Biotechnology

When President Clinton and British Prime Minister Tony Blair recently took the position that genome data should be made freely available to scientists everywhere, people holding biotech stocks stampeded to the exits. You were quoted at the time as saying the panic owed largely to a failure to distinguish between genome sequences and gene sequences. What distinction should investors be making?

What Clinton and Blair were talking about was genomic data — the raw code. When you have that, you actually don’t have any genes at all. The genes have to be predicted from the raw code. And so what Incyte and other companies in the genomics field have been doing for the past five to six years is sequencing the genes themselves. And we’ve managed to compile an almost complete list of those genes. What Clinton and Blair were talking about was making the genomic sequence freely available. And that’s been happening right along. But that’s quite different from the genes themselves, which is where all the commercial utility lies.

For example, when Chromosome 22 was published last December, the Human Genome Project scientists predicted we’d find 545 genes on that chromosome. But because we’d actually sequenced the genes at Incyte, we knew that over 1,000 of our genes would match that chromosome. So they missed nearly half of them. Don’t laugh. They admit it. It’s not like they don’t know about this problem. In fact, they said in their paper that they wished they had a transcribed gene sequence database, which is exactly what we have. And that, of course, is why almost all the major drug and biotechnology companies subscribe to our database.

Now, there’s a lot of academic value in the genome. It gives you things like the gene structure, the promoter regions and all that. It really is the crowning glory from a scientific point of view. But there’s not a lot of commercial value in that. Still, for most people, you say “human genome” and they automatically think you’re talking about all the genes. But that’s not the case. To find all the genes requires a database like ours. And another thing: Once you’ve found the genes, what you then want are physical copies, or clones. And we’ve archived all those so we can make them available to medical researchers worldwide.

In the last few weeks, Tony Blair has come out to say that public opinion should be weighed heavily in the ongoing debate over biotech regulatory policies. That means Britain now joins Switzerland and Iceland, two other countries that have insisted the public’s voice be heard. Do you feel the general public should be part of that discussion?

Absolutely. And the fact of the matter is that they’re involved already. I’m on the board of directors for the Biotechnology Industry Organization, which works all the time with various government agencies on issues surrounding biotechnology. This sounds like an exhortation to do something that’s already happening.

But what that really signifies is growing public awareness. People suddenly want to know what it means to have a copy of every human gene. What does it mean to have genetically modified foods? And these are all legitimate questions, right? So I see these as promising developments — much better, certainly, than people making ill-advised comments or policy decisions based on ignorance.

Incyte describes itself as the leading genomic information company, and, indeed, a recent article in the Wall Street Journal indicates that you hold over 375 U.S. patents on human genomic structures (essentially three times as many as any other organization) and that you have another 6,500 patent applications pending. Are those numbers accurate? And do you plan to make all that information publicly available?

Let me just clarify: What you’re talking about are full-length gene patents, where the medical use of the gene has been described as part of the patent application. As for making that information publicly available, your question actually is a classic example of the general misunderstanding I was just talking about.

What do you suppose happens when a patent issues? Just by virtue of being patented, the information is put into the public domain. So the patents that have already been issued — and we now have 400, by the way — are all, by definition, in the public domain right now. And it’s actually even broader than that, since we’re releasing more than just gene sequence databases; there also are other types of information that are even more valuable. And all that will be put online before the end of the year.

That will solve a huge problem, since, until now, a customer pretty much had to sink $1 million into computer hardware just to be able to run the Incyte database. But by putting all that data on the Internet, everybody will be able to come and use our computer power to perform their searches. So even though the information has been publicly available right along, there was a barrier in terms of computer power. That’s why, historically, it’s only been the drug companies that have been able to work with us. But now we can finally eliminate that last barrier.

But if the information is patented, isn’t there still a cost barrier?

No. That’s another great misconception about gene patents. What the debate is really about is licensing strategy. It’s not about patents at all. When people get upset about a patent, it’s usually because they think they’re going to be barred from using the information. But that only rarely happens. If you look at companies like Intel and Motorola, you’ll find they have thousands of patents. But you very rarely hear anyone complain that they’ve been barred from doing something — and that’s because the high-tech companies generally just cross-license each other. They look at the patent system as a way of getting a financial return on their R&D. And that’s exactly our approach. We license our patents broadly, not exclusively. And so far, drug companies have taken out over 30,000 licenses to our intellectual property.

What about academics and nonprofits? As I understand it, Celera Genomics has announced its intent to make its human genome sequence information freely available to academics without any restrictions whatsoever. Is that your intent as well?

Well, let’s just step back and talk about Celera for a moment. Celera made that statement over two years ago, when they first started, and, as far as I know, they’ve still not put a single bit of human data in the public domain. So I think we should have these debates once people have actually done what they said they were going to do. But as to your question: We absolutely mean to make our information freely available for academic and nonprofit researchers. For us, it’s really just a matter of getting the Web-based distribution mechanisms in place.

What exactly is the basis for asserting patent protection over a gene sequence, since what we’re talking about here is something discovered, as opposed to something invented or created?

Well, now that’s a loaded question. So let’s step back just a bit. Gene patents have been around for 20 years. They’re the whole basis of today’s biotech industry.

Incyte is getting quite a number of gene patents now and, all of a sudden, people are paying attention — and somehow forgetting that this is something that’s actually been of great benefit to the economy for the past two decades. That’s point No. 1. Then all this business about discovery vs. invention — are you familiar with taxol, the breast cancer drug that comes from the yew tree? Well, there again, you have something that’s out there in nature, but has to be purified and isolated before you can make it usable.

If you look at all the genes in the human body, they’ve been around for — what? — 200,000 years. Yet only in the last couple of years have the technologies been developed to purify and isolate those genes for the good of mankind. You saw a trickle of that with Genentech and Amgen, and now you’re seeing much more of it from Incyte and all the other genomics companies. And that’s revolutionizing medical research.

You just look at all the things that are happening today. Doing 100,000 gene scans of patient samples, new ion channels — all that. And it’s just great for the human race. So to imply that these things were just lying around out there for somebody to come along and pick up — well, that’s just a complete mischaracterization of what’s actually happened. People have put a huge amount of capital at risk to purify and isolate all these genes so they can be used for medical research. That’s great for the economy. And that’s just exactly what the patent system was designed to encourage.

Getting more specific, though, my question has to do with how broad the definition of use is. The U.S. Patent and Trademark Office says now that it will grant patents for genes wherever applicants can describe a plausible function. But often those explanations are broad and sketchy. In fact, a highly publicized controversy currently swirls around the development of CCR5 drugs designed to inhibit the transmission of AIDS. While Human Genome Sciences currently holds the patent on the gene that CCR5 targets, the HGS patent application made no mention of the potential HIV connection. And four other research teams, meanwhile, have since filed patents on the same gene that make far more specific claims about the gene’s potential role in the fight to stop AIDS. Under these kinds of circumstances, who should properly be able to claim royalties from the sale of CCR5 drugs? That’s the kind of dilemma I’m looking at.

Again, part of the problem with this debate is that people want to make sweeping generalizations. But every gene patent that’s filed is totally different — different genes, different information, different arguments, different competitors, different research, different methodologies, different patent examiners, the works.

So to make a generalization from the CCR5 matter would not necessarily do the biotech industry any service. That patent has got to have its day in court. It can be challenged just like any other patent.

But one thing I will say about gene patents from Incyte’s perspective is that our customers aren’t expressing any of these concerns. And that’s true throughout the biotech industry. So that means the very people who have to pay these royalties aren’t complaining. And people who wouldn’t have to pay any royalties in any event — which generally are the academics — seem to be the ones who have a problem. So it’s a bit strange, if you don’t mind my saying so. A big part of the problem here is that people’s knowledge of genes is pretty dim. And their knowledge of patents is even dimmer. You put the two together and you get plenty of confusion.

It seems to me that the debate, from a public policy point of view, should turn on questions like: What evidence do we have that these patents are good for the economy? What evidence do we have that they’re bad for the economy? And, as I’ve just told you, the evidence that they’re good for the economy is pretty compelling. You’ve got this biotechnology industry which is growing extremely fast and creating lots of jobs. There are a number of products — human growth hormone, insulin, you name it — that are already out there. And huge pipelines of new products are lining up at all the drug companies. We’re making quantum leaps in medical research.

Now, on the negative side, I say to people: Name an example of how one of these patents has restricted research or led to some negative result. Or make me an argument for why it’s been bad for the economy. And, you know, I’m still waiting.

Princeton molecular biology professor Lee Silver wrote recently in a New York Times Op-Ed piece that the debate over gene patents should be “focused on fair business practices and regulatory issues, not on ethics.” Is that consistent with your view?

Yes. But I wouldn’t phrase it that way. I think the real issues here are about licensing. These are not patent issues, for all the reasons I’ve indicated. From our perspective, the patent system is fundamental to the well-being of the global economy. Issues about any patent, really, always come down to licensing anyway. I think there’s a statute that says if you’ve got a patent on something and you can’t produce it, you have to license it. I’m just using that as an example of the sort of remedies out there to ensure the patent system works for the public good. And it’s an example of how you can fix patent issues through licensing policy. I think we’re looking at all the same issues when it comes to gene patents.

In the Incyte database, for example, there are many new and exciting targets for fighting Alzheimer’s, cancer and the like. But we don’t develop those drugs ourselves. Our policy is to license the patents broadly for a low, single-digit royalty to drug companies — which turns out to be great for them. The genes have already been discovered, purified and isolated, so they save years in drug development. We collect a small royalty and license our information broadly. It’s a win-win all the way around. And that’s the way the system should work. Let’s say Incyte didn’t do that and wanted a 50 percent royalty off every drug, or would only allow its own researchers to work on a particular gene. Then, maybe some public policy issues would need to be discussed. But again, there’s nothing different between that scenario and any other type of licensing arrangement.

It turns out, actually, that one suggestion put forth by a legal scholar at the University of Michigan would have the Patent Office issue “cross-licensing arrangements” in lieu of broad gene ownership patents. Are you comfortable with the Patent Office exploring alternatives like that?

Again, if it ain’t broke, why fix it? I really think the lack of empiricism here is quite appalling. Where is the problem? We are licensing these things nonexclusively anyway. I just wish people would take an intellectually honest view of what’s actually going on instead of projecting problems before they occur. I mean, I keep on hearing academics say, “This is bad because it’ll inhibit research.” But I’m still waiting to see the examples. Where is research being stopped? The fact is, through access to our data, researchers now have thousands more genes to work with than ever before.

So, basically, the great debate amounts to a lot of hand-wringing over nothing?

Yes. At this point, that is empirically the case.