Myriad gene patent ruling sent back to lower court

WASHINGTON Mon Mar 26, 2012 2:58pm EDT

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WASHINGTON (Reuters) - The U.S. Supreme Court on Monday set aside a ruling that said Myriad Genetics Inc could patent two genes linked to breast and ovarian cancers, and ordered further review by a lower court in light of a conflicting ruling in a similar case.

The Myriad case has been closely watched by the biotechnology industry, with some insiders suggesting that a ruling against gene patenting could have a devastating effect on future innovation.

That includes the fledgling field of personalized medicine, which depends on genetic tests, such as those developed by Myriad, to match patients with specific therapies.

The justices delayed any action on the ruling by the U.S. Court of Appeals for the Federal Circuit that Myriad has the right to patent two human genes, known as BRCA1 and BRCA2, that account for most inherited forms of breast and ovarian cancers.

The Supreme Court ruled last week in a separate case involving medical diagnostics that companies cannot patent observations about a natural phenomenon. On Monday, it asked the lower court to revisit the Myriad case to view how it may or may not relate to that decision.

The move is expected to delay a verdict in the Myriad case by as much as several years. In the case of the individual company, that may give it enough time to benefit from the use of its contested patents. Shares in Myriad rose over 3 percent.

"Our intellectual property consultant could potentially see a scenario where the case doesn't move its way back to the Supreme Court for another 2 to 3 plus years, keeping the BRACAnalysis franchise safe from competition," said Junaid Husain, a research analyst for Dougherty & Co.

Women who test positive using Myriad's gene test, called BRACAnalysis, have an 82 percent higher risk of developing breast cancer and a 44 percent higher risk of ovarian cancer in their lifetimes. Such tests could help determine a future course of therapy.

The appeals court by a 2-1 vote had ruled the genes isolated by the company could be patented because Myriad is testing for distinctive chemical forms of the genes, and not as they appear naturally in the body. The dissenting judge said the genes could not be patented just because they were isolated from the body.

The patents granted to Myriad give the company the exclusive right to perform the genetic tests. The appeals court in its ruling in July also found that Myriad's method for screening potential therapies can be patented.

The appeals court had overturned a ruling by a federal judge in New York that the genes could not be patented.

HOW BIG A HURDLE?

Michael Yee, biotech analyst for RBC Capital Markets, said the Supreme Court not taking up the case on Monday was positive for the biotechnology industry.

Yee said he believes the courts will ultimately uphold Myriad's patents, but does not agree that a ruling against Myriad would upend the biotech industry, as some have suggested.

"Biotechs have patents and intellectual property for proteins, antibodies, chemical entities and other composition of matter patents that support development of drugs," Yee said.

While biotechs will likely continue to develop lucrative medicines regardless of the case's ultimate outcome, a decision against gene patenting could hurt small diagnostics companies that depend on exclusive rights to such tests for revenue and could slow advances in personalized medicine.

"We will likely begin to see more copycat diagnostic tests rather than innovative tests over the next few years," according to a report by GlobalData, which compiles and analyzes industry data.

The initial lawsuit filed against Myriad in 2009 claimed the patents violated patent law, restricting scientific research and patients' access to medical care. Some groups have protested that patenting human DNA is immoral and unethical and impedes genetic research.

The appeal to the Supreme Court was backed by a number of organizations representing healthcare professionals, including the American Medical Association, and other groups.

The appeal argued that the question of whether genes and the information they convey can be patented is of "paramount importance to the future of patent law, the advancement of medical science and patients' health."

Gregory Castanias, the attorney representing Myriad, told the Supreme Court that patents involving isolated DNA molecules have been issued for nearly 30 years, resulting in significant investment by biotechnology companies.

Castanias said the challenged patents at issue in the case were filed more than 16 years ago. He said the appeals court's decision was correct and the "questions presented are unique to this case, factbound and unlikely to recur."

The Supreme Court case is the Association for Molecular pathology v. Myriad Genetics, No. 11-725.

(Reporting By James Vicini; additional reporting by Bill Berkrot in New York; Editing by Gerald E. McCormick)

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