On Monday, February 11, 2019, the US Patent Trial and Appeals Board (PTAB) denied Dr. Reddy’s petition requesting institution of inter partes review (IPR) of Celgene’s myelodysplastic syndromes (MDS) patents (IPR2018-01504, IPR2018-01507, IPR2018-01509). This is the latest development in a dispute that has garnered much attention since Bristol Myers Squibb (BMS) announced last month that it planned to acquire Celgene in a deal valued at $74 billion. The question now is how does Dr. Reddy’s loss at the PTAB change Dr. Reddy’s overall strategy and outlook? The short answer is that while Dr. Reddy’s best-case scenario is likely off the table, little else has changed.
We previously wrote about the Celgene/Dr. Reddy’s dispute here. At the heart of the dispute is Celgene’s Revlimid®, a derivative of thalidomide (lenalidomide) used to multiple myeloma (MM), transfusion-dependent anemia due to myelodysplastic syndromes (MDS), and mantel cell lymphoma. Many patents protect Revlimid®, including a composition of matter patent covering lenalidomide (U.S. Patent No. 5,635,517) which expires in October 2019, method-of-use patents which expire by 2023, and two polymorph patents, including U.S. Patent Nos. 7,855,217 and 7,465,800, which do not expire until 2024 and 2027, respectively. Revlimid’s® long-term value thus stems from these two polymorph patents.
Dr. Reddy’s ability to get onto the market before 2023 depends on its ability to get around the patents, mainly the polymorph patents. To do this, Dr. Reddy’s is suing Celgene in district court litigation over the two polymorph patents and five patents directed at treating MM. With regards to the polymorph patents, Dr. Reddy’s will argue that is does not infringe those patents because its generic product is “amorphous” lenalidomide, whereas the patents are limited to “crystalline” lenalidomide. Dr. Reddy’s thus believes it can circumvent the polymorph patents.
The case is currently in the discovery phase with discovery ending this month or next, and then the case will presumably move on to trial later this year. We probably will not see a decision from the court before Q4 2019 or even Q1 2020. If there is an appeal, that will typically take a year, which means that a final decision could be expected in early 2021.
So now the question is how did the IPR factor into all this. Dr. Reddy’s chose to challenge three MDS patents through an IPR. This included U.S. Patent Nos. 9,056,120; 8,404,717; and 7,189,740. Dr. Reddy’s did not challenge the MM patents or the polymorph patents in this way possibly because: (a) IPRs are limited to Section 102 and Section 103 issues, whereas Dr. Reddy’s appears to be arguing that its product does not infringe, and (b) a win on invalidity in an IPR would open the door for other generics to launch their products, whereas a win on non-infringement in a district court litigation would keep other generics off the market. If Dr. Reddy’s had the IPRs instituted in February 2019, a final written decision would have been expected in February 2020, and an appeal of that decision would add another year to about February 2021. If Dr. Reddy’s managed to win the IPR and also win on the two polymorph patents, then it could enter the market with respect to MDS in early 2021. Even though MDS is a smaller indication than MM, Dr. Reddy’s product could still slowly eat into Celgene’s MM profits through off-label use.
Since the IPRs were not instituted, and the hurdle to appealing the denial is high especially in light of recent case law, Dr. Reddy’s has lost a valuable opportunity to enter the MDS market early. However, not all is lost. If Dr. Reddy’s prevails in showing non-infringement of the two polymorph patents by early 2021, then it just needs to wait until the method-of-use patents expire to enter. While Natco’s agreement allows it to enter the market with a limited supply in March 2022, Dr. Reddy’s will be able to enter with a full supply as soon as the patents expire. Revlimid®’s longevity assumes that no generic will fully enter before 2026 but Dr. Reddy’s will be able to do just that if it prevails at trial on the non-infringement issue.
The next major question is whether this IPR result, or lack thereof, will impact any settlement discussion between the parties. Settlements are almost always business decisions. To date, Celgene and Dr. Reddy’s have not been able to resolve their differences, likely due, in part, to Celgene’s prior settlement agreement with Natco, which limits what Celgene can offer Dr. Reddy’s. From Celgene’s perspective, they are likely to argue that because they “won” in the IPR setting where the bar is lower, they have a stronger hand. This, however, ignores the fact that different issues will be disputed in the litigation. Dr. Reddy’s will still argue that their generic does not infringe and that has not changed with the IPR result.
We will continue following this case and will keep you informed of any new developments.
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