Shares of pharma giant Johnson & Johnson slumped late last week after the U.S. Patent and Trademark Office (PTO) issued a final rejection of U.S. Patent No. 6,284,471 ('471), relating to the blockbuster Remicade (infliximab), following a reexamination of the patent, which is due to expire in September 2018.

The New Brunswick, N.J.-based pharma has 60 days to respond to the PTO's action and confirmed in a terse statement that it "will do so," adding that "we believe the '471 patent is valid and, if necessary, will pursue all available appeals."

The ruling, disclosed before Thursday's market close, sent the company's shares (NYSE:JNJ) down nearly 2 percent in three times average volume, to $98.44, or a loss of $1.94. Although shares rebounded slightly Friday, closing at $99.62, the salvo sent ripples across the bows of makers of innovative drugs and biosimilars alike.

Despite the "final" rejection of the '471 patent – which, importantly, extends claims on the drug where other patents already have expired – J&J has options at its disposal and might still play Remicade out, according to patent law attorneys. But the rejection is another reality check for developers of novel biologics that patent law is evolving rapidly, with makers of biosimilars the likely beneficiaries.

In fact, several companies focused on the biosimilars space saw their shares spike as J&J was treading water. Shares of Boston-based Epirus Biopharmaceuticals Inc. (NASDAQ:EPRS) gained nearly 19 percent Thursday, closing at $7, and added another 9.6 percent Friday to close at $7.67. The company's lead product, BOW015, is a biosimilar version of Remicade already approved in India, with filings in emerging markets expected this year followed by filings Europe and the U.S. in 2017. (See BioWorld Today, Sept. 16, 2014.)

Investors also propelled shares of Celltrion Inc. (Kosdaq:068270), of Incheon, South Korea, which gained nearly 15 percent Friday on Korea's market to close at KRW 58,000 (US$52.80). In August 2014, Celltrion filed a 351(k) biologic license application (BLA) in the U.S. for its biosimilar of Remicade, dubbed CT-P13 in the U.S., which is partnered with Hospira Inc. and currently approved in the EU and Canada as Inflectra. The application was the first in the U.S. for a biosimilar monoclonal antibody, coming on the heels of Sandoz International GmbH's disclosure that the FDA accepted its 351(k) BLA for Zarxio, a biosimilar of Amgen Inc.'s Neupogen (filgrastim). (See BioWorld Today, July 25, 2014, and Aug. 12, 2014.)

Even Pfenex Inc., which doesn't have a disclosed Remicade biosimilar in its pipeline, saw its shares (NYSE MKT:PFNX) rise nearly 25 percent last Thursday to close at an historic high of $12.16, followed by a smaller gain and another high water mark of $13.02 Friday, when shares closed at $12.45. San Diego-based Pfenex, which completed its IPO last year, inked a potential $342 million deal with Hospira last week for PF582, its biosimilar candidate to Lucentis (ranibizumab injection, Genentech Inc.). (See BioWorld Today, June 9, 2014, and Feb. 11, 2015.)

CELLTRION MAY GET TO MARKET SOONER

In keeping with the biosimilar user fee agreement, the FDA has 10 months to review biosimilar applications before deciding whether to approve them. If Celltrion's biosimilar is approved next year, its market entry was expected to be delayed until the end of 2018, when Remicade was set to lose patent protection in the U.S. The PTO decision now throws that timetable into question, according to Gary Connell, co-president of the law firm Sheridan Ross PC in Denver.

J&J likely will turn first to the Patent Trial and Appeal Board, where the PTO's internal appeals process typically takes about 13 months, Connell said. If the pharma loses there, it can still file in the Court of Appeals for the Federal Circuit, which could prolong the appeals process another 12 to 18 months. That could get J&J's timeline closer to the September 2018 expiration date for the '471 patent, but Connell said another scenario also could play out if the Celltrion BLA is approved this year.

"Celltrion could start marketing that drug, and J&J would likely sue Celltrion under this patent, to preserve their rights, even though the patent is under appeal," he told BioWorld Today. The parties then would stay the case until J&J receives a decision on the appeal, which would dictate which company has standing to market their drug in the U.S.

The heart of the PTO's action on Remicade was based on so-called "obviousness-type double patenting," with the agency essentially ruling that the '471 patent makes the same claims as the earlier, already expired patents. Although such an action by a company is improper, Connell said, it's typically more an issue of timing than substance.

But obviousness-type double patenting also is getting heightened attention from a new wave of drugmakers seeking market access at the earliest possible opportunity.

Last year, Celltrion filed suit in the federal court of Massachusetts seeking a declaratory judgment that Janssen's remaining patents are invalid and unenforceable. According to Celltrion's complaint, Janssen's predecessor Centocor Inc. applied for patents describing Remicade in March 1991, with the first being granted in 1997. "Since then, Janssen has applied for dozens of patents that all claim the same purported invention covering cA2 and its uses, or obvious variations of that purported invention," Celltrion said. Some of those were granted as recently as 2008. (See BioWorld Today, April 3, 2014.)

Celltrion also alleged that Janssen purposefully delayed prosecution of one of the patents to improperly extend its term. The patent application was filed 24 years ago. Over the following seven years before the patent was granted, the claims were amended numerous times, and claims that were covered by an earlier patent were added.

In addition, Celltrion accused Janssen, a Johnson & Johnson company, of inequitable conduct before the PTO in obtaining another Remicade-related patent because it didn't disclose prior art.

Although that suit was later dismissed, Connell said, "it seems likely that Celltrion will be able to get on the market sooner than they would have otherwise."

RBC Capital Markets analyst Glenn Novarro agreed, writing in a research note that "We believe that the USPTO's rejection of JNJ's '471 Remicade patent increases the probability of a potential 2015 U.S. launch of biosimilar Remicade, ahead of our previous 2018 expectations," though he conceded that "regulatory and judicial hurdles remain to a potential biosimilar Remicade in the U.S."

BE CAUTIOUS PROSECUTING A PATENT PORTFOLIO

For its part, partner Hospira, of Lake Forest, Ill., which has exclusive rights to market biosimilar infliximab in the U.S., said "there are no changes" in its development plan. Together with Celltrion, "we look forward to continuing our work with the FDA on the approval pathway for biosimilar infliximab," Hospira spokeswoman Julie Ferguson told BioWorld Today, noting that CT-P13 is scheduled for review on March 17 by the FDA's Arthritis Advisory Committee.

Epirus does not plan to accelerate its timetable for BOW015 in the U.S., either, according to Amit Munshi, the company's president and CEO.

"We've thought about some of these issues in depth over time," Munshi told BioWorld Today. "While there's increasingly clarity both on the intellectual property and on the regulatory side in the U.S., we need to just continue doing what we need to do, which is to mitigate operational risks and get products launched."

Half of the market opportunity for biosimilars lies outside the U.S., "and the intellectual property position outside the U.S. is far clearer than inside the U.S." he said. "If a patent is expired, it's expired. There are very few tails on these patents."

With one approval of its Remicade biosimilar under its belt and the pursuit of approvals under way elsewhere, the PTO decision "really doesn't change our game plan very much at all," Munshi added.

Longer term, using obviousness-type double patenting to challenge patents is likely to become more common, said Duncan Greenhalgh, a partner in the business law department at Goodwin Procter LLP in Boston and a member of the law firm's life sciences and intellectual property transactions and strategies practices.

"I've seen a number of cases where these challenges have been mounted, because it will impact the term of the patent," Greenhalgh told BioWorld Today. "The facts here are specific to Remicade, but I see similar challenges elsewhere and I think obviousness-type double patenting is an area where people are looking at challenges. When there's no longer an economic incentive, then people will not use this approach."

The implication, both for developers of innovative drugs and biosimilars, is that "you have to be very careful about how you're prosecuting a patent portfolio to minimize the risk of challenges based on obvious-type double patenting," he added. "These cases were prosecuted several years ago, so we're looking back in history. The law is still evolving in this area, and it's important to keep the prosecution strategy in mind as you move forward."