Here it is.
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.
Write to Michael Waldholz at michael.waldholz@wsj.com |
