Best Of BIO: Policy & Regulatory Updates From BIO 2017

Antibiotic incentives, vaccine strategies, drug pricing, patent updates and more hot topics from the Biotechnology Innovation Organization's recent annual conference.

Editas Patents Preserved As Gene Editing Nears Clinic

The gene-editing specialist Editas Medicine Inc. is working on preclinical studies to support the filing of its first investigational new drug (IND) application in mid-2018 for a therapy to treat leber congenital amaurosis 10 (LCA10). Patent disputes between two major CRISPR/Cas9 inventors have been going on while those preparations are under way, but decisions largely have been occurring in Editas's favor.

The US Patent and Trademark Office (USPTO) Patent Trial and Appeal Board (PTAB) decided in February that there was "no interference in fact" in a patent interference complaint filed by the University of California in regard to patents issued to the Broad Institute of Harvard University and the Massachusetts Institute of Technology. Editas holds a license to the Broad patents. (Also see "UC's CRISPR Licensees Unbowed By Losing Initial US Patent Office Ruling" - Scrip, 16 Feb, 2017.)

"It was a favorable decision for us, but it also got to the heart of the matter – the patent was not obvious based on the science in the field," Editas CEO Katrine Bosley said in an interview at BIO.

"We have always looked at intellectual property as very important and it's a multifaceted portfolio," Bosley said. "These are important assets that give us the ability to build a company."

Editas is the only company using CRISPR technology for gene editing that also has intellectual property related to the protein Cpf1, which means the company can use either Cas9 or Cpf1 as the protein attached to a guide RNA molecule that's been designed to recognize and edit a specific DNA sequence. The European Patent Office recently grant the first Cpf1 patent in the EU, which is exclusively licensed to Editas. The protein Cpf1 expands the range of genomic sites that can be edited.

On top of the Cas9 and Cpf1 licenses in the company's patent portfolio, Editas has developed its own intellectual property or licensed additional IP related to the optimization and engineering of molecules in its therapeutic pipeline.

Anti-Infective R&D Needs Upfront Incentives, Zavante's Schroeder Says

Zavante has an easier path than most anti-infective drug developers with its Zolyd (intravenous fosfomycin), which is already approved ex-US and slated to be submitted to FDA in 2018 for treatment of complicated urinary tract infections. But for companies to undertake discovery and the exhaustive R&D work needed to bring novel antibiotics or antifungal agents to market, there should be greater incentives than those provided by the GAIN Act, including the Qualified Infectious Disease Product (QIDP) designation and five additional years of data exclusivity, CEO Ted Schroeder told the Pink Sheet during the BIO conference.

While anti-infective research has picked up, industry continues to push for further incentives. (Also see "Antibiotic Incentives: Pfizer’s Read Touts Exclusivity Voucher" - Pink Sheet, 28 Mar, 2017.)

"The GAIN Act tends to reward you on the back end," Schroeder said. "But you have years and years of investment and then finally commercialization and then you have to go all the way to the end of your patent life to benefit from the GAIN Act."

Schroeder thinks companies that bring a new anti-infective through full-scale R&D would benefit by a change in the CMS coding process.

"Removing antibiotics from the DRG [Diagnosis Related Group codes] and allowing separate reimbursement at the hospital level would help closer to the time of launch," he said. "Right now, if a hospital gets paid, say, $23,000 to do a gall bladder surgery, if the patient develops an infection, the cost of [treating] that infection comes out of that payment to the hospital. Maybe a couple of decades ago that system worked to bring costs under control, but the problem now with the global interaction of the population and the way organisms move around the world, I think it's a little naïve to say that the infection is the hospital's fault."

Schroeder also suggested that CMS might be able to enact a change like this on its own, without Congressional approval. He added that other policy changes being discussed to augment the GAIN Act – such as a refundable R&D tax credit that companies could sell off to generate revenue – could help, but a thorough strategy to provide incentives is needed to spur development of novel anti-infectives to address the issue of treatment-resistant bacterial and fungal infections.

"Those proposals are interesting and I understand the policy debate around them, but we're going to have to do something to figure out how to incent the companies to continue to make the investment in anti-infectives," Schroeder said. "This is a giant threat and at some point the outcomes are going to be dismal if we don't do something about this."

Too Much "Me Too" Development In Immuno-Oncology?

During a June 21 session on "standing out from the crowd" in cancer R&D, several speakers at the BIO conference asserted that the immuno-oncology space is being overrun with companies trying the same things, rather than staking out new territory.

Grant Williams, a consultant and former deputy director of oncology drugs at FDA, recalled Oncology Center of Excellence Director Richard Pazdur warning in a candid moment that biopharmaceutical companies were "going off the cliff" in terms of investing in the same classes of drugs, to create roughly the same benefits in similar patient populations. "Honestly, from my standpoint, it's stupid, it's an incredible waste of resources to be putting all of your resources into proving the very same concept and just trying to milk the same [opportunity]," Williams said.

He added that when he was involved in reviewing NDAs for Novartis AG's Gleevec (imatinib) and Bristol-Myers Squibb Co.'s Taxol (paclitaxel), cancer drug development was a vastly more differentiated process. "There was one drug at a time and you didn't know what they were doing, it was an accidental discovery, there were no 'me too's'," he said. "Now, we're in the 'me too' world and it's a huge waste of resources." Williams asserted that in such an overcrowded space, there likely is no science that will make one specific drug "jump out at the field."

Jay Stamatis, AbbVie Inc.'s VP of business development and acquisitions, said he was aware of 47 PD-L1 inhibitors that had been identified. "That's a lot of antibodies doing the same thing," he pointed out. "And a lot of them are being developed by companies that want to use them as their own [combination therapy] backbone, so they're not trying to [innovate] – it's a reimbursement question and a strategic question, so that you can kind of control your destiny with regard to how you do your pricing. It's crazy because each [sponsor] is going to have to show that each one of them works in the same way and use the regulatory models for clinical trials to isolate an effect and so on."

Offering the VC perspective, Venrock VP Nimish Shah also decried the duplication of effort going on, with waves of companies claiming to have the next great checkpoint inhibitor and then claiming that they had the ideal combination partner, or more recently that they would work in PD-1 refractory patients. "What people don't understand is for us, we're not in a vacuum, we're seeing multiple companies pitch the same message, over and over, so it's hard for us to know which one is going to win," Shah said.

A PBM Complimented A Pharma Company? Yes, Really

Express Scripts Holding Co. Senior Vice President and Chief Medical Officer Steven Miller has been a vocal critic of drug pricing practices – a leader among payers in terms of calling out the high cost of medicines. That's why it was a surprise to hear the pharmaceutical benefit manager (PBM) executive praise a pair of biopharma companies for their strategy in pricing a new atopic dermatitis drug.

Miller, speaking during a BIO Convention super session titled "Our Common Goal: Ensuring Access And Affordability Of Innovation Medicines," complimented Sanofi and Regeneron Pharmaceuticals Inc. for proactively talking with payers about their newly approved Dupixent (dupilumab) for atopic dermatitis. (Also see "Sanofi/Regeneron Choose Access Over Price With Dupixent Launch" - Scrip, 28 Mar, 2017.)

Miller noted a shift from volume-based reimbursement contracts for prescription drugs to value-based contracts under which biopharma companies are paid when drugs work as they're supposed to under US FDA-approved labels. "Value-based contracting has required people to start talking and it's not just transactional," he said, using Sanofi/Regeneron and other companies as examples.

"When Sanofi and Regeneron were bringing dupilumab to the marketplace, they went on a listening tour," Miller said. "They wanted to understand our pain points. We needed to understand their pain points."

As a result, Miller said, "they brought dupilumab out at an incredibly reasonable price" – $37,000 dollars per year versus $65,000 for biologics that treat psoriasis. Since then, Express Scripts has had similar experiences with the Genentech Inc. multiple sclerosis drug Ocrevus (ocrelizumab) and Radius Health Inc.'s new osteoporosis drug Tymlos (abaloparatide). (Also see "Roche Set For Disruptive Entry To MS Market With 'Brave' Ocrevus Pricing Strategy" - Scrip, 29 Mar, 2017.) and (Also see "Radius Prices Osteoporosis 'Blockbuster' Tymlos To Compete, Grow Market" - Scrip, 1 May, 2017.)

Of course, true to form, Miller said earlier in the discussion that "manufacturers use rebates to reward and punish PBMs. If I put a drug on my formulary, they want to give me a discount. If I don't put their drug on my formulary – I put a competitor's drug on my formulary – they want to punish me" with less of a rebate or no rebate.

Why Might Pharma Participate In International Pandemic Vaccine Effort?

Merck & Co. Inc. sees its participation in an international public-private partnership that's designed to get ahead of the curve on infectious disease pandemics as – at least in part – a matter of corporate responsibility, according to Julie Gerberding, executive vice president and chief patient officer at the New Jersey big pharma. She and other biopharma executives who participated in a June 20 panel discussion outlining the plans and goals of the Coalition for Epidemic Preparedness Innovations (CEPI) were asked why they were participating in the effort. (Also see "CEPI Global Vaccines Launch May Augur Creation Of Credible Davos Deal" - Scrip, 19 Jan, 2017.)

Gerberding noted that Merck is one of only six large companies still participating in the creation and development of vaccines.

"There is a global treasury of very limited know-how around the world and when you have the responsibility of being a custodian of that kind of capability, you have a special responsibility, which we're exercising along with Johnson & Johnson and GlaxoSmithKline PLC in the context of the recent Ebola outbreak in West Africa, to step up," she explained. "And I think that it may not be something that makes sense to shareholders today, but it certainly makes sense in terms of the traditions and ethics and values incumbent."

Nima Farzan, CEO of PaxVax Inc., another private-sector partner in the CEPI effort, added that one of the goals should be to expand expertise around vaccine development. Right now, that segment of the industry is too concentrated, he said, and as a result so is the innovation in that space.

Outcomes-Based Contracts: Ready For The Next Level

"There still are opportunities or pockets of opportunities," Ernst & Young LLP Principal Susan Garfield said in an interview after moderating a panel titled "What Is The Future For Outcomes-Based Contracting? Moving From Ideas To Action." She noted that no companies have been able to negotiate an outcomes-based contract and then take that template to other payers and institute the same or similar agreements for that same drug. There's still a need for stakeholders to come together in one place with data on the performance of outcomes-based contracts, so that the agreements can be advanced into more complex deals.

The biggest opportunity going forward, however, is that payers and industry are starting to work together more on drug pricing concerns, including solutions like outcomes-based contracts.

"Payers and industry and beginning to see each other as partners. They're asking and answering the same questions," Garfield said. "They're working together in ways that we haven't seen until very recently."

That includes working together on issues that remain roadblocks in outcomes-based contracting and other means of negotiating reimbursement agreements, such as regulations that limit discussions between biopharma companies and payers prior to US FDA approval. (Also see "Value-Based Contracts: Relief From Regulatory Barriers In Sight?" - Pink Sheet, 13 Feb, 2017.)

President Donald Trump is generally expected to support outcomes-based contracts, though his administration has not come out with any specific policy proposals on that or related drug pricing issues.

"Many people feel that the Administration is open to discussing many of these topics," Garfield said, but whether that will happen in an executive order or in the ongoing health care reform bill negotiations is unclear. "There's uncertainty about the vehicle and the timing and specifics."

Aldeyra Asking FDA To Approve Same Trial, Different Endpoint

Aldeyra Therapeutics Inc. was encouraged by the Phase IIb results for its aldehyde-trapping drug ADX-102, which the company reported just before BIO, even though the clinical trial did not meet its endpoint of at least a one-point reduction in eye itching scores for patients with allergic conjunctivitis who underwent an allergen challenge five minutes after using the eye drops. (Also see "Aldeyra's Allergy Drug Misses Endpoint But Company Sees Market Gap" - Scrip, 15 Jun, 2017.) However, the Lexington, Mass. company plans to move its topical therapeutic into Phase III testing if the FDA agrees to a different primary endpoint than in the Phase II program.

"The data were fantastic in two ways," Aldeyra President and CEO Todd Brady said in an interview, noting that ADX-102's performance versus the vehicle control was statistically significant and the drug did provide a significant reduction in itching 30 to 60 minutes after patients with seasonal allergies faced an allergen challenge. The latter point is important, Brady said, because there is nothing available that provides relief at the later time point. "It works after antihistamines stop," he said.

Aldeyra will talk with the FDA during an end-of-Phase II meeting about running a Phase III trial with seasonal allergy sufferers, excluding patients with permanent allergies, that looks for a one-point reduction in itching at 30 to 60 minutes after administration of ADX-102. That meeting is expected to occur in the fourth quarter.

Before then, the company expects to report Phase IIa data for ADX-102 in dry eye disease.

NIDA Has $1bn To On New Addiction Drugs; Embera Has Benefitted

During a June 20 panel titled "The Brain On Drugs: New Views And Approaches to Combatting Substance Abuse And Addiction," Nora Volkow, director of the National Institutes of Health's National Institute on Drug Abuse (NIDA), encouraged biopharma companies to consider development of therapies that address drug abuse, which is driven in large part by the epidemic of addiction to opioid pain medications.

"We have a $1bn-per-year budget" to fund grants that can support development of pharmaceutical interventions in the treatment of drug abuse, Volkow said. NIDA's translational researchers also are preparing and de-risking novel compounds and new formulations of existing interventions – compounds that are waiting for biopharma companies to add them to their development pipelines.

"Thank God for NIDA, because it de-risked out product enormously and it got us to our IND," Savant HWP Inc. President and CEO Stephen Hurst said during the panel discussion. NIDA provided a $6.5m grant in 2012 to support development of Savant's drug 18-MC in cocaine abuse. (Also see "Savant HWP Inc." - Scrip, 21 Feb, 2013.) The company may not have been able to raise capital without the grant, since Hurst said few biopharma investors have shown interest in addiction treatments.

Another NIDA funding recipient, Embera NeuroTherapeutics Inc. is progressing their drug EMB-001, which may be able to treat all kinds of addictions, including cocaine, nicotine and gambling addictions. The candidate is a combination of the FDA-approved drugs metyrapone (a cortisol synthesis inhibitor) and oxazepam (a benzodiazepine) that's designed to modulate the stress response in order to curb cravings. EMB-001's development has been supported by an $11m grant from NIDA, which far outpaces the company's venture capital financing to date. Embera revealed the second part of its small Series A funding round in 2015, which came in at $2m. (Also see "Embera advances drug abuse candidate with Series A" - Scrip, 10 Apr, 2015.)

"We have gotten more commitments from the NIH than investor capital, so far," Embera CEO Bob Linke said in an interview at BIO. "When we got the grant last year, it was a significant validating activity for pharma companies and investors."

The company's raising a Series B round now, which it plans to close in the second half of 2017, after which it will begin Phase II studies in smoking cessation and cocaine addiction. Both will be dose-finding studies that inform the Phase III program.