Uncertainty about consequences of the recent decision by  the European Patent Organisation’s  (EPO)  Opposition Division (OD) on the NGAL patent
Is the ruling really vital for BioPorto … and in case it is not  – why is it not so ?
While we are still (after 8 weeks) sitting waiting for the EPO – OD’s written statement on how they justify the unjustifiable – it is perhaps appropriate to reflect on the impact of the proposed reassesment  …
First of all – it is of course important to remember – BioPorto still holds the European patent issued by the EPO.  And secondly also to keep in mind that BioPorto will – at the very least  hold the patent within the EPO-area untill 2014 (and probably longer than that) – even if we face the worst case scenario. Additionally, the decision by EPO  does not directly affect either the patents issued in the BRIC countries – or for that matter the patent application in the U.S..
In short – No need to despair….
In order to fully understand the recent bewilderment amongst investors – we have to make a distinction between the NGAL-Test and the NGAL Cutoff-Patent.
The Cutoff-Patent can – (although BioPorto considers it unlikely) – be completely revoked by the EPO (or by USPTO – regarding  the U.S. patent).Nonetheless – more and more studies operates with cutoff values ​​of 230/250 ng / ml – so there seems to be some consensus that it is the right level for the identification of AKI (acute kidney injury) – but that is something the examinators at EPO must decide.
If BioPorto loses the patent (in both the EPO-area and the other adopted areas) – it means,  that BioPorto can not restrict access to the market for test of NGAL-levels with reference to a violation of the cutoff value of 250 ng / ml.
If we make the assumption that it happens – then the NGAL-test is not patent-protected – and other diagnostic companies can make a similar (or identical) test. Some companies will surely then develop a heterogeneous-test (as Abbott) – others will eventually bring a homogenous test to the market.
There is nothing unique in a test – but obviously it takes time (years) to develop and validate it.  You have to take the “time-to-market” into consideration, just think of the time it has taken to implement both Abbott’s current heterogeneous tests and BioPorto’s homogenous.
But – and this is the most important fact … BioPorto CAN lose the patent  – BUT WHATEVER THE OUTCOME IS – BioPorto cannot lose the right to market the homogeneous test, and that’s REALLY interesting  – because the NGAL-Test is the only test – at present – that can be adapted to virtually all types of equipment.
If we look at the patent case – then there are different outcomes scenarios …. Here are three of the most obvious ones:
A: BioPorto succeeds in 1st instance (again). – Happy days are here again immediately
B: BioPorto will not succeed in 1st instance – but alter after appealing – Happy days are slightly delayed
C: BioPorto lose all the way – and after 2014, BioPorto holds no patent – Working days are here again

A: If BioPorto succeeds in the June/July 2012 – (again) – it will place Abbott /Alere (A&A) in an extremely difficult situation. It will take extraordinary persuading abilities  from A&A’s side to obtain license access – after the trial (though of course it would be sensible to separate emotions and business). On the contrary, one might say –  A&A is likely to place themselves between a rock and a hard place if they uphold the case (without being in constant dialogue with BioPorto)

B: Even if BioPorto do not succeed at first instance – then there is – (as we now know from the painful experience in February)  – always the possibility of making an appeal – and there is in this period – still a patent held by BioPorto. It is not overwhelmingly likely that any independent company  (other than Abbott / Instrumentation Lab / Alere / Gaetica) will develop a test in that period.

C: In this sceario, in 2014 it is decided that BioPorto no longer has a patent regarding measurement of cut-off values. Regardless –  BioPorto de facto still have a leading edge over emerging competitors – because the NGAL-test will at that time already in distribution. It is then up to the distribution partners to maintain that position – which will certainly lead to some price pressure (rising over time) – but it will hardly be noticeable the first few years (and we’re probably over in 2017 before emerging competitors shows up with a validated test)

So what can Abbott/Alere lose? Well – by maintaining the case we can basically operate with two outcome scenarios.

If BioPorto succeeds . A&A risk having to pay a hefty compensation for marketing their own test – and can – in addition (ultimately) be forced to revoke the test that have been sold, many years of promotion and marketing will be wasted – and a possible sale of Abbott RA-machines (based on NGAL-test) goes into the sink. (The same applies to the sale of Alere’s Triage).

Eventhough  Abbott/Alere opposition proceedings turns out to be justified – then A&A will never be able effectively to block BioPorto’s NGAL-test in the market. The heterogeneous test is expensive (both in production and procurement) in comparison with a homogeneous test (which of course also can be used on Abbott machinery) – so there will be some pressure on Abbott from below – even if they succeed in having the patent  revoked

In the period until 2014  Abbott/Alere therefore have to make a choice,  either they must continue marketing their own test (full throttle  with the risks it involves) – or should try a more intensive dialogue with BioPorto (presumably while the patentcase is running).

If BioPorto enters into agreement in the first half of 2012  (as they unequivocally promised) – BioPorto will probably prove to be a very stubborn negotiating partner for A&A.   So if I were in Management in either the two companies – I’d be more than just slightly interested in making a deal (in respect for a cancellation of the patent case) – before BioPorto enters into  an agreement with the other major players such as  – Roche / Siemens?

A&A are probably left alone in pursuing the case when the Pfadia patent will be declared permanently unapplicable – and then there’s only one other company  interested in upholding the case against BioPorto (Gaetica). If Abbott /Alere /Gaetica withdraws case there is no other who can protest against Patent (the last date for filing objections has expired long ago).

In clear text: BioPorto is in the driving seat until 2014 regarding the patent – and in relation to marketing the only homogenous NGAL test at least till  2017 (in the unlikely event of the patent being lost) …

About Stengaard

BioPorto investor from way back when... I've invested in BioPorto ever since they made their debut on the danish stock exchange, it been a looooong journey with many obstacles. But well worth it all if Bioporto maintains their patent after the proceedings in 2014, and enters into agreements with Global Distributors in 2012 and 2013 If not, then it'll take another xx.years 🙂

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4 Responses to 2014 – a threat for Bioporto, the NGAL-patent or the NGAL-test ??

  1. *Bump*

  2. stengaard says:

    the minutes of the Oral Proceeding have now been despatched. A new post/thread about this vital decision have been opened – please see: EPO, Oral Proceedings / NGAL cutoff-patent

  3. stengaard says:

    Breaking News….(more or less) apparently the minutes of the oral proceedings have been despatched from EPO on May the 8th. We are indeed looking forward to the publication – whether they display BioPorto as professionals or amateurs… Inquiring minds wants to know 🙂

  4. stengaard says:

    well, we passed the 3 month mark since the decision by the OD – and still no explanation ? Quite strange…

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