for their use to drug makers.
Dr. Haseltine, a swashbuckling Harvard researcher, was recruited to be chief
executive of the company, based in Rockville, Md. In the summer of 1995,
HGS fished out the full DNA structure of a gene, later dubbed CCR5, that it
believed would make a good target for medicines against a wide range of ills,
among them arthritis, allergies and viral infections.
The company knew this because by analyzing the gene's DNA sequence -- the
specific order of thousands of chemical subunits that make up genes -- HGS
scientists realized that the gene was used by the body to make one of a large
family of proteins that are targeted by some widely used medicines, including
the ulcer drug Zantac, the allergy fighter Claritin and the migraine drug Imitrex.
"We have a total of 150" of the genes, says Dr. Haseltine. "Because we knew
the class of proteins was so important to medicine, we searched through the
genome for them all, and we have since cloned and filed patents on them." In
its 1995 patent application for the gene, HGS said the protein the gene makes
was a receptor, or docking site, on immune-system cells. HGS said it believed
that other proteins and even viruses probably latched onto the receptor in order
to interact with the cells, and that blocking the site might form the basis for a
wide range of medicines.
But except for filing this with the U.S. Patent Office, HGS didn't publicize the
work. It didn't publish the gene in a scientific journal for other researchers to
use, nor did it present its information in any scientific forum, as had been the
policy of most academics, especially those whose research was funded by the
NIH. Why? HGS by then had signed a deal worth $125 million to provide its
gene database exclusively to SmithKline Beecham PLC, the big British
pharmaceutical company; the value of that deal was based on SmithKline's
ability to have a jump on other researchers or drug companies.
Unknown to Dr. Haseltine, however, numerous HIV laboratories were in a
furious dash to find the exact same gene, though none of the scientists were
aware that HGS already had found it.
For years, scientists were mystified by reports of gay men who said they had
been exposed HIV but were impervious to its effects. "We all thought these
folks might offer a key to fighting" AIDS, says Dr. Ho, who directs the Aaron
Diamond AIDS Research Center in New York. "Something about these
people's biology made them immune to infection, and we figured if we could
find it out maybe we could mimic it with a drug or vaccine."
The scientists believed the immunity was probably due to inheritance of a
particular version of a gene that everyone carries, a variant containing some
special virus-blocking characteristic.
The breakthrough came, coincidentally, in several episodes within a few
months of HGS's patent filing. In the late fall of 1995, Dr. Gallo, renowned as
the co-discoverer of HIV, reported that years of research at his Baltimore lab
had identified a group of long-sought proteins, called chemokines, that naturally
block HIV from slipping into T-cells -- important soldiers in the immune
system that come under attack by the invading AIDS virus. While Dr. Gallo
argued that the chemokines themselves might serve as the basis for new AIDS
drugs, other AIDS scientists got to thinking that his finding might lead them to
the gene variant they sought.
Discovery in Brussels
That notion was cemented by two other reports released without fanfare within
weeks of each other in early 1996. In a research article in February of that
year, Marc Parmentier and his colleagues at Brussels University said they had
found a T-cell receptor gene. They said it probably was the receptor used by
Dr. Gallo's chemokines to snag onto the T-cells.
Dr. Parmentier had actually isolated the gene several years earlier, but he was
unaware of HGS's filing and took his time publishing the gene discovery until
his team had figured out that it was a chemokine receptor. "If I knew I was in
a race for such a valuable gene, I might have published something sooner," he
says.
Nonetheless, the university filed in March 1996 for international patents for the
gene, which haven't yet been issued, though the rights to it have been licensed
to Euroscreen SA, a Brussels biotech firm. Pierre Nokin, Euroscreen's chief
executive, says he believes "our patent is the first that claims a role for CCR5
in HIV and will certainly be an important competing patent with that of HGS
and others, when issued."
The first suggestion that Dr. Parmentier's discovery might be the long-sought
immunity-conferring gene came, also by coincidence, that same month. It
involved Edward Berger, an AIDS researcher at the National Institute of
Allergies and Infectious Disease. Using Dr. Gallo's work as a guide, he
uncovered what he thought was the doorway gene, calling it fusin because it
helped HIV fuse to target cells.
When Dr. Berger discussed his work at a science gathering in Santa Fe, N.M.,
in February 1996, "all hell broke loose," says Thomas Doms, a virologist at the
University of Pennsylvania. Within weeks, scientists realized that fusin was
indeed an HIV entryway gene -- but not the one used most commonly by the
virus. So, scientists quickly began testing Dr. Parmentier's very-similar gene to
see if it was the main HIV entrance. "It was one heck of an exciting race," says
Dr. Doms.
The race reached a climax in June 1996 when four different research teams --
those of Drs. Parmentier, Ho and Berger and one from Harvard and a company
that was later acquired by Millennium -- simultaneously published their finding
that Dr. Parmentier's gene, now formally named CCR5, was the HIV gateway
receptor.
All four groups then filed for separate U.S. patents that, while making different
claims, had one common element: They went farther than HGS had and
identified the gene's precise role in HIV and exactly how the gateway works.
This distinction is at the heart of the gene-patent dispute surrounding HGS's
recent announcement.
The final proof came from screening the HIV-resistant gay men. Each of them
had an inherited mutation to CCR5. That meant they were immune to HIV
because the cell gateway was broken, literally jammed shut by the gene defect.
"What got us so very excited right away was that despite having a gene
mutation, these men were healthy in every other way," says Christopher
Mirabelli, head of R&D research at Millennium. "It meant that you could
develop a drug to block the receptor and you weren't likely to cause deleterious
side effects. Nature had already given us that proof in the form of the
infection-resistant men."
Drug Candidates
Within weeks, several drug makers began testing potential drugs in their
gigantic chemical libraries to see if any could safely block the HIV doorway in
people in whom the gene wasn't defective. This January, Schering-Plough said
it was about to begin the first human tests of a CCR5 inhibitor. And Glaxo
Wellcome PLC, Merck & Co., Pfizer, Bristol-Myers Squibb Co. and a small
Tarrytown, N.Y., company called Progenics Pharmaceuticals Inc., all have
CCR5 drugs in the works.
That's why HGS's February announcement sent shivers down drug makers'
spines -- it suggested that HGS possibly held some rights to their experimental
drugs. In its release, HGS said it received a patent "on a human gene that
produces what is believed to be the critical entry point for the AIDS virus,"
additionally pointing out that the gene was a prime target for new AIDS drugs.
Nowhere did the company state that its patent didn't even mention HIV or that
other research groups probably would be issued competing patents. By the end
of trading the next day, Feb. 17, investors, assuming HGS was the sole
discoverer of CCR5, had sent HGS shares flying.
But contrary to what some people believe, HGS's claim to the receptor doesn't
date back to when the patent was first filed. It is, as Dr. Haseltine
acknowledges, effective only as of February, when it was approved by the
Patent Office.
That means researchers using the gene prior to February don't have to buy a
license from HGS unless they are continuing to work with it. Any scientist
who begins using it now might have to pay HGS, Dr. Haseltine believes. He
suggests such a license might amount to something less than 10% of a drug's
future revenue.
Not so, say officials at Schering-Plough. Although the company is a subscriber
to HGS's database, Schering says it never used it to find its experimental drug.
In addition, patent attorneys say HGS's claim may be weaker than those made
by the other AIDS scientists. That's because those other patents, if issued, will
make much more specific claims about the gene's ultimate medical usefulness.
Incyte's Patents
It's this issue of whether a patent should go to the researcher who uncovers a
gene's function -- or to someone who simply uncovers a gene's existence --
that is central to the current debate addressed in part by the Clinton-Blair
statement Tuesday. Incyte, for instance, has more than 375 patents and has
filed for 6,500 more for genes it discovered using Dr. Venter's gene-isolating
technique. But Incyte, which like HGS hasn't published its gene discoveries
because it's more interested in selling rights to use them to drug makers, has
only a vague idea of what many of the genes do.
Some worry that allowing patents on genes whose function is only surmised
will make scientists reluctant to take on the difficult task of figuring out the
genes' precise role in the human body. But others, notably at Pfizer, say patent
protection provided through licenses from gene hunters bolsters their
willingness to develop drugs based on genes.
In fact, the Patent Office is tightening its rules pertaining to genes, saying it no
longer will issue a patent for a gene unless the discoverer can describe in some
detail what it does. The effect of this change on Incyte or HGS still isn't
known. Dr. Haseltine agrees that final determination of whether drug makers
must license his patent may require lengthy negotiations or even court fights,
and he says all parties may have to cross-license.
Finally, many gene-hunting scientists, especially in academia, feel the HGS
patent is unfair, in that the work underlying the discovery simply used a lot of
computerized software, rather than years of investigation, to find the gene and
its likely involvement as one of a host of receptor genes. In a nutshell, their
argument is that if it weren't for the other researchers homing in on the gene's
specific role in HIV, Dr. Haseltine's early patent would have continued to
languish and be essentially worthless.
Dr. Haseltine, once an academic himself, is sympathetic but says he is just
playing by existing patent rules, which give highest claims to the person who
finds something first. "I would imagine Dr. Berger must feel like a great
detective who after many years tracks down a murderer, only to find the
fellow already has been incarcerated by someone else for a different crime,"
Dr. Haseltine says. "I think that sums up the situation pretty well."
--Ralph T. King Jr. contributed to this article.
Copyright ¸ 2000 Dow Jones & Company, Inc. All Rights Reserved. |
