NEWS OF THE WEEKPatents lie at theheart of the biotechbusiness.SUPREME COURTAFFIRMS PATENTSTHE SUPREME COURT has rejected a bid by Microsoftto make it easier to challenge the validityof patents in litigation. The ruling is a victoryfor drugmakers and other businesses that rely on thestrength of their patent portfolios.The justices unanimously upheld a record$290 million verdict against the software giantfor infringing a small Canadian company’s patentand affirmed a long-standing requirement that adefendant in an infringement case prove by clearand convincing evidence that a plaintiff ’s patentis invalid (C&EN, <strong>June</strong> 13, page 27) .Microsoft had argued that a judge or juryshould be able to overturn a patent if only a preponderanceof the evidence indicates it is invalid,a lesser standard of proof.The biotech sector “felt that this was maybeSHUTTERSTOCKINTELLECTUAL PROPERTY:Justices uphold high hurdle forproving a patent is invalidthe most important patent case to go to the SupremeCourt in a decade,” says Hans Sauer, associate generalcounsel for intellectual property at the BiotechnologyIndustry Organization (BIO), a trade association.BIO saw the case as “a great threat because biotech,more than most industries, depends on patents asstrong and enduring legal instruments that cannot beoverturned on a mere coin toss,” Sauer tells C&EN.“You can’t have a sustainable biotech business withoutbeing able to rely on your patents to a stronger degreethan just that for product development, investment,and partnering decisions,” he says.The legal fight began in <strong>20</strong>07 when Toronto-basedi4i sued Microsoft. A district court jury found that Microsofthad infringed i4i’s patent relating to text manipulationsoftware. After a federal appeals court upheldthe award, Microsoft turned to the Supreme Court.“Microsoft tried to gut the value of patents. It is now100% clear that you can only invalidate a patent basedon clear and convincing evidence,” says i4i ChairmanLoudon Owen.Justice Sonia Sotomayor wrote that any change inthe standard of proof for patent invalidity would haveto be made by Congress. She noted in the court’s opinionthat the standard of clear and convincing evidenceis nearly 30 years old and has been left untouched bylawmakers. —GLENN HESSU.S. BIOTECH FUNDINGGrowth in <strong>20</strong>10 is due mostlyto debt offerings.Corporate funding, $ billions25 ■ Debt & other ■ Stock sale■ Venture capital ■ IPO<strong>20</strong>151050<strong>20</strong>04 0506070809IPO = initial public offering of stock.SOURCE: Ernst & YoungBIOTECH SECTORREBOUNDSPHARMACEUTICALS: Recovery isoccurring but growth is slow, doggedby a widening gap in access to capital10MAJOR INDICATORS point to aturnaround for the global biotechnologyindustry, accordingto the annual industry report from theconsulting firm Ernst & Young. Totalrevenues for 622 public companiesreached $84.6 billion last year, an 8%gain over <strong>20</strong>09. Combined net incomejumped 30% to hit an all-time recordlevel of $4.7 billion.Although <strong>20</strong>10 was its second profitableyear in a row, the industry hasn’t returnedto prerecession rates of growth.And while the aggregate performancehas improved, “there is now a wideninggap between large, established companiesand those at earlier stages forwhom access to capital continues to bedifficult,” says Glen Giovannetti, Ernst& Young’s global biotechnology leader.In <strong>20</strong>10, companies worldwide raised a total of $25billion in funding, but the influx was skewed. In theU.S., large debt financings by mature, profitable companiesgrew by 150% and accounted for nearly half the<strong>20</strong>10 total. Meanwhile, funding for emerging firmsdeclined by <strong>20</strong>%.Most revenues also came from bigger companiesthat were equipped to weather the recession. Smallerfirms contributed to overall better net income in <strong>20</strong>10,but at the price of drastic cost-cutting moves, many ofwhich were in R&D. Many small firms didn’t survive therecession. The number of public companies fell by 11%in <strong>20</strong>09, then held steady in <strong>20</strong>10.For the vast majority of firms, funding for R&D hasgrown increasingly scarce, the report’s authors observe:“This has placed new pressure on the traditionalbiotech business model, and may reshape how companiespursue R&D in the future.” For the first timein the industry’s history, R&D spending fell in <strong>20</strong>09,by 21%. A modest 2% increase brought spending up to$22.8 billion in <strong>20</strong>10.Ernst & Young analysts don’t foresee any majorreversals of these trends in the near future. “As long astight funding remains an inescapable part of the newnormal for emerging companies, R&D spending willremain under pressure,” they conclude. “Numberssuch as the ones we have seen in <strong>20</strong>10—steady, solidlyprofitable, but slow-growing—may indeed be theshape of things to come over the next few years.” —ANN THAYERWWW.CEN-ONLINE.ORG 12 JUNE <strong>20</strong>, <strong>20</strong>11
NEWS OF THE WEEKSTRUCTURE OFBRASSINOLIDE’SRECEPTOR SOLVEDAGRICULTURE : First look at sensorfor plant hormone holds surprisesTHE FIRST X-RAY crystal structures of a keyplant hormone receptor protein have beensolved by two independent research teamsworking in the U.S. and China ( Nature , DOI: 10.1038/nature10178 and 10.1038/nature10153). The receptorsenses brassinolide, a steroid that helps bulk up foliage,fight pathogens, and mediate fertilization. It is amongthe last of the major plant hormone receptors to haveits structure solved.The discovery sets the stage forplant researchers to improve theyields of lettuce and cotton, twocrops that depend on brassinolidesignaling for large harvests.The structure will also help plantscientists understand and bolsteragricultural crops’ immunity tomicrobial pathogens.Surprisingly, the brassinolidereceptor “looks totally differentthan what was expected,” saysPing He, a plant biochemist atHOHOTexas A&M University. People so strongly believed thereceptor would adopt a horseshoe shape, He explains,that the wrong structure was widely “put in textbooks.”Instead, the brassinolide receptor, called BRI1, adoptsa superhelix conformation that sequesters the hormoneHHHOHOBrassinolideinside the ring, with thehelp of an “island”domain, so namedbecause it appearsto float in the centerof the receptor’scircular interior.The two researchteams—one led bystructural biologistJijie Chai at Tsinghua University,in Beijing, and theother by Joanne Chory, a plantbiologist at the Salk Institute,in La Jolla, Calif.—knew of each other’swork, but did not share data prior to submittingthe papers for publication. When Chai finally readChory’s paper, “I could not find a difference betweentheir structure and ours,” he says. The impressive similarity“certainly helped” convinceOHHOHreviewers who were expecting BRI1to look like its mammalian analog,the horseshoe-shaped steroid receptorcalled TLR3, Chory says.The researchers were also surprisedto find that BRI1 does notseem to dimerize as TLR3 does,Chai says.Chemists could use BRI1’sstructure to develop small,receptor-activating molecules thataren’t as complicated—and thereforenot as expensive to produce orpurify—as brassinolide. The structure might also helpplant scientists engineer the receptor to increase cropsensitivity to brassinolide, thus speeding the launch ofdefensive strategies against invading microbial pests,He adds. —SARAH EVERTSThe proteinthat detects theplant hormonebrassinolideadopts anunexpectedsuperhelixconformation.NATUREPHARMACEUTICALS Merck deal with South Korea’s Hanwha bolsters move into biosimilarsMerck & Co. has agreed to pay SouthKorea’s Hanwha Chemical up to $7<strong>20</strong>million for access to HD<strong>20</strong>3, a biosimilarform of Amgen’s arthritis and psoriasistreatment Enbrel. The deal buttressesMerck’s ambition to become a leader inthe market for biosimilars, which are genericversions of biologic drugs.Last year, Enbrel logged $3.3 billion insales in the U.S., where it will lose patentprotection in October <strong>20</strong>12.HD<strong>20</strong>3 is in a Phase III study in Koreato confirm its safety and therapeuticequivalence to Enbrel in treating peoplewith rheumatoid arthritis. It has yet to besubject to clinical tests in the U.S.Merck will run additional clinical trialsfor and manufacture HD<strong>20</strong>3, and it intendsto sell the drug in all countries outsideof Korea and Turkey, where Hanwharetains marketing rights. Hanwha willreceive an undisclosed up-front paymentfrom Merck, as well as milestonepayments. Hanwha could reap up to$7<strong>20</strong> million over the course of the pact,according to a financial filing from theSouth Korean firm.Merck has been working diligentlyto become a key player in the emergingbiosimilars marketplace since launchingMerck BioVentures, a unit dedicatedto developing generic biologics, in late<strong>20</strong>08. The company wants to havefive biosimilars in late-stage developmentin <strong>20</strong>12, a goal that it hopes toachieve with the aid of partnerships andac qui si tions.The deal-making kicked off in <strong>20</strong>06,with the acquisition of GlycoFi, a smallbiotech firm with technology to makeglycosylated proteins in yeast. In <strong>20</strong>09,Merck licensed generic versions ofNe upogen and Neulasta, a pair of Amgenchemotherapy adjuncts, from Insmed.And earlier this year, Parexel agreed toprovide clinical development services forbiosimilar candidates being developedby Merck.—LISA JARVISWWW.CEN-ONLINE.ORG 13 JUNE <strong>20</strong>, <strong>20</strong>11