Can Corcept Therapeutics fend off Teva's generic for Korlym®?
Corcept Therapeutics recently received a Paragraph IV notice letter from Teva for its drug, Korlym®. The market’s reaction crushed the stock, sending it from approximately $23 to roughly $17 within a day. Corcept Therapeutics has essentially one drug, Korlym® (mifepristone). The drug is protected by orphan drug exclusivity that will not expire until February 2019. Thus, the threat of a generic from Teva is not imminent. Further, whether Teva will enter with a generic version of Korlym® any time soon depends directly on the patents that Corcept has in its arsenal. What are those patents? Is the market’s reaction justified? Or is this a buying opportunity?
Korlym®’s Two OB Patents
The Orange Book currently lists two patents covering Korlym®, which are the two patents identified in Teva’s Paragraph IV certification as allegedly not infringed, invalid or unenforceable. The patents are U.S. Patent No. 8,921,348 and U.S. Patent No. 9,829,495. The expiration dates for these two patents are very favorable. The ‘348 patent expires in 2028, and the ‘495 patent expires in 2036. Thus, if Corcept can adequately show that Teva’s proposed generic is infringed by even one of these two patents, it should be able to maintain monopoly pricing for Korlym® several more years. Yet, that will likely be easier said than done. On their face, the ‘348 and ‘495 patents are not very strong, and neither will necessarily be infringed by Teva’s proposed generic.
The ‘348 patent is directed to a method of optimizing mifepristone levels in a patient. The claimed invention requires administering mifepristone to a patient for seven days, testing the patient’s serum levels, and then adjusting the dose of mifepristone to achieve desireable levels. The problem is that this patent may not be infringed by Teva’s proposed generic. The Korlym® label indicates once-daily administration, rather than seven times a day. (But see our more recent post with updated analysis on this issue.)
Similarly, the ‘921 patent is directed to a method of differentially diagnosing Cushing’s disease and another condition, adrenocorticotropic hormone (ACTH)-dependent Cushing’s syndrome. Again, to the extent Teva will be obliged to copy Korlym®’s label, it is likely that it can sell a generic version of the drug without infringing a patent directed to a diagnostic method of differentiating two different Cushing’s conditions.
Moreover, both the ‘348 and ‘921 patents are essentially diagnostic patents. They are directed, very generally, to giving the patient a drug, running a test, and drawing a conclusion. Those types of patents are typically suspect as directed to ineligible subject matter, i.e., you can’t patent that stuff. Why? Because the Patent Statute precludes patents that cover laws of nature. (Einstein may have literally been a genius when deducing that E = mc2, but he could not have patented it.)
Following the Supreme Court’s 2012 decision in Mayo Collaborative Services v. Prometheus Laboratories, courts have invalidated patents that essentially do nothing more than take a law of nature (i.e., how a drug interacts with the body), and apply it in practice. The gray area becomes whether the patent adds enough “more” to be something other than just applying the law of nature. That is what litigation is for. But the validity of diagnostic patents remain uncertain, and if that was the only form of patent protection that Corcept had against Teva’s generic, an early entry would be presumed.
Korlym®’s Pending Patent Applications
The good news is that Corcept has more patents. Or, rather, more patent applications. Corcept has three pending patent applications which, if allowed, will likely present Teva with a more formidable challenge to gaining early entry of its generic. Corcept has one patent application directed to administering Korlym® with a meal, U.S. Patent Application No. 13/677,465, and two patent applications related to drug-drug-interactions (DDI) between Korlym® and CYP3A inhibitors such as ketoconazole, U.S. Patent Application Nos. 15/627,359 and 15/627,368.
The food patent is directed to a method of administering mifepristone within one hour of a meal. The Korlym® label indicates that the drug should be administered with a meal, which indicates that Teva will most likely infringe this patent. Likewise, for the DDI patents, Corcept claims that it was previously believed that taking mifepristone with ketoconazole would unsafely increase mifepristone levels, potentially leading to toxic effects. Yet, Corcept claims to have surprisingly discovered that mifepristone and ketoconazole can be safely administered. To that end, the patent applications are directed to adjusting the dose of mifepristone downward when the patient is concomitantly taking ketoconazole. Corcept’s revised label for Korlym® appears to reflect the prescription in the DDI patent applications, thus suggesting again that Teva may struggle to show non-infringement.
These patents remains pending, and have not yet been allowed. The claims have been rejected, but patent applications are almost universally rejected before being eventually allowed. Corcept is actively prosecuting the applications. It is likely that the Corcept will be able to gain allowance of at least one of these patents. The rub, however, will be how much Corcept will have to narrow the patents to gain their allowance. That will be material to whether they will be infringed by Teva.
What are the takeaways?
Corcept currently lists two patents in the Orange Book covering Korlym®. Those two patents are weak from an infringement perspective. Worse, they are directed to diagnostic method patents. Teva’s Paragraph IV notice letter will most likely trigger a lawsuit from Corcept by mid-March 2018. That lawsuit will also trigger a 30-month stay, during which time the FDA cannot approve Teva’s generic while the litigation remains pending. Because generic pharmaceutical patent litigation typically lasts three to four years (including appeals), that could in theory buy Korlym® an additional two or three years of monopoly pricing while the litigation plays out.
Yet, diagnostic method patents are susceptible to early motions to dismiss. That means, Teva could in theory dismiss the case quickly (within six to eight months), thus precluding Corcept from enjoying the benefit of the full 30-month stay. If Teva believed Korlym® will face several other generic competitors, it may choose to rely exclusively on its non-infringement defenses, because invalidating the patents would open up entry for other generic competitors. Yet, in this case, Korlym® is an orphan drug with a limited population pool, and no other generics appear to have filed Paragraph IV letters. Thus, moving to invalidate the patents early on may be Teva’s best option.
Corcept’s saving grace, however, is its pending patent applications. These patents, if allowed, are more likely to be infringed and less likely to be invalidated under Mayo. Corcept’s job right now is to get those patents allowed as soon as possible so that they can be asserted against Teva. The two DDI patent applications have been wisely fast-tracked.
This does not mean that Corcept will necessarily prevail and succeed in keeping Teva out until way past 2030. There is still the risk that Teva invalidate the patents as obvious or on some other ground. But it does mean that if Corcept can quickly gain allowance of its pending patent applications, and list them in the Orange Book, then those patents will almost certainly be added to the upcoming patent litigation between Corcept and Teva. Because they are less likely to be the subject of early motions to dismiss, the case may run its natural course, giving Corcep the full benefit of the 30-month stay. That gives Corcept leverage to potentially negotiate a more favorable settlement, perhaps in the mid-2020’s. That, in turn, gives Corcept more time – time to either develop or add a new drug to its pipeline, thus diluting the threat of a generic entrant against its only major drug.
All told, Corcept faces an upcoming battle against competition for its only drug. But the company appears to have smartly anticipated this attack by preemptively laying the groundwork to arm itself with stronger patents. There is still a way out of the woods, and Corcept appears to have mapped it out. With that in mind, crushing the stock may not have been deserved just yet.