There's A Financings of the Fortnight In Every Crowd

"Psst, wanna buy some biotech?"

It’s already helped rock singers and indie film makers and arapaima trackers. But can crowdfunding help fill the life sciences venture gap?

The JOBS Act of 2012, signed into law by President Obama in April, aims to let small private companies raise money and go public more easily. Part of the law deals with the brave new world of equity crowdfunding, or selling private shares to the grass roots. Many of the details have yet to emerge from the Securities and Exchange Commission, which is charged with writing the new rules, including those that regulate crowdfunding. That means US entrepreneurs eager to use the model for the time being have to give something other than equity as remuneration for their backers’ cash. On the science-focused site PetriDish.org, you can search for projects based on the awards they’re using as compensation. (Get back to us when someone offers hats.)

Another example a bit closer to our hearts – or more accurately, our guts – are two citizen-science projects on the crowdfunding site IndieGoGo that ask the unwashed masses to submit body swab  samples and help build massive microbiome databases. (The more unwashed the masses, the better!) Both of the projects, American Gut and uBiome, have a sliding donation scale, but for less than $100, contributors will receive a kit to swab their various regions and, er, effluences, and submit them for analysis. Once processed the personal microbial profiles are made available back to the contributors. (Hey, a hat would be nice, too.) We’ve reported on the caution VCs have shown so far toward the wealth of microbiome data emerging from this new field, so we’re eager to see if projects like these, if and once they meet their crowdfunding goals, draw interest from more traditional investors. 

Despite the temporary regulatory limbo, plans are afoot in the US to create crowdfunding platforms that let start-ups sell equity. (We’ll dig into one of those plans in the next Capital Matters column of START-UP.) Elsewhere, the model is already underway. As we noted in this column in October, the French crowdfunding site Wiseed.com shepherded grassroots investors to what it says is the first-ever equity crowdfunding exit – through a biotech firm, no less. French antibiotic developer Antabio raised €300,000 from 207 crowdfunders in late 2010. The firm pulled in a Series B round from an angel investor a year later, and in mid-2012, the same angel offered to buy out the crowdfunders’ shares. It’s not clear what kind of return they received. An Antabio spokeswoman told the IN VIVO Blog in October it was a 2x return, but Wiseed’s own material calls it a 44% return. And the co-editor of this site says he invested €1400 and received €2434, a 73% return. (When we get clarification, we'll pass it along.)

Back in Washington, the SEC recently held a small-business meeting and took public comment on what its JOBS-related rules should look like. Some of the key crowdfunding questions remain up in the air, such as: Should equity crowdfunding services be regulated lightly, like the arts-donation site Kickstarter, or treated like broker-dealers? With serious questions like that still unresolved, we probably won't know anytime soon whether crowdfunding can become a real piece of the life science funding puzzle. But you can still find all the other puzzle pieces every two weeks by opening the rectangular cardboard box marked…

BioTime: The San Francisco Bay Area stem cell company said November 15 it has secured $10 million from an unnamed private investor to help pay for its proposed acquisition of assets from stem-cell pioneer Geron. Those assets have been in limbo for a year after Geron said abruptly in November 2011 it would end its stem-cell R&D to focus on small molecule cancer treatments. Geron’s spinal-cord injury treatment, derived from embryonic stem cells, was the first of its kind to enter the clinic, the most advanced example of cutting-edge stem-cell technology that has, to date, been slow to attract backers beyond California’s publicly funded regenerative medicine agency. Led by a Geron cofounder and its former CEO, BioTime in October made a public offer for Geron’s stem-cell assets. On November 15, concurrent with the financing announcement, BioTime published a non-binding letter of intent with Geron. If consummated under the terms outlined in the letter, the deal would create a new company to house the Geron assets, with Geron shareholders receiving more than 21% of the common stock and warrants to buy 8 million common shares of BioTime itself. The unnamed financier would put $5 million into the new company in exchange for 7% of the common stock and three-year warrants for roughly 350,000 shares at an exercise price of $5 per share. In addition, BioTime would contribute to the new company $5 million in cash, $30 million in BioTime common shares, warrants, and other rights. The anonymous investor’s other $5 million would go to the parent BioTime to buy 1.35 million common shares at about $3.70 per share, plus three-year warrants to purchase 650,000 shares with an exercise price of $5 per share. – Alex Lash

Lanthio Pharma: New European biotech start-ups have been few and far between this year. Tapping an unusual syndicate, however, the new Dutch firm Lanthio said November 27 it has raised a €4.8 million Series A round to push a lead compound from its peptide discovery platform into clinical trials, likely to treat lung fibrosis. The round was led by seed investor BioGeneration Ventures, which specializes in Dutch start-ups. But the surprising part of the funding news is that 20-year-old German antibody firm (and first-time investor) MorphoSys also took part. It will take a minority stake in Lanthio, and it will also become an R&D partner, receiving what the companies called “preferred rights to exclusively license” Lanthio’s technology for drug discovery. No financial details were disclosed. Spun out of the University of Groningen in 2011, Lanthio’s platform produces peptides that are stable in circulation and act as receptor agonists – relatively rare, as most peptide technologies find it easier to produce receptor antagonists. Other investors included INKEF Capital and Hanzepoort. INKEF Capital is an investment vehicle for the largest pension fund in the Netherlands, Stichting Pensioenfonds ABP. The round remains open for one more investor, Lanthio CEO Bart Wuurman told our colleagues at “The Pink Sheet” DAILY this week. "The number of European life science VCs with money to invest in new companies can be counted on one, maybe two, hands, as they appear to be keeping back financing for their existing investments," Wuurman said. – John Davis

Applied Genetics Technology: As we noted in September’s issue of START-UP, some VCs have taken a shine to gene therapy companies lately. Once considered far too risky for investors, the field has seen an unlikely renaissance recently, thanks to improved clinical data sets, improvements in manufacturing, and even a drug approval that could be a bellwether. On Nov. 19, the latest investment in the sector went to Gainesville, Fla.-based Applied Genetics Technology Corp., which reaped $37.5 million in a new Series B round. Leader Alta Partners was joined by first-time backer and GSK affiliate SR One as well as academic spinout specialist Osage University Partners. Returning investors from AGTC’s $11.8 million Series A round in 2009 included InterWest, Intersouth Partners and MedImmune Ventures. AGTC will use the funds for a Phase II trial on a therapy for alpha-1 antitrypsin deficiency, a protein disorder that leads to loss of lung function and liver damage, as well as early-stage treatments for the rare eye disorders achromatopsia and X-linked rentinoschisis. AGTC uses adeno-associated virus vectors to insert DNA into cells in order to correct genetic disorders. In early November, Belgian gene therapy company uniQure received European approval for Glybera (alipogene tiparvovec) to treat a rare protein deficiency, making it the world’s first gene therapy to gain regulatory approval. – Paul Bonanos

TauRx Pharmaceuticals: Just when you thought late-stage Alzheimer’s trials were done for a while, the Singapore-Scotland hybrid TauRx said November 20 it has received the first tranche of a $112 million equity investment to help push its lead candidate into Phase III. The money comes from a sole investor, Genting Management, a subsidiary of the Malaysian conglomerate Genting Berhad. The full investment is due by year’s end, according to TauRx, and gives Genting a 20% stake in TauRx. It brings the company’s total equity raised to nearly $300 million since its 2002 inception. The company says those Phase III trials have already begun enrolling. They will total more than 1500 patients around the world to confirm disease-modifying effects that a Phase II trial of an earlier version of the drug showed in mild to moderate Alzheimer’s patients, says the company. The firm’s treatment, dubbed LMTX, is aimed at dissolving the tangles of tau protein implicated in the decline of cognitive function of Alzheimer’s. The leading theory of the past decade or so -- that clearing accumulation of beta amyloid, another protein in the brain, would ameliorate the disease -- has encountered major setbacks in recent years, most notably the Phase III trial data released this year for the drugs bapineuzumab and solanezumab. Those disappointments have helped boost a cautious resurgence of work on other pathways such as tau that might lead to an Alzheimer’s treatment. They have also pushed researchers to theorize that beta-amyloid accumulation is a symptom of Alzheimer’s, and once present too late to respond to treatment. – A.L.

The Best of the Rest: To support lead candidate delafloxacin in Phase III for acute bacterial skin and skin structure infections, Rib-X Pharmaceuticals completed the first tranche of a $67.5 million Series 2 preferred share financing… led by Lilly Asia Fund, Chinese mAb developer Innovent Biologics  brought in $25 million in Series B funding… in a Series F to advance EPI743 in Phase IIb for two orphan indications, Edison Pharmaceuticals raised $20 million… French immunotherapeutics company TxCell cleared $15 million in a Series C round… Life Sciences Partners led a $12.8 million late-stage round for blood cancer drug maker Kiadis Pharma… NanoBio’s $11 million Series C will support development of infectious disease candidates and nanoemulsion-based vaccines… With $8 million from Pfizer Venture, Rhythm Pharmaceuticals expanded its June 2012 Series B to $33 million… MabVax Therapeutics raised $5.25 million in a Series B…an at-market RDO of Series A convertible preferred stock brought in $40 million for spec pharma BioDelivery Sciences to support completion of Phase III for chronic pain candidate buprenorphine… In an amended S-1 filing, Audeo Oncology set a range of $14-16 for 3.25 million shares in its planned IPO… A private placement of convertible debentures brought in $12.7 million for OTC-traded cancer therapeutics developer Arno Therapeutics… Concurrent with in-licensing of Genentech’s Phase I IAP inhibitor GDC0917, Curis secured $30 million in debt financing from Pharmakon in exchange for certain future Erivedge royalties. -- Maureen Riordan

Photo courtesy of flickr user James Cridland, whose photo stream is crowded with cool pictures.

European Regulator-HTA Rapprochement Not Quite There

Oh wouldn't it be nice if regulators and cost-effectiveness bodies could align their demands a little more helpfully? What a boon such hand-holding would be for controlling the costs of drug development, while still supporting innovation and recognizing value.

Still, there remains little substance as to how such a partnership could be effectively achieved, as was clear from this year's meeting of The Organisation for Professionals in Regulatory Affairs in Rome, Italy, on Oct. 13-14.

Despite the logic of closer HTA/regulatory harmonization -- the timelines are so close anyway, and patient access is impossible unless both sets of demands are met – regulators and price-sensitive HTAs remain uneasy bedfellows.

Indeed, back in Sept. 2009, EMA's then-director Thomas Lönngren expressed an almost ethical concern that the two sides were getting too close, as if one risked undermining the other. Since then, there's a more widespread agreement that things need to change, but certain executives, such as Aginus Kallis, head of the Dutch medicines agency, are still skeptical as to whether a closer relationship could ever work.

The fact that HTAs are now requiring even earlier-stage data further increases the value of (and need for) a coordinated regulatory/HTA approach. But according to Mats Mårfält, Senior Director, European Regulatory Affairs at AstraZeneca, progress in a Swedish pilot study designed to promote such coordination has been disappointing.

The idea was for Sweden's medicines agency (Läkemedelsverket) and its HTA body (TLV) to progress step-wise from single, to parallel and finally to joint scientific advice. Mårfält’s assessment was that the result was cacophony, as each stakeholder – including the manufacturer – sought only to blow its own horn. The regulator and HTA were reluctant to disagree and even discuss in from of the applicant; there was no attempt to align views at all. Far from building relationships, this looked more like playground squabbles.

And sadly, Anders Blanck, current head of the Swedish pharmaceutical industry association, later confirmed that there had been no further advance since this embarrassing, early stage.

If the relatively progressive Swedes can't do it, what hope for regulatory-HTA rapprochement across the rest of Europe's nations, let alone the whole region? Not much, it seems.

But maybe that doesn't matter, suggested Andrea Rappagliosi, Vice President European Government Affairs, GSK. Sure, HTA is a hurdle (albeit one that we know won't go away), and the lack of coordination with regulators is a pain. But it's Europe's patchwork of pricing and reimbursement systems – some tied up inextricably with HTA and even approval, others not – that are the real problem for market access.

So let HTA and authorization bodies continue to remain apart, provided they enjoy "robust two-way communication" in order to avoid overlap and duplication (which, judging from the Swedish experience, may be a stretch). Just speed up pricing and reimbursement – something that's being attempted, via proposed amendments to the European Transparency Directive. And here progress is being made, according to Rappagliosi, but as always the wheels of the EU legislative process move slowly -- Faraz Kermani

image by flickrer wolfsoul used under creative commons

EMA Leadership: Mr. Rasi Goes to London

From out of the mists of confusion created by the European Medicines Agency’s initial ineptitude in seeking a new head – its first job advert in German was wrongly directed at physicists and not physicians – an apparent savior has charged: Guido Rasi, current Director General of the Italian medicines agency, AIFA. The reaction of delegates at the OTC-focused AESGP meeting in Rome (where this blogger is currently reporting for "The Tan Sheet") to his nomination as EMA's next Executive Director is one of relief. Rasi, it appears, is whiter than white.

Unlike some of his AIFA predecessors, perhaps. Rasi's appointment to the top position of AIFA in 2008 came after its previous head, Nello Martini, was removed after being charged with “culpable disaster” (he was indeed acquitted in 2010). Martini's alleged crime, as deemed by public prosecutors at the time, was to have delayed the updating of pharmaceutical packaging and labeling where in fact a brief rewording of the documentation would have been appropriate. At the time, this resulted in delays to access and greatly angered the pharmaceutical industry.

But worse still were the crimes of Duilio Poggiolini, another former head of the Italian committee for drug registration, a forerunner of AIFA, who was accused of amassing a fortune in the region of CHF15 billion ($18 billion). The story goes that when police lifted floorboards in his house, they found underneath millions of Liras worth of gold bullion. (Lira was the pre-Euro Italian currency, for those of you with shorter memories).

And so Rasi was brought in to balance the ship and restore credibility to the medicines authority. An academic and physician by profession – until his AIFA appointment, he held a series of high-profile posts at various research institutes in Rome – he was credited with speeding up the drug registration process and thereby patient access.

His outstanding qualities in the eyes of his Italian colleagues, in addition to his acknowledged management skills, are honesty and trustworthiness. (Rare qualities indeed in anyone anywhere near the top of any multinational organization, let alone one whose shortened name has "As" and "Fs" in it..) Pharma industry commentators have already claimed that these qualities are growing in importance at EMA, following its ticking off by the European Ombudsman in June last year for a lack of transparency, and the questionable departure of its last Executive Director, Thomas Lönngren, to join the European regulatory and market access business the NDA Group. This move was seen as raising conflict of interest issues by many in industry, political circles and public interest groups.

The European Commission may have found a man to set the EMA’s house in order, but also one who will toe the line. The word in pharma circles is that he can be told to do things, but that he will then do them his own way.

Rasi's relatively short experience within the regulatory world (he's been chief of AIFA only since 2008, though on the board since 2004) may be an advantage, say some, as he comes without the baggage of a long-serving regulator. AIFA isn't a high profile agency within Europe, either (Italy is rarely used as a reference member state for decentralized approvals, for example). It does have a strong leaning towards risk-sharing deals, however-- which may prove significant.

Mr Rasi will go before a hearing of the European Parliament's committee on environment, public health and food safety on July 13, and his nomination will have to be approved by Parliament as well.

-- Faraz Kermani

Navigating The FDA Advisory Committee Road To Success … Or Not

On the eve of FDA’s Antiviral Drugs Advisory Committee reviews of the first protease inhibitors for hepatitis C, the drugs’ sponsors – Merck (boceprevir) and Vertex Pharmaceuticals (telaprevir) – are no doubt scrambling to make sure everything is in order.

Presumably, the companies have already locked down their slide decks, put the finishing touches on their presentations, researched the backgrounds of the committee’s standing members and shipped their AdComm teams off to hotels near FDA’s White Oak headquarters, where the meetings will take place.

Boceprevir and telaprevir are viewed as therapeutic breakthroughs in the treatment of HCV, both having shown improved cure rates when added to the current standard of care. However, the drugs have complicated and differing dosing regimens, which are likely to be an area of AdComm discussion.

Merck, which will present its case on April 27, is an old hand at the AdComm process, having most recently gone before a panel in December when it unsuccessfully sought to add prostate cancer risk reduction language to the label of its BPH drug Proscar. Vertex, on the other hand, is making its maiden voyage on the USS AdComm. The company will present its case on April 28 and should benefit from hearing panelists’ questions and concerns in their review of boceprevir the day before.

No matter how well prepared the sponsors think they might be, the AdComm road is littered with landmines. That, in a nutshell, was the message conveyed by AdComm meeting veterans at the Center for Business Intelligence’s Second Annual Forum on Effective Preparation for FDA Advisory Committees in Washington, D.C. last month.

At the two-day conference, battle-hardened veterans of the AdComm process – including pharma employees and consultants who make their living preparing drug companies for meetings – shared experiences from the trenches and offered some best practices to consider when tackling what has become a significant hurdle in drug development.

Some suggestions fall in the common sense category. It's imperative not only to have good communications with FDA leading up to an AdComm, but also to begin the meeting planning process early. Practicing presentations and Q&A is not surprisingly also considered good AdComm hygiene. But the CBI speakers voiced some additional pearls of wisdom that sponsors appearing before FDA committees might want to keep in mind, starting with…

Know Your AdComm
Pete Taft, founder and CEO of PharmApprove, a company that provides AdComm meeting preparation services, said sponsors should be ready to deal with four general types of personalities on FDA panels:

the expert – someone who knows a lot about your field and possibly your product, and is going to be well prepared for the meeting;

the judge – an individual who is swift to make judgments about your product or argument;

the thoughtful one – a quiet panel member; and,

the naysayer – the “Simon Cowell of AdComs” who you can either fight or forget about securing their vote.

PharmApprove has interviewed former AdComm members to find out how they prepare and what they expect from sponsors. At the top of their list is this nugget of wisdom...

Keep It Simple, And Don’t Be Irritating
The importance of clarity and simplicity in a sponsor’s presentation was echoed by FDA Director of Advisory Committee Oversight Michael Ortwerth, the lone agency presenter at the CBI conference. “That’s a really important thing, that the message is clear … and slides are very well put together,” Ortwerth said. “When you have slides that are so busy and so ladened and heavy, then you can’t focus on what the actual issue is.”

If AdComm members don’t like busy slides, they’re also not thrilled with sponsors or presenters who come off as cocky or overconfident. “I’ve always had this intuitive sense that if we press the committee or cause them to feel irritated, that some of that emotion will be transferred to their rational thinking,” said Taft, whose suspicion has now been confirmed. He noted the comments of a former AdComm chairman, who said: “You don’t want to make me angry about you, because then I transfer that from you onto the data and onto the drug.”

AdComm prep needs to be heavy on practice, planning and contingency planning, the speakers said. In the course of advance planning, it’s important that sponsors …

Don’t Let Belly Dancers Get In The Way
Don Cilla, vice president and product development team lead at AstraZeneca’s MedImmune division, led the company’s AdComm team for the June 2010 review of motavizumab for prophylaxis of respiratory syncytial virus. He recommends conducting AdComm team practice sessions and holding pre-meeting preparations in the same hotel ballroom that FDA will use for the meeting (when they’re not being held at White Oak). At the time of the motavizumab meeting “there was a convention of belly dancers that had that room booked for the three days leading up to it, so we couldn’t get in there to practice.”

If the company's AdComm team is all staying, and eating, together as a group for two or three days before a meeting, they should …

Avoid Eating The Mayonnaise
One of the speakers at the CBI conference recounted how a consultant, upon seeing open mayonnaise sitting at a buffet, banned all condiments at future meals so as to avoid the risk that team members would come down with a debilitating case of food poisoning on the day of the big meeting. “We had backups for everybody,” Cilla said of his team for the motavizumab meeting. “We didn’t know if they were going to get the bad mayonnaise or the Mexican food the night before or if they just couldn’t get there.”

While sponsors should plan for anything and everything to go wrong logistically, there are some factors they may have no control over. This includes the possibility that committee members will be suffering from …

An Avandia Hangover
Back-to-back scrutiny of different drugs on consecutive days can have a detrimental effect on those coming at the end of a multi-day meeting, suggested Alexander Fleming, president and CEO of the consulting firm Kinexum.

Case in point is Vivus’ obesity drug Qnexa. At a July 15 meeting, FDA's Endocrinologic and Metabolic Drugs Advisory Committee voted 10-6 against approval due to safety concerns. The negative vote took some FDA officials by surprise, but Fleming believes timing was a crucial factor. The Qnexa review marked the third consecutive day of work for the committee, its two previous days having been spent on an extensive and intensive review of the cardiovascular safety of GlaxoSmithKline’s diabetes drug Avandia.

“If nothing else, the advisors had to be exhausted” by the time they got to Qnexa, Fleming said. Calling the AdComm timing “pure bad luck” for Vivus, Fleming said the company knew “this was going to be a real disadvantage to them ... and only in retrospect do you see how it really had a major effect.”

Sponsors also may have no control over an AdComm’s walk down the path of …

Comparative Effectiveness And Cost
Disease background presentations by the sponsor are a hallmark of any product-specific AdComm. A good presentation will include a comparison of products that are on the market, including mechanism of action and limitations, said Mary Rofael, COO of scientific and regulatory communications at ProEd Communications, a firm that provides AdCom prep services.

“Many of you will say we’re here at an advisory committee, the committee should focus on evaluating the benefit/risk of a particular product,” Rofael said. “In this day and age you can’t stop people from thinking about comparing it to what they’re using currently or what’s on the market. It’s just a discussion that’s going to take place. Whether or not you engage in it, that’s a different story, but it’s important to anticipate it because these kinds of questions are being asked more and more today.

“It’s almost like the question of cost,” Rofael continued, venturing down a road that almost no sponsor wants to travel during an AdComm. “The advisory committee room is the only room where cost is not discussed … but eventually I think it’s going to make its way in. People are starting to ask about the cost of products and what the burden of cost is on the health care system.”

Aside from the detour down the cost path, what’s a sponsor to do when an AdComm’s discussion of the data starts …

Spiraling Out Of Control?
If the panel’s conversation has gone awry at some point after the sponsor’s presentation, the best a company can hope for is that the meeting agenda includes an upcoming break, said PharmApprove principal Martha Arnold. “If there’s a situation where things just are spiraling out of control, and … you think perhaps the committee is dealing with information that is just plain wrong, that there’s been a misinterpretation either of your data or FDA’s data, if there’s a break you have an opportunity to at least approach the chair” and express concern, she said.

If there are no further scheduled breaks, the sponsor could pass a note to the panel’s industry representative “or tap them on the shoulder and say, ‘Hey, can you help us out here,’” said Bruce Burlington of DB Burlington Consulting, who often serves as the industry rep on AdComms. “Alternatively, if it’s really outrageous, just stand up and say, ‘Mr. Chairman, I request your permission to insert a correction in the discussion at this point.’”
It may be more problematic, however, for sponsors to insert themselves into the process of …

Question-Morphing
Anyone who has sat through at least a handful of AdComms can confirm that panelist confusion over the wording of FDA’s questions is a fact of life, often leading to discussions as to whether and how the questions should be re-written on the fly. While these question-writing “audibles” can be disconcerting for sponsors, so can the initial questions themselves.

CBI conference attendees cited tremendous variability among review divisions in the types of questions posed at AdComs, ranging from straightforward questions on risk/benefit to queries that run multiple pages and “in essence make the FDA case in the form of a question,” one conference attendee said.

FDA’s Ortwerth acknowledged room for improvement in how review divisions ask questions. “It is important that there be consistency in the way we try to communicate. … There needs to be the right way to communicate something and a clear way to communicate something and not to drive the direction of the answer.”

Even if sponsors are able to navigate all the trouble spots outlined above, they need to keep in mind that they can …

Spend Big Money, But Still Lose Big
Preparing for an AdComm involves shelling out big bucks, all of which can be for naught if a drug is decimated when it comes to the panel’s vote. MedImmune’s Cilla said his company spent approximately $900,000 on AdCom preparations for motavazimub, which included the cost of consultants, meeting space and four mock panel meetings at approximately $60,000 each. The investment resulted in a 14-3 AdComm vote against approval, which was followed by an FDA “complete response” letter and the company’s decision to withdraw the BLA.

Sanofi-Aventis Associate Vice President of Global Regulatory Affairs Kevin Malobisky said his company spent about $1.3 million preparing for one meeting that resulted in a 14-0 vote against approval – an apparent reference to the unsuccessful June 2007 AdComm for the obesity drug Zimulti (rimonabant).

Were IN VIVO Blog writing an AdComms for Dummies manual, we might put it this way: it's expensive and a lot of work to prep for an AdComm, but you have to do it. Even so, there's no money-back guarantee.

Maybe we should start consulting--at least we've got a sense of humor.

-- By Sue Sutter (s.sutter@elsevier.com)