Lessons from Toronto on the Future of Regenerative Medicine in Japan

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One of the early pioneers of cell therapy as we know it today is Professor Arnold Caplan commonly thought of as responsible for the identification and isolation of the mesenchymal stem cell.  Several years ago Dr. Caplan launched a summer course at Case Western Reserve University he called Business of Regenerative Medicine. This year it was hosted by the Centre for Commercialization of Regenerative Medicine (CCRM) in Toronto - the first time it's been hosted outside of Cleveland.  

I was fortunate to be invited to participate in this year's 7th Annual “Business of Regenerative Medicine: New Therapies, New Models”.  Signals blogger, Mark Curtis, has done a nice job of summarizing the highlights of this year's course.  

One of the most valuable take-aways for me was from a talk given by the inimitable Professor Chris Mason of University College London who has reportedly been advising Japanese lawmakers and regulators on their new proposed regulatory framework for regenerative medicine.  

Let me back up.  In June 2012, regenerative medicine was given priority status in the national Cabinet Secretariat’s Five-year Healthcare Innovation Strategy. In October 2012 Prof. Shinya Yamanaka of Kyoto University won a share in the Nobel Prize in Physiology or Medicine for his work in the development of iPS cell technology. This solidified regenerative medicine as an area of national pride and one of the areas in which Japan wanted to demonstrate innovative global leadership not just for scientific discovery but for the development of an industry around those discoveries. However, the Japanese regulatory framework which applied to cell therapies was widely recognized as being in desperate need of revision in order to support true commercialization of these products.  It made sense, then, that the Japanese started their innovation with the regulation. 

In November 2013, the Japanese legislature (the National Diet) passed legislation that revised Japan's Pharmaceutical Affairs Law and created the new Regenerative Medicine Law intended to be the groundwork for establishing Japan as a global leader in regenerative medicine in the years ahead. The import of this legislation was that it created a legislative mandate to create regulation that established an expedited development and commercialization pathway for regenerative medicine therapies while continuing to ensure and protect patient safety. The legislation passed with overwhelming support in both the lower and upper houses of the Diet.  Since then the policy makers and regulators at the MHLW and PMDA have been busily attempting to build a regulatory framework around this mandate.

There has been a lot written about this potentially ground-breaking approach to regulating cell therapies (see also here and here) but until now I have seen very little detail around how the mandate of the new law might be translated into operational regulation.  On that front, here is my brief second-hand synopsis of what I think I learned from Chris:

• conditional approval will be available to any cell therapies that provide evidence of safety and early signals of efficacy - this is reportedly not limited in any way by the indication or by product type 
• in other words there is no need to be addressing an orphan indication or for the product to be autologous in order to qualify
• at least in the early days of this implementation it is expected that this data will be 'imported' from trials conducted outside of Japan 
• once conditional approval is granted, a sponsor company will have 7 years to obtain final approval
• there is likely to be a requirement that a product be manufactured in Japan to obtain final approval 
• conditional approval will also come with reimbursement though there is no indication yet as to how pricing will be determined
• there is an expectation that the pivotal studies needed to obtain final approval will be done outside of Japan - since the product is already being sold in Japan, conducting a placebo-controlled trial would be next-to-impossible

There are a number of Japanese companies already in the regenerative medicine and cell therapy space that may be the initial and primary beneficiaries of this new regulatory paradigm.  Most of these are involved in the Forum for Innovative Regenerative Medicine (FIRM) established in 2011 to promote and support the commercialization of regenerative medicine in Japan. 

As largely an industry organization, FIRM really started emerging as a key national player with its involvement in the development of this newly emerging regulatory framework.  To quote FIRM, "Commercializing this state-of-the-art technology is not just a question of scientific and biotechnological prowess; the broad-ranging manufacturing capabilities nurtured by Japan’s industrial community will also be an indispensable element. Indeed, this is an opportunity for Japan to leverage its unique technologies to grow an internationally competitive industry."

Over the past months it has been interesting to observe how companies in Japan (even large multinational conglomerates) have responded to this new national mandate.  Many of them appear quite anxious to demonstrate to their shareholders, government, and peers that they have active programs in regenerative medicine and thus are supporting this national initiative.  This appears to be creating considerable appetite among Japanese companies, many of whom have not been in the sector to-date, for regenerative medicine technologies with which they can associate. 

As a result of this phenomenon, we expect there will be many regenerative medicine companies outside of Japan which will find wins for themselves as a result of this national initiative.  Naturally, companies in the regenerative medicine and cell therapy space outside of Japan are tripping over themselves to prioritize Japan as part of their corporate planning and to elucidate their Japanese strategy to investors and partners as a competitive advantage and potential earlier route to market if not return on investment.  Some of the companies distinguishing themselves early in this race are Cytori (NASDAQ:CYTX), Mesoblast (ASX:MSB), and Athersys (NASDAQ:ATHX). 

Cytori has long been in Japan and is making sure no one forgets that by press releasing the importance of their Japanese focus.  

Mesoblast inherited a Japanese licensee when they took over the Prochymal portfolio from Osiris.  JCR Pharmaceuticals has the license for the allogeneic mesenchymal stem cell (MSC) product in Japan to treat steroid refractory graft-versus-host disease (GvHD). Mesoblast has announced its intention to leverage this door to the Japanese market. Given that the product has already received approval in Canada and New Zealand for pediatric GvHD, it has been speculated that JCR may be the first company to secure conditional approval for a cell therapy in Japan.

Not to be outdone, Athersys announced in January, "We are actively evaluating the potential for accelerated development of MultiStem cells in a number of therapeutic areas in Japan, and will seek to establish strategic collaborations to assist in the rapid development of products that will help Japanese patients." 

One of the sleepers in this race may be an emerging regenerative medicine company named RepliCel Life Sciences (TSXV:RP).  In May 2013 RepliCel announced a Collaboration and Technology Development Transfer Framework Agreement with Shiseido Company, Limited (Tokyo Stock Exchange Code: 4911) for an exclusive geographic license for RepliCel’s RCH-01 hair regeneration technology.  Shiseido has an exclusive geographic license to use RCH-01 in Japan, China, South Korea, Taiwan and the ASEAN countries.

This deal garnered RepliCel ~$4M in upfront cash and was valued at over $30M in milestone payments and sales royalties.  Perhaps more importantly, since that time the companies have executed a tech transfer agreement, RepliCel was granted a key patent in Japan, and Shiseido recently celebrated the opening of its new cell-processing facility at the Kobe Biomedical Innovation Cluster (KBIC).  This facility will focus on the commercialization of RepliCel’s RCH-01 hair regeneration technology for Shiseido's markets.

In speaking with management, I understand Shiseido has plans to conduct its own clinical trial of the product in Japan and that the companies are collaborating closely (through a joint development committee) on the continued improvement of the technology to ensure a single product emerges.  This means there will be data from two concurrent trials (RepliCel's proposed phase 2 trial in Germany and Shiseido's proposed trial in Japan).

My own take on this is that it seems RepliCel/Shiseido may be well positioned to take advantage of early conditional approval of this technology in Japan in a way that generates near-term revenue while they continue to generate clinical data and optimize the treatment (dose, frequency) and manufacturing.  In due course this data will be available to RepliCel to use in licensing discussions for non-Shiseido markets.  Furthermore, RepliCel/Shiseido have already solved the anticipated hurdle of having manufacturing in the country as a predicate to eventual final approval.

The fact that their Shiseido collaboration may position RepliCel as a leader among foreign companies taking early advantage of this new regenerative medicine framework in Japan has not been lost on management (see here) but given RepliCel's expanded technology platform and product/clinical pipeline combined with the 3rd party validation and unique attributes of the Shiseido deal, I'm not sure the message has sunk in with investors yet given the ~$30M market cap.

I'll be watching the Japanese regenerative medicine race with great interest over the next few months.  It has been reported that there will be a MHLW-sponsored public comment period for the new regenerative medicine law announced soon. All stakeholders are encouraged to provide feedback on the new legislation aimed at regenerative medicine therapies. 

Also of note will be to monitor how other regulatory agencies respond.  Already we have seen moves toward expedited or conditional approvals (in limited circumstances) in Europe and potentially expedited pathways (e.g., breakthrough designation) in the U.S.  Other jurisdictions such as South Korea, Canada, and Australia have apparently taken a more functional approach to expediting certain cell therapy product approvals but on a case-by-case basis.