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Biotechs look to silver lining on much-feared DNA patent ruling

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Jeffrey Rosenfeld heard all the gloom-and-doom predictions for the biotech industry in New Jersey following the Supreme Court's landmark ruling on genetic research earlier this month.

And then he pulled out his phone and realized it may not be so bad after all.

Rosenfeld, an assistant professor of medicine at the University of Medicine and Dentistry of New Jersey, said the ruling banning the patenting of naturally occurring genes will open up — not shut down — research in the field.

“This is going to spur innovation,” Rosenfeld said. “It will be better for labs. It will be better for startups. They are not going to have to worry that the genes they are working on are going to be patented and their research is going to be shut down.”

Which brings in the phone analogy.

“When you have competition, it leads to innovation,” Rosenfeld said. “If we didn't have Samsung, we'd still have iPhone 1.”

Don't be confused: The ruling will bring some hurt to the industry, one already struggling to get the necessary funding it needs to make these discoveries in the first place.

As for the ruling, Gerald Norton, a Princeton attorney who represents biotech and pharmaceutical companies in New Jersey, said the decision is a setback. But he notes that only about 12 percent of biotech research is devoted to naturally occurring gene sequences, the part which the Supreme Court declared cannot be patented.

“If I take a 12 percent salary reduction, yes that's significant,” said Norton, who heads the intellectual property department at Fox Rothschild LLP. “But I'd still be able to feed my family. Companies have other arrows in the quiver. The biotech industry is still kicking and alive.”

The industry is critical to the economy of New Jersey, home to some 350 biotech companies.

BioNJ, the state's trade group for the biotech industry, said companies are still sorting the impact of the decision and some may need to review their intellectually property portfolios. But the organization does not expect damage to established companies working on drugs and human medicine.

BioNJ stressed that the Supreme Court ruling left protected patents on synthetic DNA, commonly called cDNA. The artificially synthesized DNA is used in genetic engineering and used to produce gene clones, which BioNJ says is the most commercially important form of DNA.

“The decision was a needed reinforcement for companies that rely on cDNA for investments in innovation,” BioNJ said in a statement.

Of more than 15,000 gene patents in the country, Norton said some 3,500 are directed to naturally occurring human DNA sequences. Those patents — some of which are owned by global companies with New Jersey operations, like Merck, Novartis, Bristol-Myers Squibb, Bayer, Novo Nordisk and Pfizer — cannot be asserted against third parties as a result of this ruling, he said.

“It will open up competition,” Norton said. “It will reduce price, with respect to the consumer. But in terms of broad sweeping negative impact to the biotech industry? We just don't see it.”

Neither does Sabrina Safrin, who teaches patent law at Rutgers School of Law–Newark.

Safrin said the ability of biotech companies to patent synthetic genes leaves open an area of research that provides vast opportunity for medical breakthroughs.

“The companies that can identify these genes first will still have tremendous first-mover advantages,” Safrin said. “I don't think it is going to retard research of the biotech industry.”

The ruling involved Salt Lake City-based Myriad Genetics Inc.'s claims of patent protection on genes BRCA1 and BRCA2. Myriad identified and isolated the genes, which are used to identify certain cancers, and argued its ability to isolate DNA created a new and useful molecule that had not previously existed.

The Supreme Court ruled June 13 that naturally occurring human genes cannot be patented, even when isolated from the body. The court reasoned that such genes are products of nature and are not eligible for patent, regardless of the ingenuity or expense undertaken by the company that identified those genes.

George Goodno, spokesman for BIO, a national organization for the biotech industry, said the ruling could hurt small business.

“The companies who will be most likely impacted are smaller operations who rely upon the strength of their intellectual property to secure funding for additional research,” Goodno said. “It is their bedrock in many respects.”

The biggest winner could be the consumer.

Myriad charges more than $3,000 for its genetic test using this technology. Rosenfeld said he expects the price to drop to several hundred dollars.

That could put more money in consumer's pockets.

Perhaps even enough to get the latest phone.

E-mail to: tomz@njbiz.com
On Twitter: @biztzanki

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