'07 Forecast: biomedical
Biomedical industry to see new combinations
By Allison Chisolm
New combinations will mark the new year in the biomedical field, as big companies partner or acquire smaller ones to prime their stagnant drug-development pipelines. Drug discovery companies and drug delivery companies are becoming more alike. Companies that look to give existing drugs a second life are also on the rise.
A Democrat-controlled Congress has called for the government to use its purchasing power to force down drug prices. If those proposals succeed in Washington, future profits from new drugs and start-ups’ financial backing prospects may evaporate.
Despite that uncertainty, Worcester-based ECI Biotech anticipates a banner 2007. ECI, which develops protein sensor technology, has a new CEO, four new patents, a new corporate partner, and production lines ready to roll after years of development. Its dime-sized ChickenSense spoilage sensor for packaged poultry is in final studies this month. When the sensor’s efficacy is validated, high-speed production should begin in Worcester.
ECI’s new CEO Anthony Bernardo came from Inverness Medical Innovations Inc. earlier this year to take on the high-level negotiations and board management work from company founder Mitchell Sanders, who happily relinquished those duties to serve as executive vice president. ECI moved to 11,700 square feet of office, lab and manufacturing space at 85 Prescott Street in Worcester in June, becoming part of the new downtown Gateway Park development. Sanders hopes to double the workforce from 15 staffers now to 30 next year. ECI will also prepare for a 2008 launch of its ExpressDetect wound infection detection product with a new corporate partner. It also anticipates SBIR grants for phase I research on ExpressProtect, a novel class of protein to prevent gingivitis, and further research on ExpressDetect, a color-coded pathogen detection system. In addition, Sanders expects to close on a $5 million round of Series D financing. "It’s going to be an exciting year," he says.
By the time University of Massachusetts Medical School’s Craig Mello, professor of molecular medicine, received his Nobel Prize for the discovery of gene-silencing RNA interference, in Stockholm on December 10, the university had already licensed the patent, shared by Mello and Andrew Fire of Stanford University, to 50 users worldwide. Before the Nobel, two of the licensees had been acquired at healthy prices, says James McNamara, PhD, Director of the UMMS Office of Technology Management.
Others at UMMS have successfully transferred their technology into the marketplace, McNamara reports. Associate Professor and Director of Cytopathology Andrew Fischer, MD has developed a tissue sampling device that Marlboro-based Cytyc Corp. wants to produce. Fischer may have other invention prototypes released in 2007.
One major focus for 2007 will be applying for $3 million to $5 million in National Institutes of Health funding to create a center for translational research, where scientists would focus on clinical applications of research findings. The coming year may see the formation of a new company as UMass revisits its technology licensing strategy, he says.
Following the money |
By mid 2006, the number of biotech IPOs in the U.S. matched the total for 2005, but a third-quarter slowdown will bring year-end results just an uptick over last year, says Scott Sarazen of Global Biotechnology Markets Leader for Ernst & Young LLP in Boston.
In 2006, more money is pouring into follow-on financing for companies that have already had an initial public offering or later rounds. As in previous years, most venture capital money is going into protein therapeutics and medical devices, he said. "Basically, the private equity markets are still risk-averse."
For too long, too much money in biotechnology was chasing the latest thing - a breakthrough medical device, rather than a clinical discovery, says Kevin O’Sullivan, president of Massachusetts Biomedical Initiatives. The long-term view required to invest in new drugs was difficult to find among potential financing sources. Instead, big pharmaceutical and biotechnology companies have been snapping up smaller ones at an accelerated pace. The Wall Street Journal reports that in the two months between mid-September and mid-November, the industry saw seven acquisitions worth more than $16 billion total.
One emerging trend, Sarazen notes, is Merck’s $400 million purchase of GlycoFi last year, which offered it an entry into protein folding research. "It’s really a platform technology," Sarazen explains, not a therapeutic, but its application can help companies learn how misfolded proteins cause a number of genetic diseases. Merck’s move "tells risk-averse markets that this is an interesting technology," he says. A.C.
New drugs from old
Abbott Laboratories manufactures its successful rheumatoid arthritis drug Humira in Worcester. Since August, this monoclonal antibody, also approved for use against psoriatic and spinal arthritis, can be administered with a new prefilled syringe "pen" rather than a traditional hypodermic needle. Third quarter 2006 U.S. sales of Humira were up 43 percent and international sales rose 66 percent to $541 million worldwide. Abbott expects sales of Humira to exceed $2 billion in 2007.
Early in the fourth quarter, Humira received priority review status from the FDA to treat Crohn’s disease, a gastrointestinal inflammation, as it presents a serious unmet need for which there is no cure.
In February, Abbott plans to present phase III data for Humira’s success in psoriasis treatment, with FDA filing expected sometime in the first half of 2007. Approval and launch of that use is projected for the first half of 2008. Also in the first half of 2007, Abbott will be filing for Humira’s use with juvenile rheumatoid arthritis.
Among start-ups, an emerging trend is "repurposing," finding new drugs from old, according to Yael Schwartz, PhD and founder of Westboro-based Orcas Therapeutics. "It’s a good way to streamline new drug development with something the FDA has already deemed safe," she says.
Using already-tested drugs bypasses the $3 million-plus-per-compound cost of drug discovery. Schwartz and colleague Thomas Jerussi, PhD, left Marlboro-based Sepracor Inc. to found Orcas, eager to tap the opportunities in drugs that have failed to meet their full clinical potential. "With the right chemical tweaking, you have a new compound and an opportunity to make a real advance," she says.
Their first product is a topical-acting "soft estrogen," licensed from Yale Medical College, to address painful vaginal wall thinning in menopausal women. It leaves no estrogen in the bloodstream as do other products. The FDA has "black boxed" all estrogens due to risk of breast or uterine cancers and thromboembolytic disease. Orcas’ product also has dermatological applications for wrinkles, skin thinning and bruising. It’s expected to be ready for an Investigational New Drug filing in 18 months. Schwartz seeks funding to grow the company to seven or eight employees within a year, including a chemist, toxicologist, another pharmacologist, and chief medical officer.
Faster, better research results
Contract research organizations continue to flourish in Central Massachusetts, as big pharma companies outsource the research and testing of new compounds, then "cherry pick" those results to find that future blockbuster drug. CROs are seeing performing increasing amounts of safety and efficacy preclinical tests, says Charles River Laboratories CFO Tom Ackerman.
Wilmington-based Charles River is expanding, renovating the former Hewlett-Packard building in Shrewsbury into a two-level, 450,000-square foot office, animal studies and laboratory facility.
Ackerman predicts Charles River’s preclinical services will see growth in the "mid-double digits" in 2007, with revenue from the new facility booked in the first quarter of 2007. Relocation from the Worcester offices began this month, though ongoing studies will remain in Worcester. Within three years, Ackerman expects staffing to grow from just under 500 to 800.
Caliper’s balance sheet glowing
Hopkinton-based Caliper Life Sciences’ CEO Kevin Hrusovsky describes as "magical" a new research tool that saw 44 percent growth just in the third quarter, after Caliper’s acquisition of Xenogen Corp. closed in early August.
The system uses an extremely sensitive camera to measure the intensity of light emitted from glowing tumors in laboratory mice. Firefly genes are inserted into a mouse’s cancerous cells. The light grows brighter or dims as the tumor grows or shrinks. The IVIS (in vitro imaging system) camera and the license to use it represent a new technology that tracks a tumor’s response to targeted therapies without harming the mouse. The camera can measure both luminescence, as emitted by fireflies, and fluorescence, as seen when light shines on a treated surface.
Other growth areas for Caliper in 2007 include its microfluidics business, which uses quarter-sized chips with channels the width of a human hair to process drug experiments. It’s expected to see 15 percent growth as more pharmaceutical companies adopt its LabChip 3000 screening and profiling system, among other products, for drug discovery.
A third area of long-term strength is Caliper’s lab automation and robotics products, which came with the acquisition of Zymark Corp. in 2003. Representing 40 percent of the company’s overall revenue, robotics is expected to see five percent growth in 2007.
With the addition of Xenogen’s patent portfolio to Caliper’s lab chips patents, the company now has more than 550 patents. Caliper has been recognized by MIT and the Cambridge Health Institute, which ranked Caliper second in the world (behind Pfizer) for its patents’ potential impact on the life sciences industry. Caliper will continue to look at additional acquisitions, Hrusovsky says, as "we have plenty of room for growth."
Allison Chisolm is a freelance writer.
She can be reached at chisolmchoice@aol.com.
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