The Role of Patents in Drug Development – Telix in Australian Biotechnology Journal
5 October 2022 | Corporate Spotlight | Telix in Australasian Biotechnology Journal – The Role of Patents in Drug Development
By Dr Damian Slizys, Director of Intellectual Property, Telix Pharmaceuticals
As printed in Australasian Biotechnology Journal September 2022 | Volume 32 | Number 2
This article has been developed in collaboration with AusBiotech and its IP Advisory Group, and in response to the changes to the international TRIPS Agreement1 waiver for IP rights, which has highlighted a fundamental misunderstanding of the role of intellectual property (IP).
THE WORLD TRADE Organization’s waiver is in response to globally equitable health care and, under certain circumstances, will see member countries set aside patent rights for a vaccine in response to a public health emergency. At the time of writing, this waiver is now proposed to extend to medical technology and medicines.
Despite voluntary global agreements, and more collaboration and partnerships in biotech than ever before, a misguided understanding of equitable access remains, and the waiver will not overcome the real barriers: bottlenecks and shortages in the global supply chains, as well as strained healthcare systems in low- and middle-income countries, particularly.
Research and development is complicated, and few organisations around the world can do it at scale, at low cost, and in compliance with the strict standards and public expectations of manufacturing safety. Supply chain and distribution challenges, regrettably, prevented increased COVID-19 vaccine output and delivery.
Waiving IP rights jeopardises the existing quality-control systems, and makes it far more difficult to distinguish genuine products from knock-offs that may target vulnerable communities. It also does not address workforce challenges.
While the support in some quarters was undoubtedly well-intentioned, it ignored the important role of IP as a means for incentivising groundbreaking research and facilitating investment into innovative biotechnology companies; IP was pilloried by some parties as a barrier to equitable distribution of vaccines and the technology transfer process to enable their manufacture.
Using an example from Telix, this article explains the role of patents and IP in drug development.
Patents, in essence, are a legal construct that defines an area of technology as being property in the sense that others can be excluded from using the technology for the term of the patent. They are also like property in that they can be traded (i.e., bought and sold) and licensed to others.
A cornerstone of the patent system is that it recognises and rewards the distinct contribution of the inventor(s) to society; for example, the patent document must publish the technology in a way that allows it to be used by others, and the patent cannot legally claim any aspect of the technology that was already known. Accordingly, practically all patent systems require a patent to be examined by a government body to confirm that it satisfies these criteria, and all patent systems allow the patent to be tested in court proceedings.
What is a robust patent system?
The difficulty with any IP right is that it is intangible. It cannot be physically handled, identified or handed over. In order for IP rights to be treated as property, their scope must be as clear as possible, and this scope should not be capable of being changed arbitrarily. In this way, when an IP right is sold or licensed, the buyer or licensee can be confident that what they have bought or licensed won’t disappear or be compromised easily.
A robust patent system incorporates characteristics that mean decisions about patents are not arbitrary. The examination process should be reliable, rigorous and transparent so that the risk of the patent being found invalid by a court is minimised. Similarly, court enforcement proceedings should be reliable and transparent, and the ability to appeal a decision should be available. Australia is regarded as having a robust patent system because it has these characteristics. Many of our major trading partners – such as the United States, the United Kingdom, the European Union, Switzerland, Japan and, increasingly, China – are also seen as having these characteristics.
The international nature of the patent system
Each country has its own patent system, but there is a degree of mutual recognition by the operation of a number of treaties. The Paris Convention for the Protection of Industrial Property and the Patent Cooperation Treaty allow for the recognition of the patents filed by inventors in other countries, and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) provides for minimum standards of patent examination and patent coverage that are internationally coordinated.
These treaties mean that a patent filed in one country can effectively be extended to practically every other country in the world.
How do patents facilitate drug development?
Drug development is a long journey; it requires diverse skill sets and significant resources to take a drug from the initial drug discovery step through the clinical trials and other requirements for market authorisation, and then to distribute the drug to patients. To have all of these skill sets in a single organisation is impractical. For example, many of the ideas for new pharmaceuticals come from the basic research carried out by universities and medical research institutes; however, it is unfeasible for universities to build the infrastructure to develop these new pharmaceuticals through to market authorisation and then to full life-cycle commercialisation.
The patent system means that a company, such as Telix, can acquire or in-license a new pharmaceutical using the patent system with confidence that the patent is defensible, and therefore that it’s worth investing capital in its development. On the flip side, the initial developers of the new pharmaceutical are incentivised to make these developments because they can assign or license their patents instead of having to take the drug through to market in order to realise any benefits.
Ultimately, this means that a number of groups can participate in the drug development process, with each group being able to contribute what they specialise in. The patent system allows the baton of the technology to be passed from group to group, in order to bring life-saving and life-enhancing technologies to patients.
The other aspect of the system is that, as the market is international, patents to large markets, such as the United States, can be filed by inventors in any jurisdiction and acquired or licensed by organisations in any jurisdiction. By increasing the size of the market, there are more opportunities for each participant in the drug development process and overall for more drugs to be developed and made available for patients.
To quote Stephen Haber and Naomi Lamoreaux in The Battle Over Patents: History and Politics of Innovation2:
‘For all their imperfections, US-style patent systems spread because they had multiple advantages. By creating property rights that could be traded in a market, they facilitated the development of a productive division of labour, either within the firm or through the market, that enabled inventors to specialise in technological discovery and leave the task of developing and commercialising their ideas to others. They also made it possible for firms to transfer technological knowledge to other firms, even to firms in other countries. Moreover, patents are available not just to inventors of breakthrough technologies, but also to those who improve existing technologies incrementally or find novel ways to use them in other applications.’
Telix began its journey by in-licensing assets from a number of different universities and medical research institutions worldwide.
One example is the L-type amino acid transporter 1 (LAT1) inhibitor designated TLX101. TLX101 is a radioactive peptide that targets glioma, a highly intractable form of brain cancer. This investigational asset was initially developed by an academic group at the University of Würzburg, and showed early promise in models of glioma.
The context of the in-licensing of TLX101 illustrates the principles discussed above. The academic group filed patent applications in a number of countries throughout the world, including Australia, for TLX101 in the treatment of glioma.
The academic research did not have a commercial focus, and the studies conducted were not sufficient to satisfy a standard preclinical package for regulatory approval of a pharmaceutical, let alone the entire gamut of requirements required for marketing authorisation. In order for this very promising pharmaceutical to become available to patients, a multi-year, multimillion-dollar program of development was required.
The academic group and the university did not have the time, manpower, resources or diverse skill sets to take this product down the development pathway, and without further intervention, the pharmaceutical product would have languished.
The ability of Telix to in-license the patent portfolio as a distinct piece of property has provided Telix with the confidence to invest capital into the substantial development program required to take TLX101 to approval – the preclinical programs; the clinical trials; the manufacturing campaigns; the establishment of relationships with key opinion leaders and strategic partners; the regulatory submissions; the reimbursement strategies; and setting up the commercial team and infrastructure required to sell TLX101, subject to approval, to healthcare systems around the world.
The ability of the academic group to out-license their patent portfolio means that they have benefited from their promising work without having to progress it further down the drug development pathway and incur significant additional cost.
The operation of the patent system in encapsulating the technology relating to TLX101 into a tradeable and investable asset means that a bright idea supported by successful exploratory experiments at a prestigious university has the opportunity to be transformed into a potentially life-saving pharmaceutical product.
 The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an international legal agreement between all the member nations of the World Trade Organization
Dr Damian Slizys is Director of Intellectual Property at Telix. He is responsible for managing Telix’s intellectual property portfolio, and is a registered patent attorney with more than 20 years’ experience.
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