Kyle Bass Wins at the PTAB

Fish & Richardson

On October 21, 2016, the PTAB issued two final written decisions invalidating claims of U.S. Patent No. 7,056,886 (“the ’886 patent”), covering Shire’s drug Gattex® which were challenged by Kyle Bass last year. Although Bass allegedly used the IPR process as part of a strategy to short the stock of targeted pharmaceutical companies, he has publicly stated that he was motivated by a desire to reduce drug prices. From the outset Bass vowed to see his IPR petitions through to the end if instituted. Last week Bass made good on that promise and succeeded in invaliding all instituted claims, overcoming arguments alleging abuse of the IPR process along the way.

Gattex® is a prescription medicine that increases the intestinal uptake of nutrients, supports intestinal cell growth, and may allow some users to avoid the need for intravenous feeding (parenteral support). Gattex® received FDA approval in 2012, and had sales of $67.9 million in 2014, and $142 million in 2015. The ’886 patent discloses stable formulations of GLP-2 peptides and analogs, which have been determined to have therapeutic applications in the treatment of diseases of the gastrointestinal tract. Most GLP-2 peptides are very unstable. The ’886 patent discloses the use of a buffer to increase the pH to desired levels, the addition of some amount of the amino acid L-histidine, and a bulking agent of either sucrose or mannitol to increase stability of certain GLP-2 peptides. The claims set forth several combinations of GLP-2 peptides and peptide concentrations, pH levels, L-histidine concentrations, and different bulking agents and concentrations.

The ’886 patent claims were challenged in two IPR petitions filed by Bass and the Coalition for Affordable Drugs II LLC in April of 2015. The first IPR challenged claims 46-52 and 61-75, and the second followed a few weeks later challenging claims 1-45. On October 23, 2015 the Board instituted review of all of the claims challenged in the first IPR, and claims 1-27, 31-40, and 44-45 of the second IPR—all on obviousness grounds. All instituted claims were held unpatentable in the final written decisions issued last week.

The First Decision
The first set of challenged claims were considered in view of six prior art references that disclose the use of buffers, L-histidine, and sucrose and mannitol as GLP-2 peptide stabilizers. (IPR2015-00990, Paper 68 at 2, 9–12.) The Board found all of the challenged claims obvious in light of the cited prior art combinations. (Id. at 24–28.) The Board then considered secondary considerations of nonobviousness. Shire put on evidence of unexpected results over the prior art, substantial commercial success as evidenced by high sales, market share, and high price, as well as long-felt need in the industry because Gattex® was the first FDA approved drug of its kind. (Id. at 30–36.) The Board was not persuaded that there was sufficient evidence of nexus between the claims in the patent and the secondary considerations of nonobviousness, finding that the benefits of the drug could be attributed to the active ingredient found in another patent listed in the Orange Book as covering Gattex®. (Id. at 35–36.) Having found the claims obvious in light of the prior art, and rejecting any objective indicia of nonobviousness, the Board held claims 46-52 and 61-75 unpatentable. (Id. at 37.)

The Second Decision
The second set of challenged claims were considered in view of five of the same references from the previous IPR, and one new reference. (IPR2015-01093, Paper 67 at 2–3.) The Board again held all of the challenged claims obvious in light of the combination of disclosures in the prior art. (Id. at 21–26.) The Board then considered secondary considerations of nonobviousness. Shire put on essentially the same evidence in support of unexpected results, commercial success, and long-felt need. (Id. at 26–34.) The Board again held that there was insufficient evidence of nexus between the challenged claims and the secondary indicia provided. (Id.) Based on these findings, the Board held claims 1-27, 31-40, and 44-45 unpatentable. (Id. at 34.)

The PTABs decision regarding these IPRs left only claims 28-30, 41-43, and 53-60 as valid in the ’886 patent. Three other patents are listed in the Orange Book as covering Gattex®. Shire can request a rehearing by panel within 30 days of the final written decision, and must articulate all grounds it feels the Board “misapprehended or overlooked.” 37 C.F.R. § 42.71(d). Alternatively, Shire may appeal directly to the Federal Circuit, 37 C.F.R. § 319, and must file a notice of appeal within 63 days of the final written decision, 37 C.F.R. § 90.3.

We will continue to monitor developments in this area.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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