December 1, 2008 (Vol. 28, No. 21)

Spanish Government Has Increased Subsidies for R&D and Scientific Infrastructure

This year’s “BioSpain08” conference in Granada exposed the Spanish biotech industry for what it is—an industry that began way behind the starting line, but is showing evidence of growing and flourishing. Genoma España (the Spanish Foundation for the Development of Genomic and Proteomic Research) estimates that Spain is the fourth largest country in the EU-15.

According to Cristina Garmendia, the minister for science and innovation, Spain is enjoying growth of over 25% a year in the biotech sector in terms of job creation, attracting investment, and increase in sales and exports.

This increase in activity is due largely to Spanish government investments via its Ministry of Education and Science and Ministry of Health and Consumers.

By increasing subsidies for R&D and scientific infrastructure by over 200% from 2000–2006 and spending more than one billion euros a year since 2006, many biotech companies have been encouraged to spin off from government institutions and large Spanish pharma companies.

To sustain this growth, the Spanish government has put in place the Ingenio 2010 Program, an initiative involving government departments, universities, and other research agencies to ensure that by 2010, Spain is spending 3% of its GDP on R&D, which will indirectly benefit its biotech industry.

The investment in infrastructure in the past decade has resulted in a number of bioparks springing up all over the country, with some of Spain’s most promising biotechs being housed at the Parc Cientific de Barcelona, Parc de Recerca Biomedica de Barcelona, or Parque Tecnologico Madrid. There are also good networking groups such as BioMadrid, (the Association of Biotechnology Companies of the region of Madrid), and Biocat (BioRegió de Catalunya) serving companies in Barcelona and the Catalonia region.

Oryzon is one of the largest biotech companies in Spain, employing more than 60 scientists.

Full of Promise

Among the shining stars of Spanish biotech is Madrid-based Cellerix, a spin-off from Genetrix, a group of biotech companies that began activities in 2001 at the National Center for Biotechnology.

Cellerix is developing adult stem cells from adipose tissue to treat conditions caused mainly by autoimmune diseases. The firm has two products in clinical trials.

The lead product, Cx401 (which will be marketed in Europe as Ontaril®), consists of adult stem cells isolated from patient’s adipose tissue. It is being evaluated in Phase III trials to treat complex perianal fistulas in patients without inflammatory bowel disease and in Phase II trials for complex perianal fistulas associated with Crohn’s disease. So far results have been promising. According to Eduardo Bravo, CEO of Cellerix, Ontaril is well positioned for approval in the EU by 2011, and because it treats a highly niche indication it should achieve high-product margins.

Memory-Enhancing Drugs

In his keynote speech at BioSpain, Steve Burrill, CEO, Burrill & Company, commented, “With an increasingly aging population it will become more important to develop memory-enhancing drugs. Spanish biotechs should begin now, and they’ll have a market for them in 2020.”

This is exactly what Madrid-based Noscira, formerly Neuropharma, is doing. The company is a spin-off from Zeltia. Its focus is on using the library of marine compounds isolated by PharmaMar to look for compounds to treat neurodegenerative diseases. Using this library, Zeltia has isolated several promising drug candidates and currently has two (NP-12 and NP-61) in clinical development to treat Alzheimer’s Disease.

“Just as PharmaMar has found the anticancer treatment, Yondelis, we’re hoping to do the same for diseases such as Alzheimer’s,” said Alfonso Hurtado de Mendoza, CFO of Noscira. “There is a great need to find drugs that are effective at halting or stopping disease progression, as many new compounds are failing in trials. Additionally, with several current drugs on the market due to lose their patents in 2009, there will be a flood of generics. We should be developing new drugs for this market.”

According to Hurtado de Mendoza, NP-12 is the only GSK-3 enzyme inhibitor in trials. It has an innovative mechanism of action which works well to slow disease progression in all four transgenic Alzheimer’s Disease animal models the company has used.

“NP-12 essentially reduces tau protein phosphorylation to prevent neurofibrillary degeneration in the brain,” Hurtado de Mendoza explained. “It has just completed Phase I trials and is now entering the recruitment stage of Phase II studies. We intend to out-license U.S. marketing rights to NP-12 but would like to retain European rights to market this compound. Our intention to outlicense has triggered significant international interest, so we are hopeful that we can move forward with this compound. Since our other compound, NP-61 works to inhibit b-amyloid peptide secretion we have a well-balanced pipeline for Alzheimer’s Disease treatments,” concluded Hurtado de Mendoza.

Another Spanish biotech working in this field is Barcelona-based Oryzon, a spin-off from the Spanish National Research Council and the University of Barcelona. The firm, originally set up in 2000 as a biomarker discovery company, supplied these services to various pharma and biotech companies and became a revenue-generating business in 2005. Oryzon is one of the largest biotech companies in Spain with more than 60 scientists.

Carlos Buesa, Ph.D., CEO, commented, “We have a strong appetite for partnerships, so we have many clients. We are also lucky enough to have access to a large collection of primary tumor and tissue samples from Spanish hospitals from which we have identified biomarkers.”

“We are developing an NCE for neurodegenerative diseases as we have a number of good biomarker targets that we believe are unique,” Dr. Buesa added. “We’re using NCEs rather than mAbs due to the difficulty of getting a mAb across the blood brain barrier, but the new targets identified in our oncology biomarker discovery program are being targeted either by NCEs or by mAbs.”

The company intends to invest s20 million in developing therapeutics and associated diagnostics for oncology and neurodegenerative diseases, which they will take to Phase I and then outlicense, according to Dr. Buesa.

The Parc de Recerca Biomedica de Barcelona, an initiative of the government of Catalonia, the city council of Barcelona, and the Pompeu Fabra University, is physically connected to the Hospital del Mar de Barcelona.

Business Challenges

With less than 30 drugs in the clinical stages of development, according to ASEBIO’s (The Spanish Association of Bioenterprises) latest figures, Spain’s biopharma industry is still in its infancy. This is especially true when you compare this to the U.K., where ERBI (Eastern Region Biotechnology Association) estimates that in just the Cambridge biocluster alone, biotechs have 20 products in clinical development for cancer and related indications.

Speakers and delegates at “BioSpain” did cite a number of issues Spanish biotechs still have to deal with if the country is to increase its drug output.

Steve Burrill observed,“In Spain, they’ve filled every available parking lot with a science park, so I don’t doubt the government’s commitment to building the infrastructure, but it’s now up to Spanish commerce to make sure they are developing in the right markets.”

One difficulty Spain faces is a lack of experienced and internationally focused management teams to help commercialize the research properly.

“It is very difficult, even when you have the money to find the right people,” stated Dr. Buesa. “We have found that we have to transmit enthusiasm, show we have all the IPs covered, and stake a claim that we’re going to be leaders in this field in order to attract those commercially astute people working in large pharma who are brilliant but bored. We have to convince them that joining a Spanish biotech is not a kamikaze action.”

As many Spanish biotechs are relatively late to the party, they are finding some areas difficult to break into because of their patent position. For example, Sylentis is developing siRNA based drugs to treat glaucoma and inflammatory bowel disease.

“Since RNAi is heavily protected in cancer, we’ll leave this area to the big boys. But, as it is not sewn up so tightly in niche indications, we can still score here,” observed Eduardo Gómez-Acebo, director at Sylentis. “We have approximately 20 sequences with strong IP protection. All investors want to know about is our freedom to operate in this field before they will think about partnering with us.”

Adopt a Global Outlook

One of Spanish biotech’s biggest challenges is the ever present lack of funding.

“Noscira has invested s48 million in research on diseases of the nervous system since it was created in the year 2000, but it still needs funding,” commented Hurtado de Mendoza. “The company was renamed in September in preparation for an IPO but we are now looking for alternative international finance while we wait for market conditions to be more favorable.”

Burrill added that, “the biotech industry is bigger than Spain, but Spain has traditionally relied on internal funding via Spanish investors and IPOs. At our company, we receive between 1,000–2,000 business plans for funding every year and last year we had only one from a Spanish biotech. We’ll invest in the best technology, no matter where it comes from.”

“Spanish biotechs may not be able to access enough to fund the massive amounts they will need to push many of these compounds to market by continuing to look locally,” Burill warned. “In fact, if they continue to build their drugs in a parochial environment, they will fail. So the challenge is to raise international finance and not look to local IPOs to raise the cash.

“Disease knows no borders and even the smallest Spanish biotech has to be global in its outlook from day one or it will never thrive.”

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