Vectura Share Discussion Threads

[gbcol] 20/5/2020 12:30

Ah yes. Thanks. They said expected by Q1 2021 in prelim results.

“GSK has initiated an appeal in the US and, based on the present appeal briefing schedule, a decision is likely to be received before the end of Q1 2021. “

That was probably a bit of a guess and may be affected by corona as well as GSK extensions. I should have learnt a bit of patience after all the years in VEC/SKP!

[popper joe] 20/5/2020 12:19

Slow down!!! We cant't rush things. GSK still have one more document to submit. They now have the right to submit an "Appellant Reply Brief" which is effectively the last word. They are going to exercise that right, because they have requested additional time to do so and have been given until 26th of this month. The only other delay beyond that and the Judges' reading speed is that in a few cases, the Judges may ask to hear oral submission.

[polaris] 20/5/2020 11:43

...within 12 months...probably...

[gbcol] 20/5/2020 11:38

So with all the GSK/VEC documents now issued to the court, any views on possible timescales for hearing the decision?

[slim9] 19/5/2020 19:25

Ace read - thanks.

[polaris] 19/5/2020 18:28

@popper Joe - Thanks for the more in depth reading of the documents. A strong drink is now called for.

I thought the same on scanning the documents and can't see an obvious route for GSK to win point 1, especially with all the relevant information being in trial or post original trial briefing, where the judge rejected a retrial.

Point 2 is a non-starter as, with all the test work, you can hardly call it incidental infringement. It was done with a specific plan...that infringes the 991 patent.

The cap is all about whether Ellipta would be commercially successful. I think that can be safely put to bed for hypothetical negotiations in 2016.

TBH, i just want this one settled so VEC can move on. It will certainly prepare them for the generic AB-rated substitutable device application to the FDA, if nothing else.

[base7] 19/5/2020 18:17

Much appreciated Pappa Joe & summarised extremely succinctly.We now must hope that The Judge interprets the situation as you have & we receive a full award.

[gbcol] 19/5/2020 16:34

That’s great detail Popper Joe. Many thanks for taking the time to post.

[fhmktg] 19/5/2020 16:03

Thanks Popper Joe, great what you can get to do in lockdown.From my limited experience, there is no argument of 'obviousness' and the fact that the trial judge rules against GSK when asked for a retrial seem to weigh in favour of Vectura.If the Appeal court rule against GSK then punitive calculation for damages would seem to follow?Can't see this going to the Supreme Court!

[popper joe] 19/5/2020 15:30

OK, this is a long one, so skip to the next post now if you get bored easily 😉

I have also now read through those 2 court documents that Paul summarised yesterday and so I decided I would share my thoughts, not least because writing them down will help me to remember them!!!

I have been puzzled by this case right from the beginning and struggled to comprehend what the argument was actually about, so I read both documents from start to finish to try to get a better understanding.

The whole case revolves around a single Vectura patent-991, but an earlier Vectura patent-224 helps to grasp the complexities.

The particles of the active ingredients used in dry powder inhalers are typically 5 to 10 microns in diameter. For reference a human hair is around 50 to 100 microns diameter. These small particles present challenges when trying to deliver them in to the lungs, because, amongst other things, there is a tendency for them to clog together. To overcome this clogging and to aid dispersal, drug companies would fix the active ingredient on to a larger “carrier”; particle. This carrier particle would typically be lactose and would be around 75 microns diameter. The force associated with inhalation would then cause the active medication to separate from the carrier. The active ingredient would make its way in to the lungs and the now redundant carrier would be swallowed.The problem with this was that in the presence of moisture, the lactose could destabilise the active drug.

In the year 2000, Vectura solved this problem and were granted a patent for the invention of coating the lactose particles with Magnesium Stearate (MgSt) to create a barrier between the lactose and the active drug. This was patent-224, which GSK licensed from Vectura in 2002 in an agreement that covered over 200 patents.

In 2010, this agreement had to be renegotiated due to reasons that were not disclosed in the court document. Within that renegotiated agreement, Vectura listed some additional patents that they had been granted subsequent to the 2002 agreement or which were pending agreement. One such pending patent was patent-991. (see below) These additional patents were listed separately as the “non assert” patents and the agreement included a clause that stated that GSK would not need to abide by any of the non-assert patents until the 2010 agreement expired in July 2016.

Back to 2006, and whilst GSK were developing the Ellipta range, one of Vectura’s scientists visited GSK and advised them that to further improve flow and dispersal, they should consider coating the active ingredient with MgSt on the outside. Remember, patent-224 coats the lactose and results in the active drug being on the outside of the MgSt, whereas this idea was to put an additional layer of MgSt on the outside of the compound.

This suggestion prompted GSK to carry out a series of studies in to the effect that this would have on dispersal rates. One of these studies was “Study 2” and considered a series of mixes consisting of drugs that were and were not coated with MgSt. These mixes all included Vilanterol, which is used in 2 of the 3 Ellipta products. The study concluded that coating the active particles with MgSt gave a 3-fold increase in dispersal as opposed to coating just the lactose.

In 2012, Vectura received patent-991, which covered this new application.

In 2013/14 GSK launched the Ellipta range, using a process that in simplistic terms coats a particle of lactose with MgSt, deposits active drug particles on the outside and then further coats the whole with MgSt. In other words, it reaches the same end result as described in Vectura’s 991-patent. However, because of the restriction in the 2010 agreement, Vectura could not assert that patent, but were able to assert patent-224, which covered the coating of just the lactose.

And so, we arrived at July 2016, when the 2010 agreement and the 224-patent expired. At that point, Vectura were free to assert their 991-patent, but GSK denied that they had infringed 991.

The patent covers: “A particle of active material and particulate additive material on the surface of that particle of active material,” and “Wherein the additive material PROMOTES THE DISPERSION of the composite active particles upon actuation of a delivery device.”

I have added the capitals, because this is the crux of GSK’s appeal. They have challenged Vectura to show that the MgSt in their Ellipta range promotes dispersion.

In the original trial, Vectura referred to “Study2” from 2006, there case being that this was GSK’s own work and it had concluded that the coating of the compound with MgSt (in the way described by patent-991), did indeed promote dispersal. But GSK’s appeal is based on their assertion that Vectura should have carried out tests on the actual mix that now goes in to GSK’s Ellipta range. To this end, they supplied Vectura with an amount of their commercial mix to conduct trials.

However, Vectura chose to refer back to trials that were carried out on mixes that differ from the commercial mix, but are arguably representative enough. GSK argue that results from Study 2 do not prove that the MgSt in their Ellipta range actually does promote dispersion and that read-across from the trials is not valid. One might ask the question of why they would apply the outer coating if not to promote dispersion, but I suppose there may be some other purpose 😉 Anyway, the Vectura response dismisses this argument and quotes a number of patent cases that have been before this actual appeal court that were successful based on representative evidence.

So that is where we are. As Paul says, there are other grounds that GSK are appealing on:

In addition to Study 2 being conducted on a different mix, they also argue that the process that they now use to produce their commercial product is different to that used in Study 2, therefore Study 2 cannot be used to prove dispersion. But Vectura have countered that by pointing out that the patent is for an end result of a coated particle, not the process that achieves the end result.

They object to Vectura’s Lawyers having repeatedly referred to the profits that GSK have made from the Ellipta range compared to the limited royalties that Vectura received. The argument being that this caused bias with the jury. Vectura have countered that it was incumbent upon the GSK Lawyers to raise such objections during trial.

They have several complaints about the way in which the final damages figure was arrived at. But again, the Vectura counter-argument seems to address all of their challenges.

When I first read the GSK appeal, I felt that they had driven a coach and horses through Vectura’s case and that we had just got lucky with the Jury. But as I read the Vectura response, I became much more confident. Every argument that GSK have offered has been clearly dealt with and I will be very surprised if the judgement is overturned. It is also worth mentioning that all of the above arguments that GSK have put forward in their appeal were present in their post-trial submission when they asked the Judge for a retrial. And the Judge rejected them.

[best1467] 18/5/2020 20:00

Yes Thanks Polaris and alord53 it looks like it all hinges on number one and was that not what won GSK the EMA appeal case .
I know we are talking slightly different scenarios.
But the point raised in point one will have been raised originally so it’s based on interpretation by the higher court is that right If so you would imagine with nothing new we should get the same result.

[slim9] 18/5/2020 18:17

Cheers for info...….

[westofengland] 18/5/2020 11:42

Yes, may I join GBCol to say thanks Polaris and A1ord53.

[gbcol] 18/5/2020 10:36

Thanks for reviewing the docs polaris and thanks to A1ord53 for obtaining them.

[alexchry] 18/5/2020 10:31

I have been waiting nearly four years for some significant good news from VEC so not getting my hopes up too high but I do feel their fortunes and mine may be about to change.

[base7] 18/5/2020 09:52

I appreciate your plodding through all those pages of legalize Polaris.Perhaps our firming share price is a reflection of the continued recovery in The Market & particularly Pharma stocks , but perhaps those with more knowledge of these legal scenarios are being to appreciate the increased likelihood of confirmation of our success-apart from the expectation of more good news very soon ( generic Advair approval in the US)
Breaking back through 100p would be a notable landmark .

[polaris] 18/5/2020 09:41

I scanned the GSK (it's 163 pages!!) and VEC (64 page reply) legal documents last night that a1ord53 sent out from District of Delaware court. It's not worth the time for most people to read, unless you are a lawyer.

It runs very much like two siblings arguing the point with mum as the arbiter. Parts of it really do sound like the classic "but mum...." ... "it's not fair..."

I am not a legal expert so most of it goes above my head with reference to different case law. Anything to note from my point of view?

Basically GSK are arguing three points in descending order of importance:
1. The ruling was made on tests that were not the exact process that GSK use and so patent infringement cannot be proven, calls for JMOL (judgment as a matter of law) stating this to end proceedings.
2. The hypothetical discussions on the royalty rate are not a good basis and GSK and VEC are worlds apart - less than 0.02 % v 3 % rate. i.e a nominal $600 k for incidental infringement of patent.
3. Even if 1 and 2 go in favour of VEC then GSK state should be a cap, as there was for the original agreement.

TBH, my opinion is that if 1. is not water-tight for GSK then they will fail in the appeal, as 2-3 are weak arguments.

1. Lots of interest there and there are features where GSK has a point. However, it would be a whole bag of case law examples references in the future if the court were to overturn. It was 'close' in the original trial but I think it would be a step too far to overturn based on the submission and reply.

GSK set out their position clearly but I think the VEC reply refutes them pretty well. The tests may not have been on exactly the process used by GSK but independent tests (approved by both parties) show them to be as similar as to make them identical and there are various internal GSK documents that VEC refer to that allude to the fact that GSK are replicating the effects of the VEC process by other routes. i.e. they know full-well what they are doing wrt patents held by VEC.

2. This is BS argument by GSK. Incidental infringement? Please, ffs! See previous paragraph.

3. This the worst honestly, as the original agreement has a cap due to the fact that commercial success wasn't assured at the time. It is even stated as the reason for the cap in the agreement! That is now well and truly in the past so it should be a standard 3 % on all US sales, as per the VEC/Novartis for similar agreement for formulation.


The legal world is not my cup of tea at all. I'd probably punch someone for the evasive and obtuse language that is used.

regards,

Paul

[alexchry] 15/5/2020 13:06

pob55 - Kind of you to let everybody know to steer clear of Lloyds!

[pooroldboy55] 15/5/2020 11:11

Off topic

Just to let you see what the old do when bored bought more Lloyds yesterday @27.98p they cant go much lower can they ?? the answer to that is probably yes.

Take care all of you
Regards POB

[cockneytrader] 15/5/2020 00:56

From memory the reshuffle for FTSE Mid-250 are held on the Wednesday after the first Friday in March, June, September and December. I make that 10th of June. Second tranche of share buy back announcement expected soon, and hopefully Advair generic approval from FDA.

[slim9] 13/5/2020 23:15

Spill the beans 2morrow please guys - well done .

If GSK do not win - surely they will take out VEC !!!!!111 ?

S