By Randall Osborne

Two genomics companies won patents that make claims so wide-ranging they could encompass much of the industry, and both firms said they intend to set up licensing programs based on the patents — which might even conflict with each other.

Acacia Biosciences Inc. was granted a patent related to its method of simultaneously analyzing multiple genes' expression. OSI Pharmaceuticals Inc.'s patent deals with using small molecule drugs to regulate gene transcription.

"Somebody is eventually going to take it to court," said Mary Ann Gray, an analyst with Raymond James & Associates, of St. Petersburg, Fla.

In the meantime, Bruce Cohen, president and CEO of Richmond, Calif.-based Acacia, said the company will begin signing up partners.

"Our plan is to license this broadly," Cohen said. No firms have been contacted yet, he added.

Matthew Haines, spokesman for OSI, of Uniondale, N.Y., said the company in May signed the first licensee to its gene transcription patent estate: Aurora Biosciences Corp., of San Diego.

"We believe the technology is widespread," Haines said. "We're not interested in stopping anybody from using it. We want them to use it."

Acacia, of Richmond, Calif., said its patent was issued to the University of California at Berkeley (with which Acacia has a sublicensing agreement) for technology related to "computational analysis and database storage of signals measured in in vitro and cell-based assays."

According to the company, its patent covers methods for storing data "critical to current technologies for measuring and interpreting gene expression" in functional genomics.

The patent and an earlier one related to using reporter genes in generating organism-wide profiles of genetic response are part of the company's Genome Reporter Matrix technology, developed to measure changes in gene expression in response to compounds.

Cohen said Acacia's latest invention involves "sophisticated artificial intelligence to analyze patterns of gene expression."

He added Acacia could not find previously granted patents on technology that measures expression changes in large numbers of genes and analyzes them simultaneously.

"You'd have to have array technology and the ability to detect signals at every unit in the array, store them in an integrated fashion and analyze them, all together," Cohen said.

OSI Patent Involves Transcription Regulators

OSI's patent covers the use of small molecule drugs for regulating gene transcription, which is the process by which genes express specific proteins. Such drugs are in development by "a number" of other companies, according to OSI, which began studying gene transcription modulators in the late 1980s.

OSI has another patent, granted in September 1997, related to using reporter genes to identify compounds that modulate gene transcription in vivo. The reporter gene, spliced onto the promoter region of a target gene and then incorporated into a cell-based assay, shows signals, such as changes in emission of light, when a compound has activity against the gene.

Haines said the patent granted first, pertaining to a discovery tool, may have the broadest relevance.

"We believe pretty much any pharmaceutical company will be using [the technology] somewhere in their organization," he said.

However, the more recent patent, which deals with the drugs themselves, is potentially the more valuable to OSI, Haines said.

"The numbers can add up, depending upon what the industry produces," he observed.

Some of the patents in OSI's portfolio were filed as long ago as 1989, Haines added. "They were fundamental," he said. "We pioneered high throughput screening and now it's widely out there."

Court Fights Likely

Haines said OSI is "not looking to become litigious." Cohen said more lawsuits will "cause the genomics industry more trouble than it's worth." Gray, however, said legal clashes over the new patents are inevitable.

She compared Acacia's situation with that of Protein Design Labs Inc. (PDL), of Mountain View, Calif., which licenses its technology to humanize monoclonal antibodies.

Companies will "grudgingly take a license [with Acacia], even though they think they might not need to — just to avoid the hassle, if the terms are not onerous," Gray said.

From PDL, partners get "the right to humanize a monoclonal antibody," she added. "That's it. [The payment] is enough to hurt, but not enough to make them not do it."

Gray said the Acacia patent is "great, if you can get it." Simultaneous analysis of multiple genes is a sure winner, she added.

"Ultimately, everybody's going to want to go there," she said. "For a therapeutic, you want to see all the things that get turned on or turned off."

Gray was less familiar with the OSI patent, but said it could lead to licensing deals with such companies as Gene-Medicine Inc., of The Woodlands, Texas, which studies steroid-like compounds to control transcription.

Others could also be in line for licensing, Gray said.

"To get around [OSI's] patent, you'd have to go to a protein to induce transcription, which you could probably do," she said. "But that would defeat the point."

Acacia's and OSI's new patents could even conflict with each other, she added, although that's not as likely.

"It depends on what you mean by [transcription]," she said. Since Acacia examines profiles of gene expression in response to compounds and since OSI's patent covers small molecule drugs that "regulate" the expression process, a battle might be in the cards.

The fine points are for lawyers to work out, Gray said. Meanwhile, both companies may have found a good — though not primary — source of revenue.

"If anybody told me they were building a business model based on doing this, I don't think that would be a good idea," she said. "But I don't think, in either case, that is [what's going on]."

Acacia's patent now seems "obvious," Gray said. "It wasn't obvious at the time they filed for the patent," she added. Haines said OSI was early to file for patents too, and hopes the ones granted will pay off with minimal legal action.

"I don't think any of us can foresee the outcome," Haines said. "It will be interesting to see what happens." *