U.S. Biosimilars Under Threat?

by D’vorah Graeser, Graeser Associates International

D'vorah Graeser

While the FDA continues to develop its guidance for U.S. biosimilars, including a one-day public hearing on May 11, 2012, the basic legal underpinnings of biosimilars in the U.S. may be under threat, as the Supreme Court debates the healthcare law, a large chunk of which includes provisions for biosimilars.

As background, biosimilars were discussed for many years in the U.S., but unlike Europe, no regulations were developed. As part of the health care law’s cost controlling measures and to promote biosimilars innovation in the U.S., the Biologics Price Competition and Innovation Act (PPACA) was included in the bill. However, the act was stated to be “non-severable” from the rest of this law, meaning that if the PPACA is struck down, so is the biosimilars part of the law. That means, even if the Supreme Court does not specifically object to the Biologics Price Competition and Innovation Act, its mere inclusion in the PPACA could lead to its downfall.  As a side note, the Supreme Court does not seem to have much of an opinion on generic biologics one way or the other, with Supreme Court Justice Stephen Breyer referring to “the biosimilar thing” during oral arguments.

This uncertainty comes at precisely the wrong time. Innovation in biologics has taken off in the U.S. The FDA reported that at least 35 requests for biosimilar pre-IND meetings were made in reference to 11 biological drugs as of February 15, 2012; as of that date, 21 pre-IND sponsor meetings were held and 9 INDs had been received. The FDA is instituting measures which are likely to further increase the popularity of this program, including providing a path to regulatory approval in the U.S. for similar biological products licensed outside the U.S.

Although the Biologics Price Competition and Innovation Act could be passed again as a separate law, the upcoming presidential election and campaign maneuvering are both likely prevent any real action on that particular motion. The bill will probably be swept to the side as “politicking” takes the place of “policy making.” This would be unfortunate, as the Act would clearly benefit consumers by reducing the price of biological drugs, which are typically among the most expensive on the market. The bill would also prevent originator biotech companies from enjoying a de facto “post patent” monopoly, due to the current expense and uncertainty of achieving regulatory approval for “generic” forms of these drugs.

Dr. D’vorah Graeser is the founder and CEO of Graeser Associates International (GAI), an international healthcare intellectual property firm.

Related: Biosimilars Spend to Reach $2.5 Bln by 2015: IMS

The JOBS Act: A Boost for Biopharma?

By Christopher Allen, Associate Editor, Pharmaceutical Technology.

Amid one of the most divisive eras in our nation’s political history, one thing we can all pretty much agree on is the fact that our stalled economic engine needs a jumpstart.

According to recent data from the US Bureau of Labor Statistics, the national unemployment rate has been above 8% for more than three straight years (with some estimates above 17% for underemployment, which includes potential workers who are not even and/or no longer counted by labor statistics). A central issue for the 2012 Presidential campaign will rest on candidates’ strategies for dealing with how to stimulate economic growth in order to restore prosperity to levels not realized in this country for seemingly an eternity.

The Jumpstart Our Business Startups (JOBS) Act (H.R. 3606), which aims to ease regulatory barriers for start-up businesses, recently passed in the US House of Representatives by a 380-to-41 vote on Mar. 8, 2012, and the Senate on Mar. 27. According to H.R. 3606’s official summary (obtained from GovTrack.us), the bill “Modifies the application to emerging growth companies of any auditing or other professional standards the Public Company Accounting Oversight Board may establish that were proposed by one or more professional groups of accountants. [The bill also] exempts an emerging growth company from any such rules requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the issuer’s financial statements (auditor discussion and analysis).”

The measure has been hailed by several biopharmaceutical manufacturers as well as the Biotechnology Industry Organization (BIO). In a Mar. 27, 2012 press release, BIO President and CEO Jim Greenwood said, “BIO applauds passage of the JOBS Act and all efforts to incentivize and encourage capital formation for growing companies working to develop breakthrough medicines and cures for devastating diseases. These reforms are especially important to innovative biotechnology companies that must spend investor dollars to address bureaucratic red tape and hurdles rather than the search for cures and breakthrough medicines.”

Additionally, according to the BIO release, the JOBS Act “creates an ‘on-ramp’ to the public market for emerging growth companies, allowing them five years to focus on conducting critical research that can lead to cures for debilitating diseases—such as cancer, HIV/AIDs and Parkinson’s disease—before having to divert funds to address bureaucratic hurdles that cause unnecessary delays. Through this legislation, emerging growth companies will be exempt for their first five years on the public market from the compliance burdens of Sarbanes-Oxley Section 404(b), which the Securities and Exchange Commission (SEC) studies estimate cost companies up to $2 million per year.”

The JOBS Act also aims to:

• Expand the eligibility requirements of SEC Regulation A to include companies conducting direct public offerings of up to $50 million

• Increase the limit that requires private companies to register with the SEC from 500 to 2,000 shareholders

• Require the SEC to revise Rule 506 of Regulation D to permit general solicitation in direct public offerings, broadening the investor base.

In highly regulated industries such as the biotechnology and pharmaceutical manufacturing sectors, any measure to appropriately toss aside bureaucracy in order to foster growth and research certainly opens up doors for potential major breakthroughs. Such breakthroughs can yield the promise for massive dividends, both financially and in terms of saving lives.

VC Funding Floods Colorado Biotechs, But Will It Stifle Innovation?

By Marylyn Donahue.

Biotechs in Colorado, US, are enjoying a windfall of funding from Venture Capitalists who have to date invested $66.1 million in six of the state’s companies working in the fields of biofuel, medical devices and biopharma, according to a report released Feb 21 by OnBioVC, a Boulder-based tracker of investments in the life science industry.

The increase in money invested in the Colorado companies parallels a national trend. OnBioVC counted 305 companies received a total of $6 billion in 2011, up from 281 companies that collected $5.2 billion the previous year.

Small biotech have always been synonymous with innovation. Will that still hold true with this model? The question is asked this month by Stewart Lyman, a Seattle consultant, in an article in Xconomy.

“While this new model may generate good financial returns for VCs, is there much data to support the idea that this approach will succeed in generating new and useful drugs? Will it siphon money away from other approaches? What effect will adopting this model have on the biotech ecosystem?” asks Lyman.

His point is that the biotechs who have survived and thrived in the past quarter century such as Biogen, Immunex, and Genentech have been companies that established relatively large, cutting edge research programs that hired young, innovative scientists by promising them a certain degree of intellectual freedom to pursue research projects and build their reputations on the results.

“While these researchers were well compensated financially for their efforts, I don’t know of a single one who signed on for the money. Their true reward: the ability to make ground-breaking scientific discoveries, publish and present their data in prestigious journals and conferences, and help turn them into breakthrough medicines for treating serious medical problems,” he goes on.

Five years ago, in the heyday of small biotech funding, VC’s footed the bill for small companies with research staffs and brick and mortar headquarters. That proved not to have weathered economic hard times. This time around, VCs seem to be favoring the “virtual model,” small, single project startups who outsource R&D. Good for the funders, but not necessarily for drug development.

The primary goal of venture capitalists is to invest in companies that can be liquidated (via acquisition or IPO) for a significant return in a relatively short period of time. But are virtual companies counter to the very definition of the biotech ecosystem? asks Lyman. Having to outsource core skills will they loose hat biotechs have always been heralded for—talent? Will contract workers perform with the same passion as those who are directly invested in the success of a new drug?

“Can remote oversight substitute for walking down the hall to get your questions answered?” asks Lyman.
And where is the ability to follow-through if a single product does not deliver? The venture capitalist doesn’t suffer. But then who does?

“Every time a venture capital firm boasts about a biotech acquisition that provided a substantial return on their investment, let’s keep track of whether or not the acquired asset actually makes it to market,” says Lyman. “I’ve yet to see a sick patient cured by an infusion of stock warrants or the cutaneous application of cold, hard cash.”

Shrinking Economy Hits California Biosector

By Amy Ritter, Pharmaeutical Technology.

A report released on Feb. 8, 2012 from the California Healthcare Institute, BayBio and PwC shows that the shrinking economy, changes in investment strategies, and pressures on the pharmaceutical market have put the brakes on one of the US’s most robust biotechnology centers. California had enjoyed steady growth in its biotech sector for the past two decades, and according to the report, is the source of 28% of the country’s biomedical pipeline. More recently, as with the rest of the world, the slowdown in the global economy has taken its toll on this area. The industry lost approximately 6,300 jobs, or about 2.3% of its life-sciences workforce since 2008, returning employment levels to those seen in 2006.

By Amy Ritter, Pharmaceutical Technology.

A report released this week from the California Healthcare Institute, BayBio and PwC shows that the shrinking economy, changes in investment strategies, and pressures on the pharmaceutical market have put the brakes on one of the US’s most robust biotechnology centers. California had enjoyed steady growth in its biotech sector for the past two decades, and according to the report, is the source of 28% of the country’s biomedical pipeline. More recently, as with the rest of the world, the slowdown in the global economy has taken its toll on this area. The industry lost approximately 6,300 jobs, or about 2.3% of its life-sciences workforce since 2008, returning employment levels to those seen in 2006.

The report defines the biomedical sector as consisting of basic research, biopharmaceuticals, diagnostics, medical technology, research tools, laboratory services, and wholesale trade companies. When broken down by area, the employment news is not uniformly bad. Most of the job losses were from academia and from the device industry, and were partially offset by gains in the biopharmaceutical sector. CEOs within the industry were surveyed as to the reasons for reducing their company’s operations within the state. The top three reasons given were cost cutting, the overall business climate, and expanding new operations outside of California. Most CEOs were optimistic about the future, the majority indicating that they expected to either hold steady or increase operations inside and outside of California.

The investment climate has been affected by the economic slowdown, which in turn, affects the operations of companies in California. According to the report, more than 74% of respondents said that their company had delayed a research or development project in the past year, up from 69% in 2010. The overriding reason, at just over 40% of respondents, was cited as “funding not available.” In an accompanying press release, Tracy Lefteroff, national life sciences partner at PwC US offers this analysis. He says, “The life cycle of biomedical startup companies has changed as challenges to raising capital have increased. Whereas their greatest challenge in years past was in validating the science, these companies now need to validate getting funding by lowering costs and improving returns. The strength of California’s life sciences industry remains closely tied to the level of confidence that the investment community has in the industry’s ability to develop innovative products while effectively managing the challenges associated with clinical and regulatory risk.”