Blog @ MassSpec.org

3 Important Things the Seed Stage Biotech Company Needs to Consider

Mon, 13 Jul 2009 13:55:15 -0400

1. IP Protection
The first priority in getting a biotech company up and running is to protect your intellectual property by filing a patent application, or, if your product is a research tool or otherwise not in itself patentable, ensuring that you have proper trade secret protection via non-disclosure or other agreements. Further, before seeking funding or otherwise expending a great deal of effort in getting your business off the ground, you should enlist the help of a patent professional to get the lay of the land with regard to other previously granted patents that may already exist. Establishing freedom to operate (FTO) means that in moving the business forward you have a clear channel in the industry to pursue your technology without infringing others’ patents. Depending on how saturated the market is in your given area and how broadly others’ patents are drafted, establishing FTO may mean craftily drafting the patent for your technology around the existing patents or partnering with/getting a license from patent holders whose patents your technology would infringe upon. Having both FTO and a patent-pending technology will greatly enhance your company’s attractiveness to potential investors.

One more note here. Part of what is enjoyable about science is being able to share ideas and talk about one’s research, but doing so can be absolutely detrimental to commercializing a product. A public disclosure of your invention immediately starts the clock running on the period of time you have to file a patent application, and if you allow this period to pass, your invention becomes public knowledge and cannot be patented. You shouldn’t be barred from participating in public discourse regarding your new tech, but you should make sure it’s protected before you do.

2. Funding
One of the largest obstacles posed to a biotech company, like any startup, is raising the funding to get it off the ground. Unlike other less-technical and less-regulated industries, however, biotech timelines are long and uncertain and the extra challenges this industry presents make early investors extra wary. In addition to actually raising the funding, choosing the proper channels and the proper time to raise further funding also present challenges for the early stage biotech company. There is a tenuous balance between raising capital from non-dilutive funding sources early on when valuation of the company will be the least and waiting too long to seek sources that will provide greater capital at the expense of dilution. Non-dilutive sources, such as federal small business grants (Small Business Innovative Research [SBIR] and Small Business Technology Transfer [SBTT] grants) are advantageous in that they are non-dilutive, but the downside is that they provide very limited capital and specifically only support early R&D.

In recent years, nonprofit funding agencies have become more involved in the life sciences sector and provide other possible non-dilutive sources of capital. For companies based in MA, an important nonprofit source is the Massachusetts Life Sciences Center, a quasi-public entity formed in 2006, and armed with a dedicated $100M of public funding annually for the next ten years. Taking advantage of government reimbursement programs, such as the Orphan Drug Act, is also key. Obviously, there is much to consider in this area, and a string of future posts will deal exclusively with funding issues.

3. Establish a Support Network Early
A great product does not guarantee success, and getting a biotech venture off the ground necessitates a good support system of experienced people to offer guidance. One of the biggest obstacles to success can be the failure of a company to properly position itself for the different stages of its growth and product development. For instance, enlisting help on the marketing/PR side early on can be crucial in making sure that your company is able to transition smoothly from early R&D to clinical trials. Further, increasing awareness of your technology and public goodwill towards your venture could draw established companies interested in partnering and make your company more attractive to potential investors.

Another mistake that I have regularly seen with respect to biotech ventures is that the business aspect of the company is often taken on by the scientists who have developed the technology. I think there are a variety of reasons why this happens, but the most common is probably that of wanting to retain complete control over the direction of the company. Managing a company correctly, however, is an art unto itself and not something that should be learned through blind trial and error. Find someone who is trustworthy, has a proven track record, good contacts, and let him or her work with you to guide your company. Moreover, spending all of your time struggling through the business aspect of your venture will prevent you from focusing on what ultimately is going to make your company successful—your scientific contributions. jvbqker7m9

- Aaron Stronge

Clinical Trials I: Overview of Clinical Trial Phases

Mon, 6 Jul 2009 20:46:00 -0400

This first installment dealing with clinical trials will focus on outlining the basics of the different phases. Future posts in this area will touch on issues specifically geared towards the unique challenges that early-stage companies are presented with when initiating clinical trials.

In order to gain FDA approval for a new drug, the drug must pass through a series of three phases that test both the safety and efficacy of that drug in humans. Prior to entering Phase I, new compounds must be tested in both cell cultures and animals to make initial assessments as to their potential effect in humans. This pre-clinical data must be submitted to the FDA as part of an Investigational New Drug (IND) application, which must sufficiently convince the FDA that the drug is ready for human testing.

Phase I
The primary purpose of Phase I is to assess the basic safety of the drug for human use, although secondary goals include arriving at the best delivery method and narrowing down the range of therapeutic doses. At this stage the testing size is usually between 20 and 50 and is composed of healthy volunteers. Occasionally, in instances where no other treatment options are available, affected individuals may be included in the study as well.

Phase I safety studies are generally concerned with the determination of both the level at which adverse effects begin to emerge and of the general pharmacokinetic properties of the compound. Reaction to the drug is determined by giving single doses to different groups, at gradually higher doses from group to group, which is known as a single ascending dose (SAD) study. The point at which adverse effects are seen is defined as the maximum tolerated dose (MTD) of a given drug.

Finally, pharmacokinetics refers to how the compound is absorbed, distributed, metabolized, and excreted (ADME) in and from the body. Groups of participants are given multiple doses at the same dose level, with samples of blood or urine collected at set time points to discover how the human body processes the compound. It can be expected that Phase I clinical trials will last anywhere from one to three years.

Phase II
The safety data gathered during Phase I is used to design Phase II, which is focused primarily on efficacy but also with the intent of acquiring more extensive safety information. In Phase II studies, typically between 100 and 300 affected individuals are enrolled, and a variety of treatment paradigms may be employed in order to determine the optimal drug regimen. Phase II trials can be broken into two distinct parts: Phase IIA, the goal of which is to determine the correct dosage; and Phase IIB, which is specifically geared towards gathering efficacy data in preparation for Phase III.

Phase III
Phase III trials are essentially expanded Phase II trials, typically composed of 1,000 or more affected individuals, and usually double-blind (i.e. neither the patients nor the administrators know what each individual is given). The goal here is to test afflicted individuals from as many varied backgrounds and with as many auxiliary conditions as possible, with the goal of providing a complete view of the overall effectiveness and side effects of the compound in different populations. Phase III, the longest of the three phases, typically takes three to four years to complete due to the necessity of both its size and thoroughness. Further, Phase III studies are often done twice as a means of data validation, except in unusual instances where the strength of the results produced from the first run is sufficient. Following favorable results at the conclusion of Phase III, the drug moves to the approval phase, which will be covered in a future post.

- Aaron Stronge

Cerezyme and Ethical Considerations of the Biopharma Industry

Sun, 21 Jun 2009 09:42:42 -0400

First off, welcome to my blog! I’m loathe to start this writing venture commenting on a news story, as by the time I establish any semblance of regular readership the story will undoubtedly be stale. On the other hand, this story provides an excellent starting point because it highlights an inescapable hardship of the life science technology industry. As with any business, the primary duty of a life science venture must be to its shareholders, which generally means increasing revenue. Further, the developers of the technology have worked hard and desire, and rightly so, to be rewarded for their labor. The rub here, however, is that the products that we create in this industry regularly have the ability to change and save lives. Thus, when choices are made that prevent these products from reaching the people who need them--usually as a result of the price being out of reach--we need to recognize that this is a sentence of extended illness, pain, and perhaps death for those individuals.

It is not my intention to be melodramatic, but the downside of this wonderfully innovative and rewarding business that allows us to do so much good is that it is also built upon a model that often requires us to cause harm by omission. It is arguably not the responsibility of biopharma companies to ensure the accessibility of their products, but we must, at the least, acknowledge the effect this business model has. This is precisely what worries me about Genzyme’s undeniably innovative means of selling Cerezyme overseas.

For any who are unaware, Cerezyme is Genzyme’s enzyme replacement therapy (ERT) for the treatment of Gaucher disease, a lysosomal storage disorder. Gaucher is extremely rare; the rate of incidence for the two more serious forms are less than 1 in 100,000. As such, Genzyme’s approach to selling the drug has been to actively seek out those who suffer from it and then petition the individuals’ respective governments to pay for the treatment.

A little over a week ago, the Boston Globe ran a story about Tania Gonzalez, a Costa Rican girl who has Gaucher, highlighting the success of both the treatment itself and Genzyme’s quiet and persistent campaign to convince the Costa Rican government to pay for it. There is no denying that the therapy works, and on its face there has been a happy ending: a young girl gets to grow up, and Genzyme gets its payday so that it can develop therapies to treat other rare diseases. However, something about this just doesn’t sit right with me.

Our best estimates are that there are around 8,000 individuals with Gaucher on the planet. With Genzyme charging $160,000 per year for treatment, the revenue potential for Cerezyme is nearly $1.3B a year, and the Boston Globe notes that the profit margins are as high as 90 percent. Further, as the drug must be given in biweekly IV infusions for the rest of a patient’s life, the revenue stream for Cerezyme is likely to be solid. Additionally, the small market size and Genzyme’s firm grasp on patient whereabouts will add to the stability of that revenue due to the difficulty of introducing a generic alternative.

When I think about the financials, however, it is not the numbers themselves that irk me. Rather, and going back to my original point about ethical responsibility in the beginning of this article, what bothers me is that Genzyme seems to have in large part sidestepped the onus of its business strategy and instead put the responsibility on the foreign governments. The Boston Globe piece touched on this in talking about Jose Gonazalez’s (Tania’s father) perspective:

To Jose, to his neighbors, it did not look like an American drug company putting pressure on their nation's healthcare system. It looked like the little guy against the government, with Genzyme quietly helping out the little guy.

Putting aside any arguments related to putting a price or profit margin cap on any medically necessary drugs or devices, life science technology firms absolutely have the right to charge whatever they deem appropriate for their products. The problem here is that Genzyme gets to simultaneously play the saviour and get paid an arguably astronomical price. For a small country like Costa Rica, $160,000 represents not only a large piece of the healthcare funding pie, but also a great deal of far less expensive treatments that would aid a great number of people.

Everyone likes to make money, and being able to do so while saving lives is a unique and incredibly gratifying aspect of the medical business. However, you can’t have your cake and eat it too, and 90 percent profit margins have nothing to do with altruism.

- Aaron Stronge