Innovation and health technologies: celling science?

1. Innovation and health technologies: celling science? Professor Andrew Webster, Director SATSU, University of York and of UK SCI Australian Centre for Innovation and International Competitiveness August 19 2008

2. Outline • The emergent bioeconomy • Technology translation – an uneven story • The case of tissue engineering • Lessons and implications for innovation and take-up of new TE/hESC therapies • Conclusion

3. The emergent bioeconomy • Policy debates • US OTA – Biotechnology in a Global Economy (1991) • UK BIGT ([Red] Biotechnology Innovation and Growth Team) (2008) • Australia – Innovation Review (2008) • Biotech as key part of knowledge economy • Potential for wealth creation through development of new high tech products, industries and jobs

4. The chain of economic biovalue creation Primary resources Extraction & analysis Engineering Synthesis Tissue engineering Tissues e.g. blood, solid organs, skin, bone, gametes Tissue components, stem cells & cell lines Cell therapy Regen Med DNA, proteins & other molecules Protein engineering Gene sequencing Gene therapy Personal medical data Gene/ disease associations Molecular diagnostics

5. Progress in the clinic • Mixed progress in the clinical adoption of genomics and biotechnology • Therapeutic proteins *** • Monoclonal antibodies *** • Genetic tests (monogenic) *** • Cell therapies (non-stem cell) ** • Pharmacogenetics ** • Genetic tests (complex diseases) * • Stem cell therapies (inc HSCs) * • Therapeutic vaccines - • Gene therapy - (Martin and Morrison, ’Realising the Potential of Genomic Medicine’2006)

6. Two possible explanations • Failure to get new technologies into the clinic • Genetic tests (complex diseases) • Therapeutic vaccines • Gene therapy • Stem cells • Problems of proof of principle and safety • Lack of uptake when new technologies reach the clinic • Cell-based therapies (non-stem cells) • Pharmacogenetics (PGx) • Why the lack of demand?

7. The engineering principle in biology • Long tradition of conceiving body in mechanical terms in which parts can be exchanged and replaced artificially e.g. Prosthetics, mechanical organs, military cyborgs • Birth of tissue engineering (TE) in mid-1980s • Institutionalised in 1990s, but eclipsed by and integrated into regenerative medicine in 2000s

8. Defining TE “The application of principles and methods of engineering and life sciences to develop biological substitutes to restore, maintain, or improve tissue function.” WTEC Panel, 2002 • Core principle: Using engineering principles and techniques to create substitutes for organs and tissues (i.e. replacing parts and functions)

9. Operationalising the definition (1) • Two types of cell-based products • Structural TE products/ applications e.g. substitutes for skin, bone and cartilage; • Metabolic TE products/ applications e.g. functional substitutes of liver and pancreas • Two generations of products • First generation products based on non-stem cell therapies, grafts and implants • Second generation based on stem cells.

10. Operationalising the definition (2) • Disease targets included • Dermatology • Opthalmic applications • Aesthetic applications • Bone and cartilage disorders • Dental disorders • Muscle disorders • Cardiovascular disease • Bladder and kidney disease • Neurological disorders • Metabolic disorders

11. Cell product/choice All cell sources have different risks and benefits concerning availability, immunogenicity, pathogenicity, and quality. The choice of cells will also influence product development time, the regulatory framework to comply with and marketing strategy

12. TE Firms by Country Mesoblast, Melbourne Source: Martin, 2008

13. Growth of TE Firms by Year Founded

14. Primary Products by Disease Indication

15. Worldwide 2008: 2185 RCTs using cell-based techniques Source: NIH: ClinicalTrials.gov

16. Cumulative Growth in Launched Products

17. Sales of skin & cartilage products

18. Market estimates for tissue-engineered products have been very promising, ranging from 80 billion € for the USA alone (MedTech Insight, 2000) to 400 billion € worldwide (Langer & Vacanti, 1993). More moderate estimates still calculated a global market of 3.9 billion € by 2007 (Business Communication Company, 1998) or of 270 million € by 2007 for skin products alone (MedMarket Diligence, 2002). The reality provides much lower figures with world-wide sales of tissue-engineered products probably not surpassing 60 million € in 2002. Source: IPTS, 2003 Hyped market sales Dermagraft: ‘Skin replacement opens million dollar markets’, Health Care Industry July 1992 ‘The firm's "conservative revenue model" predicted first-year Dermagraft sales of $37 million and 1998 sales of $125 million. An aggressive model estimated sales of $280 million by 1998.’

19. Current world-wide sales Total sales $1.3b Source: M. LYSAGHT et.al. 2008 (TE, vol 14)

20. Japan Tissue Engineering Co., Ltd. (J-TEC) Est: February 1, 1999 Capitalization: 5,543.45 million yen

21. A relatively mature industry • Large number (~40%) of primary firms founded more than 10 years ago, with 30% listed on public markets • Significant number have products on the market or in clinical development • But 90% are small with <100 staff and only four companies are large with >500 staff • High level of company failure

22. Summary • The number of firms has remained stable over the last five years, but a high level of turnover • Sub-sectoral structure is slowly changing following shift to stem cells in early 2000s • Geographically concentrated • Relatively mature, but problem with firm growth • Healthy number of products, but relatively poor sales apart from a few dominant ones • Narrow development pipeline • Few collaborations with large firms

23. The Gartner Curve Gartner ‘hype cycles’ are said to distinguish hype from reality, so enabling firms to decide whether or not to enter the market

24. Technology Push: Beginning the 2nd Half of the Gartner Curve? Visibility Trough of Disillusionment Peak of Inflated Expectations Slope of Enlightment Plateau of Productivity 2001: 3000 jobs, 73 firms, mkt cap > $3B 2000 Time Magazine:TE No. 1 job 2001 Ortec FDA approved 2001 TE blood vessel enters clinic 2001 Dermagraft FDA approved 2002 ISSCR founded 1999 Intercytex founded 1999 TE bladders in clinic 1999 First TE product FDA approved (Apligraf) 2001 Bush “partial ban” on HESCs Synthetic Biology?? 1998 Plan to build human heart in 10 years 1998 Human ESCs first derived 1997 Dolly the sheep 1997 First cell therapyFDA approved (Carticel) 1992 Geronfounded 2003 UK Stem Cell Bank set up 2005 CIRM founded 2006 Carticel - 10,000 patients 2006 hESCs derived without harming embryo 2006 Batten’s Disease trial 2006 Reneuron file IND for stroke trial 2007 Apligraf - 200,000 patient therapies 2007 Mouse fibroblast to mESCs 2007 Intercytex start Phase 3 ICX-PRO 2007 Osiris Named Biotech Co. of the Year 2008 Geron expected to file IND - spinal cord 1988 SyStemix founded 1986 ATS & Organogenesis founded 1985 Term “TE” coined 2002 ATS + Organogenesis file Chapter 11 1980 Early TE research (MIT) Technology Trigger Stage of Development

25. hESCs: - currently (in short to medium term) hESCs used in drugs testing and medicines development: as disease models to explore pathology of disease; as drug screens for toxicity or efficacy e.g Roslin Cells Centre, (Edin); ES Cell International (Singapore); Cellartis (Gothenburg); Invitrogen (California); HemoGenix (Sydney) hESCs and investment Exploitation of hESCs

26. Patenting activity in hESC Patent applicants are going via national offices such as the UKIPO to file and secure patents on pluripotent lines, short-circuiting the EPO in Munich which conflates toti and pluri potent lines So, ironically, it is much easier to obtain patent protection on hESCs in the US than in Europe. Most recent data on stem cell patents reveals a dramatic growth in the number of stem cell patent applications suggesting the field is ripe for the emergence of a stem cells ‘patent thicket’ and blocking monopolies

27. Patents in hESC domain

28. ‘The technical content of the patent landscape is highly complex. Stem cell lines and preparations, stem cell culture methods and growth factors show the most intense patenting activity but also have the most potential for causing bottlenecks, with component technologies expected to show high degrees of interdependence while being widely needed for downstream innovation in stem cell applications.’ (Source Bergman and Graff, Nature biotech 2007)

29. Key questions • What were/are the difficulties faced by TE innovation? • What sort of business model: e.g. ‘product’ or ‘service’ based (akin to ‘cryovial products’ vs IVF clinic) • Allogeneic vs autologous therapies? Different business models: Allogeneic products amendable to large-scale manufacturing at single sites Autologous therapies more of a service industry, with a heavy emphasis on local or regional cell banking.

30. Tissue engineering: allogeneic paradigm

31. Why slow adoption of TE? • Multiple reasons • High cost of manufacturing & distribution • Lack of evidence base – cost-effectiveness • No better than established alternatives and more costly • Wrong product (e.g. skin thickness, storage) & poor choice of disease/ clinical target • Problems fitting products into established routines • Linked problems of storage and delivery on demand • Central issue of clinical utility not being taken into account in product specification and design • Regulatory hurdles

32. Regulatory issues • consistency in bio-processing and in therapeutic results (GMP as basis for stable product) • a scale-up that works – automation (mix of mass and customised products?), and delivery system which has regulatory approval • measures of cost effectiveness • ‘regulatory intelligence’: e.g. assignment to specific classification categories will funnel products into varying regimes of risk and functionality – eg are TE products a ‘device’ vs ‘medicine’? Scale-up via automation a key issue:

33. Lack of user-producer links • Preliminary data on development of first generation products suggests lack of interaction between developers and users • Small science-based firms adopted rather linear model – poor understanding of user needs • Success of Apligraf (Organogenesis) only after changed specification based on user feedback because of changed business model

34. Clinical utility • Acceptance only possible if new technology demonstrates clear benefit over current practice • Utility is framed by context: e.g administration of the cell product (compare diabetes with spinal injury) • Utility constructed within existing work practices, routines, infrastructures and constrained by resources

35. Need to understand two things: • clinical relevance (what would make something worthwhile having?) • clinical practice (what organisational and cultural factors influence this?)

36. Factors determining clinical relevance of TE products (source: Laboratoire D’Organogenese Experimental, Canada, 2007)

37. The nature of clinical practice • Medical work is deeply embedded in entrenched socio-technical regimes shaped by: • Management of complexity and uncertainty (about body and disease) • Established routines and interventions • Existing technical infrastructures (therapies, diagnostics) • Organisation of services and care • Rationed access to resources • Medical knowledge is much more than the appliance of science • Other forms of knowledge are key and are only produced in particular clinical settings e.g. experience of disease, routines and protocols, practice style, complementary technologies, assessment of cost-benefit

38. Australian Innovation review Bio21 Cluster argues for: • ‘an innovative entity based on the highly successful Centre for Integration of Medicine and Innovative Technology (CIMIT, www.cimit.org) in Boston, USA. CIMIT’s mission is to improve patient care by bringing scientists, engineers and clinicians together to catalyse development of innovative technology. They are interested in developing international affiliations and have recently worked with the North West of the UK to establish MIMIT in Manchester’

40. Addressing market failure • Reimagining the innovation process in therapeutics • Key role of public research in early stage clinical development – major source of innovation even in pharmaceuticals (see PUBLIN project – I.Miles) • Translational research as complex two-way flow of knowledge between bench and bedside • Better understanding of clinical need and delivery • New division of labour between public/ private sector • Change in policy focus – underwriting risk, cost & benefit sharing, greater steering to maximise public health gains? • Creating public sector innovation infrastructure

41. ‘Celling science’: lessons for stem cells • Successful embedding for both products and therapies (whether hESC-based) will require: • Overcoming major technical problems • Good product specification & design (user input) • Careful choice of clinical target (user input) • Scale manufacturing • Investment from pharma/ device companies • Evidence base (cost-effectiveness) – also key issue for reimbursement and insurance • Integration into existing practices & institutions

42. Conclusion • Challenges and opportunities of regen med defined differently across globe; ethical and practical concerns express different priorities and shape innovation patterns • Considerable scientific and clinical work needed to be done to produce robust, workable therapies • Commercial interest in cells been cautious in ‘west’, expanding in ‘east’ – but iPS likely to change this • Need to recognise role of public sector in innovation • Some regulatory convergence in Europe/Australia but still highly sensitive and politicised issue

43. Acknowledgements • Paul Martin, Institute for Innovation, University of Nottingham • SCI network (www.york.ac.uk/res/sci)