The Centre for Commercialization of Regenerative Medicine (CCRM) just finished hosting the 7th annual Business of Regenerative Medicine course here in Toronto, which saw many notable figures in the space come to weigh-in on a number of critical issues relevant to commercialization in the world of regenerative medicine and cell therapy (RM).
The subjects that rose to the top over the course of the three days, being repeated time and time again, were reimbursement and accelerated approval. It is clear that demonstrating value to payers will be absolutely essential for the successful uptake of RM technologies.
Activity in the RM space is picking up as clinical data continues to substantiate the use of live cells for myriad different disease areas and indications. Importantly, the global clinical pipeline shows a greater percentage of ongoing mid-stage RM studies versus early-stage, suggesting a bolus of commercial outputs could be on its way.
Pharma is becoming more comfortable working in the RM space, having identified the major bottlenecks and gaps in the industry, which is reflected by increased partnering activity. Accelerated approval regulatory pathways are also contributing to Pharma involvement, as a clearer and shorter paths to market are forged.
Early-stage biotechnology companies will have to be creative, at least in the short-term, and take advantage of Pharma’s willingness to partner to secure funds for development. Last quarter saw an all-time historical low for first-time venture capital (VC) financings in the biotech space.
The financing outlook for mid-to-late-stage companies is more promising, as these companies can still take advantage of the IPO (initial public offering) window that burst open in 2013, but this window is beginning to constrict.
Reimbursement and Accelerated Approval
There was particular excitement around accelerated approval regulatory pathways that are being developed to facilitate the commercialization of live cell technologies. As Gil Van Bokkelen of Athersys put it, we’re experiencing a “magical era of accelerated approval.” But in his mind this also begs the question as to the fate of cell therapy technologies upon approval, and what is being done to link accelerated approval with reimbursement.
This sentiment was echoed by cell therapy consultant Lee Buckler, who pointed to Korea as an example of a country that has been progressive with RM approval, having approved 16 therapies to date – the most of any country in the world – but has failed to support technologies through reimbursement. So far, none are paid for or exported out of the country.
Lee stressed the need to show effectiveness in the clinic, worried that if the necessary precautions are not taken we could wake up and find ourselves working in a “withering industry with a plethora of approvals.” It is evident that if these therapies are to gain market access, a dialogue between regulators and payers must be opened imminently.
None better to speak to reimbursement than Chris McCabe, a leading health economist based out of the University of Alberta. In his talk he laid out the path to de-risking reimbursement through value-engineered translation: completing therapeutic headroom analysis, value-based market access risk assessment, and efficient research and development design.
The impact of reimbursement on RM companies could not be illustrated more clearly than in the case of Organogenesis, which currently manufactures and markets the two dominant skin-substitute products for chronic wounds – Apligraf and Dermagraft. Geoff MacKay, CEO of Organogenesis, gave his first-hand, and frankly, heroic, account of corporate survival following a decision by the Centers for Medicare and Medicaid Services (CMS) late in 2013 to bundle payment of cellular products for wound healing with acellular products.
To get by, the company slashed $200M from its cost-structure, cut competition by purchasing the primary competing product Dermagraft from Shire, and put an end to its R&D program across multiple indications to shift its focus to being a manufacturer of products solely for wound healing.
Things are looking up for Organogenesis though; the 2015 draft wound healing guidelines were just released by the CMS and while bundling is still planned, bundle design handles cellular products much more favourably.
An interesting point of discussion on accelerated approval was the notion of progressive approval of cell therapies – essentially leap-frogging Phase 3 studies and launching a Phase 4 study post-marketing. Arnold Caplan, professor at Case Western University and founder of the event, argues this might be an effective means of getting cell therapies to the bedside more rapidly by approving them with only preliminary safety and efficacy data.
A precedent can be found with Japan, where the government has recently implemented a conditional approval system. Cell therapy developers are only required to have a single, albeit larger, Phase 1 study to get marketing approval. Remarkably, all cell therapies currently approved in Japan are entitled to reimbursement.
Manufacturing, Tools, and Logistics
Cost of goods in manufacturing cell therapies is typically high, primarily due to expensive growth factors required to drive differentiation of stem cells to specific cell types. Nick Timmins, Director of Product and Process Development at CCRM, gave an overview of some of the cost reduction efforts being pursued at the Centre, using natural killer (NK) cells as an example.
NK therapies for cancer are expected to have an all-in cost per patient of $100k to $150k. Through bioprocess optimization, he and his team were able to reduce the cost of consumables from $20k to ~$8k, by minimizing media, serum replacement, and growth factor requirements.
Bioprocess optimization must occur early in cell therapy development. Once a therapy’s protocol is locked in from a regulatory perspective, it is very difficult to go back and carry out this type of cost of goods reduction.
Dr. Timmins further explained some of the tools that will facilitate the efficient production of cell therapies, including analytical devices for timely measurements of process quality. Emerging tools for advanced cell manufacturing include in-line imaging, spectroscopy, and detection instruments for low abundance proteins. He urged us to think beyond scale-up and scale-out, and focus on yield.
Jessica Carmen, Business Development Manager in the Cell Therapy Contract Services division of Lonza, provided some keen insight into issues around the logistics of moving live cells. She believes that the clear-cut distinction in a RM business model should be dictated by patient-specific versus bulk cell therapies rather than by specific cell types.
Different therapies will have different requirements in terms of intake and shipping. Dr. Carmen says frozen-in and frozen-out is generally easy to manage; however, receiving cells fresh, and particularly having to ship cells fresh, comes with significant logistical challenges.
Patient-specific therapies have the greatest logistical and regulatory burden, and hence cost, as they must be tracked within a chain of custody. They are shipped fresh, which means they have a short shelf life. So, time is of the essence in moving these cellular products. Advances in logistics and the supply chain will be critical in driving down costs of patient-specific therapies.
Tissue Engineering and Drug Screening
It is clear that tissue engineering will play a significant role in the future of RM. While whole organ replacement is the panacea, this paradigm is decades from coming to fruition. However, there are some fascinating developments in the field that have applications in drug discovery, wound healing, and cosmetic testing.
This is especially the case with the advent of 3D printing, which has been adapted by the biotechnology industry for the printing of live cells. The progression has been from layers of cells to 3D constructs, and now vascularized, multicellular tissue-like constructs.
A company to watch in this space is Aspect Biosystems, which is out to create disruptive tissue engineering technologies, “on demand.” Sam Wadsworth, Co-Founder and Director of Biology, explained that organ replacement is the goal, but we must first focus on understanding the individual building blocks of the organ before we can pursue synthesizing whole organs. The company’s first product focus will be airway tissue followed by liver.
A more immediate use of these tissue constructs is in drug screening, which is evolving to use multicellular, 3D constructs as a, potentially, more predictive means to screen for toxicity during preclinical development. Between 1990 and 2010, there were 160 Phase 3 or post-market withdrawals due to toxicity issues.
Estimates for the all-in cost of developing a drug have ballooned to $4 billion (when accounting for development costs of alternate leads that didn’t make it into the clinic). Increasing the current success rate from 10-20 per cent would save a pharmaceutical company ~$1.5 billion in development costs. So, this is big business.
While screening for cardiac drugs presents a large market opportunity, targeting disease areas where animal models have failed to translate to humans is a smart business model. Dr. Wadsworth pointed out that airway fibrosis is a great example of this, with 100+ treatments that have proven successful in mice, but zero that have gone on to succeed in the clinic.
Reimbursement is everything. While accelerated approval will get RM developers to approval, ultimately they will need to demonstrate value to the patient and cost-effectiveness to payers. Without this, easing of regulatory burdens will do little to improve global health. Product and process development, and scale-up, will be essential for the industrialization of the cell therapy industry and cost of goods reduction, which will give a boost to cost-effectiveness. Logistics and a consistent, reliable, global supply chain for cellular products will help cement cell therapies as the next pillar in health care.
If you’re on Twitter and want a different type of recap from the course, search #RMBiz14 to read the live tweets or go to @ccrm_ca.