Phacilitate Cell & Gene Therapy Forum 2008 Executive Summary
A conference report based on the Moderators' summaries of their respective sessions

Compiled by
Dr Scott R. Burger, Principal, Advanced Cell & Gene Therapy

From one year to the next, the Phacilitate Cell & Gene Therapy Forum reflects the progress and setbacks of the industry overall. This year’s meeting was notable for its emphasis on products in later stages of clinical development, as well as planning for specific aspects of commercialization, such as large-scale operations, funding, reimbursement, and intellectual property. Perennial topics of interest in cell and gene therapy were discussed as well, including manufacturing process development, characterization testing, contract service options, regulatory strategy and requirements, and commercialization models for individualized cell therapy products


Progress in the Global Cell, Tissue and Gene Therapy Sectors
Reviews and panel discussions covered products late in Phase II and Phase III, and peered into the future, exploring prospects for cell and gene therapy in the coming decade. Therapies for oncology and cardiology indications seemed especially promising, with multiple products likely to come to market in the not too-distant future, though products targeting other indications also are progressing well. Products that will have commercial success can be expected to be those that have clear advantages in terms of health economics and clinical value, as well as a solid manufacturing structure and supply chain.


Clinical Development Strategies
Small biotech companies typically conduct trials in the geographical area of their home offices, unless they have development partnerships with corporations that have multi-national resources/capabilities. US centered clinical operations have the benefit of uniform regulatory rules regarding the conduct and review of gene and cellular therapy trials. EU centered clinical operations have centralized review of final marketing authorization applications by EMEA but require trial authorization from individual member nations that have different regulatory agencies and recommendations for cell and gene therapy trial conduct. Clinical development programs are more similar than different between the US and EU although EU trials initiation may be more complicated. Smaller biotech companies may benefit from partnerships with multinational corporations to expand the scope of their clinical development operations that will ultimately expedite global product approvals.


Manufacturing Cell Therapy Products as Clinical Development Progresses
For novel cell therapy products, manufacturing processes commonly are refined throughout clinical development. Progress in clinical development necessitates increasingly stringent compliance with GMPs, and, typically, increasingly robust manufacturing processes with greater capacity. The fundamental identity of the product must remain constant, however, despite changes in the manufacturing process. A product characterization profile must be established, to serve as a reference across process modifications. Because cell therapy products and their raw material are composed of living, functional cells, and hence are to some extent heterogeneous and variable, extensive characterization testing may be needed to establish a meaningful pattern of specifications.


Product and Process Development Requirements for Gene Therapy Products
This session highlighted items that need to be taken into consideration when changing a process or moving toward commercialization. The panel discussion focused on when to contract manufacturing and the audience gave very insightful comments regarding the cost and flexibility. Sometimes one must contract out manufacturing just because of limitations in capacity as one moves toward commercialization.


Convergence of the Device Sector with the Cell, Gene and Tissue Therapy Sectors
It is very important when you partner with another company that each understands the roles and responsibilities. If you are a small company partnering with a large company, you need to understand the different cultures and timelines and take this into consideration when planning the product development. Finally, it is important to make sure everyone understands the complexity including the management chain.


Targeted Delivery of Gene-Based Therapies
Targeted gene delivery, and as discussed in the session, targeting can be achieved by localized delivery, including to the eye, brain, tumor (direct injection), joint, lung, other topical delivery, or ex vivo delivery. Very localized delivery may allow for readministration, and potentially fewer toxicity issues. Active targeting is in development with non-viral particles, although there remains a concern with immune responses once targeting ligands are added. A need for sufficient duration of transgene expression still remains with some delivery systems, in order that gene therapies improve upon existing therapies.

Examples came from delivery of RNAi, adenovirus, adeno-associated virus (AAV), lentivirus, and non-viral particles. Interest continues to grow in small interfering RNA (siRNA), and similarly novel products. RNAi was generally considered likely to encounter similar issues, both scientific and regulatory, as more "conventional" forms of gene therapy.


Venture Capital Financing
Venture capital firms from the US and EU presented their near-term investment interests in and longer-term views of the cell and gene therapy markets. Recent investments have focused on therapeutics in clinical development, and enabling technologies, including manufacturing devices and analytical instruments, and materials, such as GMP cytokines. It is very encouraging to note the growing interest of the investment community in the field of regenerative medicine. Although VCs generally are looking for a fairly short-term return, many of these groups expressed a long-term interest in working with small companies and helping to drive the commercialization process.

Individual VC's commentaries on the session:
VC fundraising for cell therapy companies is difficult, in part because IPO and M&A exit markets are not embracing cell therapy. However, this may be cyclical, and positive data will overcome investor resistance over time. A handful of VC firms are seeking these opportunities now, and will take on technical risk if a company has an excellent management team and sound science. In the meantime, grant funding from government and disease-advocacy groups can fill the gap.

There are several venture groups interested in this space, but they remain highly selective with the opportunities they pick. There appears to be a hint of increasing interest from Pharma in external business development. The industry in general is showing movement in the right direction as is evidenced by several very interesting acquisitions and numerous consolidations. VCs have been watching closely the companies that have either maintained share price in the public markets, or who have been part of an acquisition/M&A to identify areas where one may fill the void. As would be expected, the successful management teams in this field often mimic the models in more traditional drug development. For example, VCs tend to like companies who have effectively implemented tangible vs conceptual platform technologies. Moreover, as one of the panel stated, VCs recommend one start with the end in mind. This applies to all aspects of the development plan, and especially to clinical endpoints.

Due to their expiring pipelines of products, large pharmas have been showing greater interest in the space. There appears to be huge financial opportunities as early stage companies still trade at low valuations due to a lack of understanding of how the science will translate into businesses. A handful of VCs, expert in the field have recently started to fund companies and will hopefully bring this space to maturity.

Failures at the end of the 90s led VCs to leave the space of cell and gene therapies. Learning from these failures, researchers, clinicians and entrepreneurs have generated a tremendous amount of good clinical focused research over the past years. Based on the origin of still a large number of diseases, for which currently no treatment exists, the only way to effectively threat them is hidden in the promises of cell and gene therapy. A comparison that is frequently made is between antibodies and to cell and gene therapies when looking at the time it took to understand and develop new technologies into products. But recent deals in this emerging area, like the deal between Ceregene and Genzyme on the Development and Marketing of CERE-120 for Parkinson's disease, have demonstrated confidence of Pharma in gene therapy. Benchmark deals like this will generate a strong support to the whole area of cell and gene therapies for which more large pharmaceutical companies are developing an interest due to their expiring pipelines of products. There appears to be a hint of increasing interest from Pharma in external business development. The industry in general is showing movement in the right direction as is evidenced by several very interesting acquisitions and numerous consolidations. It is interesting to closely follow the companies that have either maintained share price in the public markets, or who have been part of an acquisition/M&A to identify areas where one may fill the void. As would be expected, the successful management teams in this field often mimic the models in more traditional drug development. It is to be expected that the first product in the space will enter the market in the near future.

As more cell and gene therapies have recently moved into clinical development and are able to present interesting data the overall risk profile of these programs has changed and is on the eve of attracting interest from investors that have passed on these therapies over the last decades. At the moment there appears to be huge financial opportunities as early stage companies have moved along and still trade at low valuations due to a lack of understanding of how the science will translate into clinical data and finally a product.

There are several venture groups that never neglected this space, but they remain highly selective with the opportunities they support.


Alternative Funding Mechanisms
This session explored alternatives to venture capital financing. It focused on financing available through state and national governments, venture philanthropy, and angel financing, and various forms of sweat equity. This session also provided two case studies. The first case study analyzed the successful recent IPO of AMT. The second case study demonstrated how an earlier stage company successfully leveraged sources of funding other than venture capital.

Michael J. Werner, President of the Werner Group, discussed state funding initiatives for the development of cell therapy technologies, and the methods by which cell therapy companies can gain access to these funds.

Kevin Sharpe, Pan-European Biotech Analyst, ABN AMRO, spoke about the IPO process, using the recent public offering of AMT as a case study. He outlined the factors that made that IPO successful and the process that is typically followed in a European public offering.

Dr. Sonia I. Skarlatos, Acting Director, Division of Cardiovascular Diseases & NHLBI Gene Therapy Coordinator, NHLBI/NIH, gave an overview of resources and programs that are available to NHLBI/NIH investigators, including (i) the Gene Therapy Resource Program; (ii) the Fetal Non-Human Primates Gene Transfer Center; and (ii) the Cardiovascular Cell-based Research Therapy Network. She also discussed SBIR/STTR mechanisms for gene and cell-based research.

Dr. Robert J. Beall, President and CEO of the Cystic Fibrosis Foundation, discussed the role his foundation plays in early stage discovery and development of new therapeutics for the treatment of cystic fibrosis, a disease which historically was not as attractive to Big Pharma due to its relatively smaller potential market size. He further described the positive impact the Cystric Fibrosis Foundation has had on the advancement of several new drugs into the clinic and onto the market for the treatment of this disease.

Sheila A. Mikhail, Chief Executive Officer of NanoCor Therapeutics, Inc., gave an overview of how it and its parent company, Asklepios BioPharmaceutical, Inc. used a combination of SBIR grants, state backed loans, grants from foundations such as the Muscular Dystrophy Association, venture philanthropy from Musculoskeletal Transplant Foundation (MTF), and strategic relationships with large pharmaceutical and medical device companies to finance its research and development, and clinical costs.


Reimbursement
Gaining reimbursement for cell and gene therapy procedures is a significant yet highly manageable challenge. Getting appropriate reimbursement is much more likely when the data that will bear on the evaluation by payers is collected from early on in the development process. Clinical outcomes, especially those that positively affect patients’ lives as well as the overall cost to the healthcare system will be intensively scrutinized. Therefore, it will be important to include prospectively relevant measures of clinical and financial impact into all trial designs.

Cell and gene therapy companies need to consider reimbursement issues as part of their overall strategy. As health care costs rise, coincident with the aging of the US population, the likely high cost of new cell and gene therapy products will receive increased scrutiny from insurers, Medicare, and others. By focusing on these matters, companies can anticipate concerns and questions from payers and thereby increase their chances of having their products reimbursed at a reasonable price.

In response to growing cost pressures, payers are demanding more cost and clinical evidence about the value of new technologies. For example, the Blue Cross and Blue Shield Association has a formal technology evaluation process to determine the value of new products. This is part of the Association’s movement toward an evidence-based medicine approach to coverage decisions. The process attempts to balance price, value, cost effectiveness, and outcomes from new products.

It is still unclear what information payers will demand from companies for payment and coverage decisions. Experts advise that companies collect pharmaco-economic data to help demonstrate cost effectiveness of their products. Companies should also familiarize themselves with Medicare’s coding, coverage, and payment policies. Moreover, companies should consider the importance of bioethics issues as well as engage stakeholders such as patients and physicians to help build support for reimbursement of their products.


Cardiac cell therapy
What is the optimal form of delivery mechanism for cardiac cell therapy from strategic business, technical and regulatory viewpoints?

What emerged clearly from the discussion is that the single "optimal form of delivery mechanism" for cardiac cell therapy does not exist. However, as the field is emerging, clear commercial development patterns are emerging.

In any case, the choice of delivery mechanism has profound implications for the complexity of the respective clinical development strategy. Complex delivery systems, i.e. cardiac cell therapy by means of sophisticated catheter systems, are viewed as combination products by regulatory agencies, at least in the US. They typically require safety and efficacy testing of every component of the system. In clinical development, the number of arms in clinical trials tends to increase by a factor of two with combination products: typically at least one arm will investigate the effect of the catheter with placebo while another arm will investigate the combination of the delivery product with the cell product. Although there are early examples of collaborations between established device companies supplying the catheter technology and "young" cell companies, coordination and company culture issues should be anticipated in joint development efforts. Joint development projects should be jointly coordinated and meticulously planned - with a long planning horizon - early on in the collaborative process.

With these complexities understood, two main strategies are evolving in cardiac cell therapy: the device approach and the cell approach:

The device approach is typically taken by companies that favor a point of care approach. Technologies include the collection and concentration of stem cells from various sources, e.g. from the bone marrow or from adipose tissue. They typically do not entail culturing or bioengineering steps. Clinical data are typically reported from multiple smaller single-center investigator-initiated clinical trials carried out with varying degrees of control by the device company. Emphasis is on performance of the device, not so much on the device or route for delivery of the cells and on early commercialization. The advantage of this approach lies in the potentially broad clinical experience gained from different uses of the cells across multiple indications with multiple delivery mechanisms. On the other hand the collection of evidence to support safety and efficacy claims from these trials is challenging. Quality control over the released cell product is typically carried out at the level of the treating centers leaving it with the responsibility for adequate release safety testing.

The cell therapy approach is typically taken by companies that favor a centralized processing approach. Technologies typically include some kind of tissue culture or bioengineering steps during production. Clinical data are typically generated in the context of a small number of tightly controlled company-sponsored clinical trials that are carried out in phase I, II, III steps reminiscent of the development steps for biologicals. Emphasis is on delivery of a cell product with consistent quality, with tight release criteria and on the generation of safety and efficacy data to support a cell product registration. Delivery strategies are carefully chosen to minimize potential development costs. Emphasis is typically on indication sizes and not on short term revenues. The cell company has to assume responsibility for the cell production process and for the final cell product. While this approach requires substantial upfront investment, it is a more established route to secure eventual regular reimbursement for the cardiac cell therapy.

In summary, cardiac cell therapy is an emerging field with enormous promise. Cardiac cell therapy may be well on its way to transcend from an academic concept into number of cardiac stem cell and related industries.


Intellectual Property
This was a highly interactive session that attracted a significant workshop group. They heard a wide ranging discussion of the IP landscape for cell and gene therapies from a number of different angles including the patent office, small biotech and experienced legal practitioners.

John LeGuyader from the USPTO started the session off with a discussion of recent changes in practice, brought about by court decisions, at the PTO. He emphasized the changes to how obviousness (paragraph 103) rejections will be formulated, where the examiners are now trained to be more proactive in the construction of obviousness arguments, and where, for example, the criterion of "obvious to try" would now be considered to be grounds for a rejection. The other main area of change is a stricter interpretation of allowable alternatives, in claims that make lists of such alternatives ("Markush" claims). In response to questions, John also noted that the recent attempt by the USPTO to quite drastically limit the number of continuations that can be filed was mainly in response to a constantly increasing number of applications with some of these being of low quality and hence more time consuming.

Douglas Jolly from Tocagen Inc. spoke next and outlined the considerations and thought processes around IP in a start-up gene therapy biotech company. He noted that it was seldom possible to have everything necessary for a product nicely wrapped up and licensed from the start, but that it was important to be aware of IP issues, and build a cohesive in-licensing, filing, prosecution and out-licensing business strategy, based on this knowledge. In particular with the long development timelines for biologic products, patent life and possible extensions play an important role. One chicken and egg issue is how to find strong patent advice before raising money, when investors want such detail to pre-exist.

Erich Veitenheimer from Cooley Godward & Kronish LLP reviewed the very varied and complex landscape for IP around embryonic and fully pluripotent stem cells. A key difference between US and the rest of the world is the allowability of patenting stem cells themselves plus ancillary methods, whereas in the rest of the world (e.g. Taiwan, China, Japan and Europe) such matter is usually not patentable on "public order" and moral grounds. This has led to the" Wisconsin" patents (key early patents on ES cells) only issuing in the USA. However the future situation in the USA may be affected by the California stem cell initiative that demands government patent rights as a quid pro quo for the public money invested. It is also unclear how the various national patent offices will react to totipotent cells that are not made from embryonic material. In response to questions, he noted that the patent situation in China was markedly improved over the last few years but that there was still some way to go before the Chinese patent system could be relied on to the extent that is normal in the Western world.

Finally Ken Stratton (in-house General Counsel for Stem Cells Inc.) gave his perspective on the IP landscape for biologics in general and stem cells in particular. He noted that there were several trends within the US that that made it more demanding to attain good intellectual property protection in biotechnology. These included recent court decisions, proposed legislative reform, follow-on biologics, proposed rule changes at USPTO and state funding but with IP strings. With pressure on the biopharmaceutical industry from rising health care costs, from probable health care reform, from the long timelines to product for therapeutics based on stem cells, and from the growing perception of a patent thicket, the IP/drug development environment is becoming more challenging. In this context it makes sense to examine carefully the environment in other countries and some of these could be easier places to operate in future. Alternatively an IP strategy based on trade secrets could make sense in stem cells as the exclusivity from a competitive advantage protected in this way may be kept more simply and for a longer period of time compared to protection through patent applications.

In any case, it will be important for stakeholders such as scientists and companies to participate and influence the ongoing debate about IP for cell and gene therapies, and biologics in general.

The Cell & Gene Therapy Forum 2009 will take place on January 26th - 28th at the Grand Hyatt Washington, DC.

For more information, or to contribute your suggestions for topics and/or speakers, please contact:

David McCall
Project Director
t: +44 (0)20 7839 6151
e: david@phacilitate.co.uk

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