Tale of two biotech stars

In the wake of the financial crisis, one sector that has huge potential to boost and reboot Europe’s competitiveness – healthcare biotech – is facing an awkward combination of circumstances. National R&D budgets have been reduced, venture capital has evaporated, spending on medicines has been cut and the hurdles for reimbursement have never been higher.

So how will Europe keep the economic engines of the sector going – the high-growth companies that pioneer the translation of biological discoveries from the lab and into the marketplace? That was the question posed by two of Europe’s leading healthcare biotech pioneers, Joern Aldag of uniQure of the Netherlands and Edwin Moses of Belgium’s Ablynx, at a Science|Business event 10 June, supported by industry association EuropaBio.

Both head companies with high growth potential that embody Europe’s leading-edge science.  Aldag, CEO of uniQure NV, secured the first-ever approval for a gene therapy in a regulated market, winning approval for Glybera, a treatment for an ultra-rare and life-threatening digestive disorder in July 2012.

Moses, CEO of Ablynx NV, has taken a second generation antibody technology from fundamental university research to clinical proof of concept in three different diseases, most recently reporting positive results in treating a rare, potentially fatal blood clotting disorder for which there is currently no drug therapy.

Europe’s gene therapy breakthrough

After more than four decades of research on both sides the Atlantic, and following many false dawns, uniQure finally realised the vision of treating serious inherited disorders by administering a copy of the defective or missing gene, when its gene therapy Glybera was approved by the European Medicines Agency (EMA) in July 2012.

This was a triumph for the company, which had been working on gene therapy since 1997. To that point it had invested more than €50 million in Glybera, which treats an ultra-rare enzyme deficiency that leaves patients unable to digest fat in their diet.

The approval was not only significant for these patients, but also in providing validation of gene therapy as a whole. Since then, the field has prospered, attracting new investment and delivering fresh evidence of efficacy. uniQure is advancing several programmes and has moved beyond rare diseases to testing gene therapy in the chronic neurodegenerative disorder, Parkinson’s disease.

Of the €50-plus million invested to get Glybera to the point of approval, €15 million was sucked up by the regulatory process, an inordinate amount for a small biotech, as Aldag described to the meeting. In all, Glybera was reviewed by the EMA four times. Despite having been shown to be safe and having been recommended for conditional approval by the scientific experts in EMA’s Committee for Advanced Therapies (CAT), the product was continually given the thumbs down by the lead Committee for Medicinal Products for Human Use (CHMP), which consists of representatives of each EMA member country.

The issue for the CHMP was that uniQure had not provided statistical proof of efficacy. But this was impossible for the company to do in such a rare disease. The CHMP was eventually won over, but not before the European Commission had torn up the rule book and taken the unprecedented step of refusing to endorse a decision made by the CHMP, telling it to think again.

“You tell me why these things happen the way they do. We had to spend €15 million on getting CHMP approval, as patients waited longer for treatment,” Aldag said.

What is needed in the case of gene therapy and other specialised biotech drugs, such as cell and tissue therapies, which are categorised as Advanced Therapy Medicinal Products, is a more proactive regulatory system that is not fixated on avoiding risk, said Aldag.

Dr Aldag’s prescription for healthcare biotech: Reform the Advanced Therapy Medicinal Products regulations A more proactive regulatory system is needed, acting in the spirit of wanting to approve drugs, rather than avoiding risks at all costs. The EMA should send scouts into small companies and academic groups to help them shape programmes (godfather/godmother concept), rather than being adversarial and only responding to questions that are posed. Allow early access to products that are shown to be safe, to give patients therapies they need and make it possible to gather evidence of efficacy as more people are treated. There should be reimbursement for drugs that address high unmet medical need at the stage of Phase III development, once they have been shown to be safe and have clinical proof of efficacy, to enable small biotechs to finance the rest of development and take products to market. The opinions of the CAT – set up specifically to oversee advanced therapies – should not be over-ridden by the CHMP.

Dare to be different

Moses had his own story to tell. It is important, he said, to emphasise how different healthcare biotech is from other economic sectors, with a 10 – 15 year development cycle accompanied by a 90 per cent failure rate. “Classical biotech timelines are unbelievable; there’s no other industry facing such timelines apart from aerospace,” said Moses, adding, “You can go through all that, and then find you can’t get reimbursement.”

It is, as Moses said, “a very unusual industry.” He should know, having seen it from the perspective of working in several European companies and in several European countries, raising cash for biotechs from sources ranging from business angels to stock market listings.

Dr Moses’ prescription for healthcare biotech: Structural reforms Free movement of labour: Ablynx employs 300 highly qualified staff of 15 different nationalities and always tries to find the best people from around the world. Hiring from outside the EU is very complicated, and even for EU nationals it takes three months and a lot of help from the company to get all the documentation in place. Create scope to provide employee incentives: When hiring staff from pharma, biotechs need to offer warrants and share options to provide incentives to move. But in Belgium these are taxed in advance, an expense younger employees cannot contemplate. Similarly, Belgian rules giving staff an automatic 2 per cent per annum pay rise, puts up the wage bills, but does not incentivise staff because they expect the increase. Strengthen public markets in Europe and remove inconsistencies between one and another. Increase incentives for investors to fund products through to market rather than taking the risk-averse route of partnering with big pharma, or cashing out by selling the company, to allow Europe to grow more mid-sized, self-sustaining companies. Reform grant processes: companies - not grant application review boards - know what research they need to do. “The current set-up makes us, as SMEs, go in directions we wouldn’t choose otherwise,” Moses said.

In such a capital-intensive business, cash is an obsession. “The first thing you think about in the morning is where you are going to get your next euro from,” Moses said.

His current company Ablynx, is developing advanced antibody products that are able to address diseases which first generation antibodies cannot, which will be cheaper to manufacture and which are expected to show greater efficacy. To date the company has raised €220 million in equity and signed development partnerships worth €330 million. But its products remain some years from the market.

Debate with the audience

‘Tell us your story’

The Glybera delays were clearly not acceptable, said Vicky Ford, MEP. Where biotech companies face specific barriers like this, they should let MEPs know. They should also pinpoint helpful policies and practices in individual member states, and share them to help unlock barriers elsewhere.

Now is the time for healthcare biotech to get a new cadre of MEPs enthused. “Tell your story,” Ford said. “When they hear it, they will want to help.”

Barriers to research commercialisation

Removing the barriers to the commercialisation of science is “why I went into politics,” said Philippe De Backer MEP, a scientist who previously specialised in technology transfer and life sciences investment. While some of the problems highlighted – for example tax policy - are specific to individual member states, there are pan-European issues to address.

One such is the difficulty of accessing public markets. De Backer said the European Parliament has set up an initial public offering task force to look at the barriers high risk technology companies face in listing on a stock market.

Another general problem is the “zero-risk mentality” that informs medicines regulation. “We need to try and turn this around,” De Backer said.

Dainus Pavalkis, Minister of Education and Science of the Republic of Lithuania, agreed there is a danger of healthcare biotech being held back by over-regulation and bureaucracy. Although many aspects of the business and regulatory framework are subject to the principle of subsidiarity, an EU-level approach would be helpful.

“We need to re-find the balance that will allow companies and the public to regain confidence in the EU project,” Pavalkis said.

Rudolf Strohmeier, Deputy Director General of DG Research and Innovation at the European Commission acknowledged the need to tailor grants to suit innovative companies. Under Horizon 2020, grant applications will be required to demonstrate economic impact and the expected effect in combatting the societal challenges that are being addressed in the €70 billion research programme.

However, there is bottleneck with a shortage of people able to make such assessments. “We need more evaluators who understand commercial impact,” said Strohmeier.

Revisiting regulations

Cuts in drugs budgets, higher hurdles to reimbursement and the advent of health technology assessment (HTA) are all disincentivising investors. “The demand side of innovation needs fixing,” said Emmanuel Chantelot, Head of International Government Relations and Public Affairs, at Shire. “Regulations should be revisited and readjusted,” he said.

Building an attractive environment

Europe always looks to the US as the role model, but other countries, especially in Asia, have been investing and building attractive environments that are a lure for inward investment and as a result Europe risks losing its best companies. A concerted effort is required to avoid this.  “The EU needs to support the whole of the value chain,” said Nathalie Moll, Secretary General of EuropaBio.

Recommendations from the debate: What healthcare biotech needs to grow A roundtable discussion produced several suggestions for action to help healthcare biotech grow in Europe. This is a list of them, and does not necessarily represent the views of all participants or their organisations. Communicate the benefits; highlight the barriers Step up lobbying. Healthcare biotech needs to publicise its difficulties to a wider audience, involve patients groups in making the case for reform and informing MEPs when it encounters specific difficulties. Communicate benefits to the general public and harness the public voice to make the case from the bottom up. Highlight good policies in individual member states to unlock barriers elsewhere. Remove the barriers to research commercialisation Make moves to overcome the sceptical mentality of academics in Europe towards innovation and engender the entrepreneurial spirit seen in the US. Promote risk-taking by allowing people to fail honourably. Change attitudes: scientists founding businesses based on their research results are not stealing but increasing the returns from publicly-funded research. Create the right ecosystem: scientists in universities should be connected to biotechs; professors should be “pushed out” to advertise scientific advances and pull investors in. Increase the incentives for institutions to commercialise academic research and professionalise technology transfer across the EU. Change the personnel on grant review bodies to include evaluators who understand the potential commercial impact of research. Fix the demand side The EU should use its influence to improve the system for getting reimbursement and foster innovation. Having to go to each member state is a real problem for biotechs. It was stressed that International Reference Pricing is not appropriate for biotech products, as reference pricing should not undermine innovation. Similarly, separate national HTA creates huge hurdles to market for biotechs. HTA should run in parallel with drug development, rather than being an add-on at the end, when companies may be asked for data they do not have and cannot generate because the clinical studies are completed. Standardisation across national HTA bodies would help. HTA assessments should encompass the needs of all stakeholders, not just the payers. Create a pan-European ecosystem The Commission should take a view across Europe, to assess the picture overall, highlight Europe’s strengths, share best practice and support the whole of the value chain. Create an EU forum that will assist biotechs in getting products to patients and getting market access, without having to sell out to big pharma. Support national patients’ groups representing specific diseases to join forces at a European level and increase their influence, using the model adopted by rare diseases groups. The Commission’s role should extend beyond funding research and promoting the formation of biotech start-ups. Horizon 2020 is one small building block of the healthcare biotech value chain, with most funding coming from venture capital firms and the market. The Commission needs to work together with industry and financiers to nurture biotech stars across their life cycle.