Last week, the Federal Circuit overturned an obviousness determination in an inter partes review by the Patent Trial and Appeal Board in OSI Pharmaceuticals LLC v. Apotex Inc.  The Court also reaffirmed its holdings in earlier-decided cases that applying the IPR portion of the Leahy-Smith America Invents Act to patents arising from applications filed before enactment of the AIA is not unconstitutional.

The challenged patent, U.S. Patent No. 6,900,221, was listed in the Orange Book for OSI's cancer treatment Tarceva® (erlotinib), an epidermal growth factor receptor (EGFR) inhibitor used in the treatment of non-small cell lung cancer (NSCLC).  The opinion explains that NSCLC was the leading cause of cancer deaths in 2001, amounting to greater than one million cases.  At that time, chemotherapy was the standard therapy but was limited by the toxicity of most cancer chemotherapeutic agents, which showed little specificity in killing normal as well as cancer cells.

Efforts during the timeframe of the earliest claimed priority date of the '221 patent were directed to EGFR inhibitors, but (importantly for the Court's decision) the opinion notes that "many of these [EGFR inhibitors] failed in clinical trials."  One reason for these negative outcomes, according to the opinion, is that "[c]ancer treatment is highly unpredictable" and that while some promising compounds were effective in vitro, such successes were "a poor proxy for how effective that drug actually was in treating cancer in vivo (i.e., in the body)" (the opinion citing several reasons for these results).  The opinion also recites the regulatory hurdles prospective drugs much overcome, and that "[a] great majority of therapies for NSCLC failed in clinical trials" (including the 1,631 new drugs for treating NSCLC between 1990 and 2005, and the mere 7 that were approved by the FDA, one of which was OSI's erlotinib).

Before the Patent Trial and Appeal Board, Petitioner challenged claims 44-46 and 53 of the '221 patent for being unpatentable as obvious:

44.  A method for the treatment of NSCLC (non small cell lung cancer), pediatric malignancies, cervical and other tumors caused or promoted by human papilloma virus (H[P]V), Barrett's esophagus (pre-malignant syndrome), or neoplastic cutaneous diseases in a mammal comprising administering to said mammal a therapeutically effective amount of a pharmaceutical composition comprised of at least one of N-(3-ethynylphenyl)-6,7-bis(2-methoxyethoxy)-4-quinazolinamine, or pharmaceutically acceptable salts thereof in anhydrous or hydrate forms, and a carrier.

45.  The method of claim 44, wherein the treatment further comprises a palliative or neo-adjuvant/adjuvant monotherapy.

46.  The method of claim 44, wherein the treatment further comprises blocking epidermal growth factor receptors (EGFR).

53.  The method of claim 44 for the treatment of non-small cell lung cancer (NSCLC).

The asserted prior art disclosed "a class of '4-(substituted phenylamino)quinazoline derivatives which are useful in the treatment of hyperproliferative diseases, such as cancers, in mammals" (Schnur); a scientific review article summarizing studies related to cell signaling mechanisms and molecules like EGFR involved therein with regard to malignant tumors (Gibbs); and OSI's 10-K filing with the Security and Exchange Commission.  Schnur discloses 105 different compounds including erlotinib (a "preferred" compound) and that this compound could be used as a treatment for cancers of many tissues, including lung (but not specifically NSCLC).  Gibbs discloses that erlotinib was in clinical development, with "good anti-cancer activity in preclinical models."  The Gibbs reference discloses other references that did not reference erlotinib for use in treating NSCLC and had no data regarding the use of erlotinib for treating NSCLC.  OSI's 10-K discloses the company's efforts to obtain FDA approval of erlotinib for treating NSCLC (as well as several other tumor types).  This disclosure was limited to Phase I and Phase II clinical trials and there were no clinical trial data in the document.

The Board held that "a person of ordinary skill 'would have combined Gibbs or OSI 10-K with Schnur and had a reasonable expectation of success of achieving the invention of challenged claims 44 and 53.'"  Specifically, the Board found that all the limitations of claims 44 and 53 were disclosed in the Schnur reference except treatment of NSCLC with erlotinib, and this element of the claims was disclosed in OSI's 10-K or in the Gibbs disclosure that erlotinib "appear[s] to have good anti-cancer activity in preclinical models, with an acceptable therapeutic index particularly in patients with non-small cell lung cancer" (albeit without any disclosure of clinical data to support these activities).  The Board entered judgment in the IPR that claims 44-46 and 53 were invalid for obviousness, and OSI appealed.

The Federal Circuit reversed, in an opinion by Judge Stoll, joined by Judges Newman and Taranto.  While acknowledging that the Board's factual findings were due deferential, "substantial evidence" review, citing Dickinson v. Zurko, 527 U.S. 150, 162 (1999), "'[m]ere speculation' is not substantial evidence," citing Intellectual Ventures I LLC v. Motorola Mobility LLC, 870 F.3d 1320, 1331 (Fed. Cir. 2017).  The panel used the district court standard to illustrate that "substantial evidence is not a fixed quantum of evidence, and may only be determined with respect to the standard of proof," citing Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1363 (Fed. Cir. 2004) (although the relevance to the issue before the Court is not immediately apparent).  Nevertheless, the opinion states that "[t]he same point logically applies to review of the Board's finding," citing In re Hotels.com, L.P., 573 F.3d 1300, 1302 (Fed. Cir. 2009).

Applying these standards, the panel held that the Board's finding was not supported by substantial evidence because:

As an initial matter, in reaching its conclusion, the Board misinterpreted the asserted references to teach more than substantial evidence supports.  When the references are properly read, the Board's finding that the asserted references provide a reasonable expectation of success also is not supported by substantial evidence.  To be clear, the claims require only treatment of a mammal with erlotinib—efficacy in humans is not required.  But the asserted references do not disclose any data or other information about erlotinib's efficacy in treating NSCLC.  The record does not contain any clinical (human) data or pre-clinical (animal) data.  It does not even include in vitro (test tube) data regarding erlotinib's effect on NSCLC.  At the same time, it is undisputed that NSCLC treatment was highly unpredictable with an over 99.5% rate of failure for drugs entering Phase II clinical studies.  On this record, we are not persuaded that a reasonable factfinder could conclude that a person of ordinary skill would have reasonably expected success based on the combination of Schnur and Gibbs or Schnur and OSI's 10-K.

The opinion then sets out, for each reference, the deficiencies in the Board's understanding of the references and why alone or in combination they don't support an obviousness determination by substantial evidence.  Gibbs, according to the panel, is merely a reference article with no independent data of its own, and the data of others it does disclose does not include data showing that erlotinib could be used to treat NSCLC.  The references cited by Gibbs (who submitted a declaration in support of patentee during the IPR) that disclosed erlotinib did not disclose its use for treating NCSLC and the references disclosing NSCLC treatments did not disclose erlotinib, according to the opinion.

Turning to the question of whether the cited art would provide the required reasonable expectation of success, the panel held that "properly read" the cited art did not.  Regarding the combination of the Schnur and Gibbs references, "the asserted references do not disclose any information about erlotinib's efficacy in treating NSCLC in a mammal" according to the Court.  The Schnur reference "fails to disclose any in vitro or in vivo efficacy data for erlotinib or otherwise suggest the use of erlotinib to treat NSCLC" and Gibbs, "[p]roperly read in context,[] discloses only that erlotinib inhibits the EGFR and has good anti-cancer activity in some cancers, not including NSCLC."  The absence of any data "or other promising information regarding erlotinib's efficacy in treating NSCLC," combined with the "highly unpredictable nature of treating NCSLC" precluded in the Court's view these references from providing the skilled worker with a reasonable expectation of success regarding the claimed inventive methods.

With regard to the combination of the Schnur reference and OSI's 10-K document, the Court found fault with the Board's reliance on the existence of Phase I and Phase II clinical trials in the 10-K document, again without any data or reference to data showing that erlotinib could successfully treat NSCLC.  The panel also placed the Board's reliance on the 10-K statements in the context of the failure of 1,630 putative EGFR-directed anti-cancer compounds (a 99.5% failure rate), and faulted the Board for not considering this evidence when weighing the reasonableness of any likelihood for success the 10-K disclosed information would have had on the skilled artisan.  "These references provide no more than hope—and hope that a potentially promising drug will treat a particular cancer is not enough to create a reasonable expectation of success in a highly unpredictable art such as this" according to the opinion.

The United States intervened over OSI's other grounds for appeal, questioning the constitutionality of subjecting to inter partes review proceedings patents arising from applications filed before passage of the Leahy-Smith America Invents Act.  The opinion notes that only after oral argument in this case did the Federal Circuit decide that applying IPR to pre-AIA patents is not a constitutional violation, in Celgene Corp. v. Peter, 931 F.3d 1342, 1362 (Fed. Cir. 2019); and Arthrex, Inc. v. Smith & Nephew, Inc., No. 2018-1584, 2019 WL 3938271, at *7 (Fed. Cir. Aug. 21, 2019).  In the face of this precedent, OSI conceded and the panel entered judgment in accordance with its earlier decisions that applying the IPR statute to pre-AIA patents is not unconstitutional.

OSI Pharmaceuticals, LLC v. Apotex Inc. (Fed Cir. 2019)
Panel: Circuit Judges Newman, Taranto, and Stoll
Opinion by Circuit Judge Stoll