By Alexandre Bréant, Francis Turina-Malard and Bertrand Kleinmann, CEPTON Strategies

Pharma and Medtech companies are increasingly pushed to tie partnerships, driven by rising R&D costs, increasing bargaining power of purchasers, stronger regulatory constraints and the trend towards integrated care. Although Strategic Alliances seem long to initiate and complex to manage, their benefit-over-risk potential justify their increasing use. In this article, we review the basics of Strategic Alliances, describe their recent development in the healthcare industry, and give you some methodological keys to succeed in your Strategic Alliances.

What is a Strategic Alliance? 

Business relationships between companies cover a continuum from spot commercial contracts to full acquisitions. In a spot contract, the amount of shared information is minimal, so are companies’ respective influence and commitment. On the other side, acquiring a company offers full control to the buyer, but also engages it to bear all the risks. The engagement duration is unlimited, and resources used are maximal. In between, Strategic Alliances enable two companies to jointly invest in the development of a common project in line with their respective strategies. Such alliances last longer and require a stronger commitment than spot contracts but contrary to M&A operations, they have a predefined end-point (time duration, level of investment/return, etc.).

Figure 1: Strategic Alliances’ definition and characteristics

For a company, the main reason to form Strategic Alliances is to address growth opportunities that it could not address on its own, through sharing human, industrial or financial resources. The ASAP[1] claims that up to half of companies’ revenues are made from Strategic Alliances (a figure confirmed by a recent study from Columbia University: in a cohort of 1000 US public companies the share of revenues derived from alliances evolved from 5% in 1990 to 40% in 2010).

The Healthcare industry is the perfect example of an industry where companies need Strategic Alliances to grow: high research and development cost, high market-entry barriers, geographical specificities, need of large, highly-educated and well-implanted commercial teams to generate sales, etc.

A long-standing tradition of Strategic Alliances between Big Pharmas

For many decades, large pharmaceutical companies have been forming strategic partnerships between each other, or with small biotechnology companies, in order to increase their R&D productivity, expand their geographical footprint and/or share commercialization costs.

Increase R&D productivity

The difficulty, time and funds required to develop a new drug have skyrocketed in the last decades (~$2.5 billion and 10 years per drug in 2014[2]) due to increasingly complex diseases to treat (e.g. cancers), higher regulatory constraints and increased global competition. Consequently, Big Pharmas have been putting alliances at the heart of their R&D strategies. For instance, Abbvie has partnered with BMS through 3 collaboration programs, with Argenx in an up-to-$685m R&D deal and has joined the University of Chicago in a major research initiative. Abbvie also partnered in 2015 with Shanghai Pharmaceuticals to boost its clinical development pipeline in China.

Big Pharmas also intensively partner with young Biotechs to broaden their early stage portfolio and reduce risk of pipeline shortage through diversification. From Biotechs’ perspective, early stage alliances enhance their market value and provide access to Big Pharma expertise and infrastructure, which significantly reduces risk.

Enter a foreign market and share commercialization costs

Partnerships to develop sales in new geographies are also common in the Pharma industry, especially in quickly growing emergent markets as many barriers prevent foreign companies from entering these markets alone (regulatory approval, market access specificities, IP rights, infrastructure and commercial distribution network, understanding of local medical practices, etc). In 2014, Merck Serono and Lupin joined hands to tap several emerging markets: Brazil, Mexico, Indonesia, Eastern Europe. Lupin (Indian top 4 drug maker) develops and supplies finished products to Merck Serono, which remains the marketing authorization holder. Similarly, in 2017 Pfizer set up a JV with Zhejiang Hisun, a leading Chinese pharmaceutical company. Pfizer invested $250m in the JV which aims at developing, manufacturing and commercializing off-patent drugs in China. As tax law favors drugs manufactured in China, partnering with a local API manufacturer enabled Pfizer to cost-effectively penetrate this major market.

In Western markets, many co-commercialization agreements exist between Big Pharmas to reduce fixed costs. For instance, Amgen (in USA) and Pfizer (in the rest of the world) co-market Enbrel ($8.9b in 2016), while J&J and Merck have a similar partnership for Remicade ($8.2b in 2016).

A recent acceleration of Strategic Alliances activity triggered by the development of integrated care models and the rising importance of digital solutions

The last decade has seen the emergence of several new concepts (integrated care, personalized medicine, remote monitoring, telemedicine, etc.) that are bringing a fresh new paradigm in the management of healthcare. To transform these concepts into marketed solutions, Pharmaceutical companies need to acquire new expertise out of their traditional competency area. Strategic Alliances’ activity between Biopharmaceutical companies and Medtech/Tech companies (which have knowledge on Digital/Hardware and User Experience) will be needed to bring to market innovative end-to-end services.

Need for integrated care solutions

Pharmaceutical companies need to go “beyond the pill” and provide fully integrated solutions to healthcare centers, in which the medical device/diagnostic platform plays an increasingly important role. These integrated offers facilitate care delivery for physicians and centers, focus on patients Compliance/Quality of Life. For instance, Amgen France launched in 2017 a partnership in colorectal cancer with Biocartis. Biocartis develops Idylla, a Point-of-Care molecular diagnostics platform that provides physicians with actionable genetic biomarker data in 24 hours. This strategic partnership enables Amgen to propose a full offer to physicians who can test their colorectal cancerpatients and prescribe Amgen’s targeted therapy Vectibix to patients who have the appropriate genetic mutation.

Figure 2: Example of a joint Pharma/Medtech offer in an integrated care model

Chronic diseases monitoring

Long-term, remote monitoring of highly prevalent chronic diseases (cancers, diabetes, cardiology disorders, rheumatism, etc.) is becoming a central matter in today’s healthcare systems.

In oncology, drug makers have been increasingly developing oral therapies to satisfy patients and centers’ demand (1.4m cancer patients treated orally in France in 2017, i.e 30%.). This new model of care brings two major difficulties: poor patient’s compliance and complex management of serious side-effects, hence the need to develop smart and user-friendly digital monitoring solutions. Thess (Stiplastics), a mobile connected device able to monitor patients’ compliance and side effects is the typical device that adds strong value to an oral oncology therapy.

In diabetes, a JV – Onduo – was created in 2016 between Sanofi and Google Life Sciences to enable continuous monitoring of patients glycemia. Onduo aimed at combining Google’s expertise in miniaturized electronics, analytics, and consumer software with Sanofi’s diabetes program. In the terms, Google provided products and services worth $248 million while Sanofi fueled the JV with the same amount in cash. With such investments, companies were able to combine devices, software, medicine, and professional care to enable simple and intelligent disease management.

In the cardiovascular space, wearable ECGs are becoming commoditized. Apple’s latest watch includes an FDA-cleared ECG capable of detecting abnormal heart rhythms, which makes it a potential monitoring device for highly prevalent diseases like Atrial Fibrillation (6,6m patients in the US and 7,5m in the EU5 – 2016 data). Such wearable devices should trigger the interest of companies marketing cardiovascular drugs such as anticoagulants, the standard of care in Atrial Fibrillation. Considering the cost of anticoagulants to healthcare systems (the top 2 drugs, Eliquis and Xarelto, respectively generated $7.4b and $6.5b in 2017), governmental payers will be prone to promote such solutions and use the generated data to regularly evaluate drug efficacy and re-assess reimbursement levels.

Need for new competencies

Pharma companies also partner to acquire new competencies, like for instance data science experts, needed to develop solutions based on “artificial intelligence” (i.e. the analysis of big data set with modern algorithms). Because critical data on drugs and/or patients is at the heart of any AI-based solution, simple commercial contracts are too loose and risky to frame Pharma-AI collaborations. Acquiring an AI company is also risky as it could quickly become an empty shell. Hence, Strategic Alliances are ideally suited to enable Pharma and AI companies to co-develop and co-market solutions based on the analysis of large data sets to derive valuable insights on the safety and efficacy of a drug.

On the other side, Tech companies investing in healthcare opportunities may not be fully versed in navigating the complex regulatory landscape, a competency Pharma companies master. Moreover, Tech companies often have a consumer goods mindset, and are not used to targeting the specific customers pool constituted by physicians and healthcare centers. Pharma firms, with their extensive and knowledgeable salesforce that has formed long-standing relationships with physicians and hospitals can here provide highly valuable shortcuts to their Tech partner.

An increasing number of business alliances, but still with variable success 

Despite the rising number and strategic importance of alliances between Pharma, Biotech, Medtech and “pure” Tech companies, recent surveys suggest a very high failure rate – more than half, according to the ASAP. Indeed, many alliances fall short of achieving maximum value for the partners involved. From our experience, the failure of alliances can be attributed to several factors:

• Assumption of success: partners usually do not anticipate failure, though it should be defined and planned for, so corrective actions can be taken readily to inverse the situation. Therefore, if the alliance must be dissolved, the damage (brand image, finance, etc.) can be minimized.

• Unclear objectives: alliances must be structured to meet clear goals. Defining both partners’ objectives and communicating them throughout each organization is essential.

• Lack of mutual understanding: understanding the partner, its own differences, its operating market structure (especially in the case of alliances between Pharma and Medtech/diagnostic), and its business philosophy is critical to the success of any alliance.

Your survival kit when engaging in a strategic partnership in the healthcare industry

Most difficulties met by partners after a few years usually come from divergent interests and/or a perceived inequity in the distribution of responsibilities, investments, risks or benefits. In most cases, these issues could have been anticipated earlier, when the alliance was designed and negotiated. As there is no “one size fits all” in strategic alliances, sound preparation coupled with continuous management is the only way to successfully drive an alliance in the long run.

At CEPTON, we have developed a rigorous methodology to design and drive Strategic Alliances. This methodology is presented hereafter:

1.    Account for all the alliance constitutive elements from the start

In most cases, partnership discussions quickly focus on the legal translation of governance and benefit sharing matters, instead of considering all the parameters of the partnership from the very beginning:

–     The project: the object of the partnership (e.g. new product development) must be clearly defined, as well as its initial perimeter, evolution conditions and time duration. Most importantly, each company must clearly define their vision of the future alliance independently of their own interest (financial, social, societal, image, etc.):

“When someone from Lilly sits at the table, he is representing the alliance, not Lilly. This is crucial to understand.”–Director of Alliance Management at Eli Lilly

Figure 3: The 4 pillars of an Alliance

–     The business and financial cases: What is our project business potential? What are the financial resources required to meet our objectives? How much will each company contribute in terms of human resources, cash, immaterial knowledge, IP, equipment? In addition to answering these questions, partners should define clear principles regarding the alliance’s costs and revenues transparency.

–     The alliance’s management and governance must be defined during the negotiation process. Both operational and executive management levels should be addressed for the entire duration of the partnership. The following elements should be addressed in priority:

Our experience shows that operational and strategic management levels should be clearly separated to maintain the alliance’s dynamics in the long run.

“Project management should not be confounded with alliance management. The alliance manager is responsible for communication, governance, culture, problem solving, conflict resolution, etc.” –Big Pharma executive

–     Performance monitoring mechanisms and exit conditions, although often deemed secondary, are essential to be planned. By doing so, partners prevent themselves from uncontrollable value destruction (brand image, finance, regulatory, etc.) in case the Alliance does not fly as expected.

2.    Follow a structured negotiation process

Embarking for a long-term partnership with another company, or even creating a JV, is a sensitive process which requires a lot of expertise: strategy, operations, finance, legal, human resources. Each partner should integrate the constraints associated with a share of governance, as well as the disclosure of sensitive information without which the project at the heart of the alliance could not be well defined. Our experience shows that a 3-phase process is required to account for the partners various points of view and to build solid foundation for the Strategic Alliance:

Figure 4: A three-Phase approach to build a strategic alliance

In the next decade, alliances will play an ever-more important role in Pharma and Medtech companies’ growth strategy

As we look to the future, we expect companies playing in the healthcare industry to continue to develop more and more Strategic Alliances. This trend to partnership acceleration is driven by a shift in care delivery paradigm requiring increasingly complex knowledge, skills and a wide range of services. In this context, Cepton will continue to provide decisive support to companies in their definition of strategic partnerships.

Information and points of view disclosed in this article are based on Cepton’s knowledge and on the following sources: Yoon (2017): “Inter-firm partnerships in the pharmaceutical industry” ; Lam (2004): “Why Alliances Fail?” ; Dr. Madden-Smith (2016): “The role of alliances in modern drug development” ; Bianchi (2011): “Open Innovation in the bio-pharmaceutical industry” ; Gottinger (2008): “Strategic Alliances in Global Biotech industries” ; Velis (2013): “Joint Ventures and Strategic Alliances: an alternative to M&A”

_______________________________________________

[1] Association of Strategic Alliances Professionals

[2] DiMasi study in 2014, and Mullin study in 2014

By Kristine Wong and Marc-Olivier Bévierre, CEPTON Strategies

Until quite recently, radiopharmaceuticals have been confined to a very limited number of application in healthcare. However, in the last few years, medical research teams have started to unlock the huge potential of these compounds, both in the diagnostic and the therapeutic fields. Nuclear medicine, as it is also called, is becoming one of the most powerful tools in precision medicine.

What is a radiopharmaceutical?

A radiopharmaceutical (or radiotracer) is a drug that consists of a radioisotope bonded to a pharmaceutical molecule. The pharmaceutical molecule conveys the radioisotope to specifically targeted organs, tissues or cells. It can be used in clinic for diagnosis, monitoring and therapy, or in research.

Out of a range of radioactive decays, there are three types of radioactive particles that are useful in nuclear medicine. For therapeutic purposes, the beta particle emission is used, and for diagnostic purposes, positron emissionand gamma rays are used.

Fig. 1 – Main radioactive decays adapted from Association of Imaging Producers & Equipment Suppliers (AIPES)

PET scans have a higher precision than other imaging modalities, improving disease diagnosis, staging and monitoring, thus allowing the physician to better plan the course of treatment for patients

For diagnostic purposes, Positron Emission Tomography (PET) scans use radiopharmaceuticals which allow the imaging of organ function and disease states with a higher precision than other imaging modalities such as Computed Tomography (CT), Magnetic Resonance Imaging (MRI) and Ultrasonography (US). Radiopharmaceuticals permit the mapping of physiological function and metabolic activity of malfunctioning organs, as well as, the diagnosis of common cancers. With the precision of PET scans, these results are becoming the standard of care for cancer diagnosis.
For monitoring purposes, there is increasing use of a radiopharmaceutical known as Fluorine-18 (18F) Fludeoxyglucose (FDG). FDG-18 is used in PET scans for both disease staging and treatment response assessment. With newer scanning techniques that have greater sensitivity and specificity, physicians can now conduct pre-treatment staging. These pre-treatment staging results can change therapeutic intent from curative to palliative, and place patients more accurately in the stages of their disease. Furthermore, simple quantitative results of glucose metabolism detected by the PET scan, can complement visual interpretation of the patient’s response to a drug. This can be used to determine whether to continue a treatment or to switch to another one.

With an increasing availability of a wide range of radiopharmaceuticals to adapt to physicians’ needs, the use of radiopharmaceuticals is extensive and demands for such non-invasive techniques are on the rise.

Fig. 2 – Eight men with widespread metastatic prostate cancer (red spots on image mark presence of tumours) who underwent treatment with radiopharmaceuticals. Each set of image shows the evident reduction of tumours before and after treatment.

Precision medicine with radiopharmaceuticals allow targeted therapies with lower side effects; Recent acquisition trends in the market push for cancer therapy using radiopharmaceuticals

For therapeutic purposes, radiopharmaceuticals allow precision medicine where the treatment modality is tailored to a specific patient’s disease. For instance, to destroy cancerous cells, short-range particles like beta particle emissions are used to release a significant amount of energy resulting in tumour cell destruction. As damage is targeted, it reduces serious systemic side effects seen with chemotherapy. This property of radiopharmaceuticals can be further applied on pain treatment in palliative care for bone cancer or arthritis.

Current trends in therapy with radiopharmaceuticals involve Peptide Receptor Radionuclide Therapy (PRRT) and Antibody Radionuclide Conjugate (ARC). PRRT targets highly expressed tumour receptors and is relatively safe due to rapid tissue penetration and body clearance. It has also low antigenicity and is convenient to manufacture. On the other hand, ARC targets highly expressed cancer cells surface antigens like CD20 and CD37 in Non-Hodgkin Lymphomas. Novartis’ recent acquisition of Advanced Accelerator Applications (AAA) for $3.9 billion USD for Lutathera (Lu-177), a radionuclide therapy for neuroendocrine tumours, affirms these trends.

Radiopharmaceuticals are very useful in determining potential drug candidates which would succeed in Clinical Trials, thus accelerating the process of drug approval

Although only a small portion of the radiopharmaceutical market, research is starting to embrace the abilities of PET scans too. Radiopharmaceuticals are increasingly used to improve efficiency and reduce the lead time of drug development. By using radio-imaging in Phase 0 (early phase) of a clinical trial, it gives a visualization of in vivo bio-distribution of the new drug in patients, thus realizing if the new drug hits required target organs. Without the need of invasive sampling, trials can easily identify and eliminate unlikely drug candidates and only proceed to the next phase with promising ones.

With essential pharmacology data collected with radiopharmaceuticals in Phase 0, Phase I and II clinical trials could be combined into a Phase I/II trial. Successful patients in Phase 0 could be once again recruited, reducing number of new patients recruited and time needed for tests. Most impactfully, with a very well-selected group of patients in Phase I/II, the new drug would probably yield a highly positive result in this specific population. The new drug could then be put through an Expedited Approval (in US), thus skipping a full Phase III trial.

Sources

1. Recommendations for the use of PET and PET–CT for radiotherapy planning in research projects, Br J Radiol, 2012
2. Total-Body PET: Maximizing Sensitivity to Create New Opportunities for Clinical Research and Patient Care, J Nucl Med, 2018

By Marion Laguette and Marc-Olivier Bévierre, CEPTON Strategies

Several months after the FDA, the EMA has now approved Kymriah and Yescarta from Novartis and Kite/Gilead. There is no doubt that, from a medical perspective, these therapies are a revolution in cancer treatment. However, at such a cost per patient, what is their future on the European market?

Oncology represents more than 50% of the current R&D pipeline in cell and gene therapies with about 500 ongoing trials worldwide in 2017. By using genetic redirection of patient’s own immune system to kill its tumour cells, CAR-Ts appear as a revolutionary technology in cancer treatment.

CAR-Ts have been first developed for treating haematological malignancies, where tumour cells are easily accessible (compared to solid tumours). Clinical proof-of-concept with autologous CAR-T has been done on CD19 wearing tumour cancers. Autologous treatments are the most advanced: they are built from the patient’s own cells, contrary to allogeneic therapies that are built as off-the-shelf treatments from a unique healthy donor. Several autologous productsare expected to reach the market soon. Allogeneic therapies still need to get their proof-of-concept done but will offer a much more cost-effective solution.

The arrival of autologous CAR-Ts for haematological malignancies on the European market

Since the approval of Novartis’ Kymriah and Kite’s Yescarta by the FDA in 2017 for the treatment of haematological malignancies, both companies have started to work out with the US Government possible ways to address the issues of payment of these treatments and creation of a suitable logistic chain for manufacturing and supplying these products.

Kymriah and Yescarta have received their European marketing authorization in August 2018. Several other CAR-T products will follow, developed, among others, by Celgene (that recently acquired Juno Therapeutics, and owns licence for BlueBird Bio products), Ziopharm, Celyad, and Janssen (that owns licence for commercialization of the Legend Biotech product in the US and Europe, the first CAR-T that have been under regulatory review in Asia). To ensure these revolutionary treatments are available to patients needing them, Europe must answer several strategic questions:

• How will the complex commercial scale manufacturing and delivery of these treatments be organised?
• How much are European National Health Systems be prepared to put on the table for CAR-T therapies? And what will they demand in return?

Autologous CAR-Ts will be produced via a centralized manufacturing model in the next few years

Logistics is critical for autologous CAR-T therapies because the patient is part of the manufacturing chain. Time between collection of T-cells and administration of CAR-T cells is critical and must be reduced as possible. Indeed, patients eligible to these CAR-T treatments have a short life expectancy (relapsed/refractory ALL or NHL for currently approved Kymriah and Yescarta). Their production and distribution require a complex organization between several players. Players include hospital teams(collection and administration), vector (mostly virus) providers and CAR-T manufacturers(transduction of T-cells).

Figure 1: Manufacturing process for autologous CAR-T cells

In the US, Kite and Novartis developed the same model for delivering their treatments: a multicentric collection and administration of products in a limited number of certified centers and transduction in a unique manufacturing site located in the US (Morris Plain for Novartis, and El Segundo for Kite Pharma) with virus produced externally. This model was developed for clinical stage production and need to be optimized for supplying a growing demand. 2 solutions are currently under investigation: either a Point-of-Care approach with a bedside production of CAR-Ts in dedicated centers or automation and optimization of the chain in a centralized plant.

With the current model, and for delivering their treatments in Europe, the two companies must adapt their logistic chain: manufacturing CAR-Ts on a different continent would be unsustainable at commercial scale considering costs and time constraints. A European manufacturing site would be sufficient to supply all European countries: an in-house plant or a CMO could do the job. Kitehas made the choice to build a plant near Amsterdam airport (the Netherland) to supply the European market, and Novartis announced the enlargement of its European plant in Stein to product CAR-Ts, in addition to an agreement with the French CMO CellForCure.

European CMOs have a growing role to play in CAR-T development

CellForCure has already played a role as a CMO in the CAR-T field with the manufacturing of Cellectis allogeneic CAR-T cells for their trials (in addition to the Italian CMO MolMed). The role of such European CMOs will further increase with the growing demand for CAR-Ts. Expertise in autologous and allogeneic ex vivogene therapy is already present in Europe. For instance, PharmaCellalready have experience with autologous and allogeneic ex vivogene therapy manufacturing for Orchard Therapeutics and Lion Biotech. Several promising CMOs are re-orienting to propose CAR-T lines and some CMOs have already bet on allogeneic CAR-Ts, the future step of CAR-Ts, such as MaSTherCell which signed agreements with Servier and CRISPR Therapeutics for production of their allogeneic CAR-Ts in development.

In addition to transduction and cell production expertise, virus suppliers emerge as key players due to a worldwide high demand and shortage in virus supply. Virus production does not require to be perfomed locally because virus can be frozen and shipped everywhere in the world. Novartis has for instance used virus produced by Oxford Biomedica(UK) for its US product. Here again, numerous European CMOs have developed expertise in virus manufacturing, such as YposKesi, MolMed, FinVector and Novasepand offer an alternative source of virus for CAR-T manufacturing.

CAR-Ts must be delivered in expert centers – an expertise measured with specific accreditation

Commercial scale production remains the first challenge for CAR-T supply, however CAR-Ts also require to be delivered in a highly controlled environment.

In the US, Novartis and Kite had selected a limited number of centers for delivering their treatments. They wanted to insure these centers were trained to manage side effects of CAR-Ts, that may be fatal for the patient (Cytokine Release Syndrome and Neurological Toxicities). In addition, because CAR-T are innovative life-time modifying treatments, rigorous collection of patient’s data must be performed for post-authorisation follow-up. This argument is also in favour of precisely selecting delivery centers.

One criterium in the US was the obtention of FACT accreditation (Foundation for the Accreditation of Cellular Therapy). By applying this selection process to Europe, the equivalent FACT-JACIE(Joint Accreditation Committee of ISCT-Europe and EBMT) accreditation appears as a first criterium of choice for hospital centers. The EMA CAR-T cells registries workshop organized in February 2018 between clinical, regulatory and development experts highlighted this as a fact of importance. Considering the selection, the number of hospitals providing autologous CAR-Ts will be restricted to a small proportion of expert centres, to where patients will have to travel to get treated.

Funding CAR-Ts: an exciting challenge for Europe

Besides high constraints in supply chain and delivery, CAR-Ts are also very expensive (~$400k public price per treatment in the US). Despite their therapeutic effect, it is unlikely that they will be used beyond specific very small population until prices decrease. Even in the US, where a pay-for-performance scheme seems to be adopted, the situation is not clear. There is still some conflict with official classification codes from the CMS (Centers for Medicare & Medicaid Services) that are not reflecting the total costs of the procedure that require ancillary cares and a question of who-is-going-to-pay.

The public prices in Europe are not known yet but cannot be dramatically different from the US prices. It should not be taken for granted, however, that European payors will accept the US prices. The future of CAR-Ts in Europe will strongly depend on what type of deals pharmaceutical companies will be able to negotiate with authorities. There is no doubt that a lot of creativity and long-term thinking will be needed if CAR-Ts are to be used on a significant scale in Europe.

The real change, and potential long-term solution, could be the development of allogeneic CAR-Ts, that should be available at a much lower price. This technology, if it proves effective in clinic, may actually be the real start for CAR-Ts.

To improve access to care, reduce hospitalizations and lower the use of acute emergency services, the European countries’ healthcare authorities are pushing for the routine implementation of telemedicine. Notably, French authorities recently entered negotiations with the labor unions of practitioners with the objective to set the rules and pricing for Teleconsultation and Tele-expertise.

What is telemedicine?

Telemedicine allows healthcare professionals to remotely evaluate, diagnose and treat patients with the help of Information Technologies. Initially thought as a way to treat remote patients with minimal or no access to care, Telemedicine is more and more perceived as a tool for routine, convenient medical care by both patients and healthcare professionals. In practice, the conception of telemedicine solutions requires expertise from several industry segments:

• IT infrastructure: network, communications protocols, data storage, etc.
• Hardware: connected objects, medical devices, etc.
• Software: applications, web platform, algorithms for data analysis and visualization, etc.

What are the benefits?

Telemedicine can allow older and disabled patients to live at home longer and avoid the need to move into skilled nursing facilities. It can also reduce the number of hospitalizations, and readmissions, thus reducing hospital costs. It increases access to specialists for remote patients. Telemedicine thus improves the quality of life of patients, eases healthcare professionals work, cuts down costs for governments and insurance companies and limit out-of-pocket expenses for patients.What are the different segments of Telemedicine?

There are 4 main segments of Telemedicine corresponding to different uses as explained in figure 1.

HCPs: Healthcare professionals

What are the the underlying technologies?

These four segments of Telemedicine are based on three IT protocols: Store-and-forward, interactive and remote monitoring, as explained in figure 2.

What are the main telemedicine initiatives in the 5 major European countries?

• United Kingdom: already well established public and private services

In the UK, the NHS has clearly recognized Telemedicine as a priority for many years. First, authorities massively invested in Telemedicine through various pilot projects: 3millionlives campaign, All-Wales Telemedicine Development Program, NHS England Call to Action, Whole Systems Demonstrator Project (one of the largest randomized trial aimed at evaluating the effectiveness and cost-effectiveness of telemedicine), etc. These initiatives mainly targeted heart failure, diabetes and Chronic Obstructive Pulmonary Disease. Having learned from these initiatives, the NHS then launched “GP at hand”, a service offering reimbursed consultations to patients all across the UK. Private players are also well positioned on the segment, with companies such as Push Doctor and Babylon Health proposing well designed, easy-to-use platforms for on-demand teleconsultations.

• France: telemedicine practice about to strike up

French authorities started to seriously address the telemedicine question in 2014 with the “Digital Health” national plan, which targeted four therapeutic areas (diabetes, kidney failure, heart failure and hypertension) and aimed for 1 million patients managed with telemedicine in 2020. Recently, France went a step further as the 2018 healthcare budget law included teleconsultation and tele-expertise as recognized medical acts, with reimbursement levels likely to reach traditional consultations levels. Moreover, France benefits from a highly dynamic entrepreneurial activity with many startups developing solutions and devices in partnership with regional healthcare authorities (e.g. Applichimio) and hospitals. Though, these players have not yet been able to raise enough funds to widely deploy their solutions. Industrial players can benefit from the support of the French Society of Telemedicine which promotes usage towards patients, healthcare professionals and treatment centers.

• Germany: a technologically advanced healthcare system but limited telemedicine initiatives

Germany has one of the most technologically advanced healthcare infrastructures in Europe. The e-health card (eGK, launched in 2011), widely used to manage patients and reduce healthcare expenditures, is based on an IT infrastructure which could integrate Telemedicine applications in the near future. In this purpose, a criteria catalogue has recently been established to provide guidance on what telemedicine solutions should demonstrate to obtain reimbursement and be supported by the infrastructure. But up to now, Telemedicine usage has been limited to pilot projects in Bayern, Nurnberg and Sachsen (e.g. Diabetiva) and no standardized reimbursement code currently exists.

• Italy and Spain: an interest in telemedicine at the local level but limited national initiatives

In Spain and Italy, several actions are being taken at the  local and regional level. In Italy, initiatives (mainly in heart failure) are supported by regional health authorities while in Spain, recognized treatment centers with solid financial resources, such as the Institute Carlos III, are pushing for the development of technologies and their assessment in clinical trials. In both countries, although technology assessment platform and guidelines (“Pact for Digital Health” and “Horizon scanning” in Italy, “Platform of Innovation in Telehealth Systems” in Spain) are being created, the lack of national investments to fund widescale initiatives currently limits the development of Telemedicine.

What are the main barriers to the widespread adoption of Telemedicine?

Despite clear benefits and numerous initiatives in major European countries, several barriers stand in behind the widespread adoption of Telemedicine.

 Legislation

While national legislations increasingly recognize Telemedicine as a medical practice, significant limitations still apply. At the national level, HCPs often need to register and get an authorization to perform Telemedicine. International web-based Telemedicine platforms also need to assess whether their registered doctors can practice out of the country where the obtained their diploma. In Europe, the EU Directive on patient’s rights in cross-border healthcare eases this process: the HCP only needs to comply with the requirements of his Member State and does not need a license in the patient’s country. Yet, this barrier exists with non-European countries. As a comparison, in the US, the policies governing Telemedicine vary widely across the country.  Some states allow cross-border delivery of healthcare via Telemedicine, while others still ban it entirely.

If a patient can be treated by any doctor within the EU, the regulatory frameworks for HCPs and the definition of what constitutes a medical act differ between Member States laws. Other legal barriers are being currently discussed such as requiring a first face-to-face visit, asking for a written or verbal consent from the patient for any Telemedicine procedure each time, particularly concerning Tele expertise.

Pricing & reimbursement

The reimbursement of Telemedicine is not yet fully democratized in developed countries compared to traditional medical acts. While negotiations are ongoing in France regarding the pricing of Telemedicine, the reimbursement of Teleconsultations and Tele expertise by social security is currently limited to specific populations: chronic and rare diseases patients, and patients in underserved rural areas, retirement homes or medical-social residences. For privately insured patients, although many Teleconsultation platforms (e.g. in France:Medaviz, MédecinDirect, Medicitus, Axa Assistance, MesDocteurs) have already obtained reimbursement of their services from insurers (20M patients concerned in France) without restrictions, most patients are not aware of it due to a lack of communication.

In the US the coverage and reimbursement of Telemedicine services, when existing, is also often limited to patients residing in underserved rural areas.

Equipment and training

Beyond basic audio-video communication procedures, Telemedicine requires the use of sophisticated equipment: the systems should secure data collection, guarantee patients’ data privacy as well as ensure the quality of clinical data transmitted. Both HCPs and patient need to be trained on the equipment. In a context of increasing healthcare spending (ageing population, increasing access to care…) and tight budgets and even tough Telemedicine is supposed to decrease healthcare costs overall, the initial investment to equip all healthcare facilities and patients’ homes will be extensive. Furthermore, technical and organizational alignment of hospitals’ systems is crucial and the various Telemedicine devices and solutions need to be interoperable to enable massive usage across the value chain.

Conclusion: a nascent market ripe for massive adoption

As always in the healthcare industry, it takes much more time for innovations to be adopted than in other industrial or consumer markets. But European countries have a solid case for Telemedicine. In all major countries, pilot projects and clinical trials have demonstrated the medical efficacy and cost-effectiveness of Telemedicine. Industrial players are increasingly investing in the field and many startups managed by tech veterans, used to short innovation cycles, are quickly growing and releasing their solutions. Although legal, financial and educational barriers still prevent the massive adoption of telemedicine, there is no doubt the new generation of patients and healthcare professionals, used to on-demand services, will embrace the Telemedicine revolution. European governments, eager to find ways to reduce their healthcare expenditures, have already started to lay the foundation of Telemedicine-based healthcare systems and will continue to push in this direction.

In my previous article, I outlined the challenge of biomanufacturing for gene therapy [1]. Now that treatments have reached the market, fixation of prices will then drive the future development of these treatments. Following the recent craze for gene therapy, a new wave of innovative biotechs are arriving, based on recent advances in gene editing.

Gene therapy is revolutionary. But current practices have their limits.

The two main currently adopted strategies are in vivo delivery of a transgene with AAV, or ex vivo modification of autologous cells with LV.

In the first case, AAV does not integrate transgene into the patient’s DNA. The strand after cell division is then lost. In the second case, Lentivirus integrates transgene into the patient’s DNA. Even if the integration site profile of lentivirus is safer than retroviral vector’s one (its predecessor), the integration is still random, preventing its safe use for in vivo therapies.

It is then difficult with current gene therapies to combine in vivo treatment with integration into highly dividing cells. Some companies try to target, with in vivotherapies, the liver, a regenerative organ with dividing cells. For example: Vivet Therapeutics who targeting Wilson’s disease, or Genethon and Audentes Therapeutics who are both developing Crigler-Najjar treatments. Between young patients who have a small liver requiring few viruses but a growing liver which may lose the transgene and adults who have a large liver requiring more product and therefore meaning higher production costs, they must find the optimal moment to treat the patient.

In both cases, gene therapy consists of adding DNA strands to counter the gene mutation of the patient: it does not eliminate the deficient gene part. This process limits the number of pathologies for which gene therapy can be applied to, to the ones where enabling a certain level of protein production is enough for giving back functionality to the patient’s cells.

These are the reasons why gene editing therapy is the next step of this revolution.

The main advantage of gene editing is its capacity to replace defective DNA, enabling to increase the number of pathologies that could be treated (not restricted to protein deficiencies). Furthermore, gene editing is targeted and enables DNA modification/integration at a unique site, consequently avoiding random insertion properties of LV delivery but benefiting from definitive insertion into cells, even after division and independently of the delivery system used.

Because of these properties, 3 strategic approaches arise among Biotech companies.

The first approach is autologous ex vivo treatment: it is replacing and improving the current transgene-delivered-by-LV method. US based CRISPR Therapeutics and Editas Medicines are both using CRISPR technology to develop such treatments for Beta-Thalassemia and sickle cell disease. They are also both invested in new generation of gene edited immune-therapies (CAR-T).

European biotechs are more focused on another aspect of gene editing possibilities. As gene editing enables to delete and replace, some companies such as Belgian Celyad or French Cellectis, are now using gene editing to create allogeneic immune-therapies. This is the second strategy. Using TALENs technology, Cellectis is pushing CAR-T therapies to the next stage: a stage where there is no need for the patient’s own cell for the therapy, where the “universal” TCR-deficient CAR-T cells are stored “off-the-shelf” and already prepared for instillation of the treatment to the patient.

Finally, the last approach, which was first tested in human in November 2017 by Sangamo Therapeutics, is to directly perform the genetic engineering in vivo. Sangamo used AAV delivered ZFNs editing technology to treat a MPSII patient. Following that first trial, their promising gene editing treatment received recommendation from EMA for Orphan designation in Europe in December 2017. In vivo gene editing therapies face the same biomanufacturing challenge as gene therapies, requiring high level of product delivered to the patient cells with the help of viruses [1].

Pharmaceutical companies have started to pave the way for gene editing.

Pfizer started investing in gene editing in 2014 by partnering with the French Cellectis, for its allogeneic UCART19 project, a partnership to which Servier joined in the same year. One year after, Bayer and CRISPR Therapeutics created a joint venture Casebia Therapeutics for development. All these big pharmaceutical companies have starting to get a foothold in gene editing.

Swiss pharmaceutical company Novartis understood the trend to gene editing well. After its CAR-T therapy (Kymriah) was approved in the US this year, Novartis marked its presence in the field of gene therapy with ex vivo autologous gene therapy. To extend its product portfolio, Novartis also started collaborating with American biotechs Caribou Biosciences and Intellia Therapeutics for the development of ex vivoautologous gene editing therapies, managed by CRISPR technology. In addition, in May 2017, Novartis negotiated non-exclusive license for Celyad allogeneic CAR-T cells patents entering into the allogeneic market. In November 2017, Novartis also announced its collaboration with Homology Medicines for developing in vivo gene editing therapy for sickle cell anemia, via the use of AAV mediated gene editing by directed homologous recombination (AMEnDR™). Novartis is now combining gene therapy and the three different gene editing approaches described above to strengthen its position on emerging technologies for rare diseases.

[1] Gene Therapy: The Challenge of Biomanufacturing. Cepton Strategies Nov 2017

Managed Access Programs (MAPs) provide patients with anticipated access to drugs before their full-fledged commercialization. As often seen in Europe, the situation is complex: on one hand, MAPs can refer to several different schemes within a country, on the other hand MAPs are regulated at country level, with almost as many situations as there are countries. Yet, MAPs are an integral part of a successful market entry strategy for Europe. How can you maximize your chances to implement a successful MAP that will help the patients in need and speed up your adoption by the medical community?

What are MAPs and why are they necessary?

While market authorization can now be granted at a European Level, “Pricing and Reimbursement” are still the prerogative of each Member State: in some countries, a drug can fall into the paradoxical state where it is approved and yet cannot be prescribed, for lack of reimbursement. To mitigate this problem, Managed Access Programs have emerged in most European countries.

MAPs are programs designed to accelerate patient access to new, efficacious drugs, in an ethical, compliant, and controlled way until they become fully marketed (approved, with price and reimbursement schemes in place). MAPs bridge the gaps that exist between clinical trials and commercially available drugs: they are usually set up once phase III results are known, and the marketing authorization has been filed, i.e. even before the marketing authorization is granted.

For the sake of clarity, MAPs in this article will be considered to be mostly Compassionate Use Programs, but be aware that the term “MAP” sometimes has a broader definition and could be used interchangeably with – or include – programs such as Early Access Programs, conditional approval, PriMe (Priority Medicine scheme) …

Even within a given country, MAPs could either concern individual patients or groups of patients. The first case is referred to as NPP for Named Patient Program, the second as Cohort Programs.

Who will benefit from a MAP?

The patients

Getting access to effective medicine when no other option is available: the benefit to the patient is obvious.

One way for patients to receive treatment early is to be included into clinical trials (e.g. Open label extension after the randomized phase of the pivotal trial), but not all patients are eligible to participate in the trials, which are protocol-driven and have stringent inclusion and exclusion criteria. Thus, MAPs are often the only option for patients who cannot wait for the drug to be commercialized and cannot enter clinical trials.

Furthermore, MAPs are validated by local authorities and the drug can only be distributed through well defined channels, reducing the risk for counterfeit drugs.

The physicians

For physicians, MAPs are extremely useful as well, because on top of the direct benefit it provides to their patients, it also allows them to better understand the drug and have their first hands on experience with a new drug.

It can also please the early adopters within the physician population, who, once convinced of the benefits the drugs bring to patients, can become the best brand advocates, whether to recommend to their colleagues or to intervene as experts during pricing and reimbursement negotiations.

The payers

Most compassionate use programs require the drug to be provided free of charge by the market authorization holder (MAH). Some named patient programs and the Autorisation Temporaire d’Utilisation in France (ATU, ‘Temporary Authorization for Use’) are the exception to the rule: the healthcare system would pay for the drug in this case.

The MAH still takes care of the pharmacovigilance (PV): this provides safety data from a larger population sample in a more “real-life” setting, which helps better assess the safety, tolerability, and Quality of Life aspect of the reimbursement and pricing negotiations.

The market authorization holder

Despite having to provide the drug for free in most cases and assuming the costs of PV, some associated benefits have been noticed as MAPs became more common:

• Patient-centric company image: MAPs show the goodwill of the company towards patient needs, which helps strengthen the ties between the MAH, the medical community (both KOL and community prescribers) and the patient advocacy groups. Furthermore, it increases the likelihood that patients try the treatment offered through the MAP instead of others.
• Spontaneous awareness: More physicians and patients will experience the benefits associated with the treatment, which will likely fuel discussion among patient groups. This increased spontaneous (i.e. non-promoted) awareness will more likely speed up the widespread medical adoption once the drug is commercialized. It is likely it has an impact on the 1st year market share[i] (a gain close to 1/3 in terms of market share was loosely associated with the implementation of a NPP in a small retrospective study).

However, one cannot stress enough that the primary goal of a compliant MAP should be to provide efficacious treatments to patients with unmet needs.

Diversity of schemes across Europe

The diversity of programs available in France (FR), Germany (DE), Italy (IT), Spain (ES) & the United Kingdom (UK) illustrates the complexity of setting up a European MAP for a newly approved drug:

Absence of global EU framework: Within the scope of Article 83 of Regulation (EC) No 726/2004, the EMA provides recommendation through the Committee for Medicinal Products for Human Use (CHMP), but does not create a single legal framework.

There are 5 different authorities to coordinate:

• Agence nationale de sécurité du médicament et des produits de santé (ANSM, FR)
• Bundesinstitut für Arzneimittel und Medizinprodukte (BfArM, DE) & Paul-Ehrlich-Institute (PEI, DE)
• Agenzia Italiana del Farmaco (AIFA, IT)
• Agencia Española de Medicamentos y Productos Sanitarios (AEMPS, ES)
• Medicines and Healthcare Products Regulatory Agency (MHRA, UK)

Diversity in program types: Cohort programs only (DE), Named Patient Program only (UK) or both cohort and NPP available (FR, ES, IT).

Conclusion

European MAPs are more complex than their US counterpart, with no centralized approach (yet). However, and despite their non-negligible cost, they provide benefits for all stakeholders within the healthcare ecosystem, including the market authorization holder. Thus, MAPs are an integral part of strategy to foster fast adoption by the medical community but require careful planning to reach their goals while keeping expenditure under control.

Cepton Strategies will be attending the JP Morgan conference in January. We would be delighted to discuss these points with you in detail and address your concerns for the European market. Please click here for more information and to get in touch.

[i] A.K. Bates, Journal of Medical Marketing (2008) 8, 319 – 324

1.      EMA and FDA do not have the same requirements when evaluating a registration file. Anticipate the design of your phase 2 and 3 clinical trials to account of these differences.

2.      Every European country has a specific healthcare system, with variations of reimbursement procedures and requirements (timing, dossier, price). Reimbursement decisions will be made by a combination of regional and national committees: national has precedence in some countries like France but regions can be the main decision-makers in other countries like Germany or Italy, despite using guidelines issued by national committees.

3.      Medical practices are rather homogeneous across Europe. There is generally a European Expert Society for each therapeutic area, gathering members of national societies. Therefore, practitioners usually follow the same guidelines, published by these European Expert Societies.

4.      There are numerous patient advocacy groups and associations, organized at the regional, national, and pan-national level. In some disease areas, such as AIDS, these groups can be quite influential. This is true both in the US and the EU, and it is normal for groups focused on the same areas to exist on both continents.

5.      The registration procedure (CE mark) for medical devices and diagnostics is more simple and straightforward than in the US, but reimbursement is country-dependent and may be quite slow (up to several years). However, regulations are changing, and the registration process will become more demanding for Class 2b and 3 devices. Read more here.

6.      For diagnostics, there is no such thing in Europe as the LDT status allowing quick commercialization on a limited scope through CLIA labs.

7.      Depending on disease areas, your commercial model will be different across countries. You will generally have to be more payor-centered in Northern Europe and more physician-centered in Southern Europe, with several countries such as Germany standing in-between.

8.      All European payors will demand comparative trial data with the standard of care. This will have tremendous implications on your trial design and must be anticipated.

9.      HEOR studies may be quite useful in some countries but not relevant in others due to different funding processes and stakeholders, or different evaluation methodologies at national level. For example, France’s HAS does not fully recognize QUALYs as a valid outcome measure.

10.   Private health insurance companies have little influence over the reimbursement process of most drugs and devices. They usually follow the decisions of the National Healthcare System.

11.   For most drugs, a certain launch sequence has to be followed in order to maximize reimbursement prices. You must start with countries with fast processes and high historical prices, and end with low-price and/or slow countries such as Italy, Spain or Eastern European countries.

With the new European in vitro Diagnosis Device Regulation (IVDR), published in May 2017 [1], but fully in place in 2022, the rules will change for IVD players in Europe. American companies will feel more at home due to the system becoming aligned with that in the US, in addition to having the possibility to replicate processes used in their operations. Although European firms not accustomed to the US market will be starting from scratch, US companies will need new protocols to ensure efficient operations in Europe in order to develop a competitive advantage, and may benefit from specific European support, particularly to go through the reimbursement process.

The current European directives are more manufacturer-friendly than the US regulation

In the current “In Vitro Diagnostic Medical Devices Directive” (IVDD). There are four list-based categories. In the EU, manufacturers have to follow the EC’s IVDD and will have to comply with the IVDR by 2022. The current requirements address the design, production, labelling, and instructions for use. Depending on the technical specificities and indication, an IVD belongs to one of the four categories specified in the classification (General, Self-test, List B, and List A). [2]

With the current IVDD, 80% of the IVDs are self-declared. Even though there are four categories, with the current IVDD 80% of the IVDs belong to the Class I category, and so, do not need a Notified Body, making it simpler and cheaper to go through the EU regulatory pathway. [3]

The US was the only country, until now, to take patient safety into consideration, and is the most regulated one for IVDs

FDA classification is divided into three categories based on risk. It is the risk and the level of control necessary to provide reasonable assurance of the safety and effectiveness of the device that will determine its category, unlike the aforementioned list based approach of the IVDD. Depending on its risk, the device belongs to one of the three (and not four as in the EU) following categories:

In addition to classification, the FDA enforces the Clinical Laboratory Improvement Amendments (CLIA). A categorization based on the technical competence required by the user is made by the FDA (scoring of 1, 2, or 3). For example, a test that is cleared by the FDA for home use would receive a CLIA-waiver (score 1) because it requires minimum competence from the user. Whereas the Centers for Medicare & Medicaid Services (CMS) enforces the CLIA in the locations where the tests are performed, which means it controls the laboratories. [3] [4].

The IVDR brings about a convergence of the US and EU classification of IVDs, which are now both risk-based approaches

The new regulation is risk-based as the FDA, and Notified Bodies will have more products to control and power than ever before. Now, there are four categories from low to high risk (A, B, C, and D). Class D refers to IVDs dealing with high public health and high personal risk, and degressively, class A being low personal and low public health risk, and therefore the only category to be self-declared. As a result of these changes, Notified Bodies will have to assess more products than before: 80% of IVDs’ manufacturers will need them. Other new measures include clinical performance studies, the Unique Device Identification (UDI) and post-market safety surveillance. [5] [6]

An opportunity for US companies to expand into Europe

This new regulation will give a competitive advantage to companies used to the US market. It will lead to the implementation of new manufacturing processes and post-market surveillance systems in addition to an increase in legal costs (Notified Bodies’ related fees) and so on. The level of time and investment needed in designing, implementing, and managing these new processes will force companies to build more robust business cases. But for companies already competing in the US market, the internal regulatory resources, the quality assurance measures, and the clinical evidence they adopt for the FDA will be useful in their applications for CE marking. Therefore, they will not feel the impact of the changes in the same way EU companies do, thus the cards will be extensively redistributed amongst the competitors on the European market.

The different reimbursement systems in Europe stay a challenge for US manufacturers, harmonization is coming

The new IVDR regulation will quicken reimbursement processes. Despite the CE marking process for IVD products being previously quick and rather straightforward, reimbursement was slow, complex, and highly country-dependant. The new IVDR regulation, however, requires much higher levels of clinical evidence. This is exactly what payers in Europe demand to grant reimbursement. It is therefore to be expected, paradoxically, that the new IVDR regulation will speed up reimbursement processes in most EU countries. [7]

Cepton Strategies will be attending the JP Morgan conference in January. Please click here for more information.

1 – European Commission website – Regulatory framework – “The new Regulations on medical device” – 15 November 2017

2 – BSI: an In Vitro Diagnostics Notified Body – “A guide to the In Vitro Diagnostic Directive” – 2012

3 – European Observatory on Health Systems and Policies – “Ensuring innovation in diagnostics for bacterial infection” – 2015

4 – FDA website – Medical Device

5 – Lloyd’s Register LRQA – “In Vitro Diagnostic Device Regulation (IVDR)” – 2017

6 – BSI: an In Vitro Diagnostics Notified Body – “IVD Regulation What you need to know” – 5 may 2017

7 – CEPTON Strategies’ article – “European medical device reform: the changes to expect for class IIb and class III medical devices” 2017

In April 2017, a new Medical Devices Regulation (MDR) was published in Europe. The goal was to harmonize conformity assessments and clinical evaluations of medical devices at a European level to insure better safety. From a manufacturer’s point of view, class IIb and class III medical devices will have to undergo special procedures to reach the market. This regulation particularly affects class IIb and III devices.

Since the 90s, three directives regulated medical devices and in vitro diagnostic (IVD) medical devices in Europe. As the directives were open to interpretation, each country could adapt the text, leading to variations in procedures according to each state for a product to obtain a CE mark and reach the market. The European PIP scandal [1] in 2010 triggered a will to improve control of medical devices and their supply with a standardized model closer to the US one. Medical devices and IVD medical devices will now have to comply with MDR and IVD Regulation (IVDR) that will respectively provide a review of a larger proportion of devices and a greater control of diagnostics. The final implementation of regulations will happen in three years for MDR and five years for IVDR. Class IIb and class III medical devices are especially affected by MDR.

The classification of medical devices evolves with MDR

Medical device designation will extend to accessories related to medical devices (such as products used for washing medical devices), implantable non-medical products that may affect the body, and software used for a medical purpose. A larger number of medical devices will be classified as high risk (class III) and will therefore require a more demanding clinical evaluation [2].

A UDI system similar to the United States system will be launched

Medical devices will have to be registered under a Unique Device Identifier (UDI) composed of a constant device identifier, referring to the manufacturer and type of device, and a production identifier, referring to the batch of production. With this system, Europe is getting closer to the United States, where UDI legislation was implemented in 2014. Distributors and importers will then have to update the pathway of products. The UDI database will enable you to trace all medical devices in Europe through each stage in the supply chain until its use. This database is complementary to Eudamed, the transparency database containing all clinical evaluations of medical devices. For patients receiving implantable devices, an implant card will also be provided to allow the patient to have information regarding his device.

Notified Bodies will be reinforced and harmonized for conformity assessment

In order to get a CE mark and be marketed in Europe, medical devices need a conformity assessment based on relevant clinical investigations. With the new MDR, low risk device (class I) conformity is still declared by the manufacturer himself. Class IIa and not implantable class IIb devices need a generic group assessment to get the approval, and implantable class IIb and class III medical devices require a device assessment. Assessment still involves a Notified Body: an entity that can be physically present in every country in Europe. With the reform, Notified Bodies become harmonized between EU countries and will be regularly checked by national authorities to ensure compliance with MDR.

Class IIb and class III medical devices will require further clinical investigation

To be approved in conformity assessments, implantable class IIb and class III devices need a clinical evaluation more demanding than other devices. Before starting the clinical investigation, manufacturers can consult an expert panel at a European level to plan their clinical strategy and know what clinical results will be expected of them to obtain CE marking as fast as possible. In some cases, when an equivalent product is already on the market, and if a contract for sharing technical documentation is signed with the manufacturer of the already marketed device, the manufacturer can avoid clinical investigation and use equivalence for obtaining their CE mark.

In the case of a class IIb or a class III medical device, a scrutiny procedure can be put in place.

When being clinically evaluated, the Notified Body is responsible for writing a clinical evaluation report. However, this report may go through an expert panel to ensure the right level of expertise is used to assess the validity of an innovative product. This scrutiny procedure can delay market entry by 60 days.

The new mandatory post-market surveillance will require a yearly update for class IIb and class III devices

In addition to pre-market clinical evaluation, manufacturers must provide a Post-Market Surveillance plan when applying for CE mark. This plan will result in a Post-Market Clinical Follow-up that will be transcribed in a periodic safety update report. This is one of the major changes to the MDR reform and class IIb and III devices must update this report yearly.

The reform is driving high-risk medical devices closer to reimbursement, a factor of major importance in Europe

Even if, with the previous directives, clinical evaluations were less demanding to get approval for the European market, clinical expectations were high for getting reimbursement in each European country. As reimbursement is a major issue for insuring sales in Europe, a common strategy was to launch the product and then get reimbursement with clinical trials in various countries. As clinical investigation will be needed at a European level with MDR, clinical trials will be assessed in coordination with all countries where it takes place, resulting in an easier and more standardized approach for obtaining reimbursement.

With this new regulation, Europe wants to insure better safety for patients, and the European medical device system will become more structured and easily understandable at both country and European level.

Cepton Strategies will be attending the JP Morgan conference in January. Please click here for more information.

1 – Journal of the Royal Society Medicine “The PIP scandal: an analysis of the process of quality control that failed to safeguard women from the health risks” – 2013

2 – Official Journal of the European Union « Regulations on medical devices » – April 2017 

How will Brexit affect the strategies of US biotechs already in the UK, in Europe, or about to cross the Atlantic?

Dwight D. Eisenhower and Charles de Gaulle didn’t necessarily see eye to eye on many things, but both understood the strategic advantage the UK could provide to the US to set foot in Europe.

What was true from a military or political standpoint in the XXth century was still very relevant from a business point of view in the XXIst century until, on June 23rd, 2016, the UK electorate voted in favour of leaving the European Union, or in short, Brexit. As per the timelines of article 50 of the Lisbon Treaty, describing the procedure to exit the EU, Brexit will become effective on March 29th, 2019.

Current state UK for US biotechs

For the time being, the UK offers a quite favourable environment for US biotech’s: a large English-speaking population (65M+ inhabitants) with access to a performant healthcare system (NHS budget of ~170B€ in 2015-2016 [1]), supported by the lowest Corporate Tax in the G20 (20% [2]) and generous tax deductions on work related to R&D (SME may get up to 230% of R&D expenditure in deduction from their profit [3]). Furthermore, it provides access to the Single Market: 500+ Million people with a 14 Trillion €GDP [4] ($16 Trillion).

The risks and uncertainties that come with Brexit

While Brexit will impact all interactions between the UK and EU, from innovation and its funding to trade and tariffs, four areas of particular relevance for US biotechs will be covered here.

Innovation at risk

The UK is currently the main beneficiary from the European Research Council grants [5], with most projects involving intra-European collaboration [6]. Exiting EU with no deal to maintain participation to European funding would certainly hinder academic research. Interestingly, it would harm also R&D in the private sector, as there is a positive correlation between government and private R&D spending [7]: a poorly negotiated Brexit would reduce the attractiveness of the UK R&D ecosystem.

R&D occurs where ideas, money and talented people meet. The UK currently provides access to high-quality infrastructure, and world-class educational institutes that attract current and future leading scientists: about 16% of STEM academics are non-UK EU nationals [8], and their employment or even stay could be at risk upon Brexit.

Such factors may ultimately impact the decision on where firms will establish their research centres.

Fewer, costlier Clinical Trials

The UK is consistently in the top three countries in Europe for the number of clinical trials in Phase I, II or III and this premium spot could be threatened as the UK leaves the EU: to simplify management and increase efficiency & transparency of clinical trials across Europe, the European Commission has designed the Clinical Trial Regulation (EU No. 536/2014 [9]). As the UK pulls out of the EU, it might be easier for companies to set up clinical trials across Europe and leaving the UK aside.

Trickier Intellectual property protection

The EU is trying to simplify IP protection with unified patents and a unified patent court imposing jurisdiction in all EU member countries (Unified Patent Court Agreement (16351/12) and regulations 1257/2012 and 1260/2012 [10]). Being outside of the EU, the UK would not fall under this court jurisdiction. Whilst the UK may offer easy and quick access for local patent submission, the work to get IP protection in both the UK and EU would still need to be duplicated.

Delays in Drug Approval

At the moment, CE marking for medical device offers marketability across EU, and European Commission marketing authorization, after EMA evaluation, is valid in all countries in the European Economic Area (EEA), which is currently comprised of 28 EU countries, including the UK, plus Norway, Lichtenstein, and Iceland. Approval could become more complex and be delayed depending on the outcome of the ongoing negotiations.

Possible negotiation outcomes

After the June 23rd vote, Theresa May became the new prime Minister and the British Government invoked article 50 of the Lisbon Treaty on the European Union on March 29th, 2017, setting the UK on a course to leave the EU on March 29th, 2019. Since then, negotiations have been afoot and three possible scenarios have been discussed:

EEA membership (like Norway, Lichtenstein, Iceland)

• Enforce the “four freedoms”: Free movement of persons, goods, services and capital within the European Single Market (ESM).
• Contribute financially to access the ESM and to support other EU programs (eg ~800M€ for Norway in 2016 [11]).
• Implement most EU legislations including Marketing Authorization after EMA evaluation, and free marketability of CE labelled medical devices – excluding agriculture and fisheries.

This would be the solution with the least impact and most activities would continue as they do now.

Given that Theresa May vowed to exit the Single Market in January 2017, and that this status would not guarantee the UK pays less money to Europe, it would be politically difficult for the current UK government to promote this option. The Association of the British Pharmaceutical Industry however is pushing to reach an agreement to secure the ongoing cooperation between UK and Europe as fast and clearly as possible [12].

EFTA only (like Switzerland)

• Participate with the ESM (four freedoms) but not to the European Union Customs Union
• Switzerland is the only one of four EFTA members that is not an EEA member: instead of using the rules defined under the EEA membership, it has a set of bilateral agreements with the European Union.
• EMA evaluation and EC marketing authorization do not apply here, approval must be obtained from SwissMedic (Swiss Agency for Therapeutic Products) before being commercialized locally.

The UK would retain access to the Single Market.

However, the UK would need to locally approve drugs. This would cause delays as the MHRA is not staffed to handle this extra burden. This would also double the regulatory burden for US companies, as they would need to file once with EMA and once with MHRA, both agencies not having necessarily the same requirement, timelines and dossier format.

WTO (like the rest of the world)

• Default model: need to negotiate bilateral trade agreement on everything including trade and customs.
• EMA evaluation and EC marketing authorization do not apply here, approval must be obtained locally.

The UK would no retain access to the Single Market: trade agreements would have to be negotiated, which would hinder drug movement, both those produced in the UK and exported to continental Europe, and those produced in Europe trying to reach UK patients. Although a 0% tariff on pharmaceuticals is most likely (under the Most Favoured Nation status), other goods could experience tariffs (esp. medical devices). GMP certifications would also be subject to bilateral agreement.

The UK would need to locally approve drugs with the same consequences as the EFTA only scenario.

As negotiations progress at a pace slower than expected, some companies have already activated their contingency plans to mitigate the WTO scenario: Eisai and AstraZeneca have started exploring approval and testing procedures outside of UK. Others, like GSK, are about to invest money to develop their own contingency plans [13].

Conclusion:

While the UK would remain an attractive market, it is currently hard to foresee which version of the three scenarios will materialize: entry to Europe and UK will become a more complicate, prompting for expertise at the regional level to optimize market entry strategies in a timely manner.

As the UK may put some space between itself and the EU, there is hope that ties with the members of the Commonwealth of Nations, (especially Australia, Canada, and India), could be strengthened. In this case, UK could shift from a US foothold in the EU to a US foothold in other high-growth areas of the globe.

References

1° http://www.bbc.com/news/health-38887694, Accessed Nov 08th 2017

2° https://www.gov.uk/government/publications/why-overseas-companies-should-set-up-in-the-uk/why-overseas-companies-should-set-up-in-the-uk, Accessed Nov 08th 2017

3° https://www.gov.uk/guidance/corporation-tax-research-and-development-rd-relief, Accessed Nov 16th 2017

4° https://en.wikipedia.org/wiki/European_Single_Market, Accessed Nov 08th 2017

5° https://ec.europa.eu/unitedkingdom/news/european-research-council-10-%E2%80%93-uk-top-beneficiary_en, Accessed Nov 17th 2017

6° https://royalsociety.org/~/media/policy/projects/eu-uk-funding/phase-2/EU-role-in-international-research-collaboration-and-researcher-mobility.pdf, Accessed Nov 16th 2017

7° https://www.kcl.ac.uk/sspp/policy-institute/publications/SpilloversFINAL.pdf, Accessed Nov 16th 2017

8° http://www.sciencecampaign.org.uk/asset/F50CF4C1-93C7-4F38-89E55D6BDBB70ED6/, Accessed Nov 16th 2017

9° http://www.ema.europa.eu/ema/index.jsp?curl=pages/regulation/general/general_content_000629.jsp, Accessed Nov 08th 2017

10° https://www.unified-patent-court.org/, Accessed Nov 08th 2017

11° https://infacts.org/norwegians-pay-same-brits-eu-access/, Accessed Nov 08th 2017

12° http://www.abpi.org.uk/media-centre/Documents/BARNIER_DAVIS_Joint_Association_Pharma_Letter_12_July_2017.pdf, Accessed Nov 08th 2017

13° https://www.economist.com/news/britain/21731409-industry-long-production-timelines-cannot-afford-wait-any-longer-pharmaceutical-firms Accessed Nov 17th 2017

European biosimilar market: a tremendous opportunity with variable market access constraints

With the recent recommendation of an anti-cancer blockbuster biosimilar by the EMA, the market has the opportunity to soar. Driven by the fierce interest of payors for affordable alternatives to many biologics, national authorities proactively push for biosimilar adoption. To be successful, players must understand the specifics of each market and tailor their strategy accordingly.

The global market opportunity for biosimilars is emerging as a result of three factors. Through 2020, 30 blockbuster biologics, which achieved $109 billion global sales in 2016, face loss of patent exclusivity in at least one major market. In these major markets, regulatory agencies have now defined appropriate regulatory pathways for the approval of new biosimilars. Moreover, the implementation of cost containment practices on the part of governments and insurers has increased demand for such high-quality and less costly versions of blockbuster biologics. Europe dominates the market for biosimilars, but a sharp understanding of specific national attributes is required for players to perform.

EMA has been a pioneer in biosimilars regulation

In the early 2000s, the EMA led the way in establishing regulatory guidelines for the development and assessment of biosimilars, nailing down key principles that have subsequently been adopted worldwide. The EMA regulatory processes’ efficiency is demonstrated by the successful approval of 32 biosimilars already (vs. 10 in the US).

The last update of EMA biosimilar guidelines (2014-2015) attests to its will to evolve in recognition of: technological advances, accumulated experience with marketed products, and availability of new biosimilar targets. The EMA now allows clinical trials conducted outside Europe to be used for biosimilar filing, saving costs of an extra clinical trial for the sponsor. The updated guidance also addresses specific issues to ease the development of complex biosimilars (e.g. monoclonal antibodies), such as the amount of immunogenicity data needed. Furthermore, biosimilar makers can now benefit from EMA’s “Biosimilars Project” which offers free and tailored scientific advice for the development of new targets based on the originators’ data (quality, analytical and functional) in EMA’s possession.

Substitution policies are within the remit of each country

The EMA centralized procedure does not require a switching study to grant approval to biosimilars and substitution policies are within the remit of each European country. Although EMA considers approved biosimilars as equivalent therapeutics alternatives to biologics, automatic substitution is not routinely performed, mainly due to concerns regarding traceability and to the potential impact of repeated switching on immunogenicity. In some countries (UK, Italy, Spain, and Nordics), guidelines or laws prohibit automatic substitution whereas in others (France, Netherlands, Poland, and Baltics), automatic substitution is implemented at the pharmacist or physician level. For biosimilar makers not familiar with European markets, national policies can sometimes be confusing: in Finland and Germany, national authorities (respectively the FIMEA and the Paul-Ehrlich-Institut) consider biosimilars interchangeable with their reference biologicals, however automatic substitution is not included in their current recommendations, which in the end leaves the prescriber with the decision between originator and biosimilar. In this uncertain and quickly evolving environment, biosimilar makers which are able to provide strong switching data have a certain competitive advantage.

Nordic countries are at the forefront of the real-world clinical evidence gathering effort

The initial resistance that followed Europe’s first biosimilar approval in 2006 shows that physicians’ confidence cannot be taken for granted, because of biosimilars’ high complexity and of the stakes for targeted patients. Therefore, payors are aware that forcing biosimilars adoption for cost reasons alone cannot work. Consequently, European countries have been at the forefront of the real-world clinical evidence gathering effort. In Norway, the NOR-SWITCH study has been pivotal in proving biosimilars quality reliability and clinical equivalence with their originators. Funded by the Norwegian Ministry of Health, NOR-SWITCH examined switching from originator infliximab to biosimilar CTP13 in about 500 patients and showed that switching was not inferior to continued treatment with originator. NOR-SWITCH triggered a radical changed in physicians’ perception, spurring the infliximab biosimilar to a market share above 90%.

Policies targeting biologics procurement strongly enhance biosimilars adoption

Backing biosimilars with high quality data is not sufficient to drive uptake. National voluntarist policies are needed at the procurement level. Indeed, despite payors clear benefit from biosimilar usage, there might not be any financial incentives for the hospital, physician or patient to use the biosimilar.

In Nordic countries, the impressive uptake of biosimilars provides sharp insights on the impact of procurement-level strategies. In Norway, epoetins were originally covered by general reimbursement, thus neither the patient nor the physician recognized the biosimilar-associated savings, leading to little switching and low uptake. In 2016, epoetins were transferred to hospital tenders. Two months later, the epoetin biosimilar had gained a 65% market share. This drastic switch was enabled by cost containment awareness among physicians, but also due to an efficient electronic prescription system on which physicians could quickly and massively recall their patients’ prescriptions. In Finland and Denmark, biosimilars also deeply penetrate the biologics market because of strong financial incentives and a management push for biosimilars in hospitals. Opinion leaders often use the NOR-SWITCH study results as a key argument.

Incentives strongly facilitate biosimilars adoption

Tendering at hospital level does not automatically drive biosimilars adoption. Payors must closely monitor the actual adoption at hospital level. For instance, in Ireland and Belgium, although hospitals can procure biologics by competitive tendering, until recently they were indirectly incentivized to purchase the highest price product because they could keep the discount, which are larger for more expensive products. In Spain, some regions such as Madrid have contracts with hospitals to closely monitor the uptake of biosimilars and reward the hospitals that comply with the contract objectives. Prescription quotas can also be installed to force the adoption of biosimilars. In Germany, different prescription minima are set by each regional insurer to promote the use of biosimilars, with physicians being financially threatened for not achieving their objectives. Similar quotas exist in Italy, along with specific education programs designed to foster the use of biosimilars. Consequently, Germany and Italy are now among the top adopters of biosimilars in Europe.

An alignment of positive positions from expert societies, medicine agencies and hospital management, along with financial incentives, is key to fully drive biosimilars adoption. In all countries that enable such collaborations between payors and prescribers, the biosimilars market share is significant. For players, success then strongly depends on their capacity to find the right contracting channel, which is reliant on: the national market structure and clinical practices, and their therapeutic area. Therefore, players must adapt their business models depending on the country-specific market access conditions. But in a market regulated by an agency continually renewing its effort to closely accompany biosimilar makers with an adapted framework, and where 80% of physicians are incentivized to use biosimilars, opportunities cannot be missed.

Information and points of view disclosed in this article are based on Cepton’s knowledge and on the following sources, which we recommend reading:
1. Schiestl M, Zabransky M, Sörgel F. Ten years of biosimilars in Europe: development and evolution of the regulatory pathways. Drug Design, Development and Therapy. 2017;11:1509-1515. doi:10.2147/DDDT.S130318.
2. Scott Morton, Fiona, Ariel Dora Stern, and Scott Stern. “The Impact of the Entry of Biosimilars: Evidence from Europe.” Harvard Business School Working Paper, No. 16-141, June 2016. (Revised July 2017.)
3. Generics and Biosimilars Initiative online resources

Gene therapy: the trap of biomanufacturing

With the recent approval of Yescarta and Kymriah CAR-T therapies in the US market, several years after approval of Glybera and Strimvelis in Europe, the therapeutic proof of concept of gene therapy has been validated. The next, though highly challenging, step for gene therapy development will be to bypass current limitations of biomanufacturing technologies.

The principle of gene therapy is to bring functional DNA to a patient suffering genetic disease. The current trend, for both ex vivo and in vivo treatments, is the use of viruses for delivering the repaired DNA to patient cell. Manufacturing these vectors is a technical and financial bottleneck for current gene therapy development.

Ex vivo gene therapy is the first stage of innovative biomanufacturing

Yescarta (Gilead) and Kymriah (Novartis) have been approved in 2017 in the US1,2. Both treatments are intended to treat rare cancers and are based on CAR-T technology: a genetic modification of immune cells to make them attack the tumour of the patient. In Europe, Strimvelis (GSK) was approved at the end of 2016 for the treatment of Severe Combined Immunodeficiency due to Adenosine Deaminase deficiency (ADA-SCID) by modification of patient hematopoietic stem cells. All these treatments consist of an ex vivo modification of autologous (from the patient himself) cells to give their function back or provide a new function.

Manufacturing processes of these therapies have been validated but are long and complex: they require cell extraction and modification (with DNA loaded viruses) before reintroducing the cell to the patient. Thus, Strimvelis process is only carried out at MolMed and San Raffaele Hospital (Milan Italy), where it has been developed, and patients must travel there to get treated – cryopreservation of modified cells is not set yet.

Ex vivo therapies need smaller amount of viruses compared to in vivo therapies. This is one of the main reasons why they reached the market first.

Several other ex vivo treatments, developed by American firms, such as BlueBird Bio with Lenti-D (for the treatment of cerebral adrenoleukodystrophy) and LentiGlobin (for the treatment of transfusion-dependant B-Thalassemia) and European biotech, such as Orchard Therapeutics (OTL-101 for ADA-SCID) are expected to reach the market soon. Biomanufacturing is already prepared for these products; BlueBird Bio set a supply agreement with Lonza in the US and Apceth in Europe, whilst Orchard partnered with PharmaCell.

In vivo gene therapy faces the technical and financial challenges of targeting large organs

Glybera was the first in vivo gene therapy approved in Europe in 2012, for lipoprotein lipase deficiency. It was withdrawn for profitability reasons, with only one treatment sold since its approval in 2012. Uniqure sold Glybera for a fee in excess of 1m€. The price was high partly due to high R&D and manufacturing costs, driven by production of loaded viruses (dose around 1012 vg/kg).

In vivo gene therapy is mostly based on DNA loaded adeno associated viruses and requires higher doses of viruses because of the lower rate of transfection compared to ex vivo. Furthermore, viruses must reach the right tissue after in vivo injection. For these reasons, most of the approved-to-date gene therapies are ex vivo and most mature in vivo therapies are focussing on easy-to-reach small organs. Examples include Spark therapeutics’ Luxturna or Gensight’s GS010 product, which are both intended for ophthalmic disease.

Luxturna is in the process of approval in the US and Europe, and focusses on Leber congenital amaurosis and retinitis pigmentosa diseases. Its administration requires a dose around 1012vg/kg, to target eyes.

To target larger organs such as the liver, CNS or skeletal muscles, the required dose of viruses must be increased. AveXis, for Spinal Muscular atrophy, expects the clinical trial dosage to be around 1014vg/kg3, a hundred time higher than Glybera and Luxturna. AveXis took the strategic decision to control their manufacturing activity by having in-house capabilities and developing future marketable processes. In September, this process received FDA authorization for use in next trials.

On a technical prospective, most of the actual AAV production processes are based on sub-optimal transient transfection of mammalian cells, which requires expensive plasmids and transfection agents in large quantities. Other approaches are under development, such as stable cell lines and baculovirus-mediated production, to answer the demand of large volumes when reaching clinical or commercial stage4. Even if the recent move from adherence culture to suspension bioreactors was an improvement, each step of the product manufacturing needs to be optimized to improve yields, starting from the type of vector used.

Pharmaceutical companies and CMOs have increased interest for gene therapy biomanufacturing

Pharmaceutical industries have started investing in gene therapy manufacturing capacities. In 2016, Pfizer demonstrated strategic importance of gene therapy manufacturing technologies: they acquired Bamboo therapeutics, which had become famous for the discovery of a more yield-efficient mammalian cell line.

Owning biomanufacturing forces in US and Europe is essential to provide treatments to patients in both locations. The European pharmaceutical group Merck (EMD Serono) invested in gene therapy manufacturing plants in the UK and the US (BioReliance), strategically combining positions in North America and Europe for supplying therapies to patients on both continents.

Their plants, like many of the gene therapy manufacturing entities, offer CMO services. Gene therapy CMOs are not traditional manufacturers, as they also innovate production processes, to ascertain an easy-to-scale, affordable technique. Following the US, firms across Europe including Oxford BioMedica, YposKesi, Lonza, UniQure, Cell for Cure, etc… are developing and strengthening capabilities in gene therapy biomanufacturing. Europe will position as a competitive player in gene therapy.

Biomanufacturing will remain the challenge of gene therapy development in the next year, especially regarding viral production. Recent development of CRISPR-Cas9 editing therapy, may even enhance this trend, as virus may be the answer to treatment delivery.

1 – Press release – “Kite’s Yescarta becomes first CAR-T therapy approved by the FDA for the treatment of adult patients with relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy” – oct 2017
2 – Press release – “Novartis receives first ever FDA approval for a CAR-T cell therapy, Kymriah™ (CTL019), for children and young adults with B-cell ALL that is refractory or has relapsed at least twice” – aug 2017
3 – Press release – “AveXis announces plan to initiate pivotal trial of AVXS-101 in SMA type 1 using product from new GMP commercial process” – sept 2017
4 – Tony Hitchcock “manufacturing of AAV vectors for gene therapy” – jul 2017