Arakis Case Study - Protectability

Arakis began to emerge following conversations between former employees of Chiroscience, the British biotech company sold to Celltech in 1999. Following a couple of parties, three key people from Chiroscience (Andy Richards, Robin Bannister and Julian Gilbert) started meeting regularly. It became clear that there was a germ of an idea for a company and the enthusiasm to make it happen.

After three months of playing with ideas, talks and planning, the idea crystallised after Christmas 1999. As a call to action Julian Gilbert announced to his colleagues that he was leaving his job to invest his time in the creation of Arakis.

The team put together a brief business plan and raised their first funding round from friends and family. One of the uses for this round was to licence some intellectual property from Chiroscience in order to give the business substance and allow Arakis to pursue their original drug enhancement ideas.

The lengthy patenting process, which can take a year and the decision to focus on enhancing known drugs rather than creating new ones allowed enough time for an assessment of the potential product before needing to exemplify the application. Richards is keen to press the importance of balancing the need for protection with discussing business ideas: “There are things which you have to keep confidential because otherwise you will ruin your patent position, but actually the fundamental business idea – you can talk to people about it.”

Through their expertise in their industry and experience in drug development, the founders identified a hole in the drug development process that hadn’t yet been addressed by the big pharmaceutical industry either because it hadn’t been recognised yet or because it didn’t fit their established drug discovery process.

The company was originally based on the identification of new indications or uses for established drugs or drug templates in the areas of inflammatory disease and oncology adjunctive therapy, including pain. This approach allowed the company to maximise the number of successful drug targets in their pipeline and keep drug development costs low. In April 2005 Arakis signed its first global development and commercialisation agreement with Novartis for its product AD 237 for the treatment of chronic obstructive pulmonary disease.

Key Lessons on Protectability

• There are two main aspects when thinking of protecting a product: 1. Is it protectable? 2. What and how is the product going to impact in the market?
• Sometimes the issue is not to have a rock solid patent but to be able to see how an idea can be protected at the right point. The patenting process is lengthy and allows enough time for the product / idea to be refined.
• There are a number of different ways of protecting businesses, ideas and technology. Familiarisation with these different forms of protectability and their breadth allows the use of the right protection form for the particular asset.

Related Lessons

• A company distinguishes itself from competitors by its intangible and proprietary assets. Intangible assets such as intellectual property, trade secrets, pricing formulas, customer lists, business plans and the like are typically the foundation upon which a company is built in a business world full of copycat competitors. It is wise to develop a strategy to properly protect intangible assets, in order to allow the company to grow and prosper against competitors.
• A good attorney that can master issues related to intangible asset protection is crucial.
• IP does not necessarily translate directly into market value. An idea on its own is not valuable. It is doing something with this idea that is valuable.