EuropeanBiotechnology

Science & Industry NewsMay 2013

SPECIAL

II BiocapitalBiocapitalBiocapitalBiocapitalBiocapitalBiocapitalBiocapitalBiocapitalII Biocapital

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Euro|Biotech|NewsNº 5 | Volume 12 | 2013 33

Special: Biocapital

Intro

Good biocapital access – for a fewIn an era when payers are increasingly also looking at the economic benefits a new therapeutic has to offer, biotechs have to prove not only safety and efficacy to reg-ulators, but cost-effectiveness to reimbursers as well. Both factors are subject to due dilligence when it comes time to apply for financing. that’s why convincing investors of the value of product portfolios – which are most often developed by biotech innovators – has become a complex task. Market forecasts by Prime ther-apeutics/Blue Cross-Blue Shield predict specialty drugs will account for 50% of all drug costs by 2018 (up from 20% in 2009). But the most current Global Biotech report released by Ernst & Young at the end of April says despite that promising future, just a few large biotechs are benefiting from financing.

“As investors, we believe that both clini-cal and economic benefits are necessary to maximise returns,” says James Healy from Sofinnova Ventures. Europe is ahead of the US in demonstrating benefits for payer systems, he believes. According to the Ernst & Young report, however, this hasn’t yet translated into better perform-ance among European biotech companies in terms of financing.

Out of the global revenues totalling US$89.9bn (+8% compared to 2011) that

public biotech companies made in 2012, the 165 public European biotechs earned US$20.4bn, while the 316 public US en-terprises took in US$63.7bn. In contrast to US biotechs, which increased both net income (US$4.5bn, +34%) and R&D ex-penditures (US$19.3bn, +7%), the first-ever positive net income year in the Eu-ropean sector was mainly driven by R&D cuts (US$4.9bn, –1%). Ernst & Young be-lieves the cuts reflect European market realities – access to capital is still con-

siderably more challenging than it is on the other side of the Atlantic.

Although capital raised by European public companies soared by 88% in 2012 to almost US$2.9bn, that was based pri-marily on large debt financings by just a few firms. In contrast, capital raised by private companies fell by 7%, while IPOs were practically non-existent in Europe (3, –63%). The value of M&As also decreased by 28%, while the vol-ume of transactions sank to its lowest point since 2005.

In the US, debt funding plunged by a third, which was the primary cause of the 25% drop in the total amount of cash raised there. However, excluding debt financing, the capital raised in-creased by 16% compared to 2011. To-tal financing achieved the second-best score of the decade (US$23.3bn). In con-trast to Europe, M&As soared by 5% to US$23.8bn, and IPOs remained at a con-stant level (11, +10%) for a fourth con-secutive year.

Financed by Big pharma

While R&D remains the engine of biotech growth, corporate venture capital may be a way out of the financing bottleneck for small companies. At the end of April, GlaxoSmithKline presented a new model for improving the economics of investing in drug discovery. The drug major part-nered with life sciences investor Avalon Ventures to inject a total of US$495m into selected pharma biotech startups. The drug-hunter collaboration will be honed into an incubator that will look for new leads in promising disease areas. GSK wants to cherry-pick the ten most prom-ising firms over the next few years and grab options to acquire their assets. “We are going to immediately own the idea if it is successful, and the level of finan-cial exposure is, frankly, quite small,” said GSK’s Head of R&D Moncef Slaoui. The corporate venture capital approach could help both the start-ups – who are desperate to survive the financial valley of death – and drugmakers, who have an insatiable hunger for innovation to help fill lean clinical pipelines. B

Table 1: Selected M&As1 and alliances2 with big up-front payments in 2012.

Company Acquisition target1 Partner2 Up-front payment(US$m)

A BMS (US) Amylin Pharma (US)Inhibitex (US)

5,3002,500

A Hologic (US) Gene-Probe (US) 3,800

A GlaxoSmithKline (UK) Human Genome Sciences (US)

3,600

A AstraZeneca (UK) Ardea Biosciences (US) 1,260

A Amgen (US) Micromet (GER/US) 1,160

A GlaxoSmithKline (UK) Basilea Pharma. (CH) 231

A Abbott Laboratories (US) Galapagos NV (B) 150

A Merck & Co. (US) Aicuris GmbH (GER) 141

A J & J (US) Genmab (DK) 135

A Abbott Laboratories (US) Action Pharma (DK) 110

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34 Euro|Biotech|News Nº 5 | Volume 12 | 2013

Table 1: German biotech financing rounds in 2012.

Company Month Financing Value (am)

A CureVac GmbH September private 80.0

A Brain AG November private 60.0

A Wilex AG August stock market 23.9

A Affimed Therapeutics AG October private 22.0

A Probiodrug AG January private 15.0

A 4SC AG June stock market 12.6

A Wilex AG January stock market 9.93

A Apogenix GmbH January private 7.50

A Silence Therapeutics AG August stock market 6.80

A Proteros Biostructures GmbH August private 5.00

A Phenex Pharmaceuticals AG October private 5.00

A Subitec GmbH July private 4.50

A Algiax Pharmaceuticals GmbH May private 4.30

A co.don AG August stock market 3.90

A Cevec Pharmaceuticals GmbH October private 2.80

A Mologen AG March stock market 2.70

A AyoxxA Biosystems GmbH September private 2.60

A DermaTools Biotech GmbH March private 2.00

A conogenetix biosciences GmbH April private 1.50

A t-cell Europe GmbH May private 1.45

Special: Biocapital

financing

Making the right call in early-stage funding

Dr. Martin Pfister, High-Tech Gründerfonds, Bonn

The irish steak was tender, the wine tasty and the conversation enjoyable in the room full of Life Science Vcs at the recent Medtech conference in Dublin. But it wasn’t ex-actly a huge venue. it was a fairly small room that sheltered most of the people in-strumental to seed, early and mid-stage life science investments in Europe. One could argue that the focus was Medtech, but that doesn’t change the picture much. The longer-term macro trend is a dwindling number of venture firms active in bio-tech in Europe, and the number of partners in those firms. if an investor wants to have syndicate partners in the sector, the shrinking available bandwidth of the bio-tech Vc universe is a real concern. The remaining players are busy working on their portfolios and filter thoroughly for the one deal a year.

One reason for that small room is that in-vesting has outpaced fund raising. The Sili-con Valley Bank (SVB) estimates that since 2005, 25% more cash has flowed out of VCs into biotech companies than has into new VC funds earmarked for biotech. This defi-cit was destined to impact the sector, and it seems the numbers are starting to reveal it. Recent data from the Bundesverband Deutscher Kapitalbeteiligungsgesellschaf-ten (BVK) support the SVB findings. In 2012, a323m were invested in seed and early-stage companies (Germany, all branches) but funds with an early focus raised only a135m – a net loss of almost a200m.

No wonder it’s a world of haves and have-nots. Big exits of US venture -capital backed life sciences firms are up from 2005-2011, but are concentrated in the portfolios of relatively few firms. Of 170 big exits since 2005, the top 10 venture funds were involved in about half the deals. The top 20 VCs ex-pand that to 66%. For funds without big ex-its, fund raising either isn’t likely to happen soon, or is taking longer than expected.

How does that fit with the findings that in Germany, 2012 saw twice as much capital raised by biotech companies? Looking be-yond the numbers, almost half the capital

Dr. Martin Pfister joined the High-Tech gründerfonds (HTgf) Medtech/Life Sci-ences team in 2010. He is responsible for deal sourcing, invest-ment and growth of the companies – cur-rently 11 Life Science investments, among them three biotechs.

HTgf is one of the largest European seed funds, with about a574 m under manage-ment and more than 200 active technology-based portfolio companies with significant growth potential. Pfister has more than 15 years experience in the life sciences indus-try. Before joining HTgf, he worked in the biotech/diagnostics industry, where he held several management positions in start-ups. He co-founded two companies in the Dx and healthcare services fields, and was also head of the organisation that fostered the Life Sci-ences/Pharma industry in Saxony (germany). Pfister studied a combination of medicine, pharmacy and biology in germany and at new York University, and was granted his PhD in immunology from the University of Leipzig.

34-36_EBSIN5_13_SPECIAL_HTGF_tg.indd 34 30.04.2013 17:28:47 Uhr

Know the way.

Meet Dentons. The new global law firm created by Salans, FMC and SNR Denton.

© 2013 Dentons. Dentons is an international legal practice providing client services worldwide through its member firms and affiliates. Attorney Advertising. Please see dentons.com for Legal Notices.

dentons.com

35_EBSIN5_13_Dentons-Salans.indd 1 03.05.2013 14:19:03 Uhr

36 Euro|Biotech|News

tal had been invested in the firm before the exit, and its main candidate COR-1 was still in clinical Phase II. The sell-off was quite lucra-tive for the investors, among them HTGF. As it turns out, biotechs on a broader basis that are looking to out-license assets are gener-ally less satisfied with potential Big Pharma partners. A recent BCG study (and my own experience) have also shown that smaller companies that give sell-siders make a pos-itive impression. The report names Celgene and Novo Nordisk as the most popular bio-tech partners for Big Pharma on the lookout for collaborations.

R&D path’s impact

That brings us to what topics are interest-ing for VC and strategic partners. The list no longer includes cancer drug targets. A significant percentage of nearly 1,000 (!) active drug programmes are chasing the same targets. When we see this kind of cancer pipeline concentration, it makes it hard to argue better bets on what diseas-es, what targets, and what approaches the scarce industry capital should ploughed

Nº 5 | Volume 12 | 2013

Special: Biocapital

was devoted to just two deals, and doesn’t involve institutional VCs.

With its first two products entering the market in 2020, CureVac raised a80m from one investor – financier Dietmar Hopp (see table). BRAIN raised capital from the MIG Fonds, a firm that collects money from hun-dreds of private individuals. For the first year since the HTGF was founded, major contributions from follow-on rounds in 2012 didn’t come primarily from German VCs, which were outperformed by private inves-tors and VCs from abroad. Private investors have discovered a “new” asset class, and are investing their money in start-ups di-rectly. It might help that European biotechs in particular are considered ‘undervalued’ by Big Pharma and other investors – and not only those from outside Europe.

Handbook to the up-side

Overall, two-thirds of all life science financ-ings were “up-rounds” last year, a healthy percentage of rounds with step-ups in valu-ation and the highest level in five years. But that is a two-edged sword. The Cooley Ven-ture Financing Report revealed Series A pre-money valuations in 2012 are off from 2008 by between 20% and 30% (around US$5-6m in 2012). That’s the lowest level in the past five years. This suggests that the companies that have been raising new money had previously priced lower rounds in the past, giving them headroom on valuations to support the high-er frequency of step-up rounds. The good news is that in most dimensions, the deal terms (evaluation, tranching, full ratchet, etc.) are improving for startups and revert-ing to pre-2009 financial crisis levels.

Surprisingly, it has been the early-stage investors that cashed in: SVB analyses showed that companies that receive Series A venture investments at the pre-clinical stage have made up the majority of biotech big ex-its over the last six years. Another surprise was that about half of the assets were pre-clinical or Phase I-II at the time of exit. An example for that got lots of press last year: the acquisition of German company Cor-immun by US healthcare group Johnson & Johnson. Corimmun develops peptide drugs aimed at the tailored treatment of heart fail-ure and arteriosclerosis. Just a13m in capi-

into. The crowded field unites Big Pharma/Biotech (90% of spending) and smaller bio-tech (90% of the companies).

It is only fair to wonder if that is what promises a return on investments. Instead, it may be wiser to follow an R&D path in ar-eas that pharma is fleeing or that have been neglected, among them:– Gene therapy: once massively hyped, it’s

had a comeback with the first drug ap-proved by the EMA (Glybera, Amsterdam Molecular Therapeutics/uniQure) and in-teresting recent deals (BI Venture Funds investment in Eyevensys, Novartis Venture Fund fueling GenSight Biologics)

– Neuroscience: both symptomatic and dis-ease-modifying therapies address real unmet needs in neuroscience, and both are benefiting from the accelerating pace of scientific progress.

– Antibacterials: treatments to fight hospi-tal-acquired infections like MRSA

– Heart failure: new modalities like micro-RNA, stem cells, and other novel small and large molecule targets offer real promise to change the heart failure land-scape (see Corimmun example above).

– Obesity/metabolism: while pharma has been generally hesitant over the past five years amidst this uncertainty, smaller bio-techs have stepped up.

OD status is still what many biotechs are aiming at, and yes – smaller budgets do help speed things up. Bringing your indication through the committees also helps start-ups gain experience with the EMA/FDA.

As an early-stage investor focused on company creation, we think it’s less about the total amounts of money flowing into the system, and more about how to make sure the right kind of money is lined up at the right time for the right ideas: grants, ven-ture, (strategic)partners. We need intelligent biotech corporate structures and flexible in-frastructures to make financing more effi-cient. With smaller, mostly milestone-based rounds, we have to make sure companies have a pre-defined and tightly -titrated capital intensity and virtual development efficiency. CEOs shouldn’t be wasting time looking for the next cash infusion, but instead seeking to create value in the Life-Science oriented VC’s portfolio. With that, LP interest in the asset class might return. B

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Euro|Biotech|NewsNº 5 | Volume 12 | 2013 37

Special: Biocapital

Peter Homberg is a partner in Dentons’ Frankfurt office. He specialises in life sciences, IP and corporate law, especial-ly in IP transactions, R&D transactions and financings. He became a partner at Salans in 2012, and has moved with the firm to the new global entity Dentons. From 2010-2012 Hom berg led the Ger-man Life Science practice at Raupach & Wollert-Elmendorff. Prior to that, the former Deputy Head of the Legal Depart-ment at Roche Diagnostics GmbH headed the German and European Life Sciences Practice from 2001-2009 at Jones Day.

IntERvIEW

EU rules for better access to finance A brand-new EU regulation on European venture Capital Funds is predicted to re-move significant obstacles to venture Capital when it comes to cross-border fun-draising. Euro Biotechnews spoke with Peter Homberg, partner at the freshly-founded company Dentons, about the implications of the changed rules, financing trends, and the merger that resulted in the creation of his new global law firm.

Euro|BioTech|News ?Corporate financing is especially diffi-cult for European biotechs. What regu-lations are hampering access to VC in Europe compared to the US or emerg-ing markets?

HomBERG !There are a number of issues in Eu-rope that are currently preventing ven-ture capital funds from investing in Eu-ropean biotech start-up companies. The main issue is that there is no com-mon framework for the use of “EuVE-CA” for qualifying venture capital funds. Europe needs consistent rules for the portfolio of funds that operate under the “EuVECA” designation, including for their eligible investment targets, the invest-ment tools and the categories of inves-tors that are eligible to invest in them. In addition, in Germany the current tax laws relating to the lapse of the use of losses carried forward in start-ups in case of an exit need to be addressed by the leg-islative body.

Euro|BioTech|News ?How have EU policymakers tried to im-prove the situation, and how did the mar-kets respond?

HomBERG !On 12 March 2013, the European Par-liament agreed on a Regulation on Eu-

ropean Venture Capital Funds (“EuVE-CA-R”). It’s predicted the new regula-tion will remove significant obstacles to cross border fundraising by venture cap-ital funds – something that a number of our clients are concerned about. But the full impact on the markets will only be-come clear when EuVECA-R becomes ap-plicable in July.

Euro|BioTech|News ?Which current trends in financing and ac-cess to venture capital or corporate ven-ture capital have you noticed at the new law firm Dentons?

HomBERG !A number of our US-based venture capi-tal fund clients have already recognised that there are investment opportunities in Europe, and in particular in Germany. These funds are currently analysing and evaluating interesting biotech projects, and we believe that this trend will grow in the future. Firstly, there are a number of scientifically interesting projects that are currently not funded or are under-funded, and thus secondly, investment into these projects carries a relatively low price tag. It will be interesting to see how this develops.

Euro|BioTech|News ?Dentons resulted from a kind of cross-border merger between three law firms.

What can you tell us about the details of that deal?

HomBERG !Dentons is a new top ten global law firm created by the March 2013 combination of Salans, FMC and SNR Denton. Our aim is to provide our clients with a competitive edge required by an increasingly com-plex and interconnected marketplace. With more than 2,500 lawyers and pro-fessionals in 79 locations in 52 countries, we are driven to challenge the status quo in legal services by delivering consistent and uncompromising quality.

Euro|BioTech|News ?What different expertises in the life sci-ences sector did the different partners bring in?

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38 Euro|Biotech|News Nº 5 | Volume 12 | 2013

Special: Biocapital

Homberg !We are able to provide our clients un-rivalled breadth and depth of expertise in life sciences in all the markets they require. In particular, we have a very strong presence in the two key life sci-ences markets, the US and Europe. In Germany, our portfolio of advice com-prises transactions, license agree-ments, all IP and antitrust related ques-tions, issues of regulatory, products, classification as well as dispute reso-lution.

Euro|BioTech|News ?Are you seeing any synergy effects from the merger? Which ones exactly?

Homberg !Whilst our combination is still very new, we have already seen positive growth in cross-regional collaboration, and we ex-pect this to continue in the future.

Euro|BioTech|News ?Does the resulting law firm have a pre-ferred geographic focus?

Homberg !What makes this combination so special is that Dentons is truly polycentric in na-ture. This means that we embrace the diversity of our geography, cultures and legal traditions. With nearly 80 offices in over 50 countries across four continents, we are uniquely positioned to serve cli-ents wherever they are.

Euro|BioTech|News ?What are the benefits for your clients?

Homberg !Our combination is a direct response to our clients’ demands for a global law firm that can provide agile legal counsel and inventive business solutions to clients of all sizes, across border and practice

disciplines and in key industry sectors. It’s our job to connect our clients to more lawyers and services in more places, in a way that reflects the changing practice of law worldwide.

Euro|BioTech|News ?What is your strategy for the future? In which segments and areas do you want to grow?

Homberg !The first half of 2013 will be character-ised by simply becoming Dentons, and by the launch of the new brand – which will naturally enhance our competitive-ness and attractiveness. Our goals con-cerning the second half of 2013 are cur-rently being developed. I assume that the significant growth potential – especially in areas like Life Sciences – will lead to a utilisation of the opportunities arising from the new Dentons perspective.� B

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Sure we’re proud of Rembrandt.

But we prefer modern art.

The modern art of

Investment Banking.

From Amsterdam, Holland.

Sure we’re proud of Rembrandt.

But we prefer modern art.

The modern art of

Investment Banking.

From Amsterdam, Holland.

39_EBSIN5_13_Kempen.indd 1 03.05.2013 14:19:22 Uhr

40 Euro|Biotech|News Nº 5 | Volume 12 | 2013

Special: ip

The Myriad Case

Moment of truth for pharma innovations Dr. Ute Kilger, Dr. Markus Engelhard, Dr. Jan Krauss, Boehmert & Boehmert, Berlin

Oral arguments for the Myriad case, which may shape the future of medical patents, were held before the Us supreme Court in mid-april. a final decision is expected in June.

Myriad Genetics holds patents on two human genes that correlate to the risk of developing breast cancer or ovarian cancer. The genes are known as BRCA1 and BRCA2. Myriad’s patents claim eve-ry naturally occurring version of those genes, including mutations. In particular the patents claim isolated human genes, “man-made” complimentary DNA that mimics the naturally- occurring sequence (cDNA), methods for obtaining said DNA and methods for diagnosing the predispo-sition of contracting breast cancer. It was a laborious task to identify these genes, as well as a major investment, and it has led to a medical breakthrough that has saved lives.

The Court of Appeals for the Federal Circuit (CAFC), the highest patent court in the US, decided the case (again) in Au-gust 2012, and found genes to be patent-

able subject matter. Despite the “valuable insights” provided by the earlier US Su-preme Court case Mayo Clinic vs. Prometh-eus, Judge Lourie’s opinion came to the conclusion that isolated DNA molecules are not found in nature, do not represent products of nature, and are therefore pat-ent-eligible subject matter.

This case is now before the Supreme Court, and the question to be looked at by the Court is the following:

are human genes patentable, or are they a law of nature?

In the above-mentioned oral arguments, the petitioner (the opponent of Myriad) stated: “One way to address the question pre-

sented by this case is what exactly did Myriad invent? And the answer is noth-ing. Myriad unlocked the secrets of two human genes. These are genes that cor-relate with an increased risk of breast or ovarian cancer. But the genes them-selves … where they start and stop, what they do, what they are made of, and what happens when they go wrong … are all decisions that were made by nature, not by Myriad.”

… and further regarding cDNA: “What the scientist does who’s creating

the cDNA is they take the mRNA out of the body and then they simply have the natural nature-driven nucleotide bind-ing processes complement the mRNA.

So that if the mRNA has a C, the scien-tist just puts the corresponding nucle-otide in there and nature causes them to bind up. The scientist does not decide.“

These arguments have interesting con-sequences. If one follows this line of de-bate, and agree that thus (human) genes are not patentable, what will happen to (human) proteins, hormones, antibodies, and naturally -occurring substances – in-cluding small molecules? They would no longer be patentable as well! What about other inventions in the life sciences? Not patentable! All of a sudden, everything

dr. Ute Kilger (Boehmert & Boehmert, Berlin) studied chemistry at Germany’s Univer-sity of Merseburg. since completing her doctorate in bio-chemistry at the Freie Universität Berlin, she has worked for more than a decade

in the patent departments of large pharma-ceutical companies, including Boeh ringer Mannheim, roche and schering. her fields of interest are molecular biology, immunology, biochemistry and pharmacology.�dr. Markus engel-hard (Boehmert & Boehmert, Munich) studied biology, chemistry and bio-chemistry in Frank-furt/Main, Witten-herdecke and Cam-bridge (UK), where he also completed his doctorate. his interests lie in iP protection in the areas of biochemistry, molecular biology and pharmacology.�

dr. Jan Krauss (Boehmert & Boeh-mert, Berlin) stud-ied biology at the Freie Universität Berlin. after finish-ing his training as a patent attorney, he worked with a large Us law firm in Frankfurt/Main. his fields of interest

include molecular biology, immunology, plant genetics and biotechnology.

Myriad headquarters

40-42_EBSIN5_13_Special_Boehmert&Boehmert_tg.indd 40 02.05.2013 13:41:49 Uhr

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MEDTEC Europe // Stuttgart // February 26-28 BIO-Europe Spring // Barcelona // March 11-13 BIO International Convention // Chicago // April 22-25 CPhI Worldwide // Frankfurt // October 22-24BIO-Europe // Vienna // November 4-6 Medica // Duesseldorf // November 20-23

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Ins_210x275_MESSEN_2013.indd 1 10.07.12 14:5041_EBN5_13_LISA.indd 1 30.04.2013 17:32:02 Uhr

42 Euro|Biotech|News Nº 5 | Volume 12 | 2013

Special: Biocapital

would be considered a law of nature – es-pecially in the life sciences – and conse-quently this argument could be used to basically challenge any – even pre-exist-ing – patent in this field.

If absolute compound protection was no longer available for proteins, hormones, anti bodies, and naturally-occurring sub-stances (including small molecules) what would that mean for an innovative indus-try? What would provide the incentives to continue to look for the “secrets” of na-ture and make them useful for mankind? The petitioner had a very interesting an-swer to that question as well, saying that scientists are curious anyway, and would pursue research in order to try to win a Nobel Prize. He also suggested that tax-payers may sponsor such work. Thus, the overall message is: “Don’t worry about investments. They’ll come no matter how this ruling goes!”

this can’t be the answer

Providing compound protection for mol-ecules that were isolated and thus made available for use for the very first time is an absolute must for the life sciences in-dustry. So-called ‘use and method’ patents, as well as purpose-bound compound pro -tection and second medical use claims, cannot provide enough legal certainty for the investing industry, and such patents can be circumvented too easily, e.g. by cross-label use if several indications are approved for a drug. Medical practitioners may also prescribe a medication comprising an ac-tive drug for any approved use of said drug. And the health insurance company will re-imburse it, regardless of whether or not

Fig. 1: Percentage of new drugs experiencing Pharagraph IV challenges and average time from launch to first challenge (1995-2008).

the specific manufacturer holds a license for said specific approved use. Cross-label use is one reason for the need for absolute compound protection in the life sciences, including for molecules that may be found in nature. The enormous difficulties in prov-ing patent infringement for use and meth-od patents is yet another reason absolute compound protection is vital.

Many believe that an ‘absolute’ scope of protection for DNA patents would hamper research, as well as further development. However, specific exemptions are available for research and for performing clinical tri-als. Compulsory licenses are also available. There are therefore sufficient tools for pre-venting any (alleged) misuse of patents.

And more importantly, naturally -occurring molecules are not ready to use simply because they already exist. They can be used because somebody invested in the research that went into finding them, iso-lating them, and thus providing them. Such investments must be incentivised, and un-til today, those incentives have been large-ly based on patent protection.

Right now, it is difficult enough for inves-tors in the pharma and life science busi-nesses to obtain a sufficient return on in-vestment. When you look at the facts, more and more money now has to be invested before a drug hits the market. According to Nature reviews Drug Discovery (2012,11, 191-200) more than 20 drugs were launched per billion US$ spent for R&D in 1950. In con-trast, the same amount of money was not sufficient to bring even one drug to market in 2010 (around 0.8 drugs per billion US$ spent on R&D).

Thus, the costs for bringing a single drug to market have constantly and significantly increased in the past, and are continuing to do so. Rising costs are due to more re-quirements for approval and stricter reg-ulations, which in turn require higher in-vestments in drug development – for ex-ample, in clinical trials. At the same time, there is increased pressure coming from generics makers.

Fig. 1 reveals that today, generic chal-lenges start earlier, and involve a constantly increasing percentage of innovative drugs. Adequate patent protection is therefore a must for the innovative industry. The multi-faceted problems in this area were even rec-ognised some years ago by the US Supreme Court, which in one of its brighter moments stated in the Festo Decision (2002):

“Courts must be cautious before adopt-ing changes that disrupt the settled expec-tations of the investing community.”

One can only hope that the Justices who now make up the court will remember to listen to the wise advice they gave the American public back then. B© DKFZ, Heidelberg

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40-42_EBSIN5_13_Special_Boehmert&Boehmert_tg.indd 42 03.05.2013 14:20:46 Uhr