On August 2, 2012, I had the opportunity to chat on the record with Erik Iverson, Executive Vice President for Business Development & External Affairs at the Infectious Disease Research Institute. Regular readers of IPWatchdog.com will recall that I also chatted with Iverson on the record about 18 months ago while he was with the Bill & Melinda Gates Foundation. I was introduced to Iverson by friends at BIO and eventually met him when I attended the BIO IP Counsel Meeting in Seattle in April 2011.
Recently USPTO Director David Kappos authored an article for publication on IPWatchdog (see On Patents Aiding Humanity) about the Obama Administration’s Patents for Humanity program, which was announced in February of 2012 at a White House event. verson was in attendance and he and I have chatted about this and other humanitarian efforts and uses of technology in the global health arena, so I thought this would make a perfect opportunity to catch up with him, learn more about the intersection of patents and humanitarian efforts and discuss Patents for Humanity.
Patents for Humanity in the news was also the perfect excuse to chat with Erik. I always enjoy our conversations. We touch base regularly and talk about industry matters, and I always leave those conversations wanting to write about something. Unfortunately, I have had the hardest time getting my head around what seems to be very counterintuitive — namely the use of patented technology for humanitarian purposes. I can confidently now say that I get it. I am happy to share this interview and hope that it can shed light on what might seem like an otherwise purely altruistic endeavor without much likelihood of success. There is great work being done in this space and it is indeed a “win-win” for everyone.
Without further ado, here is part 1 of my two-part interview with Erik Iverson.
QUINN: Thanks, Erik, for taking the time to chat with me today. I always appreciate chatting with you about all things patents. And I wanted to take this opportunity to try and catch up with you and where you’re at. I know you’ve left the Gates Foundation since we last talked, and I wanted to also talk to you about the Patents For Humanity Program which I know you’re knowledgeabl about and involved in to some extent.
IVERSON: Yeah, I’m happy to talk with you, Gene. It’s always a pleasure and some very interesting topics for sure.
QUINN: Why don’t you catch us up – the last time we talked on the record you were at the Gates Foundation and doing some real interesting work there on the global health front. And I know you’ve left. Can you tell us where you’re at and what you’re doing now?
IVERSON: I’m now at an organization in Seattle called the Infectious Disease Research Institute, otherwise known as IDRI, I-D-R-I. And IDRI is a research and development organization focused primarily on vaccines and vaccine technologies, notably adjuvants which stimulate the immune system so that it will make vaccines more efficacious but also contributes to dose sparing, which reduces the price of the ultimate vaccine. And we have a number of vaccines in development with a few in clinical trials, including a vaccine for leishmaniasis, one for tuberculosis, and also a third for leprosy. We have a number of diagnostics also in development for the same diseases, and we are commercializing a couple diagnostics, one for Chagas and one for leishmaniasis, through commercial partners. And we also have a small molecule drug discovery program focused currently on tuberculosis therapeutics, where we are discovering new compounds for that use. Then we partner with a number of companies, as well as nonprofit institutions, for the development of their vaccines or the contribution of our technologies toward animal vaccines as well as human vaccines.
QUINN: So it sounds like you guys are a little bit research and development and a little bit global health organization, partnering with others who research and develop to get vaccines and drugs out to people who need them?
IVERSON: That’s right. As a 501(c)(3) organization. We refer to ourselves as an intentionally nonprofit biotechnology company.
QUINN: Did you say intentionally nonprofit?
IVERSON: That’s right. Versus most bio companies that are unintentionally nonprofit.
QUINN: Yes, that’s a good way to put it. Well that’s an interesting distinction. I’ve never heard it put quite that way, but that probably is a really good way to put it. Now, I know you’re an IP guy, right?
IVERSON: I’m not a patent attorney, but I have spent my professional legal career involved with licensing and deal making. And since joining IDRI, I’ve shed the legal title and I’m now the head of business development and external affairs here at IDRI.
QUINN: So you’re sort of like the deal maker?
IVERSON: I am, that’s right.
QUINN: Okay. Now I know we’ve talked about this a number of times with respect to a number of different things in the humanitarian sector both since you’ve been where you’re at now and when you were also at the Gates Foundation. And I don’t know how to articulate this in any kind of comprehensive way to get people to understand the trials and tribulations, and also to some extent the day in and day out of what it is that you and other organizations like you are doing. I think of intellectual property and my mind goes immediately to proprietary and for profit and commercialization. But there’s a whole other side of the intellectual property world in the global health arena that isn’t driven by that. And I was hoping maybe just throw that out there broadly and maybe you could comment on that and we could go from there.
IVERSON: The utility—perhaps the easiest way to say it, or one way of saying, is of the patent system in developing countries and even emerging markets differs sometimes dramatically from the utility of patents within the more customary commercial markets of the U.S., Europe, and Japan. And what I mean by that is there is a range of issues that are environmental, or if you want to call it a commercial eco system, within a given country or region, that have so many factors that may not be relevant to what we are accustom to thinking about that come into play to dilute the value of IP for approaching a given market. For example, even if you have a system within a country where you can obtain patent coverage, there may not be mechanisms or the will to enforce them. Secondly, there may be such a political system in play to commercialize your product that it inherently creates or allows for a monopoly to a given organization that takes its products into those marketplaces. And quite frankly, the patent just doesn’t have the necessity that your relationships or your ability to capture the distribution chain in a given country can help with because they’re so either unsophisticated or they’re limited in scope in their either availability or their ability to function.
QUINN: I understand that. I guess one of the things that puzzles me, and I mean I sort of get it but I sort of also get puzzled by it, is why is it exactly that these large for profit corporations that you work with following this humanitarian path and/or trying and do business in some of these developing country that don’t recognize IP when they have shareholders to answer to? And one time I know that when we talked a little light bulb went on when you explained that if you want to do business in these other countries, it’s just the same as doing business in any other country, is you’ve got play by their rules. Is that sort of what you’re talking about here now?
IVERSON: Exactly. Exactly. So every country has its own rules written, structured, unwritten, or off the cuff. And understanding how those rules operate in order to get your product into those countries and commercialized is just something that takes a level of diligence and sophistication that I think the larger companies have the resources to apply against. And it has become quite apparent that these markets can be very lucrative. And in fact, there is a great deal of benefit that comes back to a company to commercialize its products in these markets, and not just financial, though certainly financial, but also the political will, and the ability to leverage your portfolio into even more novel or innovative products because you’re really facing challenges that you might not when developing just for the U.S., Europe, or Japan.
QUINN: And what are some of those challenges that you face in trying to do these kinds of deals? Actually, let me ask you this before I even go down that path. Are you and organizations like what you do – are you the middle person between distributing these drugs to the people who need them and getting access to these countries and the commercial sector? Or how do you work within this framework?
IVERSON: We are the early and mid stage developer of the products. That is our folks have discovered the given components of the vaccines. Expressed proteins for example or formulated adjuvants, and have expertise in combining them for a potentially efficacious vaccine. And usually a set of them that you can compare in head to head trials or studies. But once we take it to a certain point, we need sufficient money to conduct the larger scale trials. Now, we can find that sometimes whether it’s from the U.S. government or the Gates Foundation, for example. But eventually we need to get these vaccines into the hands of industry, notably large pharmaceutical or vaccine companies, because they’re the ones who actually have the capacity to manufacture at very, very large scale, and who also have the commercialization mechanisms in place to get it distributed. So we’re not a middleman, but we’re certainly a large portion of the chain that needs to hand it off once it gets to a certain point in its development.
QUINN: Okay. Now I’m starting to understand a little bit more, I think. So that sounds a lot like what universities do. They’re doing the basic science research. Getting it to a certain point and then when it starts to show some promise and some potential for commercialization then they turn it over to the private sector, the for profit sector who then licenses it and then runs with it to try to commercialize and distribute. So that seems a little bit like what you’re describing with a humanitarian slant.
IVERSON: It is, and it brings up a whole different area of evolution within the life science industry. And that is, historically, technologies have come out of universities quite early stage, spun into a biotech company that will take it for a period of time using venture and private capital. And once they get to a proof of concept, or early stage trials, the pharmaceutical sector would pick it up. There is an evolution going on at the moment that the biotech sector, to some degree, is being bypassed. Because the university sector is beginning to develop the technologies or the nonprofit research institutions are beginning to develop the technologies later into its lifecycle and the pharmaceutical companies are looking directly into those organizations to obtain rights to the technology essentially bypassing the biotech sector.
QUINN: Interesting, interesting.
IVERSON: Yeah, it is. And that’s more than kind of a guess or my own kind of view. I’ve had a number of conversations with the venture community and they’re expressing a bit of a concern in this regard. We are similar to the academic sector in that sense, but we are an organization structured around taking products farther down the chain than even what universities do. We’re smaller, a bit more nimble, and we really look and feel like a biotech company.
QUINN: Okay. But you guys are doing the same kind of basic research and not necessarily just looking for the incremental stuff, you’re actually setting out what would be grandiose goals it sounds like when you’re starting your research.
IVERSON: That’s right, we do early stage research but we’re also doing a translational research translating what we find in the law into products and then actually taking those product into clinical trials into Phase 1 and even Phase 2 trials. At which point they are quite mature products in development and hopefully we’ll get them to the point that they’re very attractive and of high utility to the world by the time a pharmaceutical partner steps up.
QUINN: So I am starting to see the pieces that I was missing. It sounds like what you’re describing then is is you take this so far down to the commercialization level that if a pharmaceutical partner becomes interested in what you do and wants access to the innovation and so forth, now you’re in a position to make a deal with them and part of the deal it sounds like that you try and structure is one that ensures that these drugs and treatments will be available to people who need them?
IVERSON: Exactly right. Exactly right. And some of the products, like a tuberculosis vaccine are very attractive to the companies from a commercial perspective, but to IDRI ensuring that it’s going to be made available to the poor, or the people most in need in developing countries, is of critical importance to us and it’s something that I think can bridge those two markets. Something like leishmaniasis vaccine on the other hand, it’s not so commercially attractive and there is some money to be made there but really it’s a disease of the poor. What that means is we’ll probably have to take that vaccine further down the development pipeline to ensure that we’ve derisked it enough for a company to be willing to pick it up in a very, very late stage. And so that the final dollars to get it to a licensed product, all they really need to do is put in a little bit of money to complete that or some money to complete that, I should say. Then the goal is to manufacture it and to get it sold through the mechanisms that exist. And that last piece is really quite frankly one of the more confusing ones because the markets sometimes don’t exist and they have to figure out how to make them.
QUINN: So it doesn’t sound then to me like you are banking on the altruism of a pharmaceutical manufacturer?
IVERSON: It has to come into play. That is the companies are going to have to have a financial return in order to justify it to their stakeholders, or shareholders. But there is the opportunity cost that comes into play that they’re going to have to decide that the altruistic side of the product has to be of priority because it might displace an otherwise more financially lucrative product. So it definitely comes into play.
QUINN: And you get patents, I assume, on your stuff?
QUINN: So when these companies are licensing do they get the underlying technology in and of itself so they may also be able to use that to advance other products or their own research?
IVERSON: Yes, we’re willing to certainly be creative as to the nature and the scope of the rights that we provide. And I’m learning some lessons now that I’m in an organization that owns the products and is developing them. But inherently we are a global health organization. In that historically the concept of global health, and when I say historically, it’s a silly thing to say because it’s a an idea or a concept that really hasn’t taken off largely except for the past decade or so when the Gates Foundation brought a lot of resources to bear. The concept of global health largely has been defined by the Gates Foundation and its contemporaries. And what that means is a pretty limited set of diseases and a pretty limited geographic scope. For example, chronic diseases have never really fallen under that umbrella of global health. And then countries such as Russiahave never really fallen into that geographic scope. I’m biased because I spent so much of my career at the Gates Foundation and so you become a bit insular in your thinking because it’s driven by an organizational strategy, that’s by necessity. But what I’m learning here is that because we have a vaccine in development, tuberculosis vaccine to be specific, what we’re finding is a great deal of interest within the Eastern European and countries, Russia included also, that historically we never thought about seeking patent coverage because it wasn’t on our radar of global health ideals. And so we sought patent coverage in the countries that I guess would typically come to mind, such as the countries in Latin America, most notably Brazil, Southeast Asia, India, Indonesia, and then some countries in Africa like South Africa. But it wasn’t on our radar. And we also file in China. But it was never really on our radar to be thinking about those, to think about Russia and the Eastern European countries, when in fact TB is a massive problem over there. And now you’re seeing an influx of capital, including from U.S. venture funds into the Russian market, outside of Moscow in an area called Skolkovo that they want to build into a technology hub. And they’re coming to us saying we would like to commercialize your vaccine. And we’re looking at our patent portfolio and our patent strategy and it historically hasn’t involved those regions. And so now we’re struggling a little bit with a desire to bring the products into those countries, but approaching global health organizations that really haven’t been paying attention to those countries. And what’s proven out is there’s been a real disconnect.
QUINN: So you have to create not only the market but the infrastructure?
IVERSON: Right. And we have to become very creative. We have to really take the industrial mentality of creativity around innovation to identify the occurrences within the development process that can ultimately give rise to a new patent. That is because of the limited resources in the nonprofit sector, it’s kind of a “low hanging fruit” approach to a patenting. What industry is very good at is being very creative in building a patent portfolio. Now some people call it the patent thicket, right? The patent portfolio and having the resources to be able to file on multiple concepts within a given product or product class that gives them just a great coverage. The nonprofits just don’t have that luxury because of the lack of resources. But now that we all of a sudden have interest from geographic regions to commercialize the product and get them to the people we really care about also, they do want to see the patents there. And so what we have to do is immediately become much more creative in the process to come up with if it’s patentable so that we can attract the right investment to take the product into those marketplaces.