By Randall Osborne

In a case that could test how thoroughly U.S. patents can protect companies' rights to newly discovered genes and their mutations, Oncormed Inc. has filed a lawsuit against Myriad Genetics Inc. over BRCA1, the breast cancer gene.

Oncormed, of Gaithersburg, Md., claims Salt Lake City-based Myriad infringed on Oncormed's patent No. 5,654,155. The lawsuit was filed in the U.S. District Court for the District of Columbia.

BRCA1 is one of two genes responsible for most inherited forms of breast cancer (the other is BRCA2). A study by Myriad completed earlier this year found BRCA1 in about one in six women who contracted cancer before the age of 40, and the presence of ovarian cancer in the family greatly increases the likelihood of the mutation. (See BioWorld Today, May 20, 1997, p. 1.)

Myriad's first tussle over the gene, with the National Institutes of Health (NIH), was resolved in 1995 when the two agreed to be listed as joint inventors in patent applications related to discovery of BRCA1. Myriad and the University of Utah had excluded NIH collaborators from their patent application. The NIH filed its own application, and included scientists from all three entities. (See BioWorld Today, Feb. 16, 1995, p. 1.)

Now, Myriad's fight is with Oncormed, which was granted its patent to BRCA1 in August. Oncormed licensed rights to the gene from the University of California, whose researchers were among those in the race to find BRCA1. Myriad led the scientific teams that discovered the complete sequence of the BRCA1 and BRCA2 genes. Myriad and Oncormed have BRCA1 and BRCA2 testing services on the market.

Question Of Patenting Mutations Raised

Oncormed refused to comment on the lawsuit. William Hockett, director of corporate communications for Myriad, said he had not seen it and could not comment.

Analysts downplayed the lawsuit. An unresolved question is whether mutations of genes are patentable. "There's not clear case history here," said Matthew Murray, an analyst with Lehman Brothers, of New York.

Still, Murray said he would "be surprised if this had much of an effect" on Myriad, at least in the long term, since the patent sought by Myriad — which is related to the company's discovery of BRCA1, announced in the third quarter of 1994 — probably will be granted before the Oncormed lawsuit goes forward.

That could mean the case will not test much of anything.

"The story we're telling investors is that Myriad is on track to get its patent by the end of this year, and when that happens, the current lawsuit will be viewed as insignificant," Murray said. "[Myriad] will be in a position to counter sue or get this thrown out."

Myriad's stock at midday was "down $1.25, which is about 5 percent, but it's only traded 38,000 shares," Murray said. "The 10-day average is 56,000 shares, and the whole biotech market is down. Looking empirically, it hasn't been a big impact."

Myriad refiled its 1994 patent application in June 1995 to protect BRCA1.

"The Oncormed patent covers a consensus sequence for the gene, which is defined by seven variants — seven polymorphic sequences of the gene, which are natural variants," Murray said. "There are thousands of them. Oncormed has only seven."

David Stone, an analyst with Cowen & Co., of Boston, said Oncormed's test is "not very useful. Most normal people would have a variation, and it wouldn't be one of those [found by Oncormed], and you wouldn't know if these people would be predisposed to cancer."

Myriad, by contrast, has determined the sequences of thousands of people who have cancer in their families, and the sequences of unaffected relatives, Stone said.

Oncormed and Myriad have "a philosophical difference which is really irreconcilable, except in court," Stone said. Myriad wants to keep exclusive rights to its genetic testing service, and Oncormed believes any company should be allowed to do the testing and offer licenses to other companies.

When Myriad gets its patent, it will probably ask Oncormed to stop selling BRCA1 testing services, Stone said. "Oncormed might as well fire the first shot. By suing Myriad first, it can gain some publicity advantage," he said. "Myriad's counter lawsuit will be seen as responsive rather than proactive."

Murray said it has taken a while for Myriad to get its patent, but the time span is not unusual. "Look at how long it's taken for Human Genome Sciences Inc. [to be issued gene patents]," Murray said. That company, of Rockville, Md., takes 2.4 years to obtain a gene patent.

"With Myriad, we're right about at 2.4 years," Murray said.

Oncormed May Have Uphill Battle

He added that he was "surprised Oncormed is picking a fight here," since Myriad has claimed ownership to the whole sequence of the BRCA1 gene, and Oncormed's best bet for continued work with genetics might turn out to be a cross-licensing arrangement with Myriad.

"I don't know that it's a fight [Oncormed] can win," Murray said.

Eric Schmidt, an analyst with UBS Securities, of New York, said Myriad "has guided analysts to expect a patent to be issued by the end of the year."

Hockett confirmed as much. "We've been saying that for some time," he said. Myriad has applied for seven patents."

"I suspect they've had claims allowed by the patent office," said Schmidt, who said he was "shocked" to see Myriad's stock price fall after news broke of the lawsuit.

Myriad's stock (NASDAQ:MYGN) closed Tuesday at $25.375, down $0.687. Oncormed (NASDAQ:ONM) closed at $7, unchanged. *

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