Ecstatic over bad news sentences to ponder

Conatus Pharmaceuticals Inc. has several patents for emricasan. Some don’t expire until 2028. A third party wanting to sell the molecule would need to license it from Conatus, according to Joseph O’Malley, global chair for intellectual property at Paul Hastings LLP.

“Assuming that drug were to be found to treat Zika,” Mr. O’Malley said, “it would be bad news for the company. It would be under tremendous pressure to license it for little or no money.”

Alfred Spada, Conatus’s chief scientific officer, said if emricasan “were effective in the treatment of such a devastating disease, I think we would be ecstatic.”

Here is the full WSJ story, via the excellent Kevin Lewis.


Even if they made a tenth of a penny for every Zika pill, that's still new profit coming in that wasn't before. It's not like they'd be under pressure to cut their licensing costs for their liver drug medications. Pretty odd way of viewing this...

And they should get some great PR if they have the cure for Zika

It's really hard to see the downside. Telling someone "you are going to win a huge lottery but be taxed at 50%" and they'll take the deal.

I do worry about outsiders who come in after the fact to decide what people "really deserve." But Conatus will be fine.

the stock spiked when the story ran, but is now down a little bit.

If you listen to noise long enough you can hear aliens. Ask Alex, it is true.

The problem may be that (made up numbers) they sell it today for $10 a pill and it makes profit. Their current customers will buy the Zika pill instead at the significantly lower price that will be expected. May be able to make up for it in volume though.

'It would be under tremendous pressure to license it for little or no money.'

Such is the problem of relying on government granted monopolies - the government can occasionally be faithless when it comes to its elected officials selling out the free market just to placate voters who wish to throw away the benefits of the free market just to keep a growing number of disease caused deformed children from being born. Just ask Bayer, makers of Cipro, what almost happened to them in the U.S. after the 2001 anthrax attacks. Though luckily for the profits of the pharma industry, Bayer remains able to use patents in a way that includes paying off competitors - 'On 24 October 2001, the Prescription Access Litigation (PAL) project filed suit to dissolve an agreement between Bayer and three of its competitors which produced generic versions of drugs (Barr Laboratories, Rugby Laboratories, and Hoechst-Marion-Roussel) that PAL claimed was blocking access to adequate supplies and cheaper, generic versions of ciprofloxacin. The plaintiffs charged that Bayer Corporation, a unit of Bayer AG, had unlawfully paid the three competing companies a total of $200 million to prevent cheaper, generic versions of ciprofloxacin from being brought to the market, as well as manipulating its price and supply. Numerous other consumer advocacy groups joined the lawsuit. On 15 October 2008, five years after Bayer's patent had expired, the United States District Court for the Eastern District of New York granted Bayer's and the other defendants' motion for summary judgment, holding that any anticompetitive effects caused by the settlement agreements between Bayer and its codefendants were within the exclusionary zone of the patent and thus could not be redressed by federal antitrust law, in effect upholding Bayer's agreement with its competitors.'

I'm confident that the Bartley J. Madden Chair in Economics at the Mercatus Center would have nothing to say about this fine historical example of how the free market works, especially as it seems to have a happy ending for Bayer. After all, the FDA wasn't involved at all in preventing cheaper doses of ciprofloxacin from reaching the market. Instead, it was Bayer using the tools of the free market to enhance Bayer's ability to use a government granted monopoly to increase its profits by paying off competitors.

One would think that instead of a discussion of licensing, the talk would be about how quickly a significant amount of emricasan can be manufactured, and distributed as widely as possible, with the first produced quantites being used for field trials. The WSJ is unavailable, but intriguingly enough, this information makes that whole IP expert sound fairly ignorant - 'Researchers at the National Center for Advancing Translational Sciences (NCATS) recently identified compounds that potentially can be used to inhibit Zika virus replication and reduce its ability to kill brain cells. These compounds now can be studied by the broader research community to help combat the Zika public health crisis. NCATS is part of the National Institutes of Health.

Using NCATS’ drug repurposing screening robots, researchers identified two classes of compounds effective against Zika: one is antiviral, and the other prevents Zika-related brain cell death. The compounds include emricasan, an investigational drug currently being evaluated in a clinical trial to reduce liver injury and fibrosis, and niclosamide, a U. S. Food and Drug Administration-approved drug for use in humans to treat worm infections. In addition, the researchers identified nine cyclin-dependent kinase (CDK) inhibitors. CDK usually is involved in regulation of cellular processes as well as normal brain development, but the Zika virus can negatively affect this process.'

That's right, it was a government funded entity that discovered this potential use of the compound, not Conatus. The same government that also grants patents.

Something that Alfred Spada, Conatus’s chief scientific officer, was probably aware of when he made that statement about how good it would be to have a treatment.


Might be a good idea to take advantage of German mental healthcare and its prescription drug plan. Anti-psychotics are surely covered, and you seem to have unhealthy obsessions with individuals and groups, a tendency to believe in conspiracies, and a delusional mindset. I am neither trolling nor attempting to insult you.


"I am neither trolling nor attempting to insult you."

Then you are a natural. You did a good job of both.

Truth is, compulsory licensing is common in pharma, so the patent lawyer had it right. But it's not politically correct to say that, hence the correction. A study once found inventors get much less than 5% of the value of their inventions (that includes assignees, that is to say, the employer). Needless to say, there are many bad patents out there, but it's also true that pioneering inventors get shafted. The government should have a 'prize fund' to award both the original inventor and the company, ex post, even without a patent. That way you'll encourage innovation in the future. It's time consuming and a hassle to deal with patent attorneys. Also AlexT's prize fund for inventions dedicated to the public is a good idea (John Harrison's chronometer comes to mind, btw he also got shafted).

Funny that technology drives the Production Possibilities Frontier curve outwards, as predicted by the Solow model of growth, but everybody assumes technology is exogenous and drops out of the sky like a deus ex machina.

My view is that in most cases, whether a particular individual makes a pioneering discovery or something that's largely useless is in many ways stochastic. It's like success in most other "winner-take-most" fields. You work super hard just to put yourself in a position to have a chance to "win" (in this case, create a pioneering invention), and once you're in that position its largely chance. So ensuring that the winner gets 100% of the societal value for their invention isn't "just" in the dessertist sense.

Whether increasing these returns are the best way to incentivize innovation and pushes towards pioneering discovery is a different question, and I do think large prizes can get corporations to fund the type of scientists who do this research with the understanding that many of those investments won't pay off, but by increasing funding, you can increase the chances that at least one does, netting a positive expected return.

It is both wise and just because without the outsize rewards, many who would lose would never make the effort in the first place. Just imagine how much less innovative Silicon Valley would have been in the last 50 years if there weren't huge returns to the biggest winners. I personally know many engineers who give up jobs in stable, boring companies for iffy startups with the dream of fame and a big payoff shining in their eyes. Individually, it probably stinks for them, but for society as a whole, there's no other way to get as good a deal. Just contrast and compare the Valley to all the other faux Silicon Valleys that European and Asian governments have tried to create through fiat and regulation. And they've mostly failed miserably.

"You work super hard just to put yourself in a position to have a chance to “win”"

And when you do, mavery wants to take your winnings because [theory].

Technology comes from the steady accumulation of beakers by your cities, which can be sped up by building libraries, universities, and other such city improvements.

Someone's excited for Civ 6.

In my day we had lightbulbs, and we liked it, because that was a good day.

I also like the idea of prizes, but one limitation they have is that it takes a lot of knowledge and good luck to define contest parameters in such a way that the winner is a source of social good. Sure, there are some things that we know we want, like batteries with more energy density, rockets with more lift, etc. But many genuine innovations are innovative exactly because they make something possible that we didn't know was possible before - so we would never have thought to organize a contest to make it happen.

You could make contests where the prizes are assigned after the fact according to some utility metric. I'm picturing Linus Torvarlds getting paid from such a fund because he gave away Linux for free and it turned out to do so much good for so many industries. If there were such a source of money, but you were only eligible to draw from it for IP you release into the public domain (in proportion to how much utility your IP is having, adjusted by a time-decay function), that might produce more good than our broken patent system. But where would the money for such a fund come from? You don't get profit margins from public domain IP.

There was a previous blog post (I think here at MR but I can't find it now) about how the founding fathers considered prizes, but found that it was essentially a lobbying contest to get the rules or judgments set up just right. The market system lets inventors chase things of value if they wish.

People giving things away in hopes of winning some popularity contest is even worse. It will drain the well for people trying to sell things.

Very concerned about companies seeing a prize for literally "Scary Disease X" and then constructing a cure for X, as well as creating and spreading X itself, in order to claim the prize!

Harrison actually did get the prizes he had met the terms for. What he didn't get was the prize for solving the problem, even after the terms were revised in his favour. He was eventually asked to make two copies of H6 to win the prize. He only managed one. Basically a clock which took the world's most skilled clockmaker six years wasn't a practical solution it was a proof on concept. It was not in itself of much use to the Royal Navy. It took several decades and substantial improvements in both precision engineering and clock design before a practical marine chronometre was developed.

I'm not a doctor. It's my understanding that viral diseases are not "cured." Happy to be proved wrong.

Wouldn't pesticides and draining stagnant water do more?

Worked so well for malaria. And I'm sure those already affected by zika would be happy about that.

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