Securing market protection for cell therapies: Patents versus regulatory exclusivity

Cell therapies represent incredibly exciting science and the opportunity to treat previously intractable diseases. Cell therapies nonetheless face unique challenges in the pharmaceutical marketplace. One of these challenges is ensuring that the IP strategy for a cell therapy will secure return of investment for the product. For investors and developers, a critical consideration for all pharmaceutical drug products is determining when market competition might emerge, known as loss of exclusivity (LoE). For traditional drug products there are well-established criteria for determining LoE. However, conventional approaches to LoE fail to capture the complex reality of cell therapy products. IP strategy for cell therapy needs to be adapted to take account of these realities.

Loss of exclusivity and financial forecasting for cell therapy products

Loss of exclusivity (LoE) is one of the most important concepts in the pharmaceutical industry. The LoE date is the date on which it is predicted that generic or biosimilar products may enter the market. Generics are identical copies of the original drug product. Biosimilars are highly similar molecule to biologic drugs, e..g monoclonal antibodies having the same amino acid sequence. Generics and biosimilars are much cheaper to bring to market than new drugs, as they can piggy-back off the clinical data for the original drug. Once generic and biosimilars enter the market the price of the original drug is generally significantly undercut. The LoE date is therefore critical for financially forecasting the likelihood of return of investment for a drug product. 

Cell therapy

Given the lengthy timelines and multimillion dollar cost of bringing a drug to market, establishing the likelihood of return of investment is critical. The LoE date is therefore not only used to assist investment decisions on internal programs but is also often incorporated into the royalty terms for licensed products. Cell therapies are no different in this respect. Given the absolute critical importance of return of investment, especially in high-cost products such as cell therapies, investors will make decisions based on the LoE date for the cell therapy product. However, forecasting LoE for cell therapies is not as simple as for other drugs. 

Determining loss of exclusivity 

In the pharma industry, the LoE date for large or small molecule drugs is generally determined as either i) the expiry date of the composition of matter patent for the drug or ii) the date on which regulatory exclusivity ends, whichever is later. However, for cell therapies, which fall into neither the large nor small drug category, there is an important question as whether the LoE dogma for small and large molecule drugs makes sense for these drugs. Before addressing this question, it is first necessary to understand what is meant by regulatory exclusivity versus patent term. 

Regulatory exclusivity versus patents

In a number of core markets, including the US, Europe and Japan, drug regulatory authorities grant innovators a form of time-limited market protection following the regulatory approval for a new drug.  Regulatory exclusivity prevents regulatory agencies from approving generic or biosimilar versions of the new drug. In the US, new chemical entities (NCEs, i.e. small molecule drugs) receive 5 years of full regulatory exclusivity, whilst biologics such as monoclonal antibodies enjoy 12 years of regulatory exclusivity. In Europe, all new drug products approved by the EMA currently receive the same 10 years of regulatory protection. In Europe and the US orphan drug exclusivity (ODE) is also available for drugs targeting rare diseases. 

Critically, regulatory exclusivity is entirely separate from the patent process. Unlike patents, which have to go through the lengthy process of patent prosecution before the patent office, regulatory exclusivity is granted more-or-less automatically upon regulatory approval of a new chemical or biological entity. The only criteria for regulatory exclusivity for a new drug is that the drug has not been previously approved. In the case of orphan drug exclusivity, the only criteria is that the drug must not have been previously approved for the relevant rare disease. 

The terms of protection provided by patents and regulatory exclusivity are therefore entirely distinct. It is possible for regulatory exclusivity terms to extend years beyond the expiry of the patent protecting a new drug. This is very often the case for biologic drugs in the US, given that biologics receive 12 years of regulatory exclusivity and typically have long development time-lines that eat away at the patent term.

Regulatory exclusivity for cell therapy products is currently meaningless

Investors and pharma companies usually determine the LoE date as either the expiry date of the composition of matter patent case or the end of regulatory exclusivity term. However, cell therapies do not fit the template of other biologic drugs, either with respect to patent protection or regulatory exclusivity. How then is the all-important date of LoE to be calculated for cell therapy products? 

Cell therapies are biologic drugs and are therefore awarded 12 years of regulatory exclusivity in the US. However,  there is currently no established definition at the FDA or EMA for what would be considered a "biosimilar" cell therapy product. A generic small molecule pharmaceutical has the same chemical structure as the original drug product, whilst a biosimilar antibody has the same sequence. A cell therapy product, by contrast, is complex and heterogeneous and cannot be defined by a single chemical structure or protein sequence. 

Even the most standardised form of cell therapy products, such as off-the shelf CAR-T cells expressing identical CAR targeting molecules, are currently likely to be considered different products from a regulatory perspective (i.e. not biosimilars) if they are developed and manufactured by different companies, in view of the inherent variability of cell therapy manufacturing processes. This question of biosimilaritiy is even more complicated in the case of autologous cell therapies, which comprise a modified version of a patient's own cells. 

The biosimilar route to approval is thus unlikely to be available for companies seeking to copy an existing successful product. In this respect, therefore, regulatory exclusivity for a cell therapy product may be considered meaningless. Cell therapy products are thus protected from biosimilars not by the regulatory exclusivity period afforded by regulatory authorities, but by their inherent irreproducibility.

Not all IP is equal

If regulatory exclusivity is currently meaningless with respect to cell therapy products, how do companies forecast an LoE date for calculating return of investment? One option for protecting the market for a cell therapy product is strong patent protection. For small molecule and large molecule drugs, LoE is often established by the expiry of the composition of matter patent for the drug, covering the drug's chemical structure or protein sequence. In my previous post, I discussed the challenges and opportunities for strong composition of matter patent protection for cell therapies (IPKat). There are currently many cell therapy products currently relying solely on process IP. For all the reasons discussed in my previous article, investors would not normally consider process IP as being strong enough to protect market exclusivity. If your only IP is process IP, copycat cell therapy products could design around the process disclosed and covered by the patent in order to bring a fast-follower to market. Investors are therefore unlikely to consider a process patent as establishing an LoE date. However, with a bit of creative thinking, composition of matter protection is possible for the majority of cell therapy products that reach the clinic. It is this type of IP that is most likely to convince investors that the market can be protected for a cell therapy product.  

Broad patents are needed to protect the market

Given the lack of a clear biosimilar route, it is clear that the market for a particular cell therapy product will be eroded not by biosimilars but by fast-follower competitor products. Therefore, it is desirable not only to achieve strong composition of matter protection, but also to seek broader protection covering the essential features of the cell therapy product that will also guard against fast-follower competitors. This strategy is different to the primary focus of patent strategy for small and large molecule drugs. Given the main risk to market share for traditional drugs comes from generic and biosimilars, the primary focus of patent prosecution is usually to obtain a narrow and defensible claims that cover the chemical structure or sequence of the product. However, in the case of cell therapies, there is no single chemical structure or protein sequence that can fully define the product. Furthermore, as discussed above, the risk to market share for cell therapies comes not from biosimilars but from fast-follower copycat products. IP strategy for cell therapies should therefore focus on the structural features that underlie the cell therapies functional effects of efficacy and safety, and seek to protect these features as broadly as possible (IPKat). 

Final thoughts

To secure investment in cell therapies it is essential to have a clear IP strategy that ensures a sufficient exclusivity period to provide return of investment. The unique nature of cell therapies creates both challenges and opportunities in determining exclusivity periods. Unlike traditional pharmaceuticals, where LoE is clearly defined by patent expiration or regulatory exclusivity, cell therapies require a more creative and forward-thinking IP strategy. Companies developing these innovative treatments should focus on obtaining broad composition of matter patents that protect the essential structural features of the product, whilst also building a comprehensive portfolio that guards against fast-follower competitors. In this rapidly advancing field, a forward-thinking IP strategy that anticipates market dynamics beyond traditional LoE considerations will be crucial for attracting investment and ensuring these transformative therapies reach patients while providing sustainable returns.

Further reading

• Beyond the process: Securing robust IP protection for cell therapies (March 2025)
• Falling between the cracks: The challenges of patent strategy for stem cell therapies (T 1259/22) (Aug 2024)