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Myriad Assures Investors of Strong Patent Position Despite ACLU Anti-Gene Patenting Lawsuit

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Originally published March 3.

By Turna Ray

Myriad Genetics doesn't appear to be sweating over the outcome of its legal battle with the American Civil Liberties Union challenging the legality and constitutionality of seven of its patents on BRCA genes.

According to CEO Peter Meldrum, the company's strong IP position on the BRACAnalysis test and a large internal database of BRCA mutations ensure that "regardless of the outcome of this particular lawsuit, it will not have a material adverse effect on the company … or on the future revenues of our products."

In Association for Molecular Pathology, et al. v. United States Patent and Trademark Office, et al. — filed in May by the ACLU and the Public Patent Foundation on behalf of scientific organizations representing numerous medical professionals, researchers, women's health groups, and individual women — it is alleged that the BRCA gene patents held by the University of Utah Research Foundation and exclusively licensed to Myriad "stifle research that could lead to cures and limit women's options regarding their medical care." Specifically, the lawsuit challenges the patentability and constitutionality of Myriad's patents on the BRCA1 and BRCA2 genes, linked to increased hereditary risk for breast and ovarian cancer [see PGx Reporter 05-13-2009].

At a Feb. 2 hearing at the New York Southern District Court, Judge Robert Sweet heard summary judgment motions from the ACLU and Myriad, and a motion from the USPTO for the dismissal of the charges against it. The judge decided the issues were too complex to rule from the bench and has not yet issued a decision on the case [see PGx Reporter 02-24-2010].

Speaking during a presentation to investors this week, Meldrum acknowledged that the pending lawsuit had been weighing down the company's stock and attempted to squelch investor concern over the lawsuit's potential impact on the company's business.

Indeed, on May 11, 2009, the day before the ACLU announced its suit, Myriad's shares were trading at $32.55, but by the Feb. 2 hearing, the company's shares had fallen 26 percent to $23.98. The lowest point in the past 30 days since the hearing was on Feb. 11, when the company's stock closed at $20.90.

The ACLU and PUBPAT are challenging 15 method and composition claims on seven BRCA patents belonging to Myriad. Gene patents grant exclusivity to the patent holder for 20 years. Based on the filing dates for the patents at issue, June 2015 is when the first of Myriad's challenged patents are slated to expire. However, a patent holder can be held liable for infringement up to six years after a patent expires.

Meldrum pointed out to investors that Myriad has in total 23 patents covering BRACAnalysis. Regardless of the outcome of the ACLU lawsuit, "the other 16 patents are preserved and give this company a very strong intellectual property base," he said.

Furthermore, the 15 claims at issue in the lawsuit are a small slice of the 179 total claims in the seven patents being challenged in the lawsuit. "So, worst case scenario, if we were to lose the lawsuit with the ACLU, instead of 179, we'd have a 164 claims," Meldrum said. "All seven of those patents would still survive, as would the 16 patents that are unaffected."

Additionally, Myriad has amassed over the years an internal database of mutations in the BRCA1 and BRCA2 genes that could be a source for future patents and for new markers for new versions of the test, he said. The database will be particularly important for battling competitors when Myriad's existing patents start to expire, Meldrum pointed out.

The BRCA mutations database currently consists of 13,000 mutations, of which 4,000 are "deleterious mutations," Meldrum noted. "I would point investors to this database as a significant asset for the company."

While Myriad presented a tempered and nonchalant attitude to investors about the impact of the lawsuit on its business, the company and other defendants have told a different story in the courtroom in response to the broader implications of the suit, which is essentially challenging the constitutionality of patenting all genetic sequences on First Amendment grounds.

In fact, one reason the ACLU included the USPTO in the suit is that it believes the US government's issuance of "thousands of patents covering human genes" is illegal.

Given that the suit challenges the very concept of gene patenting, it is unclear what impact a ruling in favor of the plaintiffs might have on the remainder of Myriad's patent portfolio.

In memos to the court and at the hearing, the defendants have consistently expressed that if the ACLU and PUBPAT prevail, it would severely harm investment in the biotechnology industry and restrict entry of new healthcare products in the marketplace.

In a previous interview with Pharmacogenomics Reporter, PUBPAT's Executive Director Daniel Ravicher pointed out that the ACLU and PUBPAT are challenging a very limited number of Myriad's BRCA patent claims. Ravicher characterized his group's case against the defendants as "very moderate, very reasonable, and very consistent with precedent ruling."

Nevertheless, Ravicher said in an earlier statement that the plaintiffs "look forward to proving in court that human gene patents should never have been granted in the first place."

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