2016: Chimeron Bio: KEI comments on NIH proposal for exclusive license for patents on cancer treatments

On May 18th, 2016 the NIH posted a notice on the Federal Register stating it is contemplating the grant of an exclusive license to Chimeron Bio Corporation , Inc. for the development of Virus Like Particles for the Treatment of Breast Cancer, Lung Cancer, Melanoma, Pancreatic Cancer, and Hepatocellular Cancer. Below are the comments KEI submitted to the NIH on June 2th, 2016.

Other KEI comments on NIH licenses are found here: /nih-licenses


June 2nd, 2016

Lauren Nguyen-Antczak, Ph.D., J.D.,
Sr. Licensing and Patenting Manager,
Technology Transfer Center,
National Cancer Institute,
8490 Progress Drive, Riverside 5,
Suite 400, Frederick, MD 21701
Telephone: (301) 624-8752
Email: lauren.nguyen-antczak@nih.gov.

Re: Prospective Grant of Start-up Exclusive License: Development of Virus Like Particles for the Treatment of Breast Cancer, Lung Cancer, Melanoma, Pancreatic Cancer, and Hepatocellular Cancer

Dear Dr. Nguyen-Antczak,

Knowledge Ecology International (KEI) is responding to the Notice published in the Federal Register on May 18th, 2016 entitled “Prospective Grant of Start-up Exclusive License: Development of Virus Like Particles for the Treatment of Breast Cancer, Lung Cancer, Melanoma, Pancreatic Cancer, and Hepatocellular Cancer”, (81 FR 31250), available at:
https://federalregister.gov/a/2016-11661

The National Institutes of Health (NIH), Department of Health and Human Services (HHS), is considering the grant of a worldwide exclusive license for United States owned patents for “Delivery of Packaged RNA in Mammalian Cells” and “Cancer Immunotherapy: Delivery HLA-11 using VLP-Replicon” (including but not limited to U.S. Provisional Patent Application No.: 61/615,687 and No.: 61/916,394) to Chimeron Bio Corporation based in Delaware.

According to the Federal Register notice, the field of use may be limited to VLPs comprising “MHCII and CD80 for the treatment of breast cancer, lung cancer, melanoma, pancreatic cancer, and hepatocellular cancer.”

KEI opposes the grant of exclusive license in this case unless:

  1. The NIH conducts sufficient analysis and limits the terms and scope of the license as required under 37 CFR 404.7 (a)(1)(ii­iii);
  2. The license contains sufficient safeguards regarding affordability and reasonable pricing of the products developed under the patent licenses;
  3. The license places restrictions on charging US residents higher prices than the median prices charged in countries with the seven largest GDP and per capita incomes of 50 percent or more than the United States per capita income;
  4. The license requires products are affordable in developing countries, and explicitly allows the NIH to grant licenses to the patents to the Medicines Patent Pool (MPP) for use in developing countries, and
  5. The license requires transparent reporting on drug development costs, royalties and revenues.

About the commenters

Knowledge Ecology International (KEI) is a non-profit, non­-governmental organization based in Washington, DC, with an office in Geneva, Switzerland, that advocates for access to affordable medicines, with a focus on human rights and social justice. For more information, see: .

Why this medical technology may be important

The use of viral-like particles (VLPs) is ubiquitous as a gene delivery system in biomedical research and for therapeutic use. Viral transduction is especially useful in delivering genetic material, whether to knock-down or overexpress genes, into primary cells. The inventors of the technology hope to use VLPs to deliver constructs of the antigen presenting and costimulatory receptors’ MHC class II and CD80 into cancerous cells to elicit an immune response against certain cancers. Although the inventors Drs. Chatterjee and Kaczmarczyk have published on gene or protein delivery and ligand-receptor interactions, other than the patents, there are no peer reviewed publications authored by the inventors on the mechanisms regarding MHC-II/ CD80 underlying their discovery. It is therefore impossible to determine the maturity of the technology. Additionally, after a reasonable search, there is no record of how much the NIH has invested into this specific technology, whether in intramural or extramural grants, or in subcontracts.

Information on Chimeron Bio was also scarce and limited to a website devoid of any information on the company except for a contact link.

It is appalling that so little information is available surrounding a medical technology owe by US government or regarding the licence application. Calling for public comment on the license, and then providing almost none of the relevant information, makes the public comment process ineffective, as regards the public’s role in objecting to licenses that undermine their rights to obtain access to the benefits of the inventions on favorable terms, or in addressing other public interest issues.

Why patent license terms are important

We are concerned that the exclusively licensing the patent rights of this medical technology to Chimeron Bio will result in:

  1. Chimeron Bio requiring U.S. residents to pay more than other countries for a medical technology developed at public expense (see /xtandi for a petition to the NIH relating to a prostate cancer drug invented at UCLA on federal grants and priced far higher in the United States than in any other country)?
  2. Delays in the entry of competitive suppliers for the manufacturing and distribution of the Chimeron Bio that will increase affordability and reduce supply shortages,
  3. Barriers to innovation, including enhancements that make the technology more effective in low resource settings.

Federal regulations on the use of exclusive licenses

As noted in the Federal Register notice, the licenses are expected to comply with the public safeguards found in 35 U.S.C. § 209 and 37 CFR part 404.

Specifically, we are concerned about the obligations in 35 U.S.C. § 209(a)

§209. Licensing federally owned inventions

(a) Authority.—A Federal agency may grant an exclusive or partially exclusive license on a federally owned invention under section 207(a)(2) only if—

(1) granting the license is a reasonable and necessary incentive to—

(A) call forth the investment capital and expenditures needed to bring the invention to practical application; or

(B) otherwise promote the invention’s utilization by the public;

(2) the Federal agency finds that the public will be served by the granting of the license, as indicated by the applicant’s intentions, plans, and ability to bring the invention to practical application or otherwise promote the invention’s utilization by the public, and that the proposed scope of exclusivity is not greater than reasonably necessary to provide the incentive for bringing the invention to practical application, as proposed by the applicant, or otherwise to promote the invention’s utilization by the public;

(3) the applicant makes a commitment to achieve practical application of the invention within a reasonable time, which time may be extended by the agency upon the applicant’s request and the applicant’s demonstration that the refusal of such extension would be unreasonable;

(4) granting the license will not tend to substantially lessen competition or create or maintain a violation of the Federal antitrust laws; and

(5) in the case of an invention covered by a foreign patent application or patent, the interests of the Federal Government or United States industry in foreign commerce will be enhanced.

We also note that the term “practical application” is defined by 35 U.S.C. 201(f) as follows:

(f) The term “practical application” means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms. [emphasis added]

Under 37 CFR 404.7(a), the NIH is required to make determinations regarding the necessity of the grant of an exclusive license:

(1) Exclusive, co-exclusive or partially exclusive domestic licenses may be granted on Government owned inventions, only if

(ii) After expiration of the period in § 404.7(a)(1)(i) and consideration of any written objections received during the period, the Federal agency has determined that;

(A) The public will be served by the granting of the license, in view of the applicant’s intentions, plans and ability to bring the invention to the point of practical application or otherwise promote the invention’s utilization by the public.

(B) Exclusive, co-exclusive or partially exclusive licensing is a reasonable and necessary incentive to call forth the investment capital and expenditures needed to bring the invention to practical application or otherwise promote the invention’s utilization by the public; and

(C) The proposed scope of exclusivity is not greater than reasonably necessary to provide the incentive for bringing the invention to practical application, as proposed by the applicant, or otherwise to promote the invention’s utilization by the public[.]

We ask the NIH to provide additional assurances that the products developed under this license be made available to the public at prices that are reasonable and affordable. Among other things, this can include a provision in the license that states:

The NIH will normally expect the licensee to make products available to the public in the United States at prices no higher than the median price changed in the seven countries with the largest GDP, that have per capita incomes of at least half that of the United States.

If the geographic area includes worldwide rights, the products should be made available at affordable prices in developing countries.

As far as we know, the NIH has not demonstrated why granting an exclusive license to the company is necessary. We request that the NIH provide public evidence that the NIH has determined an an exclusive license is necessary for the development of the patented inventions, and there exists a written analysis which establishes that this evaluation has been done.

The NIH should also have the option of providing a non-exclusive license to the Medicines Patent Pool (MPP) to permit competitive supply by generic drug manufacturers, for use in developing countries. Here we note that GSK has recently announced it has begun negotiations with the MPP to license the patents for its oncology products. Certainly the NIH can be at least as sensitive to the health needs of patients living in developing countries as is the big pharma company GSK.

Since the statute requires that the “scope of exclusivity is not greater than reasonably necessary to provide the incentive for bringing the invention to practical application” we request a copy of any analysis, if any, that was done to consider how many years of exclusive rights were necessary to bring the invention to practical application. We also propose the following terms for the contract:

The exclusive rights will extend to five years from the first sale of a product receiving approval by the U.S. FDA, or until the license holder recovers at least $1 billion in global sales from the product, whichever is shorter, and thereafter, the license will become non-exclusive. After the first five years of exclusivity, the NIH can extend the exclusivity by another 3 years, upon a showing that such extension is reasonable in light on the risk adjusted R&D costs to bring the product market, and the net revenues from sales.

KEI notes that the 5 year period, with possible extensions, follows NIH practice, prior to 1984, and other NIH licenses have had terms shorter than the life of patent. For example, in October 2001, the NIH exercised an option to make the licenses for the AIDS drug DDI non-exclusive, ten years after the initial FDA registration (see: Videx® Expanding Possibilities: A Case Study, NIH, National Institutes of Health Office of Technology Transfer, September 2003) in order to expand access to the drug, and to obtain lower cost supplies for federal programs.

The NIH could consider different time periods for exclusivity, but if the answer is always life of patent, no matter what the facts are, then the NIH is no longer meeting the requirements of 35 U.S.C. § 209 to ensure that the “scope of exclusivity is not greater than reasonably necessary.”

Transparency

KEI is also asking for more transparency regarding the costs of developing new products, and the pricing, sales and royalty payments on products.

We object to any license that is not made public. Moreover, all reports specified in the license, including those described in the license appendices, should be public. If the NIH insists on transparency (as was common practice and acceptable in earlier years), Chimeron Bio would agree. The company is getting the license before making any significant investments, and the NIH’s invention may be worth several billion dollars.

We ask the NIH to create a requirement for annual reports on R&D outlays, including an obligation that the company reports the following for each clinical trial that tests products covered by the patents:

  1. ClinicalTrials.Gov identifier
  2. Phase
  3. Conditions
  4. Interventions
  5. Title Acronym/Titles
  6. Outcome Measures
  7. Sponsor/Collaborators
  8. Other Study IDs
  9. Expenditure (for that year)

With regard to sales prices, we request an annual report that provide data on the following variables:

  1. Units of sales, by country
  2. Revenue for sales, by country

With regard to government subsidies for research, we request a report that provides data for the following, by year:

  1. Grants and research contracts from government agencies, with data on the funding agency, the identifier of the grant or contract, and the amount of the grant or contact;
  2. Tax credits associated with R&D for the product, including the U.S. orphan drug tax credit, broken out by the type of credit and the expenditure the credit was associated with (such as a specific trial); and
  3. Other government R&D subsidies.

We hope the NIH will seriously consider these comments, and use its authority to advance affordable access to medical technologies that will benefit the overall health of the American public and society at large.

Respectfully submitted,

Diane Singhroy
Scientific and Technical Advisor
Knowledge Ecology International
1621 Connecticut Avenue, Suite 500
Washington, DC 20009
+1 (202) 332-2670
diane.singhroy@keionline.org

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