2012 Financing Recap: Cell Therapy and Cell-Based Regenerative Medicine Companies

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In October we posted a teaser saying that we had at that time tracked the infusion of over $1 billion dollars into cell therapy and cell-based regenerative medicine companies in 2012.  We promised details.  Here they are:

For the first half of the year, see our post "Monthly recap of funds raised by cell therapy & regenerative medicine companies" dated July 31 and updated August 8.

Since that post, we back-filled the following deals which we missed earlier:

• In February, Stemgent raised $6.3M from eight private investors
• In April, BioRestorative Therapies raised $2.1M from undisclosed private parties
• In July, Immusoft received a $300,000 grant from NIH-SITR.

August saw the following financings:

• Cell Cure Neurosciences was awarded $1.3M from Israel's Office of the Chief Scientist
• Stemgent collected another $11.3M from eight private backers
• Neuralstem brought in $2.76M in a public offering
• Fate Therapeutics received $9.2M from undisclosed investors

September was a busy month with the following deals and grants:

• Cellerant benefits from a further BARDA grant tranche with the potential to hit upwards of $36.4M
• StemCells Inc saw the second of its CIRM-funded boats come in to the tune of $20M
• Argos Therapeutics collected $16M from 24 different unnamed investors
• Neuralstem succeeded in bringing in another $7M in a direct public offering
• Pluristem rode its well-orchestrated fame to a $34M underwritten public offering
• Advanced Cell Technology brought in $35M via ATM
• Cellerant collected $2.09M from private investors
• Cytori was awarded a BARDA grant with potential to hit up to $106M
• Vital Therapies closed the first $16M from a multistage commitment to invest $76M by existing private investors. The investment is intended to fund three  Phase III trials of the company’s bioartificial liver therapy, ELAD, for two types of acute liver failure. One trial in the US (not yet recruiting) in acute alcoholic hepatitis involving 200 patients; the other two trial in EU and Australia/New Zealand for acute alcoholic hepatitis patients who fail steroid therapy and in subjects with fulminant hepatic failure
• Avita Media rounded out the month with a modest $880,000 grant from AFIRM

So after seeing $172M come into the sector in Quarter One and $252M in Quarter Two, the Third Quarter saw companies in the sector glean commitments of up to $408M from various sources. 

The Fourth Quarter saw $288M infused into the sector broken down as follows:

    October

• Capricor gleaned a $19.8M from CIRM
• China Cord Blood Corp secrured $50M in a convertible note financing from Golden Meditech Holding Limited
• Cellerant kept the grant machine rolling with a $1.7M phase 1 SBIR grant from NCI
• Tengion secured $15M in senior secured convertible notes from Celgene Corporation, RA Capital Management,  Deerfield Management Company, Bay City Capital and HealthCap
• Viacyte saw a $10M grant from CIRM
• Massachusetts-based Bluebird Bio finagled $9.36M from California's CIRM
• Fibrocell Sciences did a $45M PIPE
• Avita Medical gleaned $10M from a secondary public offering

    November

• Athersys closed a $23M secondary offering priced at $1.00
• Tissue Regeneration Therapeutics eked out a $100,000 grant from Ontario Genomics Intitute
• Quy Biosciences (formerly MedCell) raised $2.7M in a private placement
• Kiadis Pharma managed a $12.8M financing round lead by LSP (Life Sciences Partners) and supported by a large investment from DFJ-Esprit. Other investors included Alta Partners, Quest for Growth and NOM.  The round will be used to do a late-stage phase 2 trial which they hope will position them for a solid pivotal with partner, Hospira.
• NeoStem received a $1.2M grant from NIH
• French biotech, TxCell raised €12.4M from existing shareholders to support an internationa ph 2b trial of Ovasave for the treatment of Crohn’s disease in patients who are refractory to current treatments.
• In a Biotech Showcase presentation, Adaptimmune COO reported they were given 9.6M British Pounds by 'high-net-worth investors' in November to move forward their clinical pipeline

    December

• Northwest Biotherapeutics brought in $13.8M in a secondary public offering
• Organovo secured $7.7M in a tender offer to warrant holders
• Cytori closed a $23M secondary public offering (including the shoe)

Unfortunately neither Cell Therapy Group, nor any of our industry organizations, have any comprehensive financing data from year's past to know for certain whether broaching this $1,000,000,000 threshold is indeed a first-ever accomplishment.  We tracked $390M of investment into the sector in 2008 and then did not track this data for 2009-11 inclusive.

Based on everything we know, we believe this is almost certainly the first time the sector has raised over one billion dollars. 

Hope that helps.

--Lee

A proposed 6-step platform for the cell therapy industry to consider in combating non-compliant cell therapy treatments

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Further to my recent post, "Six steps to fighting non-compliant cell therapy treatments. The stuff of grey shades, spades, ivory towers and (ahem) balls.", I have crafted a 6-point platform that I propose to submit (with potential edits based on preliminary feedback) to several of the leading  industry and professional organizations for their consideration including ARM, ISCT, ISSCR, FACT, AABB  ICMS, and perhaps, in due course, to patient groups, physician groups, disease-specific professional organizations (e.g, cardiology, oncology, neurology, cosmetic, etc).

I welcome comments and feedback. 

1. In addition to helping patients distinguish between compliant and non-compliant treatments (and providers) we must do more to help patients distinguish between non-compliant cell therapy treatments (and providers) which are more or less risky. 

2. Whatever we do in response to this issue should be done with an eye to being practical and helpful to patients in the real-life context of their decision about whether or not to buy a non-complaint cell therapy.

3. Our response to this issue should be based on a risk-based approach recognizing that not all non-compliance is created equal.  We should create a framework for risk-based analysis (both for us and our audiences) and focus initiatives around those which present the highest risk.

4. We recognize the problem of non-compliant cell therapies is not just a problem that exists in jurisdictions with little, no, or poor regulation but that is a growing problem even in the most highly regulated jurisdictions meaning the solution cannot be regulated it depends on education and enforcement.

5. We recognize regulatory agencies cannot enforce non-compliance on their own.  We as an industry need to complement their efforts through our own standards and enforcement.

6. Stakeholder groups should support the formation of a multi-organizational  initiative to, based on a risk-based assessment, spotlight the categories or signs of highest-risk offenders for use by patients and/or their physicians in identifying  whether or not treatments (and providers) they may be considering fall into the that category associated with the highest level of risk.

What do you think?

Updated cell therapy index portfolio

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UPDATED AGAIN DECEMBER 1, 2012 BY ADDING NASDAQ:NWBO

This an update of a post originally released October 18.  What has changed is we've added four companies (shown below in red).

...

There are certainly analysts, traders, and brokers who cover the public segment of the cell therapy industry with much more expertise and experience than I -- among them is Henry W. McCusker of Scimitar Equity (@henryw09 on Twitter).

As part of our tracking of the sector's financial data and trends, we have created a portfolio of public cell therapy companies comprised of the 34 companies listed below (linked to their page on Google Finance).

I've been watching this portfolio since the beginning of the calendar year (January 2012) and have been commenting on its performance as against some of the major indices.  (Oct 8 post and Aug 10 post).  

In addition to these occasional reports I will occasionally report on Twitter (@celltherapyblog) on the stocks in this portfolio which are enjoying the largest gains/losses and which have the largest/smallest trading volumes.  From time-to-time I will aggregate this content into a blog post.     

Symbol         Name
ASTM        Aastrom Biosciences, Inc.
ACTC  Advanced Cell Technology, Inc.
ABH          Angel Biotechnology Holdings Plc
ATHX  Athersys, Inc.
AVMXY Avita Medical Ltd
BHRT  Bioheart, Inc.
BLFS BioLife Solutions, Inc.
BTX          BioTime, Inc.
CBAI         Cord Blood America Inc.
CNDO        Coronado Biosciences Inc.**
CCEL CRYO-CELL International, Inc.
CMXI Cytomedix, Inc.
CYTX Cytori Therapeutics Inc. (USA)
DNDN Dendreon Corporation
FCSC  Fibrocell Science Inc
IMUC  ImmunoCellular Therapeutics Ltd
ISCO International Stem Cell Corp
ISLT          Islet Sciences Inc
LVCLY       Living Cell Technologies **
MEDS Medistem Inc.
MSB          Mesoblast limited
MLM          Molecular Medicine SpA **
NBS          Neostem Inc.
CUR          Neuralstem, Inc.
NLNK  NewLink Genetics Corp
NWBO       Northwest Biotherapeutics, Inc.
OPXA  Opexa Therapeutics Inc.
OSIR Osiris Therapeutics, Inc.
PSTI          Pluristem Therapeutics Inc.
RENE ReNeuron Group Plc
REPCF       RepliCel Life Sciences Inc. **
STEM  StemCells, Inc.
TNGN Tengion, Inc.
KOOL ThermoGenesis Corp.
TIG           Tigenix NV

** added after original index portfolio was created October 18

Cell Therapy Industry Group Welcomes its 4,000th member

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I'm pleased to point out that today the LinkedIn Cell Therapy Industry Group welcomed its 4,000th member today. 

The Cell Therapy Industry group was created to serve as a network of those in the cell therapy industry. The group acts as a vehicle for referrals, networking, information, and facilitating collaboration.  The group's focus is on the activities of companies in and serving the space.

The group began in July 2008. It took 2.5 years to reach the first 1000 members, 9 mos to reach 2,0000, 6 months to reach 3,000, and 6 months to meet today's 4,000 member mark. 

As is typical, there is a very high percentage of passive participants but the group benefits from an avid group of participants who post, share, exchange, and debate on a range of topics ranging from regulatory, clinical, commercial, scientific, manufacturing, financial, and other topics of interest to the group.

As the group has grown I've noted two trends pertaining to the composition of the membership:  (a) having tapped out the c-level suite, growth is increasingly coming from down the hierarchy of the corporate food chain and including those in the operational trenches, and (b) a much higher ratio of new members of late is from outside the US, presumably as LinkedIn increasingly penetrates OUS markets.

We strive hard to maintain the quality of the participation by screening each applicant, deleting off-topic posts, moving promotional posts to the "promotions" tab" and encouraging a balance of news-sharing with useful discussion threads.

I'm proud to say the group has become a vibrant and valuable part of the sector due to the hard work and contributions of all involved.    

As these kind of virtual networks become exponentially larger and provide different value than the professional societies representing the sector, I will be fascinated to watch if and how this affects how sectors like our interact and how this will impact the traditional value proposition of member-based professional societies.

If you are not a member of the LinkedIn Cell Therapy Industry Group, check it out.

--Lee

GEN's "Cellular Therapy Wave Finally Cresting". An overview and data set.

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We first provided a listing (with very few details) of industry-sponsored late-stage (pivotal, phase 3 and 2/3) cell therapy clinical trials on this blog late last year (see the posting here).

We are now pleased to we have worked with Genetic Engineering and Biotechnology News and Enal Razvi of Select Biosciences to provide an updated (as of June 2012) and more detailed listing of industry-sponsored late-stage (pivotal, phase 3 and 2/3) cell therapy clinical trials (excluding cell-based immunotherapies which we intend to cover in a follow-up article).

A link to the listing can be found in an article published today entitled "Cellular Therapy Wave Finally Cresting" found in the November 1, 2012 issue of GEN.  

While not my favorite title, the article is a brief - but we hope useful - overview of the sector and its pipeline.  It also provides a snapshot of the cell therapy products already in commercial distribution. 

Some will quibble about the numbers. Certainly others have published larger revenue numbers, for instance, but in our view these have almost always included revenue from cord blood banking which we have excluded.

We encourage you to read the article but for convenience here is a direct link to the spreadsheet.  Of course it's already out-dated but we'll do an update again soon here on this blog.

Hope this is useful.

--Lee

[post-publication clarification]: Regarding the last sentence of the article, this should read:


"No cell therapy products approved 2002-8 vs 12 cell therapy products approved 2009-12."

2009-12 saw 9 regulatory approvals of industry-backed products : 

• ChondroCelect from TiGenix (EU),
• Provenge from Dendreon (US), 
• laViv from Fibrocell Sciences (US), 
• GINTUIT from Organogenesis (US), 
• HeartcelliGram-AMI from Pharmicell (S. Korea), 
• Cupistem from Anterogen (S. Korea), 
• Cartistem from Medipost (S. Korea),
• Prochymal from Osiris (Canada) and
• Prochymal from Osiris (NZ). 

This year also saw 3 regulatory (FDA) approval of two products from non-profits:

• HemaCord from New York Blood Center (US), 
• HPC, Cord Blood* from Clinimmune Labs, University of Colorado Cord Blood Bank (US)
• DUCORD from Duke University

* please also note the correction of "HPC, Cord Blood" which is the correct product name incorrectly stated as "Clinimmune" in the article.

Cell Therapy Industry Financing - Interim Update

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We've sent out a couple tweets from @celltherapyblog this week that we have now tracked over $1 billion having been brought in by companies in the cell therapy and cell-based regenerative medicine space this year to-date.  

We promise to post a breakdown of this stat updating our most recent post on the subject back in July but we want to wait until the month ends and we see a number of pending financings close.

We're closing the week with a Fibrocell Sciences ($FCSC) PIPE that was supposed to close Oct 11, an Immunocellular Therapeutics ($IMUC) secondary offering that supposed to close Oct 23, and an Athersys ($ATHX) secondary offering that aims to close by Halloween.

Watch for more details the first full week of November.

My cell therapy index portfolio

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So there are certainly analysts, traders, and brokers who cover the public segment of the cell therapy industry with much more expertise and experience than I. Certainly among the top of this crop is Henry W. McCusker of Scimitar Equity (@henryw09 on Twitter) who is preparing to launch a major new online initiative that I'm very excited about covering the entire regenerative medicine sector focused primarily on the public companies in the sector.

I tend to focus more attention on the activity of private companies in the sector that tend to get a lot less spotlight but as you know I have created a portfolio of public cell therapy companies comprised of the 30 companies listed below (linked to their page on Google Finance).

I've been watching this portfolio since the beginning of the calendar year (January 2012) and have been commenting on its performance as against some of the major indices.  (Oct 8 post and August 10 post).  

In addition to these occasional reports I will occasionally report on Twitter (@celltherapyblog) on the stocks in this portfolio which are enjoying the largest gains/losses and which have the largest/smallest trading volumes.  From time-to-time I will aggregate this content into a blog post.  

Symbol	Name
ASTM	Aastrom Biosciences, Inc.
ACTC	Advanced Cell Technology, Inc.
ABH	Angel Biotechnology Holdings Plc
ATHX	Athersys, Inc.
AVMXY	Avita Medical Ltd
BHRT	Bioheart, Inc.
BLFS	BioLife Solutions, Inc.
BTX	BioTime, Inc.
CBAI	Cord Blood America Inc.
CCEL	CRYO-CELL International, Inc.
CMXI	Cytomedix, Inc.
CYTX	Cytori Therapeutics Inc. (USA)
DNDN	Dendreon Corporation
FCSC	Fibrocell Science Inc
IMUC	ImmunoCellular Therapeutics Ltd
ISCO	International Stem Cell Corp
ISLT	Islet Sciences Inc
MEDS	Medistem Inc.
MSB	Mesoblast limited
NBS	Neostem Inc.
CUR	Neuralstem, Inc.
NLNK	NewLink Genetics Corp
OPXA	Opexa Therapeutics Inc.
OSIR	Osiris Therapeutics, Inc.
PSTI	Pluristem Therapeutics Inc.
RENE	ReNeuron Group Plc
STEM	StemCells, Inc.
TNGN	Tengion, Inc.
KOOL	ThermoGenesis Corp.
TIG	Tigenix NV

Updated listing of late-stage industry-sponsored cell therapy trials.

We've just updated our listing of industry-sponsored pivotal, ph3 and 2/3 cell therapy trials.  See the posting here.

Late-stage industry-sponsored cell therapy trials

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Updated 22 August 2012 (originally posted December 2011)

At Cell Therapy Group, we track cell therapy industry activity globally but  particularly activity related to the clinical development and commercialization of cell based therapeutic products globally.

Below is a synopsis of the pivotal, phase 3 or 2/3 industry-sponsored cell therapy trials we are currently tracking globally.  

There is a database behind this that includes more data fields like therapeutic category, cell/tissue source, cell type, expansion, indication, expected completion date, clinical trial site locations, etc. 

Industry-sponsored pivotal, phase 3 or 2/3 trials*
    *active or expected to be active in 2012 

Aastrom                         

• Ixmyelocel-T

Argos

• Arcelis - AGS-003

Avita Medical

• ReCell

Baxter                           

• ACT34-CMI

Bone Therapeutics           

• PROEB

Cardio3 Biosciences         

• C-CURE

Cell Medica                     

• adoptive cellular therapy

CellCoTec

• INSTRUCT

CellSeed France               

• CAOMECS (Cultured Autologous Oral Mucosal Epithelial Cell-Sheet)

co.don                            

• co.don chondrosphere

Cook Myosite                  

• AMDC

Cytori                            

• ADRCs

DePuy Mitek

• CAIS

ERYtech Pharma              

• GRASPA

GamidaCell - Teva           

• StemEx

Harvest Technologies       

• SmartPReP 2 BMAC

Healthpoint                     

• HP802-247

Histogenics                     

• NeoCart

Innocell

• Immunecell-LC

Innovacell                        

• IES13 (Urocell?)

ISTO Technologies            

• DeNovo ET

JW Creagene

• CreaVax-RCC

Kiaidis Pharma                

• ATIR

MacroCure                       

• CureXcell

Mesoblast

• Revascor    

Miltenyi                          

• CliniMACS CD34 Selection System

MolMed                          

• TK

Newlink Genetics             

• HyperAcute Pancreas

NKBio

• Biocell Natural Killer Mixture

Northwest Biotherapeutics

• DCVax-L

NovaRx                          

• Lucanix

NuVasive                        

• Osteocel Plus

Osiris                            

• Prochymal

Pharmicell

• Heartcellgram-AMI

Prima Biomed                  

• Cvac

Sanofi (Genzyme)

• MACI

SOTIO

• DVAC/Pca

Tigenix (Cellerix)

• Cx601

The Hawkins Foundation (in collaboration with Depuy Mitek

• CAIS

TissueTec

• amniotic membrane

Some of the products listed above are in more than one clinical trial - different regions and/or different indications.

In total we are tracking 48 industry sponsored, active (or expected to be active 2012) cell therapy trials in pivotal, ph III or II/III expected to involve over 11,000 patients.  Some of the products listed above are the subject of multiple trials.

The 50 trials are sponsored by 40 companies.  The trials roughly break down as follows:

• 59% are autologous
• 45% are allogeneic
• Two are gene-modified allogeneic
• One involves autologous and allogeneic cells (we counted it for both)

• 30% for oncology or related indications
• 13% for cardiac-related indications
• 13% for non-cardiovascular (PAD, CLI, VLU, etc)  & wound 
• 34% (6) for cartilage and bone repair

___________________________________

I encourage readers to comment below or email direct with any errors and/or omissions.

Commercial-stage Cell Therapy Companies and Products

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Updated 2012-03-13 update

There are a number of products in the market which are made up entirely of cells or purport to have live cells in them and as such are included in our definition of cell therapy.

Some of these have received regulatory market approval.  However, a number of these products are being legally sold, even in highly regulated markets, without overt regulatory approval because they arguably meet the requirements set out for products which do not require such approval to be marketed.

Below is sample list of companies with cell therapy products* on the market in Europe, USA, or Japan.  In some instances there are reservations about whether or not these products still contain viable cells.  Our listing of these product is not an endorsement of their market claims nor of their strict regulatory compliance.

Company                                                    Product              
Advanced BioHealing (now part of Shire)    Dermagraft
AlloSource                                                 AlloStem
Altrika                                                        MySkin
Altrika                                                        CryoSkin
Alphatec Spine                                           PureGen
Amedica                                                     BioDfactor
Arthro Kinetics                                           CaReS
Avita Medical                                             ReCell® Spray-On Skin
Bio-Tissue                                                  Prokera
Bio-Tissue                                                  AmioGraft
BioTissue Technologies                               BioSeed-C
BioTissue Technologies                               chondrotissue
Cytori                                                         Celution System
Dendreon                                                   Provenge
euroderm                                                    Epidex
euroderm                                                    EpiGraft
Fidia Farmaceuitici                                      Hyalograft 3D
Fidia Farmaceuitici                                      Laserskin
Fidia Farmaceuitici                                      Hyalograft C
Fibrocell                                                      laViv
Genzyme (a Sanofi company)                      Epicel
Genzyme (a Sanofi company)                      Carticel
Genzyme (a Sanofi company)                      MACI Implant
Japan Tissue Engineering Co.                      J-TEC Epidermis
Japan Tissue Engineering Co.                      J-TEC Cartilage                                        
Japan Tissue Engineering Co.                      J-TEC Corneal Epithelium                        
Living Cell Technologies                              DIABECELL
NuTech                                                       NuCel
NuVasive                                                    Osteocel Plus
Organogenesis                                             Appligraf
Organogenesis                                             GINTUIT
Orthofix                                                      Trinity Evolution
TiGenix                                                       ChrondroCelect
Therakos                                                     Therakos Photopheresis

Most of these are only available in one or a few jurisdictions.  Sanofi's Genzyme products (Epicel & Carticel) are two of the few which are multi-nationally available.

South Korea is an interesting example of a country with a mature regulatory framework with more than its share of approval.  There have been 14 cell therapy products approved for sale in South Korea.  They are as follows:

Company                                                    Product    
Anterogen                                                  Adipocel
Anterogen                                                  Cupistem
Antrogen                                                    Queencell
Cellontech                                                  RMS ossron
Cellontech                                                  Chondron
Chabiotech                                                 Hyalgraft-3D+
Chabiotech                                                 Autostem
Creagene                                                    Creavax-RCC+
FCB-Pharmicell                                          Heartcellgram-AMI
Innocell                                                       Immuncell-LC+
Innomedisys                                                Innolak+
MCTT                                                        Keraheal+
Medipost                                                     Cartistem
NKBio                                                        NKM+
S-Bio Medics                                              Cureskin
Tegoscience                                                 Holoderm
Tegoscience                                                 Kaloderm

+ These products were brought to market in 2006-7 under a conditional approval unique to South Korea's regulation that allows commercial sale in certain instances while a pivotal trial is underway.

At present, the Korea-FDA is assessing a Biologics License Application (BLA) for CARTISTEM® being developed by Medipost. Once approved, CARTISTEM® will become available as the World's first hUCB-MSC derived adult stem cell drug for treating osteoarthritis and will be marketed in Korea in association with Dong-A pharmaceuticals

* This list does not purport to be exhaustive of all cell therapy products legally sold in these regions.  This list  does not include approved products in other highly-regulated jurisdictions, such as Australia, New Zealand, or Singapore, for example.  This list also excludes those cell-based treatments provided as a hospital or clinic-based service such as stem cell transplantation (hospital) or Regenexx (Regeneration Sciences, Inc.).

For the purposes of this list, “cell therapy” is defined loosely as any product which has in it live cells when administered to the patient including tissue transplants and devices.

Note that some of these products may be subject to emerging regulatory restrictions under the EMA ATMP regulations which may result in them having to be pulled from the market by the end 2012 at the latest.

Several of the products on this list did not receive overt regulatory approval but are being sold in regulated markets under exemption provisions which allow companies to bring cell therapy products to market which meet certain strict criterion.  At least a couple of the products listed are the subject of dispute between the company and the FDA or other regulatory agency as to whether or not they qualify under the 'exemptions'.

If you would like to suggest any revisions or additions to this list, please do so in the comment section below.

Cell Therapy Industry Video Channel

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Cell Therapy Group and BioBusiness.TV are pleased to announce they are collaborating to build a "cell therapy" video channel focused on the cell therapy industry.  The initiative is part of BioBusiness.TVs "Best of the Web" initiative intended to bring together publicly available video content that complements their original content.

The Cell Therapy channel will focus on cell-based therapeutic products which are in clinical development by or are commercially available from companies around the world.   We will update this channel frequently.

To view other video content, see Cell Therapy Group’s YouTube channel.

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The LinkedIn Cell Therapy Industry Group - 1,000 members strong

As some of you may know, much of my recent social media energy has been spent on LinkedIn rather than blogging. This was not a conscious decision but I will admit to finding the immediacy and interconnectivity of the LinkedIn/Twitter combo to be more seductive of my limited time than the more laborious and seemingly more unidirectional facets of blogging. I'm still working on a return to more diligent and regular blogging - we'll see how that goes.

In any event, today's blog entry is ironically about the very thing which has replaced my blogging in many ways for the interim: the LinkedIn Cell Therapy Industry Group which I founded in July 2008 (about the same time as I launched this blog).

Primarily due to the outstanding participation of great members, the group has turned out to be what I had hoped would be and I believe has become a fairly valuable resource for those in or interested in the cell therapy industry.

The group grew exponentially throughout 2010 and we are proud today to announce our 1,000th member. Without his knowledge, Luc Gervais today became the 1,000th member of the LinkedIn Cell Therapy Industry Group.

Luc Gervais lists himself on LinkedIn as a "Technologist Entrepreneur" but is also a Researcher at IBM Research, Zurich Research Laboratory in addition to being a researcher at the University Hospital Basel.

He was recently involved in the development of IBM's novel, microfluidic "lab on a chip" technology that uses capillary action to create a potential one-step diagnostic tool, and which could ultimately test for a wide range of diseases and viruses. The chip requires only a small drop of blood, which it draws through tiny channels within the device. The blood reacts with different disease markers to provide accurate diagnoses in about 15 minutes.

Luc represents what I believe is one of the most exciting signs of development in and maturation of the cell therapy industry. Luc's career has included being a Game Developer at Unlikely Games, a Computational Chemistry Developer at Boehringer Ingelheim Pharmaceuticals, and a Quality Assurance Specialist at Steltor. On LinkedIn, he lists "regenerative medicine" as one of his interests.

People with the kind of experience Luc possesses are bringing a world of scientific, technical, and commercial expertise to regenerative medicine and cell therapy from outside the sector. This promises to revolutionize the way we think about, develop, and apply our technologies.

Luc and others like him who are exploding into the regenerative medicine and cell therapy field bring with them the potential for interdisciplinary exploration, the opportunity to draw from lessons already learned in other sectors, and the chance to view our field not just in terms of the incredible potential for new therapeutics which cell therapy represents but how that fits into the broader world in which cell therapy is growing up. A world that includes phenomenal advancements in personalized medicine, diagnostics, theranostics, biomarkers, bioinformatics, the ability to access and interpret personal genomics data, etc.

I have yet to speak to Luc (this was all posted from publicly available information) but I'm hoping to bring you an interview of him shortly not because being the 1,000th member of the LinkedIn Cell Therapy Industry Group is deserving of any particular attention (and certainly will not rank in his list of accomplishments I'm sure) but because I'm curious about what Luc represents.

Stay tuned....

--Lee

A Therapeutic Long Tail. Does Cell Therapy Fit the Model? (Part II)

...this is a continuation of Part I...

So are Personalized Medicines the Long Tail of the Therapeutics Industry?

In 2006, Chris Anderson, Editor-in-Chief of Wired magazine, released "The Long Tail" – a book describing the Web 2.0-induced business-to-consumer economics (r)evolution enabling businesses to now deliver product at outrageously affordable prices to global micro-markets.[i] The book quickly became one of the most influential business books of the ‘new economy’.

Indeed this flat new world – as Thomas L. Friedman describes it[ii] – is all about micro-trends and micro-markets, empowering small companies and niche products to participate successfully in the marketplace along with Fortune 100 companies and blockbuster products. More than that, this paradigm shift is forcing product and service companies to revolutionize their business and pricing models, the latest and rabidly successful of which is the pricing model of “Free!”. The blockbuster-based business model that depends on the economics of a ‘hit’ (whether it’s a platinum-selling CD or a ‘blockbuster’ drug) is no longer seen to be the only way to make money and, indeed, may not have any future at all.

To date, this internet-driven Long Tail (r)evolution has had its largest impact on – if not been largely restricted to – the retail sector. Business-to-consumer (B2C) companies are now enabled like never before to profitably supply unique global products to meet customer demands. In this respect, the (r)evolution has had a visible impact on the retail side of the pharmaceutical and biotech industries. However the ongoing realization of “personalized products” as the future of medicine for consumers seems a perfect fit for the Long Tail economic model.

But does this apply to therapeutics?

To the extent that the Long Tail economy is less about the mass market and more about businesses succeeding in serving niche markets with unique and/or customized products, the analogy fits.

Certainly, it would appear the sun is setting on the "blockbuster hit" days of the therapeutics industry. In June 2008 Genentech's Susan Desmond-Hellmann, president of product development, when outlining the biotech giant's development strategy to a group at the Goldman Sachs healthcare conference, told the group that the blockbuster drugs of the past may never be duplicated. “Future drugs,” she stated, “will cater to a smaller, better defined group of patients” and “the days of big cholesterol-lowering drugs for millions of people may be behind us.” (link).

In a June 8, 2009 post, authors of the IN VIVO Blog stated that pharma "managers these days are learning to leverage only very modest top-line growth into faster bottom-line growth through cost-savings, bolt-on acquisitions, and rapid introductions of incrementally-improved new products. The traditional, high-risk, high-growth R&D-based model is gone, in case you hadn't noticed."

The second indication that personalized medicine fits with the Long Tail supply-demand model is that therapeutics can now be customized taking advantage of personalizing elements such as HLA-typing and advances in genetic, diagnostic, and discovery testing that will permit us to more effectively both pre-select which medicines are best suited for which patient sub-groups and develop therapies that are better suited to particular genetic groups. On the clinical end of the spectrum, advances in theragnostic tools and surrogate biomarkers (e.g., imaging) are allowing clinicians to much more rapidly assess personal responses to treatment and adjust their therapeutic regimines accordingly before any symptomtic response can be observed.

The ability to match therapeutics to genetic make-up, disease stage/presentation, or predisposition will allow the provision of treatments with more confidence in their expected efficacy, fewer patient-specific adverse reactions, and result in cost savings to the health care industry and a better return to fund the premium for the development of such products.

In a recent interview with Xconomy's Luke Timmerman, Alan Frazier, founder and managing partner of Seattle-based Frazier Healthcare Ventures, one of the world’s biggest life sciences venture capital funds, said,

The trend is toward smart pharmaceuticals that address smaller populations, narrower indications, with better results. It’s based on a better understanding of disease from genomics and proteomics. You’ll see more targeted drug delivery. You’ll have incredibly focused pharmaceuticals, which will take care of some of the safety issues you read about.

Does the model apply to cell therapies?

At the intersection of the personalized and regenerative medicine sectors, lies the therapeutic industry’s response to (or reflection of) both the demand for and the ability to deliver a more personalized therapeutic to the consumer (the patient).

If the tail of the therapeutics market is being stretched longer to include products better targeted to smaller markets, this therapeutics Long Tail will almost certainly include regenerative medicine (regen 2.0) products and many of these will be cell-based therapies.

The cell therapy sector now encompasses the convergence of three distinct technologies, i.e. cell transplantation, tissue engineering, and biomaterials. Often also drawn in are elements of gene and molecular (e.g., proteins and antibodies) therapies.

Autologous cell therapies are the ultimate personalized medicine and while such medicines are often not included in definitions of personalized medicine, any approach to regenerative medicine – whether using tissue engineered products, cell-based therapies, small-molecule drugs, scaffolds, nano or biobots, etc – intended to trigger in vivo regeneration or repair... is personal!

Again, to the extent the Long Tail economy is about “selling less of more” then medicines such as cell therapies will certainly be part of the long tail of the therapeutics industry giving access to highly-personalized, tailored products to meet the unique needs of the consumer.

But does the Long Tail economic model apply?

While there may well be blockbuster cell therapies in the future, concern around the scarcity of potential blockbusters in cell therapy are seated in the notion that the blockbuster economy is the only successful model.

Who thought you could make money by giving free access to internet searches and email? There are a lot of ways the analogy breaks down but what the Long Tail economy has shown us is modern corporate ingenuity in finding profitable business models in niche markets despite the long-standing dominance of blockbuster products.

Where the paradigm falls short, in my opinion, is when one realizes that a fundamental pillar to the Long Tail economy is the commoditization of products and production processes as well as the standardization of delivery systems. The Long Tail economic model is enabled by the fact that the cost of goods sold has been brought sufficiently low enough - by new technologies which allow for small batches to be produced and shipped - that the products in question are affordable to most. Highly unique and/or customized goods were always available to those with sufficient ability to pay. The Long Tail brings these kinds of products to micro-market at the same price or lower than their mass-market counterparts.

We are a long way from this kind commoditization of personalized medicines and, in particular, of cell-based therapies. There is little-to-no standardization of production systems at any scale. The next generation of these therapies will still be highly priced goods which many people, insurers, and/or healthcare systems will be pressed to afford.

In once sense, this is not surprising. Even in the world of electronic or digial products, Moore's principle only applies because the cost of goods for new technologies when they first enter the market are prohibiitively expensive. If the model applies in the therapeutics industry, technological advances in production will bring down the cost of goods and therfore the price.

On the other hand, what drives the price of therapeutics has not been so much the cost of goods (production) but the need to recoup massive upfront R&D costs which must be recovered (with a reasonable profit) during the life of a patent.

Will this change with personlized medicines and cell therapies? One could argue it might if personlized medicines and cell therapies can deliver on the promise to have a much higher effective rate among those given the therapies. Pharmaceuticals have a notoriously low effective rate among those prescribed any given drug. New research methodologies employing surrogate biomarkers, imaging, cell-based assays, etc promise the potential to significantly lower R&D costs by (a) getting to a much quicker "go/no-go" decision point in therapeutic development, and (b) identifiying patient sub-groups for which the therapeutic will have a high rate of effectiveness. One the one hand, this has the potential to lower the cost of goods (driven by R&D costs) and simultaneously justify a higher price point because of a high rate of therapeutic success.

However, even if we were able to materially lower upfront R&D costs, this still does not change the fact that cell therapies are costly to produce on a per-unit basis and the opportunity to "scale-up" is limited particlarly with autologous cell therapies which require lot sizes to be an individual batch. While this is a seperate discussion, I am confident technological and/or commercial innovation will find a way to economically bring therapeutics to market that are proven effective. I am not alone. Recenly Howard Liang, MBA, Ph.D., Analyst and Biotechnology Managing Direct at Leerink Swan as quoted as saying that “Autologous manufacturing is not the deal breaker it used to be. If these [cell-based] vaccines work for really difficult-to-treat diseases, the manufacturing issues will be worked out.” ("Special Report: Customized Cancer Vaccines Finally (Maybe) Arrive". GEN News Highlights. 12 June 2009)

There are other reasons the Long Tail business model as it is currently defined does not fit cookie-cutter with the therapeutics industry not the least of which is that the consumer demand does not solely regulate supply. In highly regulated industries, the economies are different. Some would argue this should not be the case particularly if personalized medicines, genomics,theragnostics, etc advance to point where the consumer has an abundance of therapeutic information and options but that is the subject of another discussion.

In the end, it is certainly clear to me that the emerging technologies are enabling new therapeutic paradigms that will introduce elements of the Long Tail business model into the therapeutics industry.

How much Impact will Cell Therapies Have on New Therapeutic Paradigms and Systems?

Despite the exponential escalation of cell therapy innovation, is cell therapy ready to be a viable business that will make any material impact on the therapeutic industry? For reasons which I will continue to explore in this blog in the months to come, I believe the answer is 'yes'.

The cell therapy industry has more products in late-stage development than many believe. While the existing commercial products are far from blockbusters and questions remain regarding the business models and potential margins for cell therapy products, ground-breaking research and market enthusiasm is driving a renewed interest among an early second-round of investors including participation by mature industry players making cautious plays in the sector. Regulatory issues in the primary markets of the US and EU are rapidly becoming less problematic though harmonization remains a significant challenge.

In blogs to come I will outline the commercial developments I see transpiring that make me believe the primary issues around the 'business models' question are being addressed. Regenerative and personalized medicines are enough of a force that creative business people will (a) invent ways to lower the cost of goods and (b) figure out how to price and reimburse appropriately to ensure effective therapies get to people that need them and incentivize doctors to prescribe them.

Most indicia point to this sector being poised for a phase that will start demonstrating real answers to those challenges which have to-date prevented many from participating in a sector that they believe presents too many unanswered risks.

Conclusion

As with so many of the paradigm-shifting economic revolutions in the past, once the underlying technologies exist, business and economic models radically adjust to reflect and accommodate that change. The latest of these is the Long Tail economy (r)evolution with it ability to deliver niche (if not personalized) products to niche markets. Pesonalized medicines - regenerative medicine and cell therapies in particular – are the therapeutic industry’s answer for the demand for personalized products. For a host of reasons, however, the economic model is not yet one which makes for profitable delivery of such products to niche markets.

Nonetheless, while questions about the viability of the business and economic models for these paradigm-shifting therapies are reasonable, the next 5 years will show that today’s questions about the business models for cell therapy were rooted in limited imagination about the potential for technological and commercial innovation as well as outdated concepts of the therapeutics industry and its economies.

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[i] Anderson C: The Long Tail: Why the Future of Business is Selling Less of More. Hyperion (2006).

[ii] Friedman TL: The World is Flat. A Brief History of the Twenty-First Century. Farrar, Straus and Giroux (2005).