Healthcare Newsletter – August 2018

RNAi and Gene Therapy - Landmark Approvals, Regulatory Changes & M&A in next genTreatment Options
Home-Health In a landmark approval this month, the US FDA green-signaled the first drug based on the path-breaking RNA interference (RNAi) technology. Onpattro (patisiran) infusion, from Alnylam Pharmaceuticals, is used to treat peripheral nerve disease (polyneuropathy) caused by hereditary transthyretin-mediated amyloidosis (hATTR) in adult patients. Onpattro falls under new class of drugs called siRNAs which are produced by silencing a portion of RNA, which in turn disrupts the synthesis of the protein that clumps and causes nerve damage in affected patients. This marks the first FDA approval under a new class, ‘small interfering ribonucleic acid’ (siRNA) treatment. The drug, which was issued a breakthrough therapy designation has also been assigned orphan designation, as the disease affects only 50,000 people worldwide, thus making it eligible for exclusivity incentives for rare diseases.
While at one end, companies continue to push boundaries of frontier medicine through break-through innovations, the regulatory landscape also continues to evolve to provide a more conducive commercialization landscape. On these lines, the NIH and FDA have combined their forces to together streamline and simplify research and approval process. This is an encouraging effort in the direction of modernizing oversight of gene therapy and eliminating duplication of reporting requirements that do not exist for any other field of research. So far, for gene transfer clinical trials, sponsors have to register their study with FDA as well as NIH along with submission of annual reports and reporting of serious adverse events to both the bodies. In the new proposed amendment, NIH is seeking to remove protocol submission, review, and reporting requirements and modify the roles and responsibilities of the Recombinant DNA Advisory Committee (RAC).
The field of cell and gene therapy also has a vibrant M&A landscape, as companies scramble to jump on the bandwagon of regenerative therapy, as signified by several past deals. In yet another deal this month, PTC Therapeutics, has entered into an agreement to acquire biotech company AgilisBiotherapeutics, developing gene therapy programsfor patients suffering from rare CNS disorders.

Burgeoning PE interest in Indian Pharma
Home-HealthIndian pharma remains to be a lucrative target for Private Equity firms, with companies continuing to receive attractive valuations. Couple of deals this month signify this emerging trend. TPG has invested USD 105 Million (~INR 900 Crores)in Sai Life Sciences Limited in exchange for a 35% stake in the company. This investment has opened exit doors for earlier investor, Tata Capital, which had invested INR 185 Crores in Sai Life Sciences in 2014. Sai life Sciencesis primarily focused on API manufacturing as well as contract development and manufacturing (CDMO) with USFDA-certified manufacturing facilities in Hyderabad, Telangana and at Bidar, Karnataka. The company also has a flourishing API business.More recently, True North has invested in Glenmark’s orthopedic and pain management business in India and Nepal that has been spun out into a separate entity. The deal is valued at INR 635 Crores, which is four times the sales generated by the division (INR 156 Crores) and 14 times EBITDA. This new entity is likely to be named as Integrace Pvt Ltd and while Glenmark’s stake in the business remains undisclosed, it is speculated to hold no more than a minor share in the newly carved out venture. This deal also signifies the budding trend of Indian big pharma spinning out strategic business segments with high investment requirements to pursue accelerated growth with support from PE funds. Cipla spun out its consumer healthcare business into a separate entity Cipla Health Ltd (CHL) in March 2016, followed by which, FIL Capital Investments Mauritius II Ltd, the investment arm of Fidelity Growth Partners India (now Eight Roads Ventures) invested an undisclosed sum in CHL.

Reassuring NCE Interest In Diabetes Despite Escalating Level Of Late Stage Clinical Investments
Interests Spike The scale for novel drug focus has off late been tilted more towards biologic drugs and next generation therapies, with year-on-year shrinking of share from New Chemical Entities (NCEs) in the pool of regulatory approvals. This progressive decline in the recent past has also been partly fueled by higher regulatory scrutiny in this category on monitoring cardiovascular outcomes, especially in the case of drugs for metabolic diseases such as diabetes.In this context, it is encouraging to note Novo Nordisk inking a strategic alliance this month with Germany based Evotec to develop small molecule therapies to treat patients with diabetes and obesity along with other co-morbidities such as nonalcoholic steatohepatitis (NASH), cardiovascular diseases, and diabetic kidney disease. As per the deal, Evotec will deploy its ligand-based drug discovery program to design highly safe and efficacious drug candidates, and upon selection of preclinical candidates, Novo Nordisk will utilize Evotec’s INDiGo platform to further advance these candidates in to clinical stage. In another deal this month, Novo also acquired UK-based Ziylo, a spin out from University of Bristol, and its glucose binding molecule platform, which will be used to develop glucose-responsive insulins at a potential deal value that could exceed 800 million US dollars. The collaboration is particularly notable given the limited pipeline investments in the diabetes segment. While Novo Nordisk received approval for Ozempic(semaglutide)for type 2 diabetes in Europe earlier this year and in US in December 2017, pipeline investments have been at an all time low in this therapeutic category with continuing high unmet need.

Regulatory Thrustacross the world in Expedited and Priority Review of Drugs
Private Vaccines Market in India Global regulatory authorities are seen to be paying high attention this month to priority review of drugs, generics and novel drugs alike. In the western world, the US FDA continues its focus to expedite generic drug approval process and is actively exercising various pathways to grant generics approvals to foster healthy competition to combat affordability qualms. The regulator has granted its first approval under the Competitive Generic Therapy (CGT) pathway to Apotex’s potassium chloride oral solution which is prescribed for treatment and prevention of hypokalemia. Introduced in FDA Reauthorization Act of 2017 (FDARA)to reduce the number of review cycles for generic drugs those have insufficient competition, a drug can be designated as Competitive Generic Therapy (CGT) if it lacks a generic counterpart in the market or there is no more than one indicative entry for the drug in the active section of orange book. A drug granted a CGT designation may receive review enhancements and expedited review of their Abbreviated New Drug Applications (ANDA), in addition to the first applicant being eligible for 180 days exclusivity for marketing the product. Apotex’s first drug to have utilized the abbreviated pathway is eligible for 180 day exclusivity which is however subject to forfeiture if the drug is notcommercially marketed within 75 days after the date of ANDA approval.
At the other side of the world, China’s National Drug Administration (CNDA) has granted a rapid approval for Roche’s Alectinib. Marketed as Alecensa,it is an oral drug that blocks the activity of anaplastic lymphoma kinase (ALK) and is used to treat non-small-cell lung cancer (NSCLC). This is perceived as a positive sign redeeming China from its notoriety for delayed review process. The regulator has been taking several regulatory revamp efforts ever since its rebranding and restructuring in 2013.

Out licensing Triumph of Emerging Market Innovation
Home-Health While most large pharma players from India and other emerging markets are in active pursuit of novel drug candidates in domestic as well as regulated markets, there have only been a handful of novel therapeutics from Indian companies that have seen the light of market commercialization so far, including Sun Pharma’s Ilumya serving as a trailblazer for Indian success in regulated market novel biologics. Glenmark is another such Indian company with an active innovation pipeline. The company has successfully executed an out-licensing deal with China-based Harbor BioMed for its oncology pipeline biologic, GBR 1302 for treatment of HER-2 positive cancer patients. The asset is the first clinical candidate to be based on Glenmark’s proprietary BEAT™ (Bispecific Engagement of Antibodies based on the T cell receptor) technology platform and is a bispecific antibody targeting HER2 and CD3 and is complementary addition to the internal portfolio of Harbor BioMed. According to terms of the deal valued at over USD 120 million, Harbor Biomed will develop, manufacture and commercialize the GBR 1302 molecule for Greater China markets.Glenmark is entitled to receive upfront payment and milestone linked payments upon completion of pre-specified development, regulatory and commercialization milestones along with tiered royalties on net sales for any approved products from Harbour BioMed. In the last few years out-licensing by Asian companies including Korean companies such as SK Biopharma, HanAll and Genexine has set the stage for flatter global collaborations that are an encouraging trend in current landscape of lean pipelines and escalating drug development costs.

Continuous Glucose Monitoring Devices Target Greater Value Proposition
Home-Health Continuous glucose monitoring (CGM) offer highly patient-centered solutions for long term connected care for patients suffering with Diabetes, the most looming chronic disease with increasing incidence globally. Although it currently accounts for a small share of the glucose monitoring device market, there is burgeoning industry interest in the segment, with growing engagement from even industry leaders such as Medtronic and Abbott. US based Dexcom, Inc., one of the specialized players in the segment, has announced acquisition of Virginia based start-up TypeZero Technologies, Inc., following a long standing technology partnership between the firms and University of Virginia, for advancing innovations in CGM. TypeZero’s flagship offering, inControl Diabetes Management Platform, elevates CGM technologies from being a connected care open-loop system for informed decision making on insulin administration, to a next generation closed-loop system that can automate insulin delivery as well. Being designated the first integrated CGM by US FDA, Dexcom’s G6 is the first product permitted by the agency to be used as part of an integrated system with other compatible medical devices such as automated insulin dosing systems, insulin pumps, blood glucose meters or other electronic devices used for diabetes management. While the active industry activity in the segment is encouraging, the reimbursement landscape is also evolving in parallel, with Medicare now covering CGMs for patients on multiple daily injections of insulin (MDI) and who make frequent adjustments to their dosing schedule. As CGMs move beyond the fringes towards mainstream adoption, it is likely gain significant from the evolved value offering targeted. Integration of insulin delivery in a convenient manner will be the Holy Grail expanding CMG’s functionality beyond continuous monitoring and connected care to also offer more controlled and optimized drug delivery and clinical outcomes.

Deal Announcement – Series A fund raise for health tech venture HealthSignz
Sathguru Management Consultants Acted As Sole Transaction Advisor To HealthSignz Technologies On Its Equity Fundraise

Sathguru’s healthcare practice lead Pushpa Vijayaraghavan featured in Express Pharma on need to enhance innovation engagement in Indian pharma

Featured Publication
Indian Pharma: Enabling the Transition to Innovation Led Growth
Excerpts from the Assocham Sathguru publication released at the Assocham Pharma Conclave, May 2018

Industry at a Crossover – Quest for Higher Value Generation
– Industry in transition, with rapid shifting of gears in novel chemical and biological entities
– Large pharma companies carving their own niche with some degree of success in specialty Pharma with the 505(b) (2) pathway
– Active engagement in biosimilars for domestic markets, with need to step up pursuit to regulated as well as ROW markets
– Novel vaccines –gradual stepping up to innovation led products with some commercial success
– Robust drug discovery capability in CROs, triggered by rich expertise gained from discovery work for MNCs

Triggering Innovation Leapfrogging – Global Benchmarks
– Indian innovation ecosystem primed from several ends – Ease of access created for seed and early risk funding through TDB & BIRAC i3 Program; Incubation Infrastructure fostered and innovation hubs nurtured; Fiscal incentives such as concessional taxation on royalty income
– International benchmarks for innovation-led growth – Hong Kong, South Korea & Israel

Innovation Led Growth –Recommendations for Leapfrogging Momentum
Need of the hour for next leg of growth include
– Scale-Up Funding and Tech Access Mechanisms
– Strengthening institutional backbone, industry-academia collaboration and IP perception
– Globally comparable fiscal incentives

Click to download the publication

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