June 14, 2013

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Biomedical Industry Weighs Supreme Court Myriad Decision

Heather Stewart

June 14, 2013

The big headline from Thursday was the Supreme Court’s unanimous decision that human genes are not eligible for patent claims. However, the ruling, which revolved around Myriad Genetics’ claims on the BRCA1 and BRCA2 genes, was a mixed bag for the company, with the Court upholding Myriad’s claims on “complementary DNA,” or cDNA, which is a synthetic form of DNA. So what does all this mean for the biomedical industry?

“It could take some time to tease out the meaning of all this,” said Kimball Thomson, president & CEO of BioUtah, the state's life science industry association. “Only five of the 500 claims that [Myriad] has associated with these patents have been overturned.”

The uncertainty of how the ruling will play out was reflected in Myriad Genetics’ stock price, which actually skyrocketed after the ruling—before falling sharply at the end of the day. The stock reached a high of $38.27 but closed the day at $32.01, down 5.63 percent from the previous day.

In Utah’s biotech industry, “a lot of people are disappointed,” said Thomson.

The silver lining, he said, is that “the Supreme Court went out of its way to highlight their support for method claims.” Method patent claims refer to the specific steps and processes used to interact with the DNA molecules. “Myriad’s method patent portfolio is very strong,” said Thomson.

In a statement released on Thursday in response to the ruling, Myriad Genetics President and CEO Peter Meldrum said, "We believe the Court appropriately upheld our claims on cDNA, and underscored the patent eligibility of our method claims, ensuring strong intellectual property protection for our BRACAnalysis test moving forward.”

In the near future, it appears the company will continue to corner the market on genetic testing for the BRCA1 and BRCA2 genes. Thomson said it would be hard for another company to create an alternative test without violating Myriad’s method patents. “We don’t see them losing their industry leadership,” he said.

The larger question is what the ruling will mean for other genetic research companies. Will research be stifled as investors turn away from an industry that can’t protect its intellectual property? Or will scientists be freer to open new lines of inquiry into genes that were previously off limits to them?

“The answer is probably not entirely predictable,” said Thomson. “The ACLU is saying it will lead to greater research…I sure hope so.”

But he fears that “jittery” investors will become even more nervous about genetic research startups. “There is a very strong chance that this will make it harder to find funding partners, that there will be a chilling effect on the investor,” said Thomson.

Regardless, Utah will continue to be at the forefront of genetic research, said Thomson, particularly in the realm of personalized medicine and companion diagnostics, which relate to “how an individual’s genes work and what therapies are likely to be successful for that individual.”

“I think over time, industry leaders and investors are going to take comfort in the fact that the Supreme Court went out of its way, in this unanimous decision, to say we have tremendous respect for method patents, for companies building value out of the discoveries they make,” said Thomson.

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