What makes for a successful biotech hub

The biotech industry is currently growing and experiencing great dynamism driven not only by advancing technology but also by increased investor interest. The US is definitely experiencing a bigger boom in biotech compared to Europe well-documented in a 2012/2013 financial performance report by Ernst and Young. This is attributed to a greater risk-taking attitude in the US as compared to Europe where failure to achieve a successful business on the first-try is often looked upon with disdain. Biotechs in the US are also more mature/developed compared to Europe, attracting greater interest from venture capital firms.

The two largest biotech hubs in Europe are in Cambridge, UK and Martinsreid, Munich in Germany. An interesting article from Simcha Jong, Assistant Professor in Management Science and Innovation at University College London, studied factors influencing development of these two  biotech sectors. He raised the interesting fact that despite the rather restrictive model imposed by German capitalism, businesses in Munich have found innovative ways to get round this and produce more technologically disruptive and innovative product strategies as compared to their Cambridge counterparts.

The German capitalist model is restrictive to the development of innovative new companies based on several reasons. One of which is its rigid labor laws that make hiring/firing a time-consuming and costly affair. As a result many firms are resistant to hiring, and employees also tend to stay in one firm for a long time. Labor laws are more relaxed in Cambridge hence a greater proportion of Cambridge biotech managers come from companies in the local region. Munich businesses in contrast, tend to look abroad for experienced managers and hire their junior staff from local universities or research institutes.

Other problems faced in Munich are poor bank-lending, underdeveloped equity markets and the lack of venture capital risk funding, posing problems in finding start-up funding. To counter this, most Munich start-ups turn to foreign private investors or publicly funded investment agencies such as the federal Technologie Beteiligungs Gesellschaft (tbg), BioRegio Munich and Bayern Kapital for their funding. There has been greater interest from foreign venture capitalist firms in the Munich sector but many tend to invest during later stages of development. Cambridge on the other hand are more exposed to equity markets and venture capital firms though the extent of this still pales in comparison to the US.

An important difference between Munich and Cambridge lies in its links with academia. The paper finds that due to the higher recruitment of employees from local universities and research institutes, the maintenance of these social networks forge a closer relationship between Munich biotechs and academic institutes. This translates into greater research collaboration, more publications of better quality and hence more numerous innovative research ideas available for commercialization. In Cambridge however, hiring mostly occurs via local industry networks and contact is limited with academic institutes despite their prevalence. As a result, ties between academia and industry are weaker and  publications from Cambridge biotechs are fewer, less “in tune” with current research trends and hence receive fewer citations. This is also reflected in the number of patents filed (see DE vs GB):

filings2014

Image taken from the European Patent office website

Cambridge however has far more drug candidates in clinical development compared to Munich. This is due to hired scientists coming from a more industrial background having greater experience in pushing drugs through to markets. Munich currently lacks this expertise and as a result some companies have opened facilities abroad to gain this knowledge.

Dr Jong terms the differences between Munich and Cambridge with Munich being more focused on drug discovery while Cambridge on drug development. Speaking from working in a Munich biotech, this rings true. My colleague was hired from a university and of the two founding partners, one is a Professor at a university, so ties with academia are indeed tight. And we create technologies that big pharma is utilizing so there is a role we are playing in drug discovery.

However, it is obvious that both models are necessary to create a truly successful biotech hub. The goal of biomedical research is to create better therapies and new technologies and ideas are essential for achieving this. It will be awhile before Europe achieves the success that US has, but hopefully cautious European attitudes will change as globalization spreads.

Source:

Jong, S. (2009). The development of Munich and Cambridge therapeutic biotech firms: A case study of institutional adaptation. In C. Crouch, H. Voelzkow (Eds.), Innovation in Local Economies: Germany in Comparative Context (pp. 121-138). Oxford University Press, USA.

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What you need to know about gene therapy

Gene therapy has had its proponents and dissidents and the recent crash out of Celadon’s cardiac therapy Mydicair at the Phase IIb stage demonstrates just how challenging this field is.

So far only two gene therapies have been approved so far. The first in China in 2003 from ShenZhen-based SiBiono Gen Tech that produced Gendicine, an adenoviral vector engineered to produce tumour supressor p53 for head neck squamous cell carcinoma.  Though subject to initial skepticism, Gendicine has proven effective especially in synergy with radiation/chemotherapy against several cancer types. Only in 2012, did Europe follow suit with Glybera. An adeno-associated viral vector that delivers a lipoprotein lipase to patients suffering from a rare lipid processing disease stemming from a mutation-induced deficiency in this lipase. The US has yet to approve a gene therapy but there are currently more than 2000 clinical trials world-wide focusing on several disease areas including cancer, ocular diseases, infectious diseases and cardiac disorders.

Just what makes gene therapy so challenging? The primary factor lies in the targeted modification of host DNA as the vector transits through the host tissue->cell->nucleus->gene. The use of viruses in gene therapy comes with the nasty possibility of wrong incorporation of DNA into a non-target gene which can lead to disastrous effects such as carcinogenesis. Another major factor is the accompanying immune responses to viral vectors. The prominent case of Jesse Gelsinger, an 18yo clinical trial participant who died from multiple organ failure brought on by severe immune responses halted gene therapy research in the US for some time. Other challenges associated with gene therapy include limited DNA packaging capacity and difficulty of vector production.

The field is far from drying out though as major advances have broadened the scope as to how gene therapy is implemented. RNA for example though less stable than DNA, has reduced immunogenecity, no potential for mutagenesis and does not have to enter the nucleus to take effect. Companies are currently exploring their use to silence genes or in the case of Moderna Therapeutics, for the production of proteins in vivo. And of course CRISPR, TALENs and zinc-finger nucleases, now provide for newer methods of gene editing, sometimes with startling rapid progression.

For RNA-based therapeutics, the major hurdle to overcome is efficient systemic delivery into affected tissue due to rapid excretion of RNA and susceptibility to degradation. Current efforts avoid the use of viruses by focusing instead on polymers, liposomes and nanoparticles. Many RNA-based therapeutics target the liver as RNAs tend to accumulate there due to its high vascularity and slow elimination. Major players in RNAi therapeutics include Alnylam, Quark and Tekmira. The latter of which just obtained FDA approval for “compassionate use” of their siRNA drug in Ebola infection.  The only currently  FDA-approved RNAi therapeutic for official use was obtained by Isis Pharmaceuticals. It produced Vitravene, an ocularly-delivered antisense oligo used for the treatment of cytomegalovirus retinitis in AIDS patients. Big pharma bowed out of RNA-based therapeutics in 2010 due to difficulties of delivery as well as off-target effects but now with 23 siRNAs undergoing clinical trials, optimism is burgeoning in the field.

The  overall advantages of gene therapy is that it promises a permanent cure and is based on good scientific rationale (i.e. replacing the protein that one is deficient in, or knocking down a toxic protein). RNA-based therapies though impermanent share the same scientific basis, are easily manufactured (RNA is a lot easier to make than monoclonal antibodies), and are better translated from cell and animal models to humans as compared to small molecules. Gene therapy is definitely a lot more complex as compared to trying to tackle proteins with antibodies/drugs. And caution is indeed warranted when it comes to messing with the human genetic code. But with the current pace of development, it provides an exciting alternative to drugs in the fight against human disease.

Acquisitions galore – Morphosys, Gilead and Agilent

Several big acquisitions occurred over the past week.

Martinsreid-based Morphosys recently acquired Dutch biopharmaceutical Lanthio Pharma for 20 million Euro. Morphosys had already owned 19.98% of Lanthio but decided to fully acquire it based on its promising lead candidate for organ fibrosis, LP2, now renamed MOR107. MOR107 is a lanthipeptide which is a thioether cross-link (aka lanthionine-bridge) containing peptide produced by bacteria, Lactococcus lactis. Lanthio Pharma-synthesized lanthipeptides are reportedly more stable than natural linear peptides, being more resistant to peptidases and having a more rigid receptor-binding interface, thereby conferring it with better “drug-like” properties. MOR107 showed potent angiotensin II type 2 (AT2) receptor agonist activity and was effective in animal models of Idiopathic Pulmonary fibrosis (IPF) and kidney fibrosis. It is targeted to enter clinical trials in 2016 for diabetic nephropathy and other fibrotic diseases.

Gilead Sciences spent 57 million Euro for Danish epigenetics company, EpiTherapeutics. EpiTherapeutics was started in 2008 by renown epigenetics researcher Dr Kristian Helin. Helin is also the founder of Denmark’s Biotech Research and Innovation Centre (BRIC) and has discovered and characterized four groups of histone demethylases, enzymes that regulate epigenetic signatures. EpiTherapuetics has developed a library small molecule inhibitors mostly targeting these histone demethylases, and they are being applied for the treatment of cancer. With Helin’s backing EpiTherapeutics has not had to struggle to find funding which previously came from various venture firms including Novo Seeds, Lundbeckfond Ventures, Merck Serono Ventures, OSI Pharmaceuticals and SEED Capital. Now under Gilead, plans are to take these small molecule inhibitors to the clinic.

Finally, Agilent Technologies acquired for an undisclosed sum, Cartagenia, a company that supplies software and services for clinical genetics and molecular pathology labs. Cartagenia caters to a much required need for handling, analyzing, integrating and sharing clinical genetic data. As next-generation sequencing becomes cheaper and personalized therapy dictates the genetic screening of patients for subsequent treatment options, the management of this data and the way it is shared among institutions has to be performed carefully and efficiently. Cartagenia certainly provides the impression of being an efficient solution provider and Agilent is definitely catching the worm early as it homes in on this rather new type of service.

Generic drugs, not so easy

As patents run out over the coming years, many are placing their bets on generic drug manufacturers. Indeed the generic drug market has been growing at a rate of more than 10% a year, with a market value of $269.8 billion in 2012 projected to reach $518.5 billion by 2018. The current flurry of company stock buying activity exemplifies this – Singapore’s Temasek holdings have invested close to $600 million on three Indian drug companies that dole out generics – Sun Pharmaceutical, Glenmark Pharmaceutical and Intas Pharamaceuticals. Sun Pharmaceutical itself recently spent $3.2 billion acquiring another big Indian generic drug-maker, Ranbaxy Laboratories from previous owner Daichii Sankyo, making Sun Pharmaceutical Industries the fifth largest generic drug maker. Notwithstanding, Pfizer also bought over Hospira, another generic/biosimilar manufacturer, not too many months ago.

Though it may appear inevitable that generic drugs will eventually replace all their branded counterparts due to their lower cost, setting up a generic drug company is not without its challenges. First, many countries have tendering systems for drugs to keep prices low. This means only companies who have won the tender by having the cheapest drug, will get their drug listed in public health plans or as the recommended drug to take to patients. This places some pressure on companies to produce their drugs in an extremely cost-efficient way to edge out their competitors. In the same way, over the counter generic drugs that do not depend on prescriptions are distributed by wholesalers that also negotiate prices with generic drug manufacturers. And almost always the larger generic drug manufacturers are able to win wholesalers due to their larger market share and ability to be more operationally cost-effective.

Out of the top 15 best-selling drugs in 2014, 8 were biologics and the top 3 were all biologics – Humira, Remicade and Rituxin. One of the key reasons that pharma companies are churning out more and more biologics these days is that they are more difficult to copy. Biologics are complex molecules and their synthesis is just as multi-layered and complicated. In fact, no two biologics are ever the same. Thus the challenge to get a biosimilar (a biologic with very similar properties) passed by regulatory authorities is likely to be higher compared to a small molecule. So far, the FDA has only approved one biosimilar, Sandoz’s Zarxio which mimics Amgen’s cancer therapy Neupogen. Hence, generic drug manufacturers need to be familiar with biologic production to keep up with this trend.

Finally, generic manufacturers have to contend with strict quality control laws by regulatory authorities. Indian drug maker, Ranbaxy Laboratories, has come under fire by the US FDA for lapses in good manufacturing practices. These concerns were extreme enough to warrant bans imposed on the sale and distribution of drugs coming out of Ranbaxy sites in India as well as one US site. Major concerns involved the sanitary conditions of the laboratories as well as the practice of discarding batch failure results after successful retests were performed. Ranbaxy themselves pleaded guilty to making false claims on its drugs, often failing to run “stability” tests resulting in possible impurities that may reduce the shelf-lives of these drugs. These troubles were probably what prompted Japanese giant Daiichi Sankyo to sell all its Ranbaxy and subsequent Sun Pharma holdings very quickly.

The scale of success is almost always in favor of larger sized manufacturers (e.g. Teva, Sandoz, Mylan) as alot of their growth depends on how cheap they can make a drug. For a small generic drug company to survive, there is an intense need to focus on niche areas or to create supergenerics – which are improved versions of the original drug. So generic drug manufacturers have their work cut out for them, no one said making drugs (copies or not) was easy.