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Functional and Pharmaceutical Properties of a Lead Compound Can Be More Relevant Than Chemical Structure When Judging the Obviousness of a Patented Formulation Designed to Mimic an FDA-Approved Formulation

August 25, 2011

Decision icon Decision

Last Month at the Federal Circuit - September 2011

Judges: Rader (author), Moore, O’Malley

[Appealed from: S.D.N.Y., Judge Patterson, Jr.]

In Unigene Laboratories, Inc. v. Apotex, Inc., No. 10-1006 (Fed. Cir. Aug. 25, 2011), the Federal Circuit affirmed the district court’s SJ of nonbviousness, denial of SJ of obviousness, denial of Apotex, Inc. and Apotex Corp.’s (collectively “Apotex”) crime-fraud motion, and dismissal of Apotex’s new claims and defenses.

Unigene Laboratories, Inc. (“Unigene”) owns U.S. Patent No. RE40,812E (“the ’812E patent”), which is a reissue of U.S. Patent No. 6,440,392 (“the ’392 patent”). The ’812E patent covers Fortical®, an FDA-approved pharmaceutical nasal spray with the active ingredient salmon calcitonin that treats, inter alia, postmenopausal osteoporosis. Unigene’s NDA for Fortical® under 21 U.S.C. § 355(b)(2) established that it was bioequivalent to Miacalcin®, Fortical®’s reference drug, also a calcitonin nasal spray. While Miacalcin® and Fortical® use the same concentration of salmon calcitonin as active ingredients, they have different formulations. Miacalcin® also contains sodium chloride, nitrogen, hydrochloric acid, purified water, and benzalkonium chloride (“BZK”), which functions as a preservative, absorption enhancer, and surfactant. In contrast, Fortical® contains 20 mM of citric acid, which functions as an absorption enhancer and stabilizer/buffer; polyoxyethylene(2) sorbitan monooleate (“polysorbate 80”), which acts as a surfactant; and phenylethyl alcohol and benzyl alcohol, as preservatives.

Apotex filed an ANDA and certified under 21 U.S.C. § 355(j)(2)(A)(vii)(IV) that it intended to market a generic version of Fortical® prior to the ’812E patent’s expiration. Unigene filed suit in response, asserting only claim 19, which claims “[a] liquid pharmaceutical composition for nasal administration comprising . . . about 20 mM citric acid . . . .” Slip op. at 4. Apotex’s original and Amended Answers contained numerous affirmative defenses, including invalidity, noninfringement, and inequitable conduct based on, inter alia, failure to disclose prior art and an error in Table 3 of the ’392 patent.

Apotex moved to pierce Unigene’s attorney-client privilege under the crime-fraud exception based on substantially the same conduct underlying Apotex’s inequitable conduct claims: (1) Unigene’s alleged failure to disclose U.S. Patent No. 5,912,014 (“the ’014 patent”), even though the ’014 patent shared a named inventor with the ’812E patent; and (2) errors in Table 3 of the ’392 patent. The district court denied Apotex’s motion, finding that the ’014 patent was either immaterial to the ’392 patent because the disclosed formulations were “considerably different,” or cumulative to other cited references, and that Apotex’s evidence of fraudulent intent was insufficient to establish a prima facie case of fraud.

After the PTO reissued the ’392 patent, the district court granted Unigene’s motion to amend the Complaint to replace all references to the ’392 patent with the ’812E patent. Apotex filed an Amended Answer and included additional inequitable conduct claims.

The parties cross-moved for SJ and the district court found that it would not have been obvious to modify Miacalcin® to reach the claimed formulation because (1) the prior art did not teach using 20 mM citric acid to achieve both shelf stability and enhanced bioavailability in a nasal salmon calcitonin formulation; (2) a skilled artisan would have been motivated to find FDA-approved compounds like BZK that serve as both absorption enhancers and preservatives of calcitonin; and (3) the prior art taught alternative methods for improving bioavailability and absorption of calcitonin. The district court granted Apotex’s motion for reconsideration of its inequitable conduct counterclaims, but held that Apotex’s defenses and counterclaims were conceded, waived, barred, abandoned, or improperly raised. Apotex appealed.

The Federal Circuit, addressing Apotex’s crime-fraud motion, noted that a party must establish Walker-Process fraud (common law fraud) to pierce the attorney-client privilege under the crime-fraud exception. Common law fraud in the patent context “must be based on independent and clear evidence of deceptive intent together with a clear showing of reliance.” Id. at 9 (citation omitted). The Court found that Apotex failed to present clear evidence of intent. The record only contained Apotex’s unsupported allegation regarding the ’014 patent, and the errors in Table 3 were typographical in nature, corrected on reissue, and the inventor submitted a declaration in the reissue proceedings to explain the errors, which reflected “an honest mistake, though perhaps a careless one.” Id. at 10 (citation omitted). Thus, the Federal Circuit found no abuse of discretion with the findings on intent, and did not need to reach the issue of materiality.

Additionally, the Federal Circuit held that the district court acted within its discretion in finding that Apotex’s added counterclaims were not “colorable grounds for relief.” Id. at 11 (citation omitted). The district court rejected Apotex’s counterclaims because Unigene’s replacement of the ’392 patent with the ’812E patent did not materially alter the proceedings. The Federal Court agreed, finding that the record “shows insufficient evidence of fraudulent intent and erects an insurmountable obstacle to Apotex’s new counterclaims.” Id. at 12.

The Federal Circuit also agreed that the ’812E patent was nonobvious as a matter of law. In light of KSR International Co. v. Teleflex Inc., 550 U.S. 398, 421 (2007), the Court noted that “when design need and market pressure may dictate a commonsensical path using a finite number of identified predictable solutions to one of ordinary skill, deviations from that path are likely products of innovation.” Slip op. at 14. Because claim 19 covers a new composition or formulation, it “is not obvious if a person of ordinary skill would not select and combine the prior art references to reach the claimed composition or formulation.” Id. at 14-15. “In the context of a composition or formulation patent where the patented formulation was made to mimic a previously FDA-approved formulation, the functional and pharmaceutical properties of the ‘lead compound’ can be more relevant than the actual chemical structure (though not always mutually exclusive).” Id. at 15. Thus, the Court observed that the term “reference composition” is more appropriate than “lead compound” in this context. Id. at 16.

As applied here, the Federal Circuit first noted that the BZK in Miacalcin® acts as a preservative, absorption enhancer, and surfactant, whereas the “about 20 mM citric acid” in claim 19 acted as an absorption enhancer and surfactant. Second, a skilled artisan would have had (1) the design need to achieve a bioequivalent composition, and (2) the market demand to achieve a composition that treats the same symptoms as the reference formulation. Third, creating a bioequivalent composition could result in FDA approval. Fourth, the Court noted that “the Hatch-Waxman Act encourages and rewards replication of protected compounds in some circumstances—an activity that rarely, but can, lead to innovative products.” Id. at 17. Finally, the Court rejected Apotex’s assertion, raised for the first time at oral argument, that claim 19 was obvious in light of three pieces of prior art: the ’014 patent, Miacalcin®, and the Day reference.

With respect to the ’014 patent, the Court found that no reasonable juror could conclude that it would give a skilled artisan sufficient reason or motivation to use about 20 mM citric acid in a liquid nasal salmon calcitonin composition because the ’014 patent (1) described a solid oral formation of salmon calcitonin; (2) disclosed citric acid in concentrations much higher than those in claim 19; and (3) examined citric acid for bioavailability in the context of a liquid injection into a rat duodenum, not a human use in a liquid pharmaceutical formulation.

Considering the role of BZK in Miacalcin®, the Federal Circuit held that about 20 mM citric acid would not have been an obvious substitute for BZK’s functions as an absorption enhancer and surfactant. The Court noted that citric acid’s function, even in the closest prior art, U.S. Patent No. 5,124,315 (“the ’315 patent”), was unclear. While an example in the ’315 patent disclosed the use of citric acid, it made clear that “citric acid was not used as an absorption enhancing agent.” Id. at 18-19 (citation omitted). Rather, the Court found that the ’315 patent taught away from using “about 20 mM citric acid” as an absorption enhancing agent or stabilizing agent because, as the parties agreed, when the ’315 patent discussed another prior art patent’s disclosure of over fifty examples of absorption agents including citric acid, the ’315 patent reported that citric acid yielded “discouraging” test results. Id. at 19 (citation omitted).

Finally, with respect to the Day reference, the Court noted that citric acid appeared to be listed as a pH adjuster or buffer, not as a preservative. The Court thus found that Day provided “no evidence to support the conclusion that a person of ordinary skill would expect a combination of citric acid, benzyl alcohol, phenylethyl alcohol, and polysorbate 80 to contain a buffer, pH adjuster, preservative, and surfactant, but no absorption enhancer or excipient to promote bioavailability.” Id. at 19-20. Therefore, even with a design need and market pressure to develop a pharmaceutical bioequivalent to Miacalcin®, there was “no evidence in the record that claim 19 would be an obvious solution to those motivations.” Id. at 20.

Accordingly, the Federal Circuit affirmed the district court’s SJ of nonobviousness, denial of SJ of obviousness, denial of Apotex’s crime-fraud motion, and dismissal of Apotex’s new claims and defenses.

Summary authored by Troy L. Gwartney, Esq.