Nanopharmaceuticals: A Not So Nano Opportunity

Nano What?

Nanopharmaceuticals, as the name suggests, use nanotechnology as a delivery platform for therapeutic agents. Nanomedicine as a whole has many applications, but drug delivery is one of the most promising. The technology allows developers to create injectable nanoparticles that target specific cells in the body and spare healthy tissue from the potential toxicities associated with many therapies. Moreover, particle design can be tuned to improve the pharmacokinetics (PK) of drugs, allowing for varying degrees of delayed release and/or greater concentrations of drug in blood plasma. In short, nanoparticles have the potential to dynamically deliver high doses of drugs directly to the desired site while maintaining a strong safety profile.

How does it work?

I will try to keep this at a high level—primarily because I am not a bio-chemist. Nanoparticles can be thought of as small capsules (usually less than 100 nanometers) that carry an active pharmaceutical ingredient (API) through the bloodstream to its ultimate destination. Once at the site, the capsules begin to degrade and release the payload packaged within. This gradual degradation process is what allows for the delayed release. The variability of this mechanism and the safety of the particles themselves depend on the chemistry used in the design.

There are two primary types of nanoparticles: lipid based and polymer based. Lipid particles surround API with phospholipids that absorb naturally in the body. This absorption, though considered safer, does not allow for a significant delayed release. Polymer based particles, on the other hand, are metabolized instead of absorbed; this allows for a more sustained release and a more stable particle. Polymer particles require more complex chemistry but are less costly than lipid. Other nanoparticles also include binding mechanisms that latch on to specific cells—similar to other targeted biologics.

Where does it work?

In my descriptions above I have simply stated that the nanoparticles circulate the bloodstream and eventually concentrate in the desired location, but how does that actually happen? The answer lies in the composition and nature of the primary nanoparticle target: solid tumors. Tumors are hideous creatures whose primary goal is to survive and grow, thus tumors are constantly replicating cells and developing new blood vessels. The young tumor blood vessels are exactly where nanoparticles, quite literally, fit in.

Tumor blood vessels have more loosely arranged endothelial cells than the walls of mature healthy tissue. Nanoparticles are strategically designed to be too big for healthy tissue, yet small enough to enter the leaky vasculature of tumors. Combined with the poor drainage of tumors, nanoparticles have a handy one-way passage into the tumor. Once inside, the delayed release can create a sustained inhibition of whatever the given API may inhibit. The question then becomes: what API(s) do you want to use to kill the beast?

Below is an image taken from Cerulean Pharma’s website that illustrates how its nanoparticles enter tumors. Cerulean has a polymer based nanoparticle, CRLX101, which contains camptothecin (a potent chemotherapy drug) as its API.

Does it work?

There are a couple nanopharmaceuticals approved of which I am aware: Abraxane and Doxil. Neither of these is a game changer, but they have at least established some credibility for the technology. It is hard to move the needle in cancer so the likelihood of success will always be low. The ability to package so many different APIs into the technology, however, allows for many shots on goal and increases the likelihood of success significantly.

Even if the platform fails to improve efficacy, nanoparticles could possibly emerge as the default delivery method for all chemotherapy drugs. If the technology truly makes drugs safer, then a reduced toxicity profile for existing chemotherapy drugs would undoubtedly be an improvement in quality of life for patients. The unfortunate challenge for developers, though, is that it would be hard to justify a premium price for a drug that does not improve survival. Sadly, this business reality may delay such a sensible use of the technology.

Overall, the scientific rationale is strong but the clinical potential remains an open question. Just as RNA therapies were expected to revolutionize oncology in the 90's, nanoparticles could end up being a very sexy and frustrating flop. Investors that continue to pour billions into nanomedicine development are certainly expecting big things…hopefully they are right.

------------ About the Author: Don Driscoll ------------------------

Don is currently the Vice-President of Finance. He earned a Bachelor of Science degree in Economics with a minor in Legal Studies from Trinity College in Hartford, CT. After graduation, Don joined Fidelity Investments in Boston where he held a variety of positions including sales, trading, operations, and comprehensive financial planning. Don has a passion for healthcare and plans to transition his career into this exciting field. He is particularly interested in healthcare start-ups and has focused his studies in finance, strategy, and entrepreneurship.

Virtual Biotech: the next stage in biotechnology business model evolution

Historical Context

Biotechnology companies have been touted as the dynamic offspring of the pharmaceutical industry. The business models employed by a biotechnology firm can be as interesting as the biological molecules being developed in their labs.

The earliest biotech players (Amgen, Biogen, Genentech) sought to mimic the fully-integrated pharmaceutical company (FIPCO) models that dominated the market during their launch. The companies that followed Amgen, Biogen and Genentech during the 1990’s could not compete with the large, established players in the industry and sought to drive revenue by licensing out their proprietary technology to the large firms. The royalty income pharmaceutical company (RIPCO) business model provided the revenue that could help an early-stage company survive as they strived to become a FIPCO and to share some of the risk that arose from developing new therapeutics.

Some RIPCO’s found success not in trying to bring their own drug to the market, but in providing discreet services for established biotechnology firms. The evolution of these firms towards services by contract led to the Cxo business model, where a firm could supplement their own research from a CRO (contract research organization), CMO (contract manufacturing organization, or even a CCDO (contract clinical development organization).

Investments by venture capital firms were essential in the establishment and evolution of the biotechnology industry. In the early 2000’s though, approvals of new molecular entities by the FDA continued to drop and the industry sought a higher degree of mergers and acquisitions to fuel existing pipelines. The increase in acquisitions buoyed investments from VC firms, but only in the short term, with funding suffering in the mid to late 2000’s, especially after the financial crisis in 2008.

New firms responded to the resource limited environment by utilizing the CxO-like companies to support a virtual biotechnology business model. These companies managed to keep fixed costs low by employing relatively few employees and contracting out most services, such as research, development and clinical trial design/management, to outside organizations.

The Benefits of Virtual

The major benefits of employing a virtual biotechnology business model revolve around the limited infrastructure that is required to start the company. The utilization of a low fixed cost structure (i.e. low overhead) allows companies to control their burn rate and to focus on filling their pipelines with potential candidates, not building infrastructure. This limited infrastructure means that cash can go a lot further and provides the ability for firms to continue operations even when additional early-stage funding may be limited.

The virtual biotechnology business model also avoids the growing pains associated with developing internal specialized capabilities. Hiring external firms (CxOs) whose strategic capabilities are focused and already efficient means a better return on each dollar spent throughout the development period.

A final benefit for the virtual business model, and its investors, is if the new venture is not able to deliver a quick-to-market success, then the startup entity can be dissolved much easier than a fully integrated company.

From Virtual to Reality or Remaining Virtual; Challenges Exist

While the virtual biotechnology business model may seem like a golden opportunity and the future of the industry, it is not without its challenges. Notably, no firm has fully demonstrated success in employing this method and then converting to a fully sustainable organization. The industry has had many successful companies to date that have used this model to advance into later clinical trials and be acquired by a larger company. The very ideal (low infrastructure) will play out to be the challenge that any company will face if it decides to pursue an integrated business model.

Like any industry that functions by contracted outsourcing, a large amount of energy must be expended on overseeing project management and development and ensuring timely completion of tasks as specified. This level of oversight can be complicated even more as the locations for many CxOs are geographically distant, often spanning the globe. To effectively meet timelines and deliver on the promise of a quick-to-market strategy, advanced planning and coordination is necessary.

During the early years of the virtual business model, there were concerns with quality and scalability. Growing operations or focusing on multiple therapeutic areas will likely require the use of multiple CROs which complicates management and may diverge the focus of a project stream. These concerns have been slowly addressed as more companies seek to utilize the services of CxOs and as the virtual industry grows. Indeed, the rise in use of CxO services has resulted in increased scrutiny on quality, especially as established companies seek to buy or license the affected therapeutics. Increased use has also resulted in CxOs investing to develop greater capacity to meet the growing demand.

An Evolutionary (Business) Cycle

The business models of the biotechnology industry will continue to evolve as new companies are started in response to advancements in the understanding of disease states, mechanisms of action in disrupting disease pathways and novel technologies to address patient needs. At the heart of this pathway is the need for capital to sustain research and development activities so that novel technologies can demonstrate their promise. Greater growth within the industry is likely to lead to less available capital per start-up, which will drive the need for more adaptive business models given limited resources.

**Please note that the historical context of the evolution of the Biotechnology sector is more nuanced and complicated than presented here. For additional information on business models in the pharmaceutical or biotechnology industry, and greater detail on their development, please read “The Business of Healthcare Innovation” by Lawton Robert Burns, 2012 (http://amzn.to/UUPJ9D)**

Additional articles for more information on and examples of virtual biotechs:

• http://www.nature.com.proxy.library.cmu.edu/naturejobs/science/articles/10.1038/nj7452-127a

• Aldridge, S. (2010). Biotechs go virtual. Nature Biotechnology, 28(3), 189. doi:http://dx.doi.org/10.1038/nbt0310-189b

• http://www.tcpinnovations.com/drugbaron/the-zero-person-biotech-company/

• http://www.xconomy.com/seattle/2012/05/03/virtual-biotech-companies-built-on-solid-bedrock-or-unstable-landfill/

--------  About the Author: Jared Worful  -------------------------------

Jared is the President of the BioPharma and Healthcare Club. He graduated with his BS and MS in Biochemistry from the University of Maine. Before coming to Tepper, he worked as a Process Science Engineer for ImmunoGen in Boston. During his five years at ImmunoGen, he focused on developing antibody-drug conjugates to treat various types of cancer and worked to expand their conjugation platform technology.

At Tepper he is concentrating on Operations, Marketing and Strategy. He will be spending his summer at Bayer Healthcare in Whippany, New Jersey. In his spare time he enjoys hiking, playing volleyball and gardening.

Healthcare, IT and Us

Buzzzzzz. 

5:30 a.m. and my alarm clock goes off. I still feel tired and my sleeping app confirms that I barely entered REM sleep last night. I get up and weigh myself, entering the number into my nutrition and weight tracking app. Phew! Good thing my step counting app confirms I made it over 10,000 steps yesterday. While the pizza and beer I had for dinner may be a grad school staple, it’s loaded in sodium and fat, as I was reminded while recording it. Better order the salad at lunch today. I finish getting ready for my summer internship, but today I also have a Dr.’s appointment. I have chronic asthma and to be honest I’ve been so busy focusing on my internship that I haven’t really been thinking about it. However, my Primary Care Physician (PCP) tracks population health information and sent me an automated call last week saying that the area in Boston where I’m living this summer has a higher than average incidence rate, and since it’s linked to my electronic health record (EHR), the call also reminds me to refill my soon to expire asthma medication.

My normal PCP is in Pittsburgh, but today I’m seeing a specialist. I was able to use my PCP’s website to look for the most affordable and high quality specialist available in Boston that was also covered by my student insurance. When I scheduled the specialist appointment I texted my PCP and her staff was able to send my EHR to the specialist even though my PCP owns her own private practice and the specialist is employed through a large hospital system and they don’t use the same EHR system. The specialist writes a prescription, uses an app that checks for common drug interactions, and lets me know that a common side effect is nausea which can be reduced by taking the drug with meals. The order is sent electronically to the pharmacy near my work so I can easily pick it up during my lunch break. A note about the prescription is entered into my EHR and the Dr.’s office emails me educational materials about behavioral ways I can help control asthma attacks. I go to pick up my prescription and decide to buy the drug container that can send me alert texts when I’m supposed to take my meds. To be honest, without this feature I often forget to take meds because I’m so busy during school. I gave permission for my Dr. to have access to this information, so her office is able to track my compliance and send me reminder texts when I miss my meds for two days in a row.

While the above scenario is just that at this point, technology is disrupting the healthcare industry from providers, payers, device and drug makers, directly into patients’ daily lives. Healthcare remains one of the most highly regulated industries and this regulation often limits the extent that different players are able to work together. 

In 2009, as part of the American Recovery and Reinvestment Act, the Health Information Technology for Economic and Clinical Health Act (HITECH Act) was passed in an effort to “promote and expand the adoption of health information technology.” 

The act focuses around EHRs and created Meaningful Use (MU) standards that financially incentivize providers that are able to demonstrate meaningful use of EHRs. Examples of meaningful use are e-prescribing, electronic exchange of protected health information (PHI) to improve patient quality of care, and using clinical data to improve public or population health outcomes. 

PHI is covered under the Health Insurance Portability and Accountability Act (HIPAA) of 1996 which governs how and when patient health information can be shared. Given the current state of healthcare technology for most providers and other players, meaningful use of EHRs is a lot easier said than done. Most providers are not achieving meaningful use even if they are using EHRs and the integration required for the scenario presented above is still years away. However, this information is only the tip of iceberg of the potential for and current innovation in health information technology. It will remain one of the most challenging and exciting components of healthcare for years to come.

-------- About the Author: Susana Valverde --------------

Susana is currently the Vice-President of Cross Campus Relations for the BioPharma and Healthcare Club. She graduated from with a B.A. in Politics, a minor in Biology, and a public health concentration from Scripps College in Claremont, CA. After graduation, she completed an AmeriCorps Year of Service at a community health center working on population health and health equity campaigns. Prior to Tepper, Susana worked at a nonprofit focusing on behavioral health intervention studies and technical assistance for the federal Safe Schools, Healthy Students violence prevention and mental health promotion initiative. Susana is concentrating in Entrepreneurship, Strategy, & Finance at Tepper. She is also interested in Brazilian Jiu Jitsu, Bolivian Coffee, Baking, and watching historical documentaries when she should probably be doing her homework.

An overview of the Genetic Sequencing Industry

The human genome project, an attempt to decode the human genome consisting of 3.3 billion base pairs, took 13 years and approximately $3 billion. This feat promised a future of personalized medicine to unravel the mysteries of human diseases and promote longer healthier lives. It also fueled a race to develop technology that would provide scientists with the same outcome, a sequenced genome, at a fraction of the price.

Presently, a human genome can be sequenced within a few months and the now costs on average between $4,000 to $10,000. The cost may continue to drop as Sequencing Industry leaders, Illumina release new products that project sequencing costs to be $1000/ sequenced genome.

So has this technology delivered on its promise? Well, not quite yet.

Sequencing has been able to provide many insights into many rare inherited and undiagnosed diseases. Most recently, sequencing helped diagnose a mysterious infection contracted by a 14 year-old boy, Joshua Osborn, in Wisconsin.

Joshua's family was skeptical that sequencing would provide any insight into why their son had suffered encephalitis and was in coma; yet they agreed to the test. Within 48 hours of sequencing DNA found in his cerebrospinal fluid, physicians were able to identify the bacteria and eradicate it within days.

In other cases, sequencing has been able to help physicians identify mutations in cancer and aid with specific treatment options to target mutations as the most effective solution with the least amount of complications. Companies such as Foundation Medicine, GeneDx, Guardant Health, PGDx, and Personalis are all competing in this space alongside many large research institutions: Baylor, Yale, and Columbia to provide sequencing and interpretation services.

The answer to whether or not sequencing technology will help healthy patients is still unknown. Several studies (Genome wide association studies – GWAS) have helped to understand population genetics and epigenetics, but not many studies have been conducted with the purpose of understanding how genetics predicts the onset of common ailments like diabetes, cardiovascular disease, Alzheimer’s etc. The main reason being that these diseases are multi-gene disorders. Having a mutation in any one gene that is related to the disease may increase your risk of developing that disease but it cannot predict the likelihood of the disease manifesting.

However, many research and healthcare systems are trying to answer that very question. Projects are underway that will sequence and monitor thousands of healthy individuals with the goal of discerning how genetics plays a role in disease onset.

A few examples of these studies are:

Institute of System Biology - 100K Wellness Project
Genomes 2 People – MedSeq
Genomes 2 People – BabySeq
Genomics England – 100,000 Genome Project
U.S. Department of Veterans Affairs – Million Veterans Program

Only time will tell, but it will be interesting to see what data these and other research projects will collect, and then to see what innovation will spring up to capitalize on those findings to help people live longer, healthier lives.

-------  About the Author: Nina Patel --------------------------------

Nina currently is a Marketing Intern at Personalis, a genomic startup company in Silicon Valley. She is the VP of Events and Alumni Relations for the BioPharma/Healthcare Club, and has actively been involved as a co-chair for the Innovation in Health Care Technology Conference at CMU (2014).

Prior to Tepper, Nina worked as an R&D Engineer developing DNA sequencing instruments at Life Technologies. During her six years at Life Technologies she developed a passion to build customer centric solutions that improved the lives of others. At Tepper, she is pursuing Entrepreneurship with a focus on Healthcare. In her spare time, she enjoys Spanish Red wine and friendly games of bowling or Ping-Pong.

A-Lung, a Pittsburgh start-up offers an inside look into growing a healthcare company

On Friday, April 4th, a small group of healthcare and entrepreneur enthusiasts ventured into the rain to visit a healthcare start-up nestled amongst the low brick buildings of the Southside. ALung, known for developing extracorporeal CO2 removal devices, welcomed us with enthusiasm.

The first hour was an intimate discussion with Peter DeComo, CEO, Nicholas Kuhn, President and CBO and James Sweeney, SVP Corporate Development about their experience with starting a new company and the hurdles faced especially within starting a healthcare/life sciences company. Their discussion touched upon funding sources, making it a priority to develop knowledgeable and competent teams and how to manage the risk of starting a new company.

In the second hour, we were treated to a tour of the ALung’s in-house manufacturing process. We saw how the cartridges are assembled, heard about which of their processes they source outside of the company and their rational, and saw the flow of inventory for the site. Next we ventured into the development lab where engineers were working on the next product iteration of their Hemolung RAS. They discussed some of the major cost drivers for their product and the major changes that are currently being made to address those issues and reduce the cost of goods by a significant value.

The site visit to ALung was an excellent opportunity to see a company from many viewpoints. Anyone interested in entrepreneurship, business development or operations would have benefited from the visit.

Check the company out at: http://www.alung.com/

----- About the Author ----------------------------------------------

Jared is the President of the BioPharma and Healthcare Club. He graduated with his BS and MS in Biochemistry from the University of Maine. Before coming to Tepper, he worked as a Process Science Engineer for ImmunoGen in Boston. During his five years at ImmunoGen, he focused on developing antibody-drug conjugates to treat various types of cancer and worked to expand their conjugation platform technology.

At Tepper he is concentrating on Operations, Marketing and Strategy. He will be spending his summer at Bayer Healthcare in Whippany, New Jersey. In his spare time he enjoys hiking, playing volleyball and gardening.

Welcome to Pharm-ville

Welcome to Pharm-ville!

This blog is owned by the BioPharma Club at the Tepper School of Business, Carnegie Mellon University. The platform is leveraged as an open-forum to discuss, review and present thoughts and comments on the industry, developments in pharma space and job opportunities for management graduates.

All views expressed come with the sole cognitive consent of the author - feel free to accept, endorse, confirm or challenge - in short, drop a note. 

Welcome to Pharm-ville - and though we can't promise you corn and peas, we certainly do provide food for thought.

Cheers,

Team BP&H