Myriad Ruling Will Undermine Global Biotech investment But All Is Not Lost

Guest blog written by Adrian Tombling, partner and patent attorney at Withers & Rogers LLP.

The US Supreme Court ruling in the so-called ‘Myriad case’ regarding the patentability of human genes will undermine global biotech investment but all is not lost. Judge Thomas, in Association for Molecular Pathology v. Myriad Genetics, effectively tightened the rules on the patentability of human genes, finding that all naturally occurring gene sequences, even when isolated in the laboratory, are not patentable. In future, only non-naturally occurring gene sequences (e.g., sequences that have been modified or entirely created in the laboratory), will be patentable, and therefore, attract investment from biotech companies.

Myriad currently produces diagnostic tests used to detect mutations of two gene sequences-BRCA1 and BRCA2, which have been linked to the development of breast and ovarian cancer. The ruling will invalidate some, if not all, of the patents that exist for these tests and could allow rivals to bring similar products to market. Furthermore, literally thousands of patents granted for naturally occurring gene sequences, such as BRCA1 and BRCA2, by the US Patent and Trade Mark Office (USPTO) since 1982 have been rendered invalid by this decision.

Not only did the decision come as a disappointment but it will also undermine biotech investment in the US and around the world. Patents exist to protect the commercial viability of certain areas of research and without them, the research will simply not happen in future.

While Myriad will be disappointed by this decision, the company can at least take solace from the fact that the patents on their diagnostic gene sequence tests are due to expire in 2014 and 2015, and hence, so they didn’t have long left to run. This decision will mainly impact pioneering areas of gene-related research linked to gene therapy, genetically modified crops and disease diagnosis wherein gene markers are detected.

However, all is not lost. While the patentability of naturally occurring gene sequences will not be possible, biotech companies will still be able to obtain patent protection for gene sequences that have been modified or created in the laboratory. Furthermore, as most naturally occurring genes have already been sequenced and identified (e.g., the human genome was sequenced in 2003), the opportunities to identify new and commercially relevant, naturally occurring gene sequences are considerably smaller than in the 1990s.

Investors and researchers must not be put off by the US Supreme Court decision relating to Myriad Genetics because in reality, little has changed from a research and commercial perspective. Although it is no longer possible to obtain patent protection in the US for human gene sequences, even when they have been isolated, it is still possible to achieve commercially valuable patent protection for genetic tests and other diagnostic and therapeutic inventions.

In the immediate aftermath of the ruling in Association for Molecular Pathology v. Myriad Genetics, there was, in some areas, confusion about what it would mean for biotech businesses. Now that the dust has settled, it is clear that the judge made an important distinction in determining that human gene sequences were not eligible for patent protection, whereas complementary DNA or cDNA, which is synthesized in a laboratory, could still be patented. Other elements required for performing genetic tests also remain patentable in the US. This means that the ruling is far less obstructive to biotech research than some may have initially thought.

Since the ruling, Myriad Genetics has taken legal action against two rivals-Ambry Genetics Corp and Gene by Gene Ltd-for bringing new screening tests to market that allegedly infringe their patented BRCA-1 and BRCA-2 tests, which are used to detect a genetic propensity to breast and ovarian cancer. Myriad claims that its genetic tests are still protected by 515 of the 520 patents, which it had originally secured in the US. While Ambry has opted to countersue, Myriad is convinced that the ring of patent protection secured for its BRCA-1 and BRCA-2 screening tests is still valid and robust enough to withstand competitor challenges. In the meantime, investor confidence appears to be siding with Myriad Genetics.

Interestingly, despite the share price for Myriad Genetics falling after the US Supreme Court ruling, it has steadily climbed since then, indicating that smart investors are not concerned by the ruling. The company has also recently forecast full-year results ahead of market estimates, which suggests they are not overly troubled by the ruling either.

Any dip in investor confidence could undermine valuable research in this area and without good reason but the fact is that such screening tests can still achieve commercially valuable patent protection in the US. Therefore it makes sense for the industry to continue to develop them so they can continue to play their part in disease prevention and intervention in the future.