Biogen has had a news-breaking start to the year, first with Michael Vounatsos taking over as the CEO of the company; and second, with Vounatsos announcing a payout of $1.25 billion to Forward Pharma to settle a patent licensing agreement. Vounatos has been quoted in the media as saying this will help strengthen Biogen’s intellectual property and protect its drug Tecfidera, comprising dimethyl fumarate, to treat multiple sclerosis.
What does this settlement mean?
Biogen’s payoutm which seems more like an initial settlement, has come as quite some victory for the Danish firm, Forward Pharma. Simultaneously, it has formed a basis for the value of patent filings based on novel formulations of long-known drug substances. The use of fumaric acid derivatives to treat psoriasis has a clinical history that dates back to the 1950s. Forward Pharma entered into this space in 2005 with an arsenal of patents describing the slow release of DMF in the small intestine. These patents were filed by Aditech Pharma AB, a privately held Swedish firm, and a related Swiss firm Aditech Pharma AG.
Biogen forayed into this space through a 2003 licensing deal with Switzerland-based Fumapharm AG, which it later acquired in 2006 for $220 million + milestones and royalties. The resulting product, Tecfidera (formerly BG-12), which earned an FDA approval for treating relapsing forms of MS, is currently Biogen’s top-selling product, with nearly $3 billion in sales during the first three quarters of 2016.
Forward Pharma has been eying Biogen for a while now, which proves that this dispute is far from over. The initial cash consideration is non-refundable and can be interpreted as a down payment. In future, Forward could share the economics of Tecfidera in various ways. It’s all contingent on Forward Pharma prevailing in an interference proceeding in the U.S. and an opposition proceeding in Europe concerning its claim of a 480-mg oral daily dose of DMF-based products to treat MS. If it does, then Biogen will need to hand over 10% of its royalty on sales of Tecfidera from 2021 through 2018 and a 20% royalty on sales from 2029 until the relevant patent expires. This especially if Biogen enters into an exclusive IP licensing agreement with Forward.
What are parties litigating?
On April 13th, 2-15, the Patent Trial and Appeal Board (PTAB) filed an interference between Forward Pharma’s patent application 11/576,871 and Biogen’s issued patent 8,399,514. The PTAB designated Forward Phrama as the “Senior Party” in the interference based on the Company’s earlier patent application filing date.
This patent application is one of several filed by Forward Pharma claiming methods of treating multiple sclerosis with 480 mg of dimethyl fumarate per day. Biogen’s granted patent also claims the same. If Forward Pharma prevails in the interference, its patent application will be issued and the claims in Biogen’s patent will be cancelled. It must be noted that Forward Pharma has two other U.S. pending patent applications numbered 14/213,399 and 14/212,503 and three European pending patent applications numbered EP 14172398.1, EP 14172390.8 and EP 14172396.5, as well as a German utility model, all of which include claims to compositions or methods for treating MS with 480 mg of DMF per day.
Biogen’s contentions focus on two prime points in the interference:
- Forward Pharma’s application does not provide adequate written description support for its claims.
- Biogen claims it has an earlier date of invention, which will be a prime point during the interference proceedings.
Forward Pharma appears to be focusing on three main arguments in the interference:
- Biogen’s patent does not provide adequate written description support for the recited dose of 480 mg.
- Biogen’s patent is anticipated by Forward Pharma’s PCT application, which was published in April of 2006, and Biogen has not met its burden to swear behind it.
- Forward Pharma has an earlier date of invention based on its provisional application.
Why is this a must-win situation for Biogen?
Tecfidera is Biogen’s approved drug. Hence this case becomes a must win for Biogen considering the time and money invested to obtain an FDA approval. While the interference and IPR raise overlapping , it is not difficult to imagine scenarios where Biogen prevails in the interference but not the IPR. But at this juncture, Biogen needs to prevail in both proceedings primarily to preserve the sanctity of its patent.
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