‘Funding Biopharma: Strategies for Reaching Investors in a Financial Crisis’ Draws Regional Biopharmaceutical Executives, Investment Leaders

BASKING RIDGE, N.J., June 18 /PRNewswire/ — Biotech companies throughout the country are reeling from the economic recession with half of the industry’s 370 small-cap funds slated to run out of cash before 2010, regional biopharmaceutical executives and investment market leaders concluded during a life sciences symposium presented by Yankee Public Relations. Panelists and attendees at “Funding Biopharma: Strategies for Reaching Investors in a Financial Crisis,” emphasized the importance of intensifying investor relations efforts as biotechs continue to struggle with the market meltdown.

“I am seeing many situations in the private company and venture capital deal world with mistakes being made by companies pressed to the wall,” said Jeffrey Nicholas, J.D., a Partner at Fox Rothschild in Princeton. “They don’t necessarily take a good measure of their investors and realize what an asset their investor base can be. There is an intense public relations effort that should be deployed, in my view, in connection with any down round. It’s no surprise to investors that a down round may be necessary, but how you communicate that message is very important. So the cautionary note is that companies need to put themselves in the position of the investor and realize how important it is to get the message out.”

Yankee Public Relations President Fred Feiner moderated three panel discussions focused on successful finance strategies, the current investment market and regulatory tactics to maximize profitability. In a panel discussion of biotech executives from public and private companies, Ellen McDonald, Regado Biosciences Senior Vice President and Chief Business Officer noted how the changing climate has impacted the Basking Ridge-based company.

“I firmly believe two years ago the firm I’m with would already have been bought by a pharmaceutical company,” said McDonald. “Essentially the lesson we have learned is never give up because the world keeps changing. Keep going forward on all fronts and never give up because everything is dynamic right now. Keep raising awareness about your company and building networks and getting well known.”

John Pennett, C.P.A., a Partner and Director of Life Sciences with Amper, Politziner & Mattia in Edison, emphasized the importance of a company’s reputation when pursuing funding.

“At the end of the day, it’s all about credibility,” said Pennett. “There are a lot of early stage companies out there and it really comes down to credibility. It’s the credibility of the plan, it’s the credibility of the pathway to commercialization, it’s the credibility of the management team and the credibility of the financial plan.”

“There are no shortcuts to credibility,” added Feiner. “From an investor relations perspective, it is vitally important to be known and known to be trusted. The absolute worst position to find yourself in is asking people for money when they have not heard of you.”

Several panelists emphasized how difficult it has become for early stage companies to get funding.

“On the private company side, it has been difficult to fund early stage, pre-clinical or stage one,” said Emilio Ragosa, J.D., a Partner in Business Finance with Morgan Lewis in Princeton. “It’s mainly later stage deals that are getting done. And for those companies that have not been able to get funding, we have seen a number of distressed sales.”

Gene Detroyer, a Director with Five Prime Advisors in New York City, emphasized that the current crisis is unlike anything the industry has seen before and big pharma is unlikely to come to the rescue.

“Big pharma is in the business of delivering drugs through their channels,” said Detroyer. “They need billion dollar drugs to justify supporting their channels. So if you think you’re going to cash out with big pharma, don’t wait for it. Find ways to incrementally increase the value of your company. There was a similar crisis in 2001, but this one is much deeper. It will take much longer to come out of it. Those folks with funds are more reticent. They are looking at a completely different risk-reward equation.”

Symposium panelists also included: Annarie Lyles, Ph.D., Genmab, Senior Vice President/Head of Business Development; Andrew Reaume, Ph.D., M.B.A., Melior Discovery, President/CEO; Evan Myrianthopoulos, DOR Biopharma, Chief Financial Officer/Senior Vice President; Avjit Roy, Ph.D., Five Prime Advisors, Director; Mike Page, United BioSource Corp., Sr. Director, Regulatory Affairs; Linda Pissott Reig, J.D., Porzio, Bromberg & Newman, Principal; Nigel Smart, Ph.D., Smart Consulting, Managing Partner; and Vincent A. Vietti, J.D., Fox Rothschild, Partner.

Yankee Public Relations

Yankee Public Relations LLC is a boutique investor relations, marketing communications and media relations firm with more than 45 years of combined experience leading proactive communications initiatives in the life sciences and finance industries. For more information, please visit www.yankeepr.com.

SOURCE Yankee Public Relations LLC

Below is the press release report released today following up on a workshop held in November 2008. Access to report and press release are available at http://www.ftc.gov/opa/2009/06/biologics.shtm.

FTC Releases Report on “Follow-on Biologic Drug Competition”

Providing FDA With Authority to Approve Follow-on Biologics Would be an Efficient Way to Bring Them to Market, Lowering Consumers’ Health Care Costs

The Federal Trade Commission today released a report entitled “Follow-on Biologic Drug Competition”which examines whether the price of biologic drugs – products manufactured using living tissues and microorganisms – could be reduced by competition from so-called “follow-on biologics” (FOBs). FOBs are like generic drugs, but with significant differences. Biologics are increasingly used to treat arthritis, cancer, diabetes, and other diseases. No pathway currently exists for such FOBs to enter the market and compete with their pioneer counterparts. The FTC’s Report concludes that providing the U.S. Food and Drug Administration (FDA) with the authority to approve such FOBs would be an efficient way to bring these lower-priced drugs to market.

“If Congress creates an efficient pathway to follow-on biologic drugs and, at least as important, ends ‘pay-for-delay’ pharmaceutical settlements that delay entry of traditional generic drugs, it will be taking a major step forward for both health care reform and affordable drugs for all Americans,” said FTC Chairman Jon Leibowitz.

Biologic drugs are quite expensive – even more than branded versions of most traditional “small-molecule” drugs. For example, the annual treatment with the biologic drug Herceptin (a breast cancer treatment) can cost $48,000. FOBs, if brought to market, could reduce the estimated $40.3 billion a year consumers spend on biologic drugs. The FTC’s Report examines how this might occur.

The Commission’s Report summarizes the findings of a public roundtable the agency held in November 2008 to examine how FOBs could enter the market, and what competition between FOBs and pioneer biologic drugs likely would look like. The FTC also solicited two rounds of public comments on the issue of biologic drug competition and accepted additional expert analysis in reaching its findings and developing forward-looking recommendations.

In large part, the Report compares potential entry and competition by FOBs with entry
and competition by small-molecule pharmaceuticals. In 1984, to encourage generic competition in the small-molecule drug market, Congress passed the Hatch-Waxman Act. The Act, among other things, gives the first-filing generic drug manufacturer a 180-day marketing exclusivity period after it introduces its product. The goal was to encourage innovation and generic drug entry by providing a period in which the first-filer would have no competition from other generic firms. As the price of generic drugs is often significantly less than their branded counterparts, generic entry can significantly reduce health care costs for consumers. In fact, after several generic competitors enter the market, prices for a particular drug can be reduced by up to 80 percent.

In recent years, “pay-for-delay” patent settlements, in which manufacturers of brand-name drugs pay potential generic competitors to stay out of the market, have delayed consumer access to lower-cost generic drugs. Last week, U.S. House Energy and Commerce Committee’s Commerce, Trade, and Consumer Protection Subcommittee passed the Protecting Consumer Access to Generic Drugs Act of 2009 (H.R. 1706), which would prohibit such anticompetitive settlements and, ultimately, could significantly lower prescription drug costs.

The Commission’s Report states that competition by FOBs is unlikely to be similar to branded-generic drug competition because:

• The substantial costs to obtain FDA approval, plus the substantial costs to develop manufacturing capacity, will limit the number of FOB competitors;

• The lack of automatic substitution between an FOB drug and a pioneer biologic drug will slow the rate at which FOBs can acquire market share;

• An FOB drug also may have difficulty gaining market share due to concerns about safety and efficacy differences with the pioneer biologic drug;

• Biologic drugs currently are not reimbursed according to strategies that insurers often use to encourage the use of lower-priced drugs;

• As a result of these factors, FOB entry, although important, will be less-dramatic than generic drug competition. FOB entry is likely in biologic drug markets larger than $250 million in annual sales. Only two or three FOB manufacturers are likely to attempt entry for a given pioneer drug product. These entrants are unlikely to introduce their drugs at discounts any larger than between 10 and 30 percent of the pioneer product’s price;

• The effect on pioneer manufacturers also will be different. They are expected to respond and offer competitive discounts to maintain market share and are likely to retain 70 to 90 percent of their market share and will continue to reap substantial profits, even after FOB entry.

Based on these findings, the Report concludes that patent protection and market-based pricing will promote competition by FOBs, as well as spur biologic innovation. It states that legislation to put a process in place for the abbreviated FDA approval of FOBs is likely to be an efficient way to bring FOBs to market, because of the time and cost savings it would provide.

In addition, the Report states that the 12- to 14-year regulatory exclusivity period is too long to promote innovation by these firms, particularly since they likely will retain substantial market share after FOB entry. The Report concludes that special procedures to resolve patent issues between pioneer and FOB manufacturers before FDA approval, which are not needed,
could undermine patent incentives and harm consumers. Finally, the Report states that FOB manufacturers are unlikely to need additional incentives – such as a 180-day marketing exclusivity period – to develop interchangeable FOB products.

The Commission vote approving issuance of the Report was 4-0. It can be found on the agency’s Web site at http://www.ftc.gov/os/2009/06/P083901biologicsreport.pdf.

Production of recombinant protein drugs starts out with the selection of a cell line. This decision is crucial to avoid increased costs down the line. Once a suitable cell line has been established, further development and optimization of the production process can be considered. The varied modes of cultivation and of holding media available, including common in-situ fixed bioreactors and single-use systems, lead to  more decision points and optimization strategies. Testing the scalability of a chosen process prior to production is a fundamental step for an efficient and cost-effective transition to clinical material lproduction from development. Looking at the relationship of all of these factors very early in the process allows for a significant reduction in complications downstream.

The selection of expression technology should be considered the most important decision in the development of any product. An uninformed selection based only on commercial requirements, can have dire consequences on the efficacy of the target recombinants down the line. Bacterial systems are considered ideal because of their low cost, high productivity and ease of use compared with mammalian systems. The lower risk of contamination due to viruses and other agents which can be present in, for instance, mammalian systems, is a regulatory and safety benefit. However, bacterial production cannot yield an effective product because of the requirement for post-translational modifications such as  glycosylation, which can only be achieved with eukaryotic systems.

Other systems, such as yeast and insect cell production bring a combination of some of the benefits of microbial production with the capability for limited post-translational modifications. However, some of the best production systems, such as Pichia pastoris, are under protection and require licensing for their use. Of the hundreds of biopharmaceuticals in development, it is estimated that  50%  are being developed using mammalian systems. The main observed advantage is the achievement of a recombinant protein that is  ‘human-like’ in nature.  The problem is that the possible production costs and hurdles are much greater than those encountered when using microbial systems.

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Regenerative medicine is finally enjoying advancements at least equivalent to those of other areas. Given that its subject matter is the reduction of degeneration and increase of tissue repair, this area of medicine required a lot more research before it began to show any results. In particular, the discovery of stem cells was of great importance.

Stem cells are unprogrammed cells that can divide forever and become specialized as any kind of tissue. They can be found in embryos and in some adult tissues such as bone marrow.

The promise of regenerative medicine is quite remarkable: to heal injuries and cure disease by growing and replacing body tissues. The claim that this can be achieved is not made lightly, and where money starts flowing one can expect there to be reasonable probability of success. One such instance can be found in the investment announced by Pfizer, the U.S. drugs group last April.  Pfizer cash is going into backing University College London research into a stem-cell project to treat a common cause of blindness, age-related macular degeneration. This revived Intercytex, a struggling biotech that put itself up for sale this year. “Intercytex rose 4p to 9.875p as investors noted that its subsidiary supplies stem cells for the project and should benefit from royalty payments if Pfizer manages to bring a treatment into clinics.”, reported the London Times.

To be sure, such treatments becoming commercially available will mean a bonanza to the health industry – not to mention the unequaled advancement in human well-being.

Even in its infancy, stem cell based treatment research is already getting the financial markets and pharmaceutical industry excited, and while there will be winners and losers, all seems to indicate that research is showing promise that is tangible enough to put cash behind it.

Advancements keep coming; Alpha Med Press published a paper on May 1, 2009 that University of Texas MD Anderson Cancer Center scientists put out, where they announced having found functional evidence that the embryonic stem cell self-renewal gene NANOG, which is purportedly expressed in some epithelial cancer cells, can also be found expressed as a functional variant in cultured cancer cells, xenograft and human prostate cancer cells. Functional studies have found that RNA interference mediated NANOG knockdown inhibits tumor development.

When it comes to recombinant protein drugs, the selection of the correct expression technology is of paramount importance. This is true from the first steps of development through clinical production to commercial manufacturing thereafter.

This is so important because, the correct balance between time and cost against yield and quality is essential to maximize return on investment. Although the creation of a regulatory-compliant cell line is a basic step in the production of clinical material, the starting choice of expression technology is sometimes a quick and not well-considered activity that is sometimes sacrificed  in importance over financial expediency..

Recently, there has been increasing pressure within the biopharmaceutical community to produce high-quality batches  in shorter production times, which is only possible through flexible and robust, low-cost processes.

An increasingly important number of recombinant proteins in development are monoclonal antibodies, which usually require  multiple clinical doses at 10–100 times greater dosage concentrations than some other successful recombinant protein drugs, such as erythropoietin and human growth hormone. As a result there is a concerns in the industry about the sufficiency of manufacturing capacity for Cell Culture products.

To make up for these potential short falls in available capacity, there is intense focus on increasing expression levels to 1 g/L, with some now reporting 5 g/L. Demand for greater productivity has caused cell line development and optimization to become an increasingly critical step in the development process and one to be considered very early so as to guarantee effectiveness.

Some key factors in the cell line optimization process include deciding on the appropriate expression vector, cell line stability, media choice, media development, clone analysis, and process optimization Strategy.

Like in every biopharmaceutical process, the possible benefits of using proprietary expression technologies need to be carefully considered against the costs; in particular intellectual property rights costs, which may trigger eventual royalty accumulation. In the production of a clonal cell line, the expected development of molecular biology, transfection/selection and the minimum two rounds of cloning along with some scaled evaluation of each clone is often limited by deadlines, cost and the utility of the cell line. Identifying the critical decision points and key steps of cell line development is essential when putting together the strategies and methodologies for successful recombinant products manufacture.

The Internet age has brought about countless positive changes to the way we live.. However, it has also created many problems, due to the difficulty to keep control over information used for the wrong reasons. . Every day different controversies arise as a result of governments’ intents to protect people’s welfare without breaking their right to freedom of expression, free will.

The FDA is currently struggling to contol the flourishing online pharmaceutical business, as it is perceived that in some cases it may pose a health risk to US citizens. This perception is being fueled by the fact that not all the internet marketers comply with the standards and laws policed by the US FDA . Even though pharmaceutical consultancy firms have assisted the different companies to help them comply with the all necessary regulations, the task for the FDA has become increasingly difficult, mainly because of the number of rouge websites, offering foreign products with no control and therefore, no safety.

The FDA claims that the uncontrolled provision of medications online represents an enormous risk that needs to be reduced; the result of such complaints has led some to consider the purchase and distribution of foreign medications to US citizens as officially illegal. What are the real dangers behind online medications? Here is a list of the main points of the controversy, for your consideration.

1. NO PHYSICIAN: Only a few websites have a physician online to provide professional assistance. Many websites offer a survey-type service, whose main failure lies in the fact that symptoms are standardized without considering individual differences and individual patient’s medical history. Only an online physician can ask the right questions, and in the absence of a professional, self medication is an enormous risk.
2. IMPORTED DRUGS WITH NO CONTROL : Prescription drugs require the approval of a doctor because they still represent some risk under specific circumstances. To skip this, most Internet users resort to imported prescription drugs because they are a quick and an uncontrolled buy. Many of these products are still in the process of obtaining FDA approval, and some have clearly been rejected. The choice for an imported prescription drug with no control may bring on dangerous results to health. Self medication and no quality control can cost lives.
3. CHEATING: Foreign or imported medications online may be cheaper, but if quality isn’t up to par, customers are definitely cheated. Clearly, if the products bought online give poor results, the buyers waste their money. If the medications present undesirable, irreversible side effects, no possible reimbursement can compensate for their loss. People don’t seem to be aware of the danger of buying products which are not considered as safe and effective by the FDA. In an uncontrolled business, losing only a few dollars and not your life can be the least of your troubles.

The FDA is not always seen as popular because of this controversy, but the agency’s original responsibility for public health  remains unchanged. Thousands of lives can be saved by exerting more control over what people buy on the Internet. And even if  the pharmaceutical business finds the amount of regulation excessive and time consuming, the FDA will keep enforcing the law.. By proving that a product is harmless and gives good results, both consumers and companies are protected. Consumers, on the other hand, complain that their free will is being affected, but, in a world where Internet frauds are born every day and trustworthy companies risk their prestige due to poor imitations, isn’t it good to have someone taking care of these matters?

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Biotechnology companies are now quite convinced of the advantages of stirred tank disposable bioreactors for their manufacturing. The economics and advantages are so compelling that in a few years we could see the universal use of these equipments in all new production lines. Also, the FDA has accepted now, for more than one year, investigational new drug applications using these new equipments.

Large scale means upwards of forty and up to two-thousand litre working volume ranges and higher, although beyond two-thousand litres, the traditional stainless steel bioreactor is still preferred.

The fully-installed capital cost to put a single-use system, is double that of disposable systems, including utilities. Installation time is one-third in the case of one-use reactors. The need for cleaning validation is eliminated, thus reducing costs even more and improving the opportunity of changeover in facilities that are multiproduct. Stainless steel reactors require many hours of cleaning, lots of water and cleaning products, and agents to be ready to use, which increases production time – and cost.

With time between batches also reduced, the output of a production facility can also be increased, thereby also reducing costs.

In the next decade, the workhorse bioreactor for the industry will be around two-thousand litres and not 10,000 to 20,000 litres, as it currently stands. Drugs are becoming more potent and niche markets are becoming smaller, which requires more specific, productive, and efficient processes. Disposable technology makes drug development in niche markets much more economical, since a major hurdle in the development of these personalized drugs is precisely the smaller size of the niche and thus the difficult justification of an investment by a manufacturer.

In short, both development and manufacturing of bio products using single-use technology is more economical when we look at the trend taking hold, where products are more focused and go to smaller and smaller niche markets.