[Ip-health] RAPS: NIH’s Exclusive Licenses to Biotech, Pharma Start-Ups: Lots of Secrecy, Few Successes

Michael H Davis m.davis at csuohio.edu
Wed May 11 14:57:56 PDT 2016

This is rather interesting. The NIH and fda refuse to judge the reasonableness of prices with the excuse that they don't have expertise in such matters. But they do have expertise to judge whether documents deserve confidentiality or not. How do they get to choose their areas of expertise? Apparently when it suits them.

Sent from my T-Mobile 4G LTE Device

-------- Original message --------
From: Zack Struver <zack.struver at keionline.org>
Date: 11/05/2016 15:35 (GMT-05:00)
To: ip-health at lists.keionline.org
Subject: [Ip-health] RAPS: NIH’s Exclusive Licenses to Biotech, Pharma Start-Ups: Lots of Secrecy, Few Successes


NIH’s Exclusive Licenses to Biotech, Pharma Start-Ups: Lots of Secrecy, Few

Posted 10 May 2016

By Zachary Brennan

It’s well-known that the National Institutes of Health (NIH) offers
billions of dollars in grants to US academic research facilities. What’s
less well-known is that each year, hundreds of new inventions are produced
in the laboratories of NIH, the Centers for Disease Control and Prevention
(CDC) and the Food and Drug Administration (FDA), and these inventions are
licensed out to private companies in the US and internationally for further
research and development, with the hopes of bringing new products to market.

The licenses generate significant amounts of revenue for NIH. From 1988 to
2004, NIH entered into almost 2,500 license agreements and generated more
than $500 million in royalty revenues, according to a study from Nature

And among those licensing opportunities, there’s a subset of exclusive
licenses, meaning the use of the invention is limited to the license
holder, which are offered to only tiny start-up biotech, pharmaceutical and
medical device companies that are less than five years old, have raised
less than $5 million and have less than 50 employees.


Transparency Questions
More recently, NIH has awarded exclusive licenses to companies that don’t
have office space or even websites.

James Love, director of the non-profit non-governmental organization
Knowledge Ecology International, which has been denied information from NIH
on the exclusive licenses, told Focus: “I think the NIH Is operating in a
highly non-transparent manner, really appalling.  Nothing that is not in
the federal register notice is known about the licenses. They won't answer
questions about the state of the technology, provide copies of the patent
applications, give out the addresses or names of principals the businesses
that have no web pages.  They won't give the royalty rate, the term of the
license, or answer any questions about the analysis that was done to limit
the exclusivity to something less than worldwide life of patent rights.
The NIH seems to be ignoring the requirements of 35 USC 209(a)(1-2).”

For instance, NIH released a proposal to grant exclusive patent licenses to
Vital Spark Inc. and Kalytera Therapeutics Inc. for CB1 receptor mediating
compounds, but as KEI noted, Vital Spark does not have a website and
there’s “virtually no information” on their status as a company.

“As far as we know, the NIH has not demonstrated why granting an exclusive
license to either company is necessary, how the proposed scope of
exclusivity is limited to that “reasonably necessary to provide the
incentive for bringing the invention to practical application,” or how the
NIH will ensure that the inventions is available to the public on
reasonable terms, including but not limited to a reasonable price,” KEI
said in a letter to NIH on 4 May.

Last year, NIH granted a start-up exclusive commercial patent license to
Virotas Biopharmaceuticals, which also does not have a website and is
listed as an LLC based in Delaware, though NIH said the company is based in

Sudarshan Upadhya, co-founder and chief scientific officer of AestasRx,
which does not have a website but won the exclusive start-up license to
develop diagnostics for Alzheimer’s and other diseases, told Focus that he
could not discuss his work because of a non-disclosure agreement with NIH.

Ram Aiyar, executive vice president of corporate and business development
at Corvidia, which has four employees and was granted an exclusive NIH
start-up license this year for a cardiovascular therapeutic, told Focus his
company is targeting certain segments of cardiovascular disease with
mortality rates higher than 20%.

He said the company’s decision to apply for the license was based on
Corvidia CEO Michael Davidson’s relationship with an NIH official, though
the company was not launched “solely based off of that asset.” Corvidia
recently closed $26 million in Series A financing, though Aiyar declined to
offer any details on the timeline for the development of the NIH-developed

Sai Prashant Boyreddy, manager of Great Lakes Neuroscience, told Focus,
noting his start-up of seven employees is still working on obtaining an
exclusive license from NIH, which is reviewing the company's comments. He
said NIH's due diligence has been a "long and lengthy process" and that he
should know in two or three weeks if they've won the license. If they do,
he said the company could hire more employees.

"The most important thing that needs to be told is that these inventions
cannot be commercialized by NIH," Boyreddy said. "And the inventions are at
such an early stage that large pharmaceutical companies don't want to waste
their time on them."

An NIH spokeswoman also told Focus: “Any information about why a company
submitting an application for an exclusive license was found acceptable
would be business confidential and not subject to release to the public.”

Zack Struver, Communications and Research Associate
Knowledge Ecology International
zack.struver at keionline.org
Twitter: @zstruver <https://twitter.com/zstruver>
Office: +1 (202) 332-2670 Cell: +1 (914) 582-1428
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