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Supreme Court ruling isn’t a game-changer for start-ups that rely on gene technology

The U.S. Supreme Court’s ruling that “naturally occurring” genes can’t be patented isn’t viewed as a game-changer for start-ups that rely on cutting-edge gene technology.

Essentially, the possibility that the nation’s highest court might rule as it did already has been factored into the startup universe, said venture capitalist James Rosen of Durham’s Intersouth Partners. Intersouth, the Triangle’s oldest and largest venture capital firm, invests in both life science and information technology companies.

“This case has been in the making for a long time,” Rosen said. “I would be surprised if this decision on its face has an impact on many startup companies or companies that have been conceived in the past decade.”

The Triangle has long been a hotbed for biotechnology startups.

Early-stage companies that relied on a patented gene sequence as their sole intellectual property protection have for years had a tough time raising money from outside investors because of the lengthy shadow cast by the Supreme Court case, Rosen said. That case revolved around patent claims filed by Myriad Genetics, a Utah company that had obtained patents on the precise location of a pair of genes associated with an increased risk of developing breast or ovarian cancer.

The smart companies – and the ones most likely to succeed in raising venture capital – instead have relied on a patent protection that extended beyond the gene itself.

“We try to invest in companies that have strong intellectual property and not intellectual property that’s concentrated in a single asset,” Rosen said. “When you are talking about patenting a gene sequence, that’s not really a product (in and of itself). And the companies that we invest in have to have a product at the end of the day.”

GeneCentric Diagnostics, a tiny Durham startup founded in 2011 with technology licensed from the Lineberger Comprehensive Cancer Center at the UNC School of Medicine, is one gene-oriented company whose patent strategy hasn’t been altered by the Supreme Court ruling.

GeneCentric, which has raised $250,000 in venture capital and is now seeking additional funding, has licensed to Laboratory Corp. of America a diagnostic test that helps oncologists determine the best treatments for individual cancer patients based on their genetic makeup. It’s also developing a second test that identifies patients who would benefit from drugs that inhibit tumor growth, known as angiogenesis inhibitors.

Co-founder and CEO Myla Lai-Goldman said the company’s patent applications are focused on patenting the methods it uses to detect the “gene signatures” that correlate with diseases.

“We patented the methods because that is what we invented,” said Lai-Goldman, a former chief medical officer and chief scientific officer at LabCorp.

Down the road, the impact of the Supreme Court’s ruling conceivably could extend beyond genes to other “biologics” such as proteins.

“As with any Supreme Court decision, you always worry about what precedent does it set and how will it be applied and enforced and how will it trickle down to related areas,” Rosen said.

Consequently, Rosen said, companies that provide protein replacement therapy – proteins that are injected regularly to make up for a patient’s protein deficiency – won’t want to rely solely on patented proteins. Instead, they’ll also want to patent the complex processes used to make the proteins.

Ranii: 919-829-4877
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