Industry Impact and Emergency Preparation in Swine Flu
As the threat becomes more immediate, many of the giants, such as MedImmune and AstraZeneca, gets into standby positions to participate in playing their parts in making the world situation better. This is to be expected, of course, since few companies would be uninterested in ‘saving the world’ while supplying vaccines, drugs, or diagnostic tests for a demand that can reach pandemic levels in very little time. An interesting aspect, however, is the fact that many of the most promising technologies (e.g. unapproved drugs and medical devices) still have many years to commercialization but in an emergency situation may get authority by the FDA to be released on the market as an emergency plan without having finished clinical trials. This creates an interesting situation for biotech companies who has recently been suffering during the financial crisis since their expected return-on-investement from an investor’s perspective may go from 5 years to 0.
One example of a sudden change was the share price of Rockville based biotech company Novavax, that experienced a 173% increase during the midmorning trading on Monday, closing up 80% at the end of the day, after it had announced that it could produce a vaccine in as little as 10 to 12 weeks using an emerging vaccine production technology. The technology uses virus-like particles rather than the entire virus strain and is currently not approved by federal regulators (it is currently being tested in a clinical trial involving 300 patients). Other promising technologies to follow in relation to the swine flu are being developed by Bacilligen Inc. and Cel-Sci Corp..
In its recent guidance to Influenza laboratories issued on April 25, the WHO stated that "Rapid antigen tests designed to detect Influenza A viruses should be able to detect this swine virus but due to the low sensitivity, compared to other lab diagnostic methods, may give false negative results". I thought it would be interesting to look at influenza diagnostic technology using PCR from an IP standpoint since this is considered to be faster and more reliable than other methods (e.g. immunodiagnostics).
IP Value Case Study: Qiagen NV
Qiagen claims to have the worldwide broadest portfolio of molecular screening solutions for viral infectious diseases and that public health institutions and more than 80 reference laboratories around the globe use the company's molecular tests and testing components for surveillance and research of viral infections. Qiagen is the leading provider of Avian Flu (H5N1) molecular detection tools worldwide and has also developed the first test for the detection of SARS.
Swine Flu Technologies
The solutions for swine flu screening, testing and research which Qiagen provides include (as declared in their press release);
1) QIAGEN's artus Influenza Kit, globally one of the most widely used assays in influenza screening, uses Polymerase Chain Reaction (PCR) and runs on LightCycler, a widely used detection platform.
2) QIAGEN's Resplex II v 2.0 assay, a multiplex test which is also PCR based, not only differentiates between Influenza Type A and B, but also detects whether a sample contains additional respiratory related viruses.
3) QIAGEN components, a number of components used for testing of samples including sample preparation reagents, PCR enzymes, and instrumentation. These components are widely used by laboratories to create their own tests (so called homebrew assays).
“The primers, which define the starting and end points of a genetic sequence that is amplified to make the target sequence visible, match 100 percent for the artus kit [artus Influenza LC RT PCR Kit (at € 1.857,00 for the (96) RUO kit) ] We are now working closely with reference institutions to have both assays further re-validated and optimized based on clinical samples”, was stated by Dr Thomas Grewing (Senior Director R&D Qiagen Hamburg).
Current World Impact of Technology
The CDC have announced that they have created diagnostic screening tests that use the components (3) developed by Qiagen after having identified a study performed in Norway that incorporated the components.
Trademarks: QIAGEN®, QIAamp®, artus®, (QIAGEN Group), LightCycler® (Roche Diagnostics).
Patents: The PCR process is covered by the foreign counterparts of U.S. Patents Nos. 5,219,727 and 5,322,770 and 5,210,015 and 5,176,995 and 6,040,166 and 6,197,563 and 5,994,056 and 6,171,785 and 5,487,972 and 5,804,375 and 5,407,800 and 5,310,652 and 5,994,056 owned by F. Hoffmann-La Roche Ltd.
A quick patent citation analysis of the 13 patents stated above retrieves a total of 604 forward citations (i.e. patents that refer back to the 13 patents as ‘prior art’). Where the top assignees citing back to these patents are;
1. ROCHE DIAGNOSTICS GMBH (16%)
2. APPLERA CORP (5.1%)
3. MAXYGEN INC (3.5%)
With Qiagen itself being responsible for 1.6% and Roche 16% (being the marketer of much of Qiagen’s technologies) of all the forward citations, this tells me that the companies are continuing to build on this technology and are likely to have a lot of in-house capability in relation to this specific technology.
Below is the patent citation distribution over years:
Current Value-in-use Contexts
Current technology use context: The artus Influenza LC RT-PCR Kit is for research use only. Not for use in diagnostic procedures. The QIAamp Kits are intended for general laboratory use. No claim or representation is intended to provide information for
the diagnosis, prevention, or treatment of a disease. (according to Qiagen’s product handbook)
License bundled with sale of kit: Purchase of artus PCR Kits is accompanied by a limited license to use them in the polymerase chain reaction (PCR) process for human and veterinary in vitro diagnostics in conjunction with a thermal cycler whose use in the automated performance
of the PCR process is covered by the up-front license fee, either by payment to Applied Biosystems or as purchased, i.e. an authorized thermal cycler. (also according to Qiagen’s product handbook)
The data above is obviously way too little information to base a decision as in regards to the “true” value (if there even exists a “true” value) of the IP above, especially since there are multiple categories of assets that are not accounted for, such as related methods, know-how, capabilities, trade secrets, supplier agreements, financial assets, virtual libraries of sequences, databases of research data, etc., that would all affect the value of the technology. But I think that it is still an interesting thought experiment, that a number of registered intellectual property rights (with the right to exclude) may in a pre-“swine influenza” era (i.e. pre-23 April 2009) had a certain value with its limited value in use since the technology was (actually still is) not to be used for diagnostic purposes. However, in the current situation when CDC has publicly announced the use for the technology in diagnosis, the IP value has (or rather is likely to have from an investor’s perspective) dramatically changed.
Something tells me that the patent citation frequency, which has been declining since 2003, will increase for Qiagen’s technology and a number of players will enter the same space trying to claim market share using substitute technologies (see figure below). Maybe IP and patent information will be the best metric to determine stock market purchases and company value in the knowledge economy...
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Interesting discussion about the value of IP in the blogosphere initiated by: Duncan Bucknell
Here’s an overview of the patent citation data for those of you wondering what companies that are developing technology referring to Qiagen’s patent (Y-axis: Assignees; X-axis: IPC codes; Size of circles - relative number of patents).
More of my previous biotech case-studies:
Monsanto: Successful Value Creation in Intellectual Asset Management
23 and me: Community based research