July 1, 2010 (Vol. 30, No. 13)
Vicki Glaser Writer GEN
BIO Forums Showcase Strategies and Technologies for Overcoming Obstacles
International opportunities for outsourcing of drug discovery and development research, preclinical studies, clinical trials, and product manufacturing, as well as the allure of large, untapped global markets for new and existing drugs, were the focus of several sessions at BIO’s annual meeting in May.
One session entitled “Going Global Overnight: The Dos and Don’ts of Expansion in Emerging Markets,” chaired by Dane Bedward, senior vp for international affairs and GM Eurasia at Genzyme, featured a panel of speakers representing government, biotech firms, and the business sector.
Matthew Hudes, U.S. managing principal for biotechnology at Deloitte, led the discussion, highlighting two major developments in 2010 that will impact biotechnology companies’ decisions about global expansion, outsourcing, and partnering opportunities—the economic crisis and the backdrop of healthcare reform, which Hudes believes will accelerate growth in the biotech industry, as price reductions will present “real incentives to lower costs.”
Hudes described the growing popularity of a “dual-purpose global strategy” that encompasses market expansion and sourcing opportunities. He anticipates increasing specialization in biotech outsourcing overseas, with small clusters of companies developing expertise in target areas such as preclinical development, clinical trials, or manufacturing.
It will be important for U.S. firms interested in these services to know where to find the resources they need and not to rely on a one-size-fits-all strategy. Additionally, he emphasized the importance of understanding the local culture, customs, and tax and business structure, and the value in building a local network that can provide this knowledge.
From the perspective of outsourcing manufacturing, Hudes presented some of the current challenges, including timing issues and keeping abreast of the continuously changing global landscape in terms of capacity and the lead time needed to secure a spot in a contract manufacturing organization’s (CMO) queue. Other factors to consider when deciding whether to outsource is the political stability of the region and access to a highly skilled workforce.
Another aspect of Hudes’ talk focused on strategies for “staying out of trouble” from a regulatory perspective. He cautioned the attendees on four areas of growing tension—increasing requirements for information/data gathering and reporting; rising risk of criminal and civil prosecution for companies doing business overseas, due mainly to increased enforcement of the Foreign Corrupt Practices Act (FCPA); cost pressures to improve efficiency; and increased demand for more proactive and responsive business operational support for expansion activities.
In particular, he warned that the costs of FCPA-related fines “are not trivial” and can run into the billions of dollars. This represents only the direct costs from criminal and civil penalties; indirect costs may include damage to a company’s reputation and brand value, legal and consulting fees, and the management resources required to respond to these actions.
Holly Vineyard, deputy assistant secretary for Africa, the Middle East and South Asia, for the International Trade Administration (ITA), U.S. Department of Commerce, spoke about the opportunities and challenges for doing business in India. The ITA’s National Export Initiative, created to help meet President Obama’s goal of doubling exports in the next five years, has helped strengthen the relationship between the U.S. and India.”
The government of India has increased fiscal incentives for R&D spending, including tax incentives, and is investing in biotech parks and training of scientists. Additionally, in its 2010 national budget, India has increased expenditures on healthcare by 10%. However, there remain significant challenges to doing business in India, Vineyard told attendees, in particular a weak intellectual property (IP) structure. She advised U.S. companies to utilize the tools and expertise available from the ITA to help navigate these challenges.
Haroon Hashmi, director of drug development at Biogen Idec, presented the strategy his company has taken for expansion, beginning by analyzing the global opportunities and targeting specialty markets in which to deliver products that can address large unmet patient needs. Asia Pacific and Japan alone represent about 20% of the world market, said Hashmi. Government spending on healthcare is increasing in these regions, as are individuals’ disposable incomes, he noted, and it is important to look closely at the issue of reimbursement versus out-of-pocket expenses, especially when assessing the potential market for niche products and high-end biologics.
One of the challenges for introducing products into countries such as China, Japan, and Korea is the need to provide clinical data from studies on local populations as part of the regulatory process. This may necessitate bridging studies, and companies need to decide whether to outsource trials or to establish a presence in the country. These types of decisions require a good understanding of the country’s regulatory pathway, reimbursement picture, and launch.
In the session, “Drug Approval in China—Challenges and Opportunities,” Jane Earley, director, pharmaceutics and medical devices, Office of Health and Consumer Goods of the U.S. ITA, spoke about strategies for drug approval in China, which currently represents an $825 billion market, estimated to grow to $975 billion by 2013. In 2009, China had the world’s third largest economy and was the U.S.’s second largest trading partner.
“China is changing rapidly and pursuing healthcare reform,” said Earley. It is establishing new regulations and moving toward greater harmonization with other countries. She encouraged companies to view China as a variety of different markets, and not a single market, as there are several secondary cities beyond the main markets of Beijing and Shanghai that present significant opportunities. In summary, Earley advised companies considering expansion into China to “craft an IP, register in China, and plan an exit strategy.”
Legislation Spurs Biosimilars
Hashmi identified biosimilars as a “hot topic” and an important part of the equation when navigating the regulatory landscape in Asia. Similarly, in the U.S., biosimilars and their evolving regulatory status are of significance. Timothy Shea Jr., J.D., a director at Sterne, Kessler, Goldstein & Fox, led a session of the BIO Discovery Theatre with a talk entitled, “The New Biosimilars Act: Overview of the Legislation and IP Implications.”
On March 23, President Obama signed the Biologics Price Competition and Innovation Act into law, following pressure from governmental and consumer advocacy groups to establish a biosimilars pathway in the U.S.
Currently, the top five Medicare expenditures are for biologicals, with EPO (erythropoietin) alone accounting for $2 billion. And while a traditional small molecule drug will cost about $2/day, a typical biologic may cost $44/day. Biosimilars represent a key strategy for reducing those costs. Other drivers include the fact that more than 500 biologics are in clinical development, nearly one-third of all new drug approvals will be for biologics, and patents for first-generation biologics have either expired or are soon to expire, with sales of off-patent biologics climbing to more than $20 billion/year.
Passage of the recent initiative is a starting point, but Shea pointed out that there is currently “no formal regulatory framework for approval of biologics in the U.S.,” and it will likely take at least two years for the FDA to establish such a framework.
Shea walked attendees through some of the intricacies of the biosimilars legislation, explaining that it recognizes two classes of products: biologics that are either “biosimilar” or “interchangeable” with a reference biological product. “Only biosimilar products that meet the higher interchangeability standard are eligible for market exclusivity,” he noted. Market exclusivity will be granted only to the first interchangeable biological product and will prevent other interchangeable products from entering the market for a defined period of time. However, biosimilar products can gain approval during the period of market exclusivity.
The Biologics Price Competition and Innovation Act requires that the FDA approve an application for a biologic if the applicant demonstrates that the biological product is either biosimilar to or interchangeable with the reference product.
Other distinctions between biosimilar and interchangeable biologics include the following: only interchangeable products can be substituted for the reference product without the intervention of the healthcare provider that prescribed the reference product; and biosimilar products are deemed to contain a new active ingredient, whereas interchangeable products are not.
“Genomic Data in Clinical Trials: It is Inevitable,” was the title of a presentation by Boris Umylny, Ph.D., from Japan Bioinformatics.
Although utilization of genomic information in drug development and clinical trials has been slow to take hold, Dr. Umylny believes that in the near future it will play a greater role in predicting adverse reactions, rescuing failed products, and contributing to the design of adaptive clinical trials.
Driving increased utilization of genomic data are continuing improvements in data-generation techniques that are leading to the $1,000 personal genome, healthcare budget pressures and a move toward outcome-dependent pricing, and FDA support for the collection of genomic data during clinical trials. The evolution toward personalized medicine will require access to personalized genomic information, noted Dr. Umylny.
He predicted that one of the main applications of genomic data in clinical trials will for modeling and simulation of pharmacokinetic and pharmacodynamic studies. A key technology challenge is developing the software capability to apply genomic information and the millions of biomarkers involved. Enhancing software capabilities can rely on the purchase of commercial products or accessing public domain options.
In his presentation “New Methods of Genetic Manipulation and Their Role in Drug Discovery,” Eric Ostertag, M.D., Ph.D., president and CEO of Transposagen Biopharmaceuticals, proposed a solution to the high failure rate plaguing therapeutic candidates in late-stage development. He described the advantages of working with new rat models that more closely represent human physiology, size, and toxicologic responses, compared to traditional mouse models of disease.
Dr. Ostertag summarized the main approaches for producing genetic alterations in rats—mutagenesis, transgenesis, and the creation of humanized animal models. Among the techniques for mutagenesis is mobile DNA technology, using DNA transposons such as piggyBac or Sleeping Beauty to generate insertional mutations.
Kenneth Eilertsen, Ph.D., CSO of NuPotential, described the company’s approach to overcoming epigenetic barriers that limit somatic cell reprogramming for the development of cell-based therapies. The use of small molecules to reprogram human somatic cells to a pluripotent state is complicated by evidence of epigenetic redundancy/compensation that limits persistent changes in gene expression.
NuPotential is pursuing the discovery and development of combinations of small molecules capable of inducing expression of pluripotency genes and overcoming mechanisms of epigenetic redundancy. Induction of transcription factor networks can achieve overexpression of genes active in cellular reprogramming, including Oct4, Sox2, and Nanog. Overcoming epigenetic barriers established during cellular differentiation may require the erasure of “epigenetic memory” by replacing transcriptionally repressive histones with transcriptionally permissive histones and demethylating key promoters.
The company is using RNA interference (RNAi) technology to introduce short hairpin RNA (shRNA)/lentivirus vectors that can knock down epi-gene activity and identify targets for small molecule drugs capable of incapacitating epigenetic redundancy and achieving de-repression of transcriptionally inactive pluripotent genes required for re-differentiation of somatic cells into multiple lineages. It is developing and screening focused compound libraries to discover optimal combinations of small molecules for cellular reprogramming.
Hiroto Hara, Ph.D., manager of alliance and project promotion at DNAVEC described the company’s PlasmEx™ core platform technology that uses a Sendai virus-based cytoplasmic expression system to generate induced pluripotent stem (iPS) cells, RNA-based vaccines, and therapeutics.
Genes for cellular reprogramming or vaccine/therapeutic development are transduced into the host cell cytoplasm, where they express the proteins of interest. As the transduction vectors are RNA-based and do not enter the nucleus, there is no risk of recombination with the host genome or of chromosomal damage. The PlasmEx and transgenes can be cleared from cells within a few days using a targeted manipulation. The company plans to introduce the CytoTune™ vector kit for iPS cell generation during 3Q10, it will carry genes for the four Yamanaka reprogramming factors.
These genes modulate epigenetic factors from the cytoplasm to promote over-expression of iPS-inducing genes. Genes for iPS cell differentiation can also be transduced using PlasmEx. DNAVEC is also developing PlasmEx as a platform for producing genetic vaccines for AIDS and influenza, as well as for gene therapy.