Biotech Firm Targets Big Pharma With Drug-Tweak Patent Strategy

A neuroscientist-led startup is borrowing a page from Big Pharma’s playbook, taking advantage of drug-approval shortcuts while securing advancements in psychiatric treatments—including in the growing psychedelics industry—before larger companies get there.

Terran Biosciences Inc., a self-described “biotech platform company,” develops therapeutics and technologies for patients with neurological and psychiatric disorders.

Terran’s goal is to patent secondary drug advances before the original drugmaker, upending the “patent thicket” strategy major pharmaceutical companies use to block competing medication. The approach is aimed at speeding the availability of improved treatment options for patients with chronic neurological and psychiatric ailments, but critics warn of the potential problems a glut of secondary patents may bring.

The company’s business model centers on finding and patenting new forms of existing drugs that are easier to administer, more effective, or have fewer side effects. It then leverages the safety data of original manufacturers’ reference drugs to get a faster track to US Food and Drug Administration approval for its tweaked versions. Terran’s approach is designed to dodge the automatic 30-month delay of FDA approval triggered by factors including the reference-drug maker’s filing of a patent-infringement lawsuit.

CEO Sam Clark said the company uses the same tactics pharmaceutical firms employ to extend a branded drug’s exclusivity “to basically turn the process on its head” and “cut out 20-plus years of delays for patients.”

It’s also a response to Big Pharma’s creation of “patent thickets": groups of mostly secondary patents related to a branded drug that have expirations sequentially timed to maximize its exclusivity. Such barriers allow patent owners to effectively keep more affordable or improved alternatives off the market for years. Pharmaceutical companies refer to the practice as “lifecycle management,” while critics call it “evergreening.”

“This is truly Jiu Jitsu—that is, using pharma’s own tactics against them,” Robin Feldman, a professor at the University of California College of the Law, San Francisco who runs its Center for Innovation, wrote in an email.

But some worry about the systemic cost of Terran’s approach. While it seems to have found “a great way to try and navigate what could be coming down the pipeline,” Tahir Amin, CEO of the Initiative for Medicines, Access & Knowledge, said, the company’s focus on secondary patents is “just adding more pollution to the patent system.”

Moving ‘in Stealth’

“Lifecycle management in Big Pharma is set up to only bring forward the new innovations as the last patent on the old version expires,” Clark said, while Terran’s model is to “sidestep that by bringing forward the more technologically advanced version of the drug on a faster time horizon” than makers of the reference drug might prefer.

Clark’s company makes its moves before the FDA approves the reference drugs. If Terran waited until after approval and years of marketing, he said, the company behind the reference drug “would likely have filed all their own IP anyway and blocked out that path.”

Terran, which also has drug-development deals with French conglomerates Sanofi SA and Pierre Fabre Médicament SAS, hopes to use what’s known by its US Code section as the 505(b)(2) pathway to speed up the FDA’s process for approving new drugs.

The regulatory shortcut allows applicants to reference data submitted in earlier, traditional new drug applications, or NDAs—including those filed by other companies—making it possible to get a new drug on the market by demonstrating bioequivalence to the original without having to redo lengthy, expensive trials. And the FDA may grant such tweaked drugs their own periods of protection from generic competition, independent of patents.

By moving “in stealth” while the reference drug’s makers are still developing a treatment, Clark said, Terran short-circuits companies’ tendency to “purposely delay” improvements to billion-dollar blockbusters to avoid cannibalizing profits. And that, he said, leaves IP “gaps” for Terran to fill.

But Amin, whose I-MAK advocacy group pushes for affordable medicines, said most “of these ‘improvement’ or bettering-patient-compliance-type patents are not novel or non-obvious science, but we have a system that grants them because of the utility associated with them.”

“I think the incentives have been skewed, and that’s why we have a patent-abuse problem,” he said.

Psychedelic Focus

Clark founded Terran in 2017, fueled he said by experiences of relatives with schizophrenia or bipolar disorder who were frustrated with existing treatments. He structured it with tech companies in mind, he said, “impressed by what I saw in Silicon Valley with companies like Snapchat, Instagram, Facebook moving quickly.”

Among its prime targets are long-known psychedelics including psilocybin, a hallucinogenic found in “magic mushrooms"; the synthetic compound MDMA, known as “ecstasy"; and DMT, found in certain plants and animals, can produce effects similar to those of LSD and mushrooms.

Terran has six active US patents related to treating neurological and psychiatric conditions—all issued since last August, according to Bloomberg Law data. It also has 36 formal, or “non-provisional,” US patent applications, the company said.

The US Patent and Trademark Office in April issued Terran a patent for the first new polymorphs and salts of MDMA for treating post-traumatic stress disorder. Terran’s other patents include two covering new forms of psilocybin for treating depression; one for using DMT with an ingredient that stops its hallucinogenic effects to treat depression and anxiety; and one for treating depression with prodrugs of DMT. Prodrugs are versions of existing drugs converted into the active form within the body.

In May, Terran said the PTO had sent a notice of patent claims found to be allowable in the company’s application for a composition-of-matter patent for the world’s first prodrugs of xanomeline, a 1990s invention the company will combine with new prodrugs of trospium, created in the 1960s, for a long-acting schizophrenia treatment called TerXT. The new product would compete with KarXT, a potential blockbuster Bristol-Myers Squibb Co. acquired in its recent $14 billion purchase of Karuna Therapeutics.

Terran is also closely watching Lykos Therapeutics Inc.'s efforts to get an MDMA-based therapy for PTSD approved by the FDA.

The company is no stranger to going head-to-head with big players in psychedelics over IP. For nearly two years, the company has been locked in a trade-secrets case with a unit of Compass Pathways Plc, whose $400 million value is tops among psychedelics drugmakers, over a potential non-hallucinogenic antidepressant therapy derived from psilocybin.

Debated Strategy

Using the 505(b)(2) pathway is “an intelligent strategy for any emerging pharmaceutical company,” said Ivor Elrifi, chair of Cooley LLP’s global patent counseling and prosecution practice group, who serves asTerran’s lead outside patent lawyer.

Terran’s using a tried-and-true approach on a wider range of potential drugs than he’s seen any one company attempt, Elrifi said.

“This is a big scale,” he said. “This is massively parallel drug development.”

Despite criticisms of Terran’s approach, Kevin E. Noonan, a partner at McDonnell Boehnen Hulbert & Berghoff LLP, said “they’re not robber barons.”

“They’re people who are looking to see where the opportunities are,” he said, but the moves also should help patients who’d gain access to “new versions of drugs that wouldn’t come to market—or at least not in any reasonable amount of time.”

But Amin, whose group I-MAK calls for an overhaul of the patent system, expressed the need for a policy shift that would reduce what’s considered eligible for secondary patents.

The tweaks they cover “are very, very basic sorts of things that are pretty obvious,” he said. And “you’re giving somebody else that power, even though they say they’re going to use it benevolently.”

The patients wind up being the ones “who pay the price,” Amin said.