Lessons for “Lean Start-up” / “Evidence based Entrepreneurs” in Lifesciences: 2

Reducing development & reimbursement risk,

whilst achieving pre-approval sales.

Intercytex Ltd

Paul Kemp, CEO

I spoke recently with Paul Kemp, CEO of cellular therapy company Intercytex, regarding approaches to reducing time, cost and risk in product development and reimbursement.  Including their “Progressive Translation” approach and forthcoming Cell2therapy^TM “Contract Translation Service”.

Development & pre-approval sales

Paul began by outlining two long standing routes to getting product to the patient (in UK) before a formal MHRA marketing license:

·    “Specials” – this applies to any type of medicinal product but has to be a bone fide request from a clinician and can only be used if a licensed alternative is not available, the product can be exported if it is legal to supply unlicensed products to patients in the receiving country.

·    “Hospital Exemption” – for ATMP (i.e. Regen Med & gene therapy) only, and applies even if a licensed alternative is available, provided that the physician determines this is better.  But is hospital use only, and cannot be routine, nor exported. .

He then mentioned the work of Brian Salter, who believes that the development of Stem Cell therapeutic products is predominantly;

·    Science led in The West; so that patients/doctors etc. have to wait until a company delivers a licensed therapy.   It’s a very linear approach, risky and time consuming.

·    Demand led in The East; with an individual patient focus & based upon clinical experience and medical innovation, and is a circular (iterative) processes. (C.f. transplantation in the UK). Hence it’s quicker and less risky.  However, this approach cannot achieve broad application until a marketing license is obtained.

Intercytex have developed a "Progressive Translation” approach, which combines the best of both worlds. This arose during their development of their fibroblast preparation based wrinkle therapy.  They followed the classic linear approach and completed Phase two trials.  Unfortunately the Fibroblast prep was not sufficiently efficacious using the trial’s protocol to make it economically viable.  Part of problem was that in phase 2b one uses “Dose ranging” to determine optimal doses ready for  phase 3.  However, as Paul explained, for cells (cell based products) this is not that relevant – more important is the overall protocol such as number of doses over what time i.e. “Protocol ranging” - and phase 2 approvals don’t allow this!

They were in the classic trap of being locked into a product that does not work (well enough), and nowhere to go – so abandon?  Not in their case: they realised some of their trial physicians were using Fibroblast preps under the Specials procedure to test out as a therapy for Epidermolysis bullosa and scar contractures.  So they pivoted to these applications, and are taking a “time-out” from phase 2 trials.  The clinicians are treating patients under Specials, with “very promising results”, and the information gained is helping to develop a better protocol for use in later trials.  What’s more, clinicians are sometimes able to obtain reimbursement on a “Named Patient” basis.  And all of this is within existing legislation.

The one thing to be particularly careful about, Paul indicated, is that a company cannot promote a Special product nor make any efficacy claims, so that care needs to be taken in getting physicians involved.  Intercytex are looking at the optimum way to interact with clinicians with the current legislative framework

They are establishing Cell2therapy^TM a “Contract Translation Service", in collaboration with UHSM at Wythenshawe in order to provide this to third parties.

The other approach Intercytex are taking to de-risk development is “to build change into the product from the start”.   The issue is once you’ve defined and agreed your product with the regulator, you are locked in.  So subsequent changes need a large effort, to effectively go back to the start.  

Paul’s approach now, is to discuss with the regulator, “testing the water”, to define the minimum aspects necessary to achieve the expected function of the product (effectively an MVP), thereby providing sufficient leeway for later stage product modifications.  This allows process and even product changes, provided “comparability” can be determined.  

He also mentioned, that once in phase 3, there are the more widely know approaches to expediting registration/sales, such as conditional licenses, orphan status, breakthrough product designation….”the national competent authorities around the world have appreciated that the current standard clinical trial process provides a huge burden to a therapy developer, and are working to improve the situation without compromising patient safety.”

Reimbursement games

A further benefit of the specials etc. approach (achieving pre-approval sales), is that “you develop some degree of market pricing”, along with evidence for cost: benefit, which then aids in reimbursement discussions. It’s also the case that patients can pay for specials, hospital exemptions etc. themselves, although co-payment is not possible (in UK).  This helps to de-risks reimbursement negotiations. 

“we are learning the reimbursement games”!

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 This post is part of an occasional series exploring lessons for risk, time and cost reduction, and the application of Lean Start-up techniques and Evidence based Entrepreneurialism to Lifescience based start-up companies.  Ideas explored during The Science of Entrepreneurship event, and practiced at Next Business Generation, Nottingham.

Lessons for “Lean Start-up” / “Evidence based Entrepreneurs” in Lifesciences

Tightly define both your product/service offering

 and the customer’s problem that it solves

Imagen Biotech

Rod Benson COO

(10/3/14)

I spoke recently with Rod Benson of Imagen Biotech, which he founded in 2007, with the proposition of being a High Content Screening CRO for Pharma Industry.  As you may recall, around this time HCS was the broadly seen as the new panacea for all the sector’s R&D ills, and many expected that it would fulfil the promise of restoring innovation and productivity to Big Pharma R&D (as had been thought for HTS previously!).  So this seemed like a great idea. 

Rod’s lesson for “Evidence Based Entrepreneurs” (lean start-up) is that a specific tight definition of the problem to be solved and solution to that problem (that you are offering), gives rise to clear and actionable interest, whereas broad multivariate offerings are deceptively well received (false positives), but give little real learning, and do not translate to sales.

Initial discussions with a number of Pharma’s, proposing a service offering based on a broad panel of many different assays within a HCS platform, gave lots of positive indications of interest.  So a business plan was put together, a working bank overdraft of 50K obtained based on a letter of intent from AstraZeneca. Early on they obtained a grant, several small studies and two larger contracts which made the company look as if it was following a healthy start-up trajectory. This allowed them to write an upbeat business plan to raise 400K to upgrade their equipment.  However, things started to “go off the rails” after this 400K investment in 2011.  Sales leads failed to materialize and this continued to grow worse during 2012 resulting in a year on year decrease in turnover. Whilst some of this is likely due to the tough economic conditions and the patent cliff, Rod contends that although the broad service offering created early interest, it leads to a woolly sales message….

“What companies prefer to be told is how they can solve a specific problem [assuming this is so] and that you have a specific answer that will solve this for them”.  

With a cash crisis looming at the end of 2012, they looked around to see what other opportunities where available with the now more developed technology base. Existing collaborative work, with The University of Manchester, showed good clear results in testing for cell death within glioblastoma stem cell cancer samples.  And their own drug discovery program around phenotypic screening of natural product libraries was showing promise. After an initial aborted fundraising attempt and  careful financial modelling of the personalized medicine idea, they concluded that development of a business around personalized chemotherapy had all the “upside” of a blockbuster drug but none of the downside of trying to get a new entity through first phase clinical trials.  Armed with this they wrote a much more focussed plan based solely on personalized chemotherapy and Pivoted from a broad general service offering to a specific one focused on offering a chemosensitivity assay to the NHS and private hospital sector.  With this and a new CEO, they were able to raise investment of ~£1M from a HNW syndicate, which in Rod’s words “happened only just in time”!  Imagen Biotech is now developing this new service platform with a great deal of specific interest from potential customers. 

Could this pivot have happened much earlier?  Actually, not that much.  Neither the screens themselves nor the enabling vision-hardware & software were sufficiently developed at the start, for this possibility to exit even perceptually. 

His conclusion, to reiterate, is that a specific tight definition of the problem to be solved and solution to that problem (that you are offering), gives rise to clear and actionable interest, whereas broad multivariate offerings are deceptively well received (false positives), but give little real learning, and do not translate to sales.

Rod also observed that “Service businesses just don’t [normally] give enough uplift for VCs”.

This post is part of an occasional series exploring lessons for risk, time and cost reduction, and the application of Lean Start-up techniques and Evidence based Entrepreneurialism to Lifescience based start-up companies.  Ideas that will be explored in the forthcoming The Science of Entrepreneurship event, and are practiced at Next Business Generation, Nottingham.