Image showing an assignment of intellectual property printed on a paper with a hand on top of it and an eyeglass.

As the closing keynote speaker for the first day of Citeline’s two-day TrialScope EXTRA event, Ali Pashazadeh discussed a topic frowned upon by the disclosure experts in the room: noncompliance. Pashazadeh, founder and CEO of Treehill Partners, an international strategic and financial advisory focused on healthcare, shared candid insights on clinical trial disclosure compliance and its relation to intellectual property (IP) and patents.

In preparation for his talk, Pashazadeh interviewed 46 subject matter experts ― IP attorneys, CROs, bankers, large-cap pharma, biotech CEOs, investor relations and public relations professionals ― and found that they all had varying views on the topic. He asked global CROs: Why do you disclose? Their answer: To make our clients look good. Pashazadeh’s response: “I didn’t think that was the role of clinical trial disclosure.” He described this approach as using trial disclosure as a marketing tool, not as an inform-the-rest-of-the-world tool.

Pashazadeh posed the same question to an IP counsel, and the response was that disclosure is looked at in terms of risk of prior art. In patent law, prior art is any evidence that an invention is already known. The counsel said if there is any risk of prior art, he would claim prior art. When asked what he would advise his client, the counsel said, “Don’t disclose. The downside is $10,000 [fine]. You’ll get a slap on the wrist.”

A working paper by UCLA Anderson’s Jennifer Kao that looks at trial reporting across 2007–2019 suggests nondisclosure of results “often is a strategic decision by for-profit trial sponsors facing competition for drugs in development,” reports the UCLA Anderson Review. “Pharmaceutical companies in competitive markets ― i.e., one in which a competitor is developing a drug to treat the same condition ― are less likely to file results on time, or to report them at all.”

According to the article, Kao categorized more than 147,000 Stage II and III clinical trials. She found that overall, only 30% of trials in the study sample reported results within two years, with average disclosure rates by pharmaceutical companies about 25% lower than public-sponsor rates. What’s more, disclosure compliance rates generally fell as the level of competition increased.

Kao also looked at patent filings for the trial drugs, which suggest that increased competition leads sponsors to delay trial disclosures to be most beneficial to their patent applications. She estimated that 1,374 more private-sector trials, involving about $20.6 billion in investment, would have publicly reported results if their sponsors were not concerned about competition. Separately, the FDAAAA TrialsTracker shows that the FDA could have imposed fines of a minimum $37.43 billion for late reporting.

The conclusion Pashazadeh came to is that there is no incentive for sponsors to publish their data. “There’s no incentive for someone to do the right thing,” he said. “You’re going to get a much bigger slap on the wrist from an IP perspective than you are from a regulatory perspective. We have a regulatory framework that isn’t being enforced.”

The question remains, he said, “How do you act as a good corporate citizen and disclose, without jeopardizing the unknown?” He advocated for disclosure, saying his advice was to wait until the patent is submitted before disclosing. “The advice isn’t to flout the regulation,” he emphasized. The reality, he said, is that many “companies equate the robustness of what they’re doing with the number of patents they have.”

Image of Ali Pashazadeh

Ali Pashazadeh

Patent attorney Alexander Trimble agrees with delaying disclosure. In an article making the case for waiting, he writes that “the better default timeframe for filing such an application is after the start of the Phase II clinical trials, as the delay does not increase the risk of invalidation for public use, but maximizes the exclusivity and value provided by the patent.” He even argues: “Delaying the filing of the patent application further until after the start of the Phase III clinical trial is also possible in limited circumstances.”

However, he warns against waiting to file a patent application. “Delaying the filing of the clinical trial-related patent application comes with a risk that clinical trial-related publications, such as the listing on … may qualify as a printed publication (35 U.S.C. § 102(a)). As with any printed publication, a lack of novelty or obviousness requires the publication, or publications, to describe the invention.”

And in Europe, the opposite may be advised. “Filing a European patent application before starting clinical trials if possible — this is the simplest and safest way of ensuring that clinical trials will not become an obstacle to patent protection,” say three patent attorneys in an article on the topic.

In any case, clinical trial sponsors are encouraged to be prudent. An Australia-based patent attorney advises they should carefully consider “what information is required when registering a clinical trial with a view to avoiding disclosures that may be problematic for patent protection.”

Other Australia-based experts warn of the hazards in disclosing clinical trial protocols. “In many jurisdictions including Australia, New Zealand, Europe, and the US, clinical trial protocols are required to be registered on publicly accessible databases,” write Stefania Sassnink and Sheila Barbero. “Consequently, the potential exists for the protocols to become prior art. Notably, an Australian Full Federal Court decision1 highlighted this risk, where the claims of a patent were found to lack novelty in view of a reasoned but unproven hypothesis disclosed in a clinical trial protocol.”

Pashazadeh also approached bankers on the topic of IP as well as mergers and acquisitions (M&A). Out of 21 major banking organizations he spoke with, none take into account the impact of clinical trial disclosure.

Pashazadeh advises his own clients to disclose the minimum required “if they have any sense that there is a patentability point in the future.” He did say there should be coordination between regulatory requirements for disclosure and the concept of safe haven, that the research disclosed is not deemed as prior art.

“I do think that needs to have a safe haven component to it.” Referring to the fact that other aspects of drug development are so highly regulated, he said, “I don’t understand why clinical trial disclosure isn’t regulated with the same degree of rigor.” His advice to clients is to self-regulate in the absence of stricter regulatory enforcement. “The regulator isn’t there to police you; you should be regulating yourself.

“There’s a tactical point of what you put out there,” he explained. Someone can challenge a patent, and “they don’t have to be right, they just have to make a claim” and have more money than you do, Pashazadeh said.

He stressed the importance of accountability. “If all you’re trying to do is tick the box and disclose … you don’t really care.”

The relationship between regulatory and IP teams does not have to be a contentious one. Kristan Lansbery, patent attorney at Regeneron Pharmaceuticals, in an article in the Food & Drug Law Institute, writes: “Regulatory professionals are in a unique position to identify trade secrets because of their close interactions with the company scientists when drafting regulatory filings. … Regulatory professionals working with the company scientists can help their IP colleagues identify and protect trade secrets. … Because regulatory filings must be detailed and can be made public through the agencies where they are submitted, regulatory professionals are an important ally for protecting this valuable asset.”

How do you act as a good corporate citizen and disclose, without jeopardizing the unknown?
Ali Pashazadeh, Founder and CEO, Treehill Partners

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