Growing Ebola Outbreak in West Africa Fosters Urgent Need for More Drugs and Tests to Help

A man who recently returned from west Africa to Dallas, Texas yesterday was admitted to a hospital there sick from Ebola. He is the first US case of a tourist to be infected by the deadly disease. The CDC confirmed his diagnosis. The newswires are abuzz about how this man traveled from Africa on a commercial airliner to the US while infected with the Ebola virus.

This story follows the two Ebola infected US doctors who were airlifted in a specially equipped airplane to an Atlanta hospital where they were treated and recovered. This Ebola outbreak is the largest one since it was discovered in 1976 in the Congo.

Since the Ebola cases double every 21 days, public health experts estimate that there might be 300,000 to 500,000 cases in west Africa by year-end and perhaps a million cases by mid-January 2015. The US has committed 3,000 troops to the area to provide supportive care to the decimated health care workforce.

Several drug companies have developed experimental drugs and vaccines that are in clinical trials that may be fast tracked to African patients a some point in the future.

  • Mapp Biopharmaceutical of Sorrento Mesa –ZMapp serum
  • Newlink Genetics Corp.  Earlier in the month, FDA gave it the OK Phase clinical trial for its Ebola vaccine.
  • Sarepta Therapeutics Inc. Sarepta is developing a treatment designated AVI-7537 to treat the Ebola virus.
  • GlaxoSmithKline PLC .Glaxo is working with the National Institutes of Health’s Vaccine Research Center to help develop of an early stage vaccine for Ebola.
  • Tekmira Pharmaceuticals Inc. TKM-Ebola is in Phase 1, clinical trials.

Achillion vs. Actelion More Biotech M&A’s to Come

Last week’s announcement by Swiss drug maker, Roche Holding AG, that it was buying biotech firm InterMune, Inc. for $8.3 billlion sparked speculation by industry watchers about who would be the biotechs that might be involved in the next round of M&As. InterMune makes a drug, Esbriet (pirefnidone) that treats a lung condition, idiopathic pulmonary fibrosis. Esbriet is approved in Canada and Europe. The drug has the potential to become a blockbuster seller. InterMune’s product would join Roche’s Pulmozyme and Xolair to build up its lung drug portfolio.

A number of names popped up such as Achillion Pharamaceuticals, Actelion, Puma Biotechnology, Intercept Pharmaceuticals, and others. Maybe people heard Achillian but were attracted to similar sounding Actelion.

  • Achillion Pharamaceuticals makes Phase II hepatitis C virus (:HCV) candidate, ACH-3102.
  • Puma Biotechnology is developing its Phase III breast cancer candidate neratinib, PB272.
  • Intercept Pharmaceuticals makes its phase II nonalcoholic steatohepatitis drug, obeticholic acid, OCA.
  • Actelion Pharmaceuticals makes a cancer drug to treat a rare form of non-Hodgekin’s lymphoma.

Some in the big pharma side are still holding out hopes of buying a biotech that can make their next blockbuster. So which will it be? Achillion? Actelion? Others? To be sure, we will need wait and see.

ThermoFisher Aims to Get FDA OK for its Ion Torrent PGM

By Paula Myers

At this year’s CHI Molecular Medicine Tri-Conference at the Moscone Convention Center, San Francisco, February 11th, there were over 3000 attendees and more than 200 exhibitors. I visited some of the many booths on the exhibit floor. One of those was the ThermoFisher booth. I spoke with Zhen Mahoney,Sr. Clinical Sales Specialist/Pharma Business. Mahoney talked about the acquisition of Life Technology and how it affects ThermoFisher.  Thermo will have to absorb Life’s 9,000 employees. Thermo currently has 40,000 employees. Mahoney pointed out that Life has a broad product portfolio. Ion Torrent, which Life acquired in 2010, is located at Oyster Point near South San Francisco. The rest of company is located at Carlsbad, California, near San Diego, including the Invitrogen and Gibco brands. These groups are staying intact, according to Mahoney.

She also pointed out that the company submitted an application for 510K marketing clearance to the FDA for its Ion PGM system for use as a diagnostics medical device. They are hoping for a 3 to 4 month approval timeframe. By comparison, the Illumina MiSeq took about 9 months to get FDA 510K approval because it was the first of its kind. The Illumina MiSeq received a relatively fast approval because the company worked closely with FDA reviewers so that they can understand its technology. The MiSeq platform serves as a template to the FDA for follow-on platforms from Illumina and other desktop sequencer vendors. Mahoney said that the next revision for their Ion Torrent electronic P-2 Chip is coming later in 2014. It will have 660 million wells.

Some of the other firms that I visited included: Guardant Health, Diagenode, and Epitomics. I focused on companies involved in epigenetics. Guardant Health is a two-year-old service company for individuals. In February, they released GUARDANT360, the first pan-cancer blood test that provides doctors with real-time genetic information to help them prescribe the right treatments for their cancer patients.

  Diagenode is a company originally from Belgium and sells Japanese made disruptor shearing machines such as the Bioruptor Pico for DNA, chromatin, and RNA shearing. Epitomics, located in Burlingame, California, offers custom antibody services for use in epigenetics research. Li Fang, Project Manager of Custom Antibody Services at Epitomics, said that Abcam is buying the company. Abcam is a supplier of antibodies,proteins, kits and reagents.

Emerging Changes Coming to the Drug Development Ecosystem

At last, the face of the Affordable Care Act (ACA) has entered the public arena.  Last October at the launch of the web marketplace of the ACA, the public became keenly aware that major changes in the US healthcare system were underway.  Despite its rocky beginning, by January several million customers had successfully signed up for their new healthcare insurance plans for 2014.  The ACA will have an impact on many stakeholder groups including patients, health care providers, hospitals, insurance payers, government agencies, drug developers, and others.  In particular, one can expect to see changes of the drug development ecosystem emerge over the next few years.

On January 14th at the Parc 55 Hotel in San Francisco, the Biotech Showcase presented a plenary luncheon presentation, The Changing Dynamic of the Drug Development Ecosystem.  A panel of experts shared their insights and opinions of what might play out in the industry over the next few years.  Moderator, Ellen Corenswet, Partner at Covington & Burling LLP, posed key questions to the panelists.

The panelists included:  Karen Bernstein – Co-Founder, Chairman and Editor-In-Chief, BioCentury; Anton Gopka – Managing Partner, RMI Partners; Dan Mendelson – CEO, Avalere Health; Dennis Purcell – Sr. Managing Director, Aisling Capital; Evonne Sepsis – Managing Director, ESC Advisors.

Karen Bernstein opened the initial discussion about patients, what drugs they want, how they pay for healthcare insurance and so on.  She spoke about the ACA (aka: ObamaCare) in relation to patients and how they interact with drug companies.  Dan Mendelson seemed to know many detail data points about what to expect from the ACA since his firm has done some studies that model the potential impacts of the law.  Dan said “more and more, healthcare costs are being pushed to consumers.”  He said that many of the plans offered on the Exchanges cause consumers that need Tier-4 drugs “to pay 50% of the market price of the drugs.”  Tier-4 drugs are expensive targeted cancer drugs.

Berstein said that drug companies have offered discount coupons to consumers for some expensive drugs.  Mendelson said that there is a contradiction between ObamaCare and Medicare.  For example, Medicare does not accept discount coupons.  But, ObamaCare does accept discount coupons.

Dennis Percell said “In Boston, there are three hospitals within three miles of each other that do heart transplants. In New York City, there are hospitals that repair hips. There is one that charges $15,000.  At another place it costs $60,000.”  He asked, “What’s going to happen in pricing five years from now to the hospitals that do the heart transplants and the ones that do the hip repairs?”

Dan Mendelson  said he has “seen that consolidation is already happening either through acquisition or through contracts among organizations.“  “In many areas there is significant over capacity such as from teaching hospitals and academic centers.”  He said that “a lot of the teaching hospitals are being excluded from the networks that are fielded under the exchanges.”  Dan said that the exchanges will get up to about 6 million people and will represent just two percent of the health care system.

He said that “small businesses are calling the insurance companies and asking them to design new insurance plans for them.” He expects that “over the next five years, the benefit designs for the ACA will eventually spill over to whole healthcare insurance market.”  This scenario will have an impact on biotech’s future drug development plans.

Evonne Sepsis said “Reimbursement needs to be considered at the beginning of drug development process. She said “historically, most drug development companies considered reimbursement later.”  But not now.

Bernstein noted that companies say that their partner’s drug R&D costs need to be recovered through higher prices. However, high new drug prices are not sustainable. Dennis Purcell pointed out that “the last ten of twelve new cancer drugs cost $100,000 or more” for a course of treatment.

Evonne added “A few years ago, ten years ago, we saw the orphan drug market emerge. It needed just a patient population of 1000-5000.”  But now “with smaller patient populations in personalized medicine it is similar to the orphan drug market.”

Ellen asked  “What about the role of international going forward?”

Anton Gopka said that international pharmas are doing clinical trials in Russia for proof of concept studies.  This business model might work.  After the trials they can commercialize the new drug in U.S. Dan Mendelson said “Well maybe not so, because most U.S. payers or regulators prefer drug trials to be done in U.S.”  Dennis Purcell said  “If it were a country, the U.S. healthcare system would be the 5th biggest country in world.”

The discussion turned toward disease foundations and patient groups.

Dennis Purcell said “I believe that we will see lot of disease foundations that will open a VC arm.  So VC groups should work together with them to bring their projects forward.  Dan Mendelson offered that disease groups would work as clients. That is. A diabetes group would test the glucose value of products.

Ellen asked how to engage with the patients.

Dan Mendelson said that we need to understand and look at the quality measures. “We can’t expect the payer to give you a guarantee. Its not possible.” “We need to show an advantage vs. other drug competitors.  We need payer buy-in — each payer wants something different.  Small companies need to be competitive.  This situation has ham-stringed the FDA — They are not up to speed with the leading technologies.”

Karen Bernstein wrapped up their discussion by saying that the FDA is good in certain areas.  They are the only government agency that is under funded.  She noted that Janet Woodcock is expected to return soon, others, key people are expected to leave or retire by 2016.  She said “I see the next five years as tough for the FDA.”

Spotlight on New Medtech Firms at the 12th BIO Investor Forum Meeting in SF

Palace Hotel, 12th Annual BIO Investor Forum meeting in San Francisco Oct 8-9, 2013.  According to David Thorcirus, the host of the opening meeting, this year’s BIO Investor Forum had about 700 attendees, 900 one-on-one partnering meetings and had a 30% increase in attendees compared to last year. The meeting focus is about small companies seeking funding or commercial partners. Of the 120 presenting companies, about 2/3 were private and about 1/3 were public stock firms.

Small Company Presentations Of Note.

  I found four new interesting medtech firms that were worth a first look.

1. Nano3D Biosciences (n3D) is new company run by Glonco Souza, the President and CSO.  The company is a spin-off of Rice University and the MD Anderson Cancer Center in Texas.  n3D’s mission is to develop the “Bio-Assembler” technology. They said it is a big paradigm shift in the developing of complex 3D tissue models.  They do this by levitating cells in dish. The Bio-Assembler (TM) is a nnao shuttle refill.  The product is covered by patent IP.

They get in-vivo -like results.  They claim to have the fastest 3D cell-based assay. It can produce results overnight vs. in 10 days. n3D uses Apple iPod Touch 4G mobile devices as computer controllers.

The “Magnetic Levitation Grows Realistic Lung Tissue…” in a headline in Science Magazine. The company uses ten Apple iPod Touch mobile devices for its compute platform.  Souza said that the limitation of existing 3D tools and assays for a small company. So far, n3D has raised $2.3 million.  Souza said that the investor exit strategy is to sell itself to a large company.  The firm is looking for customers, partners and investors.  Souza said that they currently need $600,000 in new funding.

2.Another new company, Nanofiber Solutions creates poly-nanofiber structures.  Ross Kayula, CEO, said that they place cells in fiber and look normal (cancer cells).  Their plates replace 2D plates. Their idea is similar to those of Nano 3D Biosciences.

The CEO said that their scaffold for implants prevents rejection and scarring in a trachea.  Their idea is a platform technology for organ regeneration — as implantable products.  Product status: Trachea in clinical trials; Other products are in pre-clinicals.

Ross said that IP is their largest cost and said that they need to raise a VC-backed seed-funding round of about $2 million.

3. iNanoBio is a new firm based in Tempe, Az. The company develops nanoscale sensors for combining nanoscale and diagnostics.  iNnaoBio seeks $7.5 million in a VC funding series.  The company is developing ultrafast next generation sequencing technology over the past nine months. The initial phase of their development is to make kinase activity high throughput screening. The CEO said that their technology is ultra fast an will sequence DNA in just fifteen minutes for about $200. They expect to target clinical applications using nanopore diagnostic technology. iNanoBio will make nanowire sensors attached to a nanopore to detect DNA in one pass at high speed. The firm is involved in an NIH program to develop their platform technology. The technology provides real-time detection of kinase proteins when compared to competing technologies from Thermo, Life Technologies, DiscoverX or others. The CEO said that their next step is to integrate microfluidics.  The manufacturing process is the same as in making semiconductor chips on a six-inch wafer. They can make a 1×3-inch slide with 10,000 wells to make an alpha-p53 assay. Their future n-MEDD product lines include: 1. Kinase chip assays, 2. Inhibitor discovery assay, 3. Target-ID assays for phenotypic screens. A key value is the real time kinetic results.  They are talking with Big Phama companies about their technology. iNanoBio plans to seek series A and B funding from VC firms.  The n-MEDD system development beta product is being shipped to customers.  They are developing a prototype genome sequencing device.

4. Metactive Medical is a medical device company run by CEO, Nicholas Franano MD.  He is the former founder of Proteon Therapeutics. The firm is developing two vascular repair products. Nicholas said that their first product involves a device for treating cereberal aneurisms that have a narrow neck. He said that cereberal aneurisms impact about 4% of the population. A rupture of an aneurism produces a hemorragic stroke which is often fatal. Patients usually have very bad headache symptom prior to an aneurism occurring. If they can detect the aneurism in time, the Dr. uses a catheter to put a coil of wire into the ball of the aneurism. The wire coiling procedure is the standard of care for treating cerebral aneurisms. This is a $500 million market segment. Dr. Franano said that wire coiling procedure is delicate, difficult and takes about two hours to complete.  He said that doctors need about two years training to perform this procedure. Unfortunately, about 3-5% of the aneurisms are punctured by dosctors. Each coil costs about $1,000 and some aneurisms require up to twenty wire coils.

Metactive Medical is developing a better device, the Ball Stent which is attached to a microcatheter. The Ball Stent is guided up to and into the ball of the aneurism. When activated, the end of the stent expands and fills the ball of the aneurism. A wire seals off the bloodflow from the artery at the neck of the aneurism. The procedure takes about twenty minutes. The company tested the idea in a pilot study in dogs by testing an 8mm Ball Stent. The successful procedure delivers a permanent treatment. The FDA classify would the Ball Stent as Class-2 Device and would require a 510K filing application. The second product is vacular device to repair peripheral artery occlusion.  This is a $50 to $75 million market. The Firm’s device deploys a ballon that repairs the artery wall. Dr. Franano estinmated that the market for the Ball Stent is $1 billion and the peripheral artery occlusion device market is $100 million.  He said that the company would sell itself for $200-250 million to a buyer or develop its products further. I asked when might the Ball Stent likely reach the market and Dr. Franano said that, if developed, it could reach Europe by 2020.

Financing Trend Expands for Young Biotechs in 2013

There were around 1,600 attendees this year at Biotech Showcase 2013 held at the Parc 55 Hotel in San Francisco.  One of the luncheons I attended was a panel discussion.  The topic was “The View from the Street: Looking Forward.” Here is some of what was discussed by the panel. Each of the panelists gave their view of this topic.

Robert Hazlett, Senior Research Analyst at Roth Capital said that he is “bullish for the biotech and pharma industry.”  He also predicts 38 drug approvals a year.  Hazlett said there has been beneficial advancement in biology and he is enthusiastic about advancements in oncology.  He thinks there has been modest progress on the regulatory side.

Evan McCullough, Portfolio Manager at Franklin Templeton, gave his perspective as a buy side guy.  He said Gilead started a rally by buying Pharmacet.  McCullough said that the IPO window is open, payers are tough, high deductible plans are coming so think about how that effects reimbursement of drugs.  He is also frustrated that there isn’t more M&As.  If a company wants to go IPO, they need proof of concept and solid Phase 2 data, McCullough added.  He said that for companies that want to have an IPO, there are ways to do it.  Companies spend too much time on the lead compound.  They need other compounds in case the lead compound fails.

Evonne Sepsis, Managing Director at ESC Advisors said, “Companies are looking for $2 million initially and that’s difficult.”  Private companies need a great management team, great technology, and safety is becoming very important, she added.  Also important are pricing, reimbursement, and commercialization.

Also on the panel was Greg Simon, CEO at Poliwogg.com.  Poliwogg is an internet-based broker/dealer/crowd funding portal/asset manager.  Simon pointed out that there are lots of people going into there 30’s.  They will be investing.  With crowd funding, a non-accredited investor can invest $1 million in a company.  Accredited investors can invest over $1 million.  The new JOBS Act law lets people like Simon for example invest only $100,000 in a company.  He said,  “You can now get a crowd of people to invest in you.”  The JOBS Act lowers the threshold of investment.  People typically start investing at age 35.  VC’s are making room for a whole new crowd to move in.

Diagnostic Companies Speak About Challenges With Pharma Partners at IBC Event

On August 6, 2012, I attended the IBC Life Sciences’ Drug & Diagnostic Development Conference at the Westin San Francisco Market Street Hotel.  The three-day conference consisted of four ‘summits’ that included the Future of Rx/Dx Summit, the Clinical Biomarkers and New Frontiers in Cancer Summit, the Next-Gen Sequencing Summit, and the Antibody-Drug Conjugates, Bispecfics and Empowered Antibodies Summit.  I decided to focus on the Future of Rx/Dx Summit business track.  A number of the presentations discussed the many challenges and success factors that go into developing companion diagnostics (CDx), which companies need to consider when developing a CDx.

Tips to Navigate Rx/Dx Co-Development

Patrick Goody, Divisional Vice President, R&D at Abbott Molecular brought up a number of important guidelines during his case study presentation, “Co-development of Diagnostics and Therapeutics: Abbott/Pfizer Crizotinib.”  Crizotinib (Xalkori) is Pfizer’s personalized medicine that targets a type of late stage non-small cell lung cancer (NSCLC).  Abbott Molecular developed the FDA required EML4-ALK fusion companion molecular test that enables physicians to select the sub-group of patients that would benefit from using crizotinib.

He said in order to be successful, the partners need to “capitalize on their collective strengths and establish good chemistry.”  He believes that good “communication is key.”  Other important factors include “coordination of drug/IVD submissions as well as commercial execution and worldwide distribution.”  Goody emphasized that pharmas should get involved with a diagnostic partner early. This point was mentioned in other presentations as well.  He also said that there must be business incentives for both partners.

Ron Mazumber, Global Head, Research and Product Development, at Janssen Diagnostics spoke of the “Challenges and Opportunities/Solutions of CDx in Pharma” during his presentation.  Some of the main challenges include the “complex regulatory landscape, PMA process/expectations, and variability of testing.”  He offered some solutions such as “repurposing an existing 510 (k) cleared product, bridging studies, use of CTCs (circulating tumor cells), and multiple partners/platforms.”  Mazumber said the “ideal scenario is to start at Phase 3 with an IUO (investigational use only).”

Panel Discusses Rx/Dx Business Ideas

I also attended the panel discussion about “Emerging Commercialization, Collaboration and Business Models for Rx and Dx.”  One of the major themes of the discussion was that diagnostic companies need to continue to drive the value of their product.  Panelist Michael Pellini, President and CEO, at Foundation Medicine, said, “it’s all about education.”  Another panelist, Ron Andrews, President, Medical Sciences, at Life Technologies said, “We are venturing into a more complex world.”  He said “a lot more goes into a diagnostic nowadays than even five years ago.”  To the question posed by moderator Alexis Borisy, Partner, at Third Rock Ventures, “Do Pharmas ever pay diagnostic companies big fat royalties?”  “No, pharmas are not paying diagnostic companies big fat royalties,” said panelist Ron Mazumder at Janssen.”  However he did say, “pharmas are starting to recognize value but it is still a sticky issue.”  Andrews said “there are tons of therapeutics that have been shelved that might have value if the right diagnostic is developed.”  Panelist Pellini said that he “dreams of a fat royalty if they enter into a relationship with a pharma company and salvage a drug with a diagnostic.”  “They should share revenue downstream if they add enough value,” he added.

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