News Roundup: Biotech Funding and LDT Regulation

With so many developments at the intersection of genomics and the law, there is often a variety of interesting stories that, for one reason or another, don’t find their way into a full-length posting on the Genomics Law Report. In this post we recap several recent key developments and, at bottom, round up all of the recent tweets from @genomicslawyer.

Biotech Funding: No Bubble, New Models and the IPO Option. Despite speculation that a recent rise in venture capital investments is indicative of a bubble, to be followed soon by a plunge in available investment capital, venture capital investments in the life sciences are holding steady, both in total dollars and in the size of an average financing. Thus, says Bruce Booth, a partner at Atlas Venture and author of Life Sci VC, there appears to be no bubble to debate, at least not in the life sciences. Booth observes that overall funding is “down considerably from the recent highs in 2007 and 2008” and, while other industries may be experiencing fewer but larger financings, “the data doesn’t support a frothy market for LS venture financings these days.”

Still,biotechnology innovation is neither easy nor cheap, leading venture firms to explore new product development and financing models. Large pharmaceutical companies, meanwhile, are also seeking to reinvent how they develop products in the face of a looming “patent cliff”. As the patents protecting many branded pharmaceuticals begin to expire, as will happen with Pfizer’s cholesterol drug Lipitor later this year, sales of these lucrative drugs will decline due to aggressive competition from generic pharmaceutical manufacturers. While not everyone is convinced that the patent cliff is a real phenomenon, real or not, big pharma certainly appears to be facing pressure to find new ways to identify and develop therapeutics.

The result, writes Ryan McBride of Fierce Biotech, is that VCs and big pharma are joining forces.

Pharma giants like Eli Lilly and Monsanto are collaborating directly with venture firms in an attempt to develop new products more efficiently. As McBride reports, Eli Lilly has announced plans to invest up to $150 million in external venture capital funds (including CMEA Capital) and Monsanto is collaborating with Atlas Venture (Booth’s firm) to identify new and early-stage biotech investment opportunities. Another example of VC/pharma collaboration is Enlight Biosciences, the drug discovery and development company founded by PureTech Ventures and funded by six major pharmaceutical companies (Abbott Laboratories, Eli Lilly, Johnson & Johnson, Merck, Novartis and Pfizer).

Even if some of these alternative biotech product development models prove to be successful, the end game for early-stage biotech investors remains murky. In his most recent post, Booth looks at the latest crop of biotech IPOs (since January 2010). Far from being the exit event early-stage investors might have hoped for, Booth finds that recent IPOs require significant additional participation from pre-IPO investors, affirming the prevailing wisdom that, at least in biotechnology, “IPOs are just financing events, and tough ones at that.” Just another reminder that an IPO may not be the right approach for every company.

LDT Regulatory Debate Continues. Since announcing last summer its intention to dramatically expand its oversight of laboratory developed tests (LDTs) by regulating them as medical devices, the FDA has yet to publicly propose a specific plan to bring LDTs under its purview. That does not mean, of course, that the issue has died. The FDA, Congress and industry groups are all considering several alternative approaches designed to modify – and hopefully to improve – how LDTs are regulated.

In a recent Boston Globe op-ed, Mara Aspinall of On-Q-ity and Brook Byers of Kleiner, Perkins, Caufield & Byers, “propose the creation of a dedicated FDA Center for Advanced Diagnostics Evaluation and Research [CADER] staffed with molecular diagnostics experts from all the relevant fields” as a preferred alternative to regulation of molecular diagnostics (many of which would likely qualify as LDTs) as medical devices within the existing FDA regulatory infrastructure. Although Aspinall and Byers do not refer to it by name, their proposal is another effort to promote a piece of legislation under development within the office of Senator Orrin Hatch (R-UT) that would create a separate regulatory pathway for so-called “advanced personalized diagnostics,” including the creation and funding of CADER within the FDA. Both Aspinall and Byers have previously indicated their support for the Hatch bill, which has yet to be introduced in Congress.

Meanwhile, at least one laboratory group is set to ask Congress to take a very different approach to LDT regulation.  According to Pharmacogenomics Reporter, the American Clinical Laboratory Association has “conceptually agreed” to ask Congress to modify two pieces of existing legislation – the Federal Food, Drug, and Cosmetic Act (FFDCA) and the Clinical Laboratory Improvement Amendments (CLIA) – to specify that the regulation of LDTs will be overseen by the Centers for Medicare & Medicaid Services (CMS) and not by the FDA. As Turna Ray writes for Pharmacogenomics Reporter, “ACLA’s plan to take its case to Congress suggests a deepening rift among disparate players in the diagnostics industry about how tests based on emerging technologies and marketed under complex business models should be regulated.”

Back in January, when we previewed the year ahead in personal genomics, we wrote the following:

Such a rapidly-moving field poses substantial challenges for overburdened lawmakers and regulators even in the best of political environments and 2011, with its newly divided Congress and promise of contentious battles over healthcare reform and other key issues, hardly qualifies as an ideal political environment. Never say never, but those who would bring legislative and regulatory change to personal genomics are likely to spend 2011 primarily laying the groundwork for 2012 and beyond.

With more than one third of 2011 in the books, and both a Congressional recess and the FY2012 budget battle looming, there seems little cause to alter that analysis.

Roundup of tweets from the intersection of genomics, personalized medicine and the law:

Filed under: General Interest, Genomic Policymaking, Genomics & Medicine, Genomics & Society, Industry News, Legal & Regulatory, Pending Regulation
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