Incyte Corporation—Biopharmaceutical IP analysis
A company portfolio analysis for Incyte reveals 6,910 patent records globally—but only 9% have actually ever been granted. It also reveals that Incyte’s patenting activity has significantly slowed. Can a biotech firm, that according to Forbes was the 6th most innovative company globally in 2017, really just be resting on its laurels as these indicators suggest?
Incyte Corp. is a biopharmaceutical company, based in Delaware, USA, with 980 employees. Incyte’s key focus is in the discovery and development of proprietary therapeutics for oncology treatments.
In 2011, Jakafi (Ruxolitinib), a JAK1 and JAK2 inhibitor, was approved in the USA for the treatment of polycythemia vera (blood thickening) and certain types of myelofibrosis (a bone marrow disorder). In 2017, Olumiant (baricitinib), an oral JAK1 and JAK2 inhibitor treating rheumatoid arthritis, was approved in the EU, but later turned down in the US.
With annual sales of over $1.1 billion and a market cap of $18.7 billion, Incyte certainly appears to have some financial clout, but does it have IP clout?
Beginning with a top level overview, Incyte’s IP strategy shows a high share of complex multi-technology patents within its portfolio. But there also appears to be little growth or improvement indicated.
Could a Biotech business avoid science driven R&D? Avoid joint R&D? And can tech diversity also be specialised?
Looking deeper into IP data reveals some insights that suggest first impressions aren’t all that they seem.
Tech Diversification and specialisation
All-time patent filing
These generally relate to enzymes, micro-organisms and peptides and their uses in medical science. In fact, IPCs C12N15, C12Q1 and A61K38 are mentioned in over 50% of Incyte's patents each. In contrast, Incyte names over 600 different IPCs across its entire patent portfolio—137 different IPCs falling under A61K, 167 under C07D and 131 under A61P.
This is helpful for determining Incyte’s core competencies and where it has allocated the most resources and validates the initial impression of high technological diversity. But there are also a few common threads running through the core of the portfolio confirming specialisation too.
Innovation and market trends punctuated by the biotech boom’s implosion
We can easily see that the tech focuses have changed over time. The table below shows the yearly patenting trend of published patents by technology area.
The size of the circle represents the number of patents filed in that particular year. Incyte’s patenting applications for its top 9 IPCs peaked in 2002 and has since died out—but in tenth place we see A61K31 emerging. This demonstrates a significant shift in technology focus and behaviours—possibly diverting attention to Incyte’s next drug development.
By isolating technology applications that are now on an upward trajectory we can start to identify those new focusses and some resurgences. Of particular note are antineoplastic agents and heterocyclic compounds.
But it’s clear that there’s a drop in the general volume of applications—suggesting that growth has declined.
But that isn’t quite the case for Incyte.
The dawn of a new, more strategic approach to patenting
Here we can observe Incyte's patenting pace and effectiveness of filing. Between 1996 and 2002 Incyte made a lot of patent applications, however the vast majority of these applications failed to ever get granted. As was common to many biopharma companies, many of these patent applications were utilised as a strategic accumulation of patents, effectively ringfencing DNA sequences.
In 2001 Incyte made 709 patent applications. Yet, for the three year period between 2014 and 2016 it only made 655 applications in total. The grant rates, however, are perhaps the more interesting feature. Incyte only managed to get 3 patents approved in 2001—a 0.43% approval rate. In 2014 alone, 51 patents were approved (21.7% approval rate), indicating a much more disciplined and cost effective approach to its IP strategy.
Two important events occurred at the start of the 21st century for Incyte. Incyte’s share price dropped 28% in one day, in March 2000, after President Clinton and Prime Minister Tony Blair made a joint statement calling for the sequence of the human genome to be made freely available to all researchers. A year or so later, in 2001, Incyte appointed a new CEO, Paul Friedman, formerly president of DuPont Pharmaceuticals Research Laboratories, and CSO, Robert Stein, formerly DuPont Pharmaceuticals executive vice president of research and preclinical development, to the business—potentially pioneering Incyte's change in IP strategy.
Wheel of innovation for Incyte’s portfolio
IPCs can reveal the overall categorisation of a business’s filing strategy, but not necessarily in much detail. By looking at keywords, we can take a top line look at the major concepts referred to, and the relative sub-concepts, within Incyte's patents. When taking a long view of Incyte’s key themes, "Treatment of Diseases" and "Prevention Disorders" appear—particularly relating to Kinases. A Janus Kinase 1 and 2 (JAK1 and JAK2) inhibitor is Incyte's key product, so this fits well.
By refining the patent search to the last 5 years of filed patent applications, we can see a few new key themes added into the mix including LSD1, PIM and BET inhibitors. This allows us to start to understand Incyte’s shift in patent strategy and core concepts—and we haven’t had to look at a single patent yet.
Internationalisation and joint R&D
A US biotech company with US and EU drug approval—patenting globally
Incyte is playing on a global platform and patenting its core technologies. But it doesn’t yet have global approval for utilising these products. Jakafi has FDA approval for use in the USA since 2011. Olumiant was approved in the EU in 2017, and subsequently turned down in the US.
Incyte are also investing resources with other companies to enhance developments—recent collaborations include Syros Pharmaceuticals, Eli Lilly and Merck.
Market driven R&D
Life saving and life changing Jak inhibitors are protected by Incyte’s most valuable patents
There are 44 simple families linked to the patent US20160346286A1—conservatively valued at an estimated $10.7 million. But this patent also has 171 extended families dating back to 2005. Incyte is definitely making iterative improvements to its patent. This latest version was published in November 2017—and Incyte has already applied for its next extension.
Incyte’s key competitors
Identifying companies sharing common ground
Focussing our search on Incyte’s more recent patenting activity we can identify which companies share common themes within its intellectual property. Using the following search parameters reveals 3,277 simple patent families on similar territory and the key players involved.
(IPC: (A61K OR A61P OR C07D)) AND (TAC:("JAK1" OR "JAK2" OR "Janus kinase" OR "BET1" OR "PIM" OR "LSD1" OR "JAK") AND ("Inhibitor" OR "Inhibitors"))
Incyte began patenting in these areas in earnest in 2014 and is leading the charge on volume. Although it’s worth noting the early offerings from Novatis, Pfizer and Schering.
Co-incidentally, 2014 saw another change in CEO for Incyte. Hervé Hoppenot—formerly the president of Novartis Oncology.
Determining areas of strength and weakness
Here we can see the main areas of patenting activity by technology field coverage, based on keyword analysis
The three main areas across all companies seem to focus on “Kinase Inhibitors”, “Compounds of Formulas” and “Pharmaceutical Compositions”.
Incyte dominates the field of Kinase Inhibitors, however it has some competition in other sub-segments.
This chart can help identify the strengths and weaknesses of the top patentees within this technology area, highlighting areas that may need improvement, as well as potential business or licensing opportunities.
Determining the direction of competitor activity
Plotting patent data on a 3D landscape allows us to identify isolated space and areas with high densities of operation.
Elevated topography shows technology segments with high level of innovation activity. Meanwhile, low areas reveal white space with potential for exploitation. In particular, low-lying spaces between areas that have already experienced activity.
In this example, Novartis has a patent (WO2017114497A1 - Immune Effector Cell Therapies with Enhanced Efficacy) relative to LSD1 inhibitors which sits well away from other key competitor activity.
This patent was published in July 2017.
Finding value in future innovation
This visualisation shows the most valuable patents relevant to Incyte’s recent patenting strategy, with patents categorised and mapped according to their patent classification codes (IPC) and keyword similarity.
There are some key areas with high value assets. But there is also an area that is densely populated—including 20% of Incyte’s relevant patents—which is not yielding a significant ROI.
Further isolation analysis might reveal that this is an area that has been fully exploited and has no meaningful future value—or perhaps this is an emerging opportunity that hasn’t had enough time to realise it’s potential.