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An Effective Way to Ensure Consistent Protein Expression

BioPharm International, July 2009 (PDF)

There is virtually no activity conducted by biotech companies that is not currently monitored for compliance. Requirements in the form of good laboratory practices (GLPs), good clinical practices (GCPs), and good manufacturing practices (GMPs) affect nearly every aspect of the discovery, development, clinical testing, manufacturing, labeling, marketing, and distribution of products. And product development oversight will likely become more, rather than less, intense in the future. 

Such regulation can be doubly expensive. On one hand, you must shoulder regulation's direct costs: those incurred to develop and maintain compliance programs and rectify cited failures. On the other hand, in the event of citations, you must endure the business costs that accrue from not achieving compliance: delayed approvals; missed market opportunities; product liability; expensive remediation; and potential loss of product, market share, and credibility. 

But does compliance have to be as costly as most companies believe?  

Consider that compliance, by definition, is reactive. It implies a response to something—a rule or requirement. As a result, the compliance management strategies of most life sciences companies are fundamentally reactive. They focus on whatever issues arise and the companies often face the same issues year after year. A few companies, however, take a more proactive approach. They learn from regulatory experiences and aim their compliance efforts at preventing problems, thereby achieving savings in both direct and business costs. The top performing organizations, however, take a more strategic approach. Instead of treating compliance as a cost of doing business, they extract the business value from regulatory and quality imperatives, and move from a culture of compliance, whether reactive or proactive, to a culture of strategic quality management.  

The dimensions of quality—not compliance—must be the focus of a strategically oriented company. Such strategic quality management is no more expensive than a reactive wait-and-fix strategy, or a proactive plan-and-prevent approach. In fact, by evolving compliance into regulated quality, companies can achieve lower overall quality assurance costs, enormous time savings, fewer compliance problems, and a stronger alliance with regulatory authorities. 

METHODS FOR MOVING TO STRATEGIC QUALITY MANAGEMENT 

Moving fast from reactive to proactive compliance, and then to genuinely strategic quality management, is a communication and relationship challenge. Business processes throughout the organization must emphasize the forging of partnerships throughout the organization. Departments understand their interrelationships and work together to leverage technical and business tools jointly (Figure 1). The overall objective is to first identify and then add value to regulatory work practices by combining traditional compliance procedures with breakthrough business methodologies. 

Companies with strong, strategic approaches to quality use a variety of distinctive work practices and methodologies. Some, for example, regularly perform GMP process audits that help them quantify levels of risk should compliance goals not be met. Such auditing also helps companies strategically focus their quality assurance (QA) dollars on areas that most require adjustment, or where savings likely will be most significant, instead of the much more costly approach of waiting until problems occur.  

Some companies are using the newly in-vogue enterprise risk assessments (ERAs) to identify and prioritize quality risk and then draft a mitigation plan. These ERAs raise awareness of the nature of quality management and facilitate analysis of the business value of the quality function.  

To build flexibility into compliance-budgeting activities, a few companies use a "work breakdown structure" that helps them "predefine" what has to be done and what costs are involved. Operating budgets can then be structured to portray accurately where the company is positioned currently with respect to GMP compliance. This can be accomplished by considering  baseline costs, factoring in acceptable industry tolerances, and then developing alternative model projections. It is then possible to track actual figures and compare them to projections. Other companies rely on trend analyses to understand the financial impact of reaching key business goals. These analyses typically consist of industry best practices, historical data, and interpolation of economic trends into financial projection models. Both of these elements are typically incorporated into ERAs. 

Virtually all companies can increase compliance levels and improve overall quality management through benchmarking. By helping to identify, adopt, and deploy the best practices of diverse life sciences organizations, as well as best internal practices, benchmarking programs make it possible for companies to develop individualized best manufacturing practices.  

One specific process—quality management benchmarking—can help companies analyze the costs and risks associated with reaching best-practice compliance. Quality management benchmarking provides a clear view of inter-departmental connectivity, so it helps QA and executive management implement processes and technologies that support an integrated, strategic approach to quality. Quality benchmarking also can help forge links between those responsible for the financial health of the company and those responsible for the quality of products produced. 

Quality management benchmarking seeks to answer two important questions. The first question is: Is the compliance effort harmonized across regulatory standards in the markets for the company's products, such as the US, EU, Japan, and China?  

Despite the ultimate stringency of regulation, most drug regulations are subject to interpretation. Yet many companies take the gray ink of regulations as the indelible black ink of dogma. They will therefore develop one set of standard operating procedures (SOPs) for their US sites, another set of SOPs for their European sites, and another for Japan. But it is far more efficient and cost-effective to develop and maintain one overarching set of SOPs that harmonizes requirements across all three markets with a sub-set of SOPs that covers any absolutely clear differences.  

The second question is: How do specific compliance practices within departments compare with other departments in the same company; other sites in the same company; the competition; other relevant industries in the global marketplace; and other companies in nonrelated industries but with some similar business processes? 

If different departments in the same company—such as R&D, manufacturing, and pharmacovigilance—are handling similar compliance matters differently, then compliance can't be managed effectively. Benchmarking across departments enables the enterprise-wide alignment of these activities. For example, information technology is pervasive in biotech companies. Data should be standardized across departments and computer system validation should be consistent.  

Sometimes, different sites dedicated to different therapeutic areas in a company will use different SOPs for compliance. This situation is often encountered following mergers and acquisitions. Here, too, benchmarking across sites can uncover opportunities for consistent and strategic management of compliance.  

Benchmarking against other biotech companies is difficult because the cultural, people-driven components of various companies differ widely and are difficult to replicate. Although such benchmarking may not enable emulation, it can provide a window into successful business practices. Biotech, despite a plethora of things that make it different from small-molecule pharmaceuticals and other businesses, is still, after all, a business. And many business practices translate well from industry to industry.  

For example, consider biotech as a knowledge-based business. Although the end-product is a biologically-derived compound, the research leading up to the development, data in the clinical trials and subsequent applications, information highly relevant to drug safety, and so on, is ... well, information. Successful businesses "tag" this information with certain actions (such as proactively passing it to a colleague, to R&D, to medical affairs or legal, or even to certain parts of manufacturing). This tagging enables a knowledge lifecycle and actually enhances the knowledge by further enabling a state of proactive collaboration. Information has thus been transformed from a static to a dynamic state and becomes a business asset. 

Benchmarking against other relevant global industries, such as small-molecule pharmaceuticals or medical devices, can provide additional insights into best practices in regulated industries. Benchmarking against unrelated industries with similar business processes, like oil and gas or automotive, can provide insight into the management of protracted, expensive R&D, or quality programs. 

A quality management benchmarking program must begin with the establishment of metrics that help quantify program success and provide a basis for re-assessment. The same metrics also may help QA executives establish cost-bases or estimates to improve their overall quality program. In the process of establishing these metrics, companies must be able to recognize their most critical compliance issues. Do they trend more in the R&D side as opposed to manufacturing, product delivery, or even within QA itself? Also, how is quality currently measured? The most compliance-focused (reactive) companies, for example, often use GMPs as their primary, and even sole measure of quality. Finally, the development of quality metrics helps companies determine cost-reduction "actuals" before implementing complex information systems. 

QA departments can do a number of things to help create a culture of quality, instead of reactive compliance. These include: 

to uncover potential vulnerability to regulations. Most companies perform annual GMP audits, but few companies simultaneously examine the costs associated with fixing the identified deficiencies. Even fewer extend the data to consider the enterprise-wide risks and costs associated with those deficiencies.  

Consistently seek to improve inter-department communications.

 This can include, for example, enhancing operating procedures, reducing documentation review time, training, and auditing. Auditing helps identify gaps between the procedure and the actual or desired business process. Training and amended SOPs can bridge these gaps effectively if the review or release process encourages authors to make enhancements. 

Eliminate (not just reduce) redundancies in the corporate QA environment

. At many companies, procedures are layered in their development. For example, most companies add SOPs to groups rather than simultaneously revising groups of SOPs, resulting in the duplication of material and redundancy in tasks. 

Understand what should and should not be outsourced.

 Should you outsource such things as a biologics license application, IT, or manufacturing? There are a number of things that can be outsourced, which can reduce headcount, but before doing so, it's important to understand both pros and cons.  

Standardize outsourced efforts through vendor auditing

 (or some pre-approval process) and early communication of compliance issues to prospective vendors. The FDA regularly requests vendor audit reports, and specifically mentions consultants and vendors in the GMPs (21 

 211.34). Companies must set standards for consultants and vendors. 

Despite the need for a high level of control and coordination among IT systems, many companies remain wary of the costs and efforts involved in developing such capabilities. For many, this is because FDA validation guidelines and enforcement procedures seem vague and capricious, which makes it harder to make prudent investment decisions. Nevertheless, the evolution from compliance to quality must include the ability to identify compliance-management investments with a strong payback potential. In turn, that ability requires a strong understanding of regulatory requirements and the strategic context of the business so that money is not misspent.  

A robust document-management system—combined with work processes that effectively use the system—can dramatically improve compliance activities, including tracking and trending adverse reactions, reporting and documenting manufacturing problems, and maintaining standard SOPs needed for compliant operation.  

Unfortunately, many companies purchase expensive document-management systems and then neglect to use their workflow features. As a result, the system simply functions as a big, expensive electronic filing cabinet. Before purchasing such systems, companies should understand their overall IT strategy for compliance and what they expect from the document-management process to help achieve it. Then, an informed decision can be made about which system to buy.  

In some cases, the company's existing technology may suffice. For example, most companies use business intelligence software, which is neutral when it comes to what kind of data it can handle. It is therefore possible to use that software to manage toxicology or adverse events.  

No matter what software or system is used, the key to making document management successful is deploying systems and processes concurrently. Because a document management system directly affects how people do their work, that work may have to be restructured to take advantage of the efficiencies offered by such a system. To capture maximum value from document-management systems, companies must examine their operating systems and approaches, break down work processes, and reconstruct them in a manner that:  

capitalizes on benchmarking and best practices research

better uses budgeted regulatory and QA funds

identifies compliance "high-risk elements"

eliminates redundancies in the QA and regulatory environment

minimizes modification of the chosen system.

Successful document management, thus, does not require a computer system as much as it requires a computer-related system. Whereas the former involves implementing hardware, software, and peripherals, in the latter a comprehensive operating environment is implemented that also includes system inputs, related business processes, operating procedures, physical utilities that support system operation, and any other factors that affect the "steady state" of the system.  

Compliance Notes

A culture of quality that emphasizes business objectives, risk management, and the informed application of technology can improve compliance.

How to Shift from Reactive Compliance to Strategic Quality Management

In cell line development, the integration of transgenes into the chromosomal DNA of the host cell is a crucial step. Targeted introduction has many advantages over classical random integration procedures because of strong influences of the chromosomal surroundings on the expression of transgenes. Site-directed integration leads to predictable expression properties, avoids screening, is fast, provides high safety, and is thus the method of choice for the targeted integration of transgenes. Recombinase mediated cassette exchange (RMCE) using heterologous recombinases has been described as an efficient and reliable method to target (integrate and replace) transgenes by site-directed engineering of defined chromosomal sites for recombinant protein and virus expression. The article reports on the exploitation of defined chromosomal sites for the consistent production of highly biologically relevant proteins, namely the expression of viral vectors and antibodies. 

Genetically modified cells are used for a wide variety of purposes, ranging from basic research to elucidate gene functions (e.g., in transgenic mouse models) to biotechnological applications like manufacturing antibodies. Efficient production of proteins and virus particles using mammalian cell lines usually relies on stable, albeit random integration of an expression construct into the cell's chromosomal DNA. After a construct is incorporated, its expression levels will be determined by neighboring genetic elements.

 To exploit a favorable genomic locus for expression of a given construct, intensive screening usually is required to identify integration sites that support high-level protein production. Frequently, screened clones are even engineered to maximize their expression potential. Gene amplification is a standard technology that aims to increase the gene copy number and thereby improve the production properties of a given cell clone. The genomic instability associated with gene amplification is a major challenge for the establishment of a stable and fully characterized producer cell line. Further, these current state-of-the art protocols are usually time consuming and importantly, must be repeated for each and any transgene to be expressed.  

In comparison to the integration of numerous copies, a single copy of the gene of interest represents an advantageous scenario because of the possibility of full characterization of the integration site and the increased genomic stability of the producer cell line. The production of biopharmaceuticals from a single integration site is indeed a possibility, as already shown by the authors of this article and others. Single copy integration of transgenes in selected chromosomal sites provides the required expression strength and stability.

The biotechnological exploitation of producer cell lines containing a single copy of the transgene of interest gained considerable importance following the introduction of RMCE. As specified below, this technology permits the rapid exchange of expression cassettes of choice in defined genomic surroundings. In this way, RMCE allows the manipulation of a single chromosomal locus that supports the desired expression level of the relevant protein and renders its repeated re-use feasible. In this way, this technology represents an excellent way to exploit defined genomic sites and is a breakthrough in cell engineering. 

To enable exploitation of a favorable chromosomal integration site, an initial primary (preliminary) genomic modification to first mark or tag the site must be performed (Figure 1). This, in turn, creates a genomic platform that supports subsequent modifications of that particular site. Although the first generation of tag-and-targeting approaches (so-called 

approaches) has limitations with respect to efficiency, RMCE is considered the method of choice for targeted integration mainly because of the lack of reversibility, the lack of insertion of bacterial sequences, and the elimination of the tagging cassette (as summarized in Gama-Norton, et al.).

Figure 1.  The recombinase mediated cassette exchange (RMCE) principle and strategy for efficient selection of correctly targeted subclones. A single copy of a tagging cassette is initially integrated into the genome of the cell of choice through random integration or viral mediated delivery of the DNA sequence (the tagging step). A reporter gene can be used to identify tagged cell clones with desired expression levels. The cassette exchange-targeting step through RMCE is performed by co-transfecting an Flp-encoding vector and a targeting vector containing the gene of interest (GOI). The latter is flanked by two heterospecific Flp recognition target sites (FRT) that are identical to those flanking the tagging cassette. Additionally, the vector contains an ATG start codon to restore the nonfunctional Îmarker-gene of the tagging cassette. Once the Flp enzyme has exchanged the tagging for the targeting cassette, the ATG is placed in frame with the marker gene and cells can easily be selected by the addition of the respective marker drug.10 Importantly, because of the incompatibility of the two heterospecific FRT sites, excision reaction of the tagging cassette is excluded.  

By tagging the genomic locus of interest, the heterotypic and incompatible recognition targets such as the Flp recognition target (FRT) and FRTmut are introduced into a genomic locus (Figure 1).

 This creates a cassette acceptor allele, i.e., this tagged locus can now be used to integrate and exchange different DNA cassettes of choice.  

To target the genomic locus, a targeting vector containing the desired transgene flanked by the same set of heterotypic recognition target sites as the tagged cassette is transfected together with an expression plasmid that encodes for the recombinase. A double reciprocal crossover recombination event will lead to the exchange of the reporter cassette with the cassette of interest, the targeting cassette. This strategy can hence be termed the 

Screening at the tagging stage (step 1) makes it possible to identify the integration sites that provide the desired expression properties, i.e., high, stable, or regulated expression of the transgene. A successful selection process might require screening large numbers of cells. Once this cell line is established, it will be further characterized for stability and safety. Further, the optimal culture conditions that support maximal productivity will be defined. In this state, these cells can constitute a platform that can be exploited to predictably express other proteins in a short time. This is illustrated in Figure 2. 

Figure 2.  Timelines to generate tagged high expression clones and constitute a producer cell line after targeting with the gene of interest. Standard protocols to generate conventional producer cell lines rely on the establishment of a different cell line for the expression of a different product. Commonly, more than 24 months are needed for the development and full characterization of a biotechnologically relevant cell line. In contrast, the establishment of different cell lines that express different products with biotechnological value by the application of RMCE technology can be achieved one-month after targeting of an already tagged cell clone. This represents a tremendous advantage and opens up the possibility of creating a panel of cell lines that express different genes of interest in a predictive manner.  

The examples given below illustrate the performance of this technology for the establishment and exploitation of biopharmaceutical producer cell lines. 

USING RMCE TO PRODUCE VIRUSES AND PROTEINS 

We screened various cell lines including human 293 cells, mouse NIH3T3, Chinese hamster ovary (CHO), and baby hamster kidney (BHK) cells for integration sites that meet the requirements of stable and high expression.  For this purpose, we implemented an advanced site-specific cassette replacement strategy that combines retroviral tagging and a positive selection trap with the Flp/FRT recombination.

 To select exclusively cells that underwent the site-specific recombination, the tagging cassette contains a transcriptionally inactive selection marker that is only activated by correct site-specific integration. This strategy makes it possible to correctly identify recombined clones with an efficiency level of 90% or better.

 We established a set of cells with singly tagged chromosomal sites and used green fluorescent protein (GFP) to identify potent integration sites. Various tagging protocols were successfully applied.

After the sites are tagged and characterized, they can be used to target expression cassettes of choice. Figure 3A gives examples for a GFP-tagged cell line into which the lacZ expression cassette was integrated. Targeting eliminates the GFP and includes lacZ. Importantly, the clones generated upon targeting have homogeneous expression profiles as expected from the integration into a given chromosomal site. 

Figure 3A.  Predictable and homogeneous product expression after targeting a tagged locus A. The GFP-containing tagging cassette of a master cell line has been replaced by a targeting vector encoding lacZ. The GFP expression analysis (measured by FACS) and a lacZ staining protocol were performed before and after RMCE. Whereas the tagged cell population exhibits a high level GFP expression but is negative in lacZ staining, resulting subclones after RMCE homogeneously lost the GFP signal but gained the expression of lacZ.  

We exploited this homogenous expression to generate retroviral producer cells. The production of viruses, or viral vectors, can be seen as a special case of protein expression. Retroviral vectors constitute a powerful tool for stable gene transfer into mammalian cells. They can be used to efficiently infect cells of different origin of various species. Vectors derived from murine leukemia virus (MLV) are used as gene delivery systems in clinical gene therapy trials.

 Considerable success in the treatment of several inherited diseases by integrating an expression unit for the therapeutic transgene(s) in the cellular genome delivered by retroviral vectors has been achieved, demonstrating the enormous potential of viral vectors in clinical therapy.

Figure 3B.  Predictable and homogeneous product expression after targeting a tagged locus B. Seven individual clones of the RMCE experiment described in A were analyzed by Southern blotting to confirm a correct cassette exchange. Therefore, chromosomal DNA of the clones was digested with DNA endonucleases, blotted, and probed against the marker gene. Only successfully targeted clones would show a 3 kb fragment and be clearly distinguished from the tagged parental clone The lacZ expression of these clones was quantified and compared to the parental cell line. As shown in the diagram, the expression behavior is highly homogenous among all analyzed isogenic subclones.  

To translate the application of viral vectors into the clinic, it is mandatory to produce high titers of viral vector from a fully characterized producer cell line. For each therapeutic vector, a specific producer cell line must be generated. The titer critically depends on the site of chromosomal integration of the therapeutic vector. Thus, tremendous screening efforts must be undertaken to isolate clones that express the vectors in high concentrations and stably over time—a process that can take several months when conventional retrovirus packaging cell lines are used.

 We established a strategy based on RMCE to establish a new generation of producer cell lines. Upon selection for a chromosomal locus that supports retroviral vector insertion, a flexible retrovirus producer cell line was established that simplifies the isolation of highly productive producer clones.

 This approach reduces laboratory time, increases safety, and in particular makes it possible to adjust viral vectors to the requirements of individual loci.

With these modular packaging cells, infectious particles can be efficiently produced with high reproducibility, achieving titers up to 2 ×10

 cells in 24 hours (Figure 3C). Importantly, this technology can be used to produce clinically relevant viral vectors. Indeed, high-titer producer cells for a therapeutic vector that encodes the 8.9-kb collagen VII cDNA in a marker-free cassette were obtained within three weeks without screening.

 Because the master cell line is fully characterized with respect to retroviral vector production conditions, the establishment of a producer cell line is reduced to the replacement step to introduce the vector of interest. 

Figure 3C.  Predictable and homogeneous product expression after targeting a tagged locus C. Based on a chromosomal site tagged with a retroviral vector, a packaging cell line was established.3 The tagging vector was replaced by various viral vectors. The productivity of subclones obtained by the targeting of one of those vectors reveals that the expression levels are strictly homogenous among all analyzed isogenic subclones.  

Finally, the high capacity of this strategy is demonstrated by its use in the predictable expression of antibodies. For this purpose, we used single-step vectors that encode both the heavy- and the light-chain genes. Upon targeting into the prescreened integration sites, antibody expression clones are generated. Importantly, they show homogeneous antibody expression levels which are expected from the defined genetic modification (Figure 3D). 

Figure 3D.  Predictable and homogeneous product expression after targeting a tagged locus D. To prove the flexibility of the RMCE system, an antibody expression cassette was targeted into the tagged chromosomal loci of clones of different origin, including Chinese hamster ovary cells (CHO), and human embryonic kidney cells (HEK293). The expression of the targeted subclonal producer was measured by ELISA and, although different between the species, is homogenous amongst each other. 

The illustrated data presented here give evidence that this technology is a powerful method for achieving defined and reproducible genetic modification of cells, thereby making it possible to establish producer cells in a short period of time. After a potent integration site is tagged and identified on screening, characterized with respect to safety, and optimized for production, it constitutes a platform for integrating other expression cassettes of interest. Thus, it makes it possible to establish expression clones with predictable properties in a minimal time. Apart from this, it makes it possible to adjust expression cassettes to the requirements of the individual chromosomal sites.

 In this way, it contributes to a predictable modification of the mammalian genome and its exploitation for the production of biopharmaceutical molecules. 

, is head of the research group Model Systems for Infection and Immunity (MSYS), +49 531 6181 5040, 

  This group is associated with the division of Molecular Biotechnology at the Helmholtz Centre for Infection Research, Braunschweig, Germany. 

, are scientists in MSYS and this division, respectively.  Leonor Gama-Norton is also a member of the Instituto de Biologia Experimental e Tecnológica, Universidade Nova de Lisboa  (IBET/ITQB/UNL), Oeiras, Portugal. 

1. Bell AC, Felsenfeld G. Stopped at the border: boundaries and insulators. Curr Opin Genet Dev. 1999 Apr;9(2):191–8. 

2. Festenstein R, Tolaini M, Corbella P, et al. Locus control region function and heterochromatin-induced position effect variegation. Science. 1996 Feb 23;271(5252):1123–5. 

3. Schucht R, Coroadinha AS, Zanta-Boussif MA, et al. A new generation of retroviral producer cells: predictable and stable virus production by Flp-mediated site-specific integration of retroviral vectors. Mol Ther. 2006 Aug;14(2):285–92. 

4. Coroadinha AS, Schucht R, Gama-Norton L, Wirth D, Hauser H, Carrondo MJ. The use of recombinase mediated cassette exchange in retroviral vector producer cell lines: predictability and efficiency by transgene exchange. J Biotechnol. 2006 Jul 13;124(2):457–68. 

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 6. Gama-Norton LR, P.; Sandhu U, Nehlsen K.; Schucht R, Hauser H, Wirth D. Defeating randomness—Targeted Integration as a Boost for Biotechnology. In: M. Al-Rubeai E, ed. Cell Engineering; in press. 

 7. Wirth D, Gama-Norton L, Riemer P, Sandhu U, Schucht R, Hauser H. Road to precision: recombinase-based targeting technologies for genome engineering. Curr Opin Biotechnol. 2007 Sep 26. 

 8. Baer A, Bode J. Coping with kinetic and thermodynamic barriers: RMCE, an efficient strategy for the targeted integration of transgenes. Curr Opin Biotechnol. 2001 Oct;12(5):473–80. 

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 10. Verhoeyen E, Hauser H, Wirth D. Evaluation of retroviral vector design in defined chromosomal loci by Flp-mediated cassette replacement. Hum Gene Ther. 2001 May 20;12(8):933–44. 

11. Nehlsen K, Schucht R, Gama-Norton L, Krömer W, Baer A, Cayli A, Hauser H, Wirth, D.  Recombinant protein expression by targeting pre-selected chromosomal loci. Submitted. 

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17. Gama-Norton L, Herrmann S, Schucht R, Coroadinha A, Löw R, Alves P, Baum C, Schambach A, Hauser H, Wirth D. Retroviral vector performance upon integration in to defined chromosomal loci of modular packaging cell lines. Submitted. 

Cover

Site-Directed Engineering of Defined Chromosomal Sites for Recombinant Protein and Virus Expression

March 2009 was an active month for the proposal of legislation that would create a pathway for the US Food and Drug Administration to approve generic biologic drugs, or biosimilars. Two competing bills were introduced into the US House of Representatives, and one into the US Senate, that would provide such a pathway. This biosimilars legislation has been introduced during a time when healthcare reform in the United States, particularly in the area of maximizing affordability of prescription drugs, is receiving increased attention as a primary initiative of the Obama administration. 

Rep. Henry Waxman (D–CA) introduced a bill (H.R. 1427) entitled "Promoting Innovation and Access to Life-Saving Medicine Act" in the US House of Representatives on March 11, 2009. This bill, co-sponsored by Reps. Frank Pallone, Jr. (D–NJ), Nathan Deal (R–GA), and Jo Ann Emerson (R–MO), was assigned to the House Committee on Energy and Commerce (chaired by Rep. Waxman) and to the House Committee on the Judiciary. On March 26, 2009, a companion bill (S. 726) was introduced in the US Senate by Sen. Charles E. Schumer (D–NY). This bill, containing the same title and text as H.R. 1427, was co-sponsored by Sens. Susan M. Collins (R–ME), Sherrod Brown (D–OH), David Vitter (R–LA), Debbie Stabenow (D–MI), Mel Martinez (R–FL), and Jeanne Shaheen (D–NH), and was referred to the Senate Committee on Health, Education, Labor, and Pensions, which is chaired by Sen. Edward M. Kennedy (D–MA). According to the bills' text, these companion House and Senate bills are intended "to provide for the licensing of biosimilar and biogeneric biological products . . ."  

A second bill having a similar expressed purpose—"to establish a pathway for the licensure of biosimilar biological products"—was introduced into the House by Rep. Anna G. Eshoo (D–CA) on March 17, 2009. This bill (H.R. 1548), is entitled the "Pathway for Biosimilars Act" and was co-sponsored by 44 of Rep. Eshoo's fellow members of the House, with Reps. Jay Inslee (D–WA) and Joe Barton (R–TX) being primary co-sponsors. H.R. 1548 also has been referred to the House Committee on Energy and Commerce and to the House Committee on the Judiciary. 

By their titles and their expressed purposes, H.R. 1427 ("the Waxman bill") and H.R. 1548 ("the Eshoo bill") appear to have a common goal—to provide a mechanism for the review and licensing by the FDA of generic biotherapeutic products (also sometimes referred to as "biogenerics" or "follow-on biologics," but referred to as "biosimilars"). Because S. 726 is a companion bill to, and contains the same text as, H.R. 1427, this article will focus on the differences between the two House bills. It seems likely that because both bills have been introduced into the House Energy and Commerce Committee and Judiciary Committee, the real negotiations for a final bill will take place within those House committees and the final Senate bill would conform to the bill emerging from the House. 

By their provisions, however, these two competing House bills set out to achieve a common goal in very different ways, setting up drastically different regulatory schemes for the approval of biosimilars. The introduction of these rival bills has intensified the long-simmering debate between various groups having an interest in biosimilars regulation. This includes high-profile individuals from the generics pharmaceutical industry and the biotechnology industry, and even certain members of Congress, who have spoken out in recent weeks on the merits and demerits of these two bills. Of interest to both sides in the debate is the fact that this discussion is taking place at a time when the biopharmaceutical industry is not only beginning to deliver its long-promised benefits in the treatment and prevention of certain diseases, but also when the industry is increasingly being viewed as the "savior of the pipeline" for many traditional pharmaceutical companies. 

This article will examine some of the primary differences between these competing bills, focusing on the provisions that have received the most attention in the trade and popular press. The article will also compare the provisions of these bills to the regulatory scheme currently in place for traditional or small-molecule pharmaceuticals, better-known as the Hatch-Waxman Act, which has provided a mechanism for the review and licensing of generic pharmaceutical products for the last 25 years.

 Finally, the article will note some of the public comments made by individuals on both sides of the debate.  

This article does not intend to advocate for one proposed regulatory scenario over another, but instead attempts to provide an overview of the key provisions of these bills so that the key constituencies involved in the 

* industry can remain informed as the legislative process evolves.  

The Waxman and Eshoo bills are a study in contrasts, differing in many key provisions that are important to the constituencies interested in coming up with an appropriate and effective regulatory scheme for biosimilars. Several of these key differences between these bills, and a comparison of their provisions to those in the Hatch-Waxman Act under which generic small-molecule therapeutics are regulated, are highlighted in Table 1. 

Table 1.  A comparison of key provisions of the biosimilars bills and the Hatch-Waxman Act 

The provision that is receiving the most attention is the exclusivity period that each bill would provide. This provision mandates the length of time after initial introduction of a new biologic product, a new formulation containing the biologic product, or a new indication for the biologic product, during which the FDA could not approve a biosimilar drug for marketing in the US if it contained the same biologic, was contained in the same or a similar formulation, or was indicated for the same medical or therapeutic use. As shown in Table 1, the Hatch-Waxman Act has similar provisions prohibiting approval of generic pharmaceuticals by the FDA during the first five years after approval of a new small-molecule drug (commonly referred to as a new chemical entity), and during the first three years after approval of either a new formulation containing a previously approved and marketed small-molecule drug or a new medical or therapeutic use for a previously approved and marketed small-molecule drug. The Act also provides for a six-month additional period of market exclusivity if the approval-holder undertakes pediatric studies to determine the safety and efficacy of the approved drug in pediatric populations. Under the Hatch-Waxman rubric, these periods of market exclusivity were intended to provide brand-name pharmaceutical companies with incentives to research and develop new pharmaceutical products and methods for using such products, providing them with a head-start in the marketplace before any competitor could enter the market with a generic version of the approved drug for the approved indication.  

The Waxman biosimilars bill largely tracks the exclusivity periods seen in the Hatch-Waxman Act, providing the same five-year and three-year exclusivity periods seen in the small-molecule regime and the same six-month pediatric extension. In contrast, the Eshoo bill goes far beyond the Waxman bill, providing for 12 years of market exclusivity for a new biologic product, and up to 14 years for a previously approved biologic product if, during the first eight years after its approval, the biologic is approved for a new indication (although that term of exclusivity is measured from the date on which the biologic was first approved for any indication). Thus, under the Waxman bill, a new biologic product could receive a maximum of 5.5 years of market exclusivity before a biosimilar could be approved, whereas the Eshoo bill would provide for up to 14.5 years of market exclusivity for a new biologic product. 

Another key difference between the bills is the requirement for new clinical trials on the part of the biosimilar applicant. Under the Eshoo bill, biosimilar applicants would have to conduct clinical trials comparing the immunogenicity of the biosimilar product to that of the reference (previously approved) biologic product, and those data would have to be included in the biosimilar application submitted to the FDA. The FDA would be permitted to waive the requirement for such trials, but only after it published regulatory guidance regarding the conditions under which such a waiver would be provided. In contrast, the Waxman bill would not require new clinical trials for a biosimilar drug, and would permit the biosimilar applicant to rely on the safety and efficacy data provided to the FDA by the reference drug manufacturer in its application for first approval of the reference biologic, provided that the biosimilar application contains information demonstrating that: (a) the biosimilar product and the reference biologic product have highly similar molecular structural features; (b) no clinically meaningful differences would be expected between the biosimilar and the reference product in terms of safety, purity, and potency; (c) the biosimilar and the reference biologic product have the same mechanism or mechanisms of action; and (d) the biosimilar and the reference biologic product are used and administered in the same way, and the dosage form and strength of the biosimilar are the same as those of the reference product. This scenario is similar to that used for the review and licensing of small-molecule generic therapeutic pharmaceutical products under the Hatch-Waxman Act, which permits the generic applicant to rely on safety and efficacy data provided to the FDA by the brand name applicant in support of a new drug application. 

There are several additional differences between the Waxman and Eshoo bills. For example, the Waxman bill would permit complete interchangeability of an approved biosimilar drug for the reference drug once the former has been approved by the FDA. This would allow substitution at the pharmacy level of the biosimilar as being equivalent to the branded drug unless a physician writes a prescription that contains a "no substitution" order, the same scenario as exists for small-molecule pharmaceuticals under Hatch-Waxman. In contrast, the Eshoo bill would not permit such outright interchangeability, and would only permit such substitution in a certain limited set of situations and only after the FDA has issued guidelines relating to the circumstances under which complete interchangeability of a biosimilar for a reference drug would be permitted. In addition, although the Waxman bill would permit the FDA to use the same official name for a biosimilar as for the reference biologic, the Eshoo bill would require the two biologic products to have different names. The bills also differ with respect to the "first-to-file exclusivity" accorded to the first applicant to receive approval for a biosimilar drug (i.e., the period during which the FDA cannot approve a second biosimilar application for the same biologic). The Waxman bill provides one year of first-to-file exclusivity and the Eshoo bill provides two years (although both are longer than the 180-day first-to-file exclusivity that is provided under Hatch-Waxman for small-molecule generic pharmaceuticals). 

Finally, there is a significant difference in the mechanisms by which the two bills permit challenges to patents that may protect biologics or their methods of use or manufacture. Moreover, both these bills differ dramatically from the patent challenge mechanism provided for small-molecule pharmaceuticals under Hatch-Waxman. Neither of the biosimilar bills recently introduced into the House uses the "Orange Book" system that is familiar to those who work in the small-molecule generic pharmaceuticals environment under Hatch-Waxman. In that system, a pharmaceutical approval holder can submit a listing of patents to the FDA that the approval holder believes in good faith provide patent protection for the approved active pharmaceutical ingredient (API), an approved formulation containing the approved API, or an approved method of use (i.e., indication) of the approved API and/or approved formulation. Those patents would then be listed in the FDA's 

Approved Drug Products with Therapeutic Equivalence Evaluations

. When a generic manufacturer submits an application for FDA approval of a generic version of the approved drug, formulation, or indication, the generic applicant must then certify to the FDA that: (1) there are no patents that encompass the generic drug to be approved; (2) any patents listed in 

 that purport to cover the generic drug have already expired; (3) any patents listed in 

 that purport to cover the generic drug would expire before the first date on which the generic applicant would market the generic version of the drug; or (4) that the patents listed in 

 that purport to cover the drug compound, formulation or use either would not be infringed by the generic drug, or are invalid (a so-called "paragraph IV certification"). If its FDA application contains a paragraph IV certification, then the generic applicant must notify the approval holder and patentee of the filing of the generic application, and provide a statement of the reasoning for its patent certification; the approval holder/patentee then has 45 days to decide whether or not to sue the generic applicant for patent infringement. This process was designed to lead to more rapid adjudication of the patent exclusivity covering branded pharmaceuticals, and has been used with great success for the past 25 years. 

In contrast, neither the Waxman nor the Eshoo biosimilars bill contains such an Orange Book mechanism for patent challenges. The Waxman bill permits a biosimilar applicant (or someone even just contemplating filing a biosimilar application) to request information from the approval holder on the reference biologic drug regarding any patents that the approval holder believes will cover the approved biologic, its use, or its manufacture. After receipt of such a request, the approval holder then has 60 days to provide such patent information to the requestor, and must update that patent information for two years from date of initial inquiry. Once an application for approval of the biosimilar has been submitted to the FDA, the biosimilar applicant may (but is not required to) notify the approval holder of the filing of the application. If such a notification is sent, it must include a patent notification similar to that for a paragraph IV certification under Hatch-Waxman, and the holder of the approval on the reference biologic would then have 45 days to sue the biosimilar applicant. Under the Eshoo bill, the FDA would provide a copy of a biosimilar application to the reference product approval holder, who would then be required to (a) provide the biosimilar applicant with a list of patents that purport to cover the product or its use, and (b) explain in writing to the biosimilar applicant why the reference product approval holder believes the biosimilar product would infringe one or more patents on that list. Thus, the Eshoo bill shifts the burden of patent certification from the biosimilar applicant to the reference product approval holder, a significant departure from both the Hatch-Waxman regime and that provided under the Waxman biosimilars bill. 

The interested constituencies on both sides of the biosimilars debate have provided comments for and against each bill and the regulatory schemes envisioned by those bills.  

The biotechnology industry generally favors the Eshoo bill, particularly because of its provision of longer exclusivity periods for newly approved biologics. For example, the Biotechnology Industry Organization (BIO), one of the largest trade and advocacy organizations in the biotech industry that counts many of the key biotech corporations among its members, said in a statement that it favors the Eshoo bill, calling it "an effective, reasonable and safe pathway to biosimilars . . ." that "provides patients with the right balance between innovation and competition."

 Jim Greenwood, president and CEO of BIO, was quoted as saying that the Eshoo bill "will help reduce costs by enabling additional competition among biologics but at the same time help safeguard patient safety by requiring demonstration of the purity, safety and effectiveness of biosimilars."

 In contrast, BIO believes the Waxman bill "does not strike the necessary balance for patients or the economy," contending that the bill "seeks to cut prices but instead cuts corners."

 BIO issued a similar statement of disdain for the companion bill introduced into the US Senate by Sen. Schumer, contending that S. 726 "follows its companion bill in the House . . . through the looking glass to a world of biosimilars that would jeopardize patient safety and undermine future medical breakthroughs."

The Pharmaceutical Research and Manufacturers of America (PhRMA), a pharmaceuticals industry trade and advocacy group whose members include the largest brand name pharmaceutical companies and their supporters, has expressed a similar view to that of BIO. PhRMA's senior vice president Ken Johnson was quoted as saying that the Eshoo bill "represents a positive step forward" at least in part because of the Eshoo bill's requirement for more extensive clinical trials than are required in the Waxman bill.

In addition, many big companies have supported the Eshoo bill over the Waxman bill. For example, Robert Armitage, senior vice president and General Counsel of Eli Lilly & Co., was quoted as saying that the Eshoo bill "makes certain that innovator companies can continue to make these types of investments in new therapies for patients, and that, once a reasonable period of time has passed for recouping its investment, generics companies can copy those innovations in a safe, scientifically sound manner."

 Analogous statements in support of the Eshoo legislation were made by representatives from Johnson & Johnson and Amgen Corporation.

 The primary issue driving them to favor the Eshoo bill over the Waxman bill, according to these industry advocacy groups and biopharma companies, is the longer exclusivity period provided in the Eshoo bill. According to Armitage, biotechnology innovation "entails many years of research, massive investments and high risk," and it is only with the longer exclusivity period provided by the Eshoo bill that such investment and risk would be undertaken by the innovator companies.

 Similarly, Audrey Phillips, an executive director of public policy for Johnson & Johnson, was quoted as saying that the exclusivity provided by the Waxman bill "is far from sufficient," contending that companies need about 12 years of exclusivity to have the appropriate financial incentive to innovate new biologic products.

In contrast, the generics pharmaceutical industry sees things quite differently. The Generic Pharmaceutical Association (GPhA) has stated its opposition to the Eshoo bill, calling it "the wrong road for patients looking for safe and affordable biogeneric medicines, particularly during these difficult economic times" and "a long route filled with needless roadblocks that will keep patients from getting needed medicines in a timely manner."

GPhA contends that there is little justification for the longer exclusivity period provided by the Eshoo bill compared to that provided by the Waxman bill, stating that the former "will only benefit brand companies by erecting barriers including an unprecedented and unjustifiable 14 years of market exclusivity" and that "there is a minimal difference of less than eight months longer in the development of biopharmaceuticals when compared to traditional pharmaceuticals, [so] there is little justification for excessively expanding exclusivity beyond the Hatch-Waxman model."

 GPhA also issued statements in support of the Waxman bill in the House and its counterpart in the Senate, contending that because these bills are based in large part on "our healthcare system's successful experience with generic medicines for the past 25 years" under the Hatch-Waxman rubric, it would "achieve the much-needed balance between pharmaceutical competition and innovation for the benefit of consumers, payors and state and federal governments."

 GPhA had previously come out in support of the opening remarks of President Obama's 2010 budget proposal, which stated that the ideal system for review and licensing of biosimilars would be modeled in large part on the Hatch-Waxman Act.

Teva Pharmaceuticals, one of the largest manufacturers of generic pharmaceutical products in the world, echoed the sentiments of GPhA. Debra Barrett, Teva's senior vice president of government affairs, was quoted as saying that the Eshoo bill "clearly is written to protect brand-name drugs and their innovators' government-granted monopoly at the expense of access and innovation."

Thus, it is clear that the battle lines have been drawn between the biotechnology industry and its advocates on one side, and the generics pharmaceuticals industry and its advocates on the other. This battle is shaping up to be reminiscent of the one that took place 25 years ago during the debate over the bills that ultimately became the Hatch-Waxman Act and that set the stage for the development of the generics pharmaceutical industry itself. This time around, however, the generics industry is far more robust than it was 25 years ago, and the industry groups and Congress also have 25 years' worth of experience in the small-molecule arena to draw from as they debate the most appropriate system for regulation of biosimilars.  

The FTC's Views on Biosimilars Legislation

As we went to press, the US Federal Trade Commission (FTC) issued its report on biosimilars. Entitled, 

Emerging Health Care Issues:  Follow-on Biologic Drug Competition,

 the FTC report examined the effects on commercial competition that may result from the various regulatory schemes currently being considered. The report contained a number of findings and recommendations, among them finding that the longer exclusivity period proposed in the Eshoo biologics bill "is unnecessary to promote innovation by pioneer biologic drug manufacturers" (p. vi) and "imperils the efficiency benefits of a [follow-on biologics] approval process in the first place" (id. at p. vii). However, the report also recommended against adoption of a traditional Hatch-Waxman regulatory scheme as proposed in the Waxman biologics bill, contending that such a scheme would still have "anticompetitive consequences" (id. at p. x), and that "market dynamics counsel against [a follow-on biologics] exclusivity period" (id., at p. ix).  This is because, in the FTC's view, market entry of a subsequent follow-on biologic after the approval of the first is "unlikely to cause a substantial price drop due to the high costs of developing and manufacturing" follow-on biologics in general (id.). Thus, the FTC report concludes, "market opportunities are likely to be sufficient to incentive [sic] development of interchangeable [follow-on biologics]" (id.), and that competition in the biologics market thus would be more akin to brand–brand competition rather than brand–generic competition in the small molecule arena. As a result, the FTC report does not favor the regulatory schemes proposed in either the Waxman or the Eshoo bills; instead, the report concludes that the most promising system would be one that would provide for an abbreviated FDA approval while relying on patent protection and market-based pricing to promote competition and spur innovation in the biologics marketplace.  

Given the two different regulatory schemes provided by the Waxman and Eshoo bills, the debate over which proposal should prevail will no doubt continue to grow within the House and between the industry, trade, and consumer groups having sometimes-competing interests in the outcome of this debate. Healthcare reform is one of the top priorities of the Obama Administration, and the administration's 2010 budget proposal contained a framework for biosimilars regulation that appears to mirror the Hatch-Waxman pathway for small-molecule generic pharmaceuticals. As a result, we can likely expect heavy lobbying efforts from the generics and the biotechnology industries as Congress works toward a final bill. With the biopharma industry continuing to mature and beginning to deliver its long-promised benefits in the treatment and prevention of certain diseases, and as that industry is increasingly viewed as the "savior of the pipeline" for many traditional pharmaceutical companies, it becomes even more important that the debate is framed such that the outcome—a workable mechanism for FDA review and licensing of biosimilars—ultimately maximizes the protection of the interests of the public as well as those of both the biotechnology and generics industries. 

The views expressed herein are those of the author and should not be attributed to former, present, or future clients or any employees of Sterne, Kessler, Goldstein & Fox P.L.L.C.

is a director in the Biotechnology/Chemical Group at Sterne, Kessler, Goldstein & Fox, Washington, DC, 202.371.2600,  

*Throughout this article, the term biopharma is used to refer to the combination of biotechnology and pharmaceutical companies. It is recognized that companies in these two industries face certain issues that are unique to one industry or the other. However, because the author believes that there is significant overlap in the primary issues relating to regulation of biosimilars that are important to both industries, and because a number of companies straddle the line between the two, biopharma has been used throughout this article to refer to the combination of the biotechnology and pharmaceutical industries.  

 1. The Drug Price Competition and Patent Term Restoration Act of 1984. Pub. Law 98-417; 1984. Primarily codified at 21 U.S.C. § 355 et seq. and 35 U.S.C. § 271(e). 

 2. Biotechnology Industry Organization. 2009;Mar 11. New bipartisan, consensus bill points to right path to biosimilars. 2009 Mar 17. Aavailable from: 

http://bio.org/news/pressreleases/newsitem.asp?id=2009_0317_03

 3. Mixter BD. Reps. Eshoo, Inslee, Barton introduce bill to create generic biologics pathway. Pharmaceutical Law & Industry Report. 2009;19(7);318. 

Features

The introduction of two rival bills has intensified the long-simmering debate on biosimilars regulation in the US.

Moving Toward a Biosimilars Pathway: The Lines are Drawn in Congress

The markets closed out May in positive territory following their April performance, which was their best month in nine years. The Dow Jones industrial average posted its third straight monthly gain, closing up 4%, with the NASDAQ close behind—up 3.3% in May. This positive market trend helped biotech; the Burrill Biotech Select index posted a modest monthly gain of 0.4%. 

Vaulting Cougar Biotechnology's share value by 33% in May was the news that Johnson & Johnson (J&J) bid approximately $970 million in cash to acquire the company and gain access to compounds in development for the treatment of prostate cancer, breast cancer, and multiple myeloma. Cougar Biotechnology is currently conducting two Phase 3 trials for abiraterone acetate, a late-stage, first-in-class compound for the treatment of prostate cancer.  

The predicted land grab of biotech by Big Pharma because of biotechs' depressed values has not yet panned out as pharmaceutical companies acquire each other instead. We may now see an upswing in merger and acquisition activity heading into the summer months, however, because the J&J acquisition of Cougar may prompt pharmaceutical companies, who have been generally been sitting on the sidelines, to "pull the trigger" on biotech deals so that they don't lose out to their competitors.  

Shares of Dendreon have increased in value by a whopping 440% since the company first announced it had positive Phase 3 data showing that its lead product, Provenge, extended the lives of men with advanced prostate cancer by an average of 4.1 months. According to analysts, Dendreon should be able to file for regulatory approval during the fourth quarter of 2009. On the basis of its positive clinical data and strengthening share price, the company raised $221 million, the second best biotech financing deal so far this year, to help fund the manufacture and sale of Provenge. 

Although the industry overall is still going through tough times and it probably will take many more months before biotech starts on the road to full recovery, it is encouraging to see that investors are prepared to reward biotech companies that achieve significant milestones. 

Moreover, despite the prevailing economic recession and travel restrictions some countries imposed because of the H1N1 flu outbreak, the 2009 BIO International Convention, held in May, attracted well over 14,000 attendees to Atlanta, Georgia. The success of the meeting demonstrates that business is still ongoing and companies are actively looking for strategies and partners to help them get through the challenges they are currently facing. 

The first quarter 2009 (Q1 '09) financial results from biotech's elite companies did not inspire investor confidence and confirmed that the worldwide economic crisis is taking a tougher-than-expected toll on drug sales. 

Amgen reported lower-than-expected Q1 earnings as sales of virtually all of its key drugs fell well short of Wall Street estimates and the company lowered its 2009 revenue forecast, blaming deterioration in the global economy. The company's shares closed down 2% in April.  Other companies followed suit. Genzyme's shares dipped 10% in April. Shares of Biogen fell almost 8% on weaker-than-expected first-quarter sales, although its per-share earnings beat Wall Street estimates. Celgene beat lowered first-quarter earnings expectations on weak sales of its cancer drugs but blamed its first-quarter financial shortfall on weakening demand for its cancer drugs, including Revlimid.  

Our prediction that biotech would face tough times during 2009 and into 2010 is unfortunately playing out as financing and investor support remain in short supply. 

) provides ongoing statistics and analysis on the 343 biotech companies that are publicly traded on major US markets. According to the report, at the end of May this group of companies had an aggregate market cap of $297.6 billion (up 3.6 % for the month). Other key findings in the report include:  

There are 43 companies that have market caps greater than $1 billion. 

154 public biotechnology companies (44%) have a market cap below $100 million. 

More than 110 companies have announced corporate restructuring, slashing staff and putting promising projects on hold.

Year-to-date (YTD), the Burrill Biotech Select Index has fallen by 7%.

The performance of the top five biotech companies since the beginning of the year is as follows: Amgen (–13.8%); Gilead Sciences (–16.5%); Celgene (–24%); Genzyme (–11%); and Biogen (+ 8.6%).

It is not just biotech that is feeling the pain of the economic downturn. IMS Health has reported that it now expects the global pharmaceutical market to grow by an anemic 2.5% to 3.5% in 2009, down two percentage points from the forecast it issued six months earlier, and the lowest growth rate in at least 25 years. 

There is just a glimmer of an upward trend for biotech as evidenced by the performance of the Burrill Mid-Cap Biotech Index, (Table 1). Overall, the members of this index have been particularly hard hit during this economic downturn, but for the past couple of months, a few companies in the index, such as Cougar Biotech, Geron, and Dendreon, have been on a tear, pushing the YTD performance of the index up a remarkable 16%, with a 5% jump in May alone. 

Table 1.  The Burrill Biotech Select index posted a modest monthly gain in May 

Financings and partnering deals collectively brought in almost $10 billion for US companies in Q1 '09 with more than $5 billion through financings and another $5 billion in partnering capital. The 47% increase in funds raised compared to the Q1 '08 total shows that despite the market conditions and the lower valuations of public companies, capital is still flowing. However, there were several outlier deals, including Amgen's $2-billion two-part sale of an oversubscribed debt issue. Remove this transaction and it becomes clear that companies had a hard time with this form of financing in the first quarter of 2009. 

Overall, public financing remained below last year's quarter levels with PIPEs and secondary offerings off by 18% and 17% respectively (Table 2). Even though venture capital deals generated 77% more capital than in 2008, the number of deals rose by 100% to over 200 and the average size of a deal fell from $20 million in Q1 '08 to $7 million in Q1 '09. 

Table 2.  Quarter comparisons of the number of financing events (in USD) 

Partnering deal making generated almost $5 billion in Q1 '09. Contributing to this total was the potential $1.1 billion dollar global collaboration that ZymoGenetics made with Bristol-Myers Squibb for PEG-interferon lambda (IL-29), a novel type 3 interferon currently in Phase 1b development for hepatitis C. Bristol-Myers Squibb agreed to pay ZymoGenetics an upfront cash payment of $85 million for the development and commercialization rights to PEG-interferon lambda, and to pay an additional license fee of $20 million in 2009. ZymoGenetics could receive additional payments of up to $430 million based on pre-defined development and regulatory milestones for PEG-interferon lambda in hepatitis C, up to $287 million in development and regulatory milestones for other potential indications, and up to $285 million based on predefined sales-based milestones. Other notable deals are included in Table 3. 

 is chief executive officer at Burrill & Company, San Francisco, CA, 415.591.5400,  

Burrill on Biotech

Although the markets closed on a positive note in May, it will still take many more months before biotech starts on the road to full recovery.

Biotech Shows Glimmer of an Upward Trend

In the 1992 film "A Few Good Men," Nathan Jessup, played by Jack Nicholson, is an aggressive marine colonel in charge of the US military base in Guantánamo, Cuba (pre-9/11, when communists were the enemy). In a trial over the death of a marine in a hazing gone awry, a cocky young Navy lawyer named Daniel Kaffee challenges Jessup, questioning his leadership methods, and trying to get him to admit responsibility for the marine's death. 

Jessup is appalled by Kaffee's arrogance. This young navy officer has never been in battle, yet has the gall to criticize those like Jessup who live on the front lines, staring down the enemy, defending freedom. In the final confrontation, Jessup declares, "You curse the marines. You have that luxury. [But] deep down . . . You 

Jessup is not a sympathetic character—his extreme approach to discipline leads to a young man's death—but he is passionate, and willing to protect others, whether they appreciate it or not. This reminds me of the threat of an influenza pandemic, where some work tirelessly to defend all of us, even when the public has little appreciation of what is involved, and is even critical. 

When the H1N1 influenza virus appeared in May, many people became fearful. A few weeks later, when it appeared that the strain was not particularly deadly or virulent, many expressed anger that they had been made afraid.  

But the truth is, they should have been afraid, because the threat of a flu pandemic is real. Using the egg-based manufacturing systems that still predominate today, it takes about 20–24 weeks to produce a vaccine for a new viral strain; in past pandemics, the first wave of mortality already took a serious toll weeks before that. Furthermore, as of just a few years ago, the total worldwide influenza vaccine manufacturing capacity was about 900 million doses, enough for 10–15% of the world's population. And those doses are not distributed evenly throughout the world; it is widely assumed that in a pandemic, national borders will close to stem the spread of disease, making vaccine distribution difficult. Lastly, if the strain is avian and kills chickens, egg-based production could grind to a halt. 

Fortunately, many players have been working hard to reduce these risks. A key approach has been to seek manufacturing methods that are faster than egg-based systems. A few firms, like Novartis and Baxter, have been developing mammalian-cell–based production. Small vaccine companies, in turn, are advancing other options, such as an adjuvant-free vaccine made in the faster-growing 

 (VaxInnate), a vaccine made in insect cells (Protein Sciences Corporation), a virus-like particle vaccine (Novavax), and a DNA vaccine (Vical). Some of these programs include efforts to accelerate scale up and reduce facility costs. Several firms, meanwhile, are working on a universal influenza vaccine approach, to provide protection against both seasonal and emerging pandemic strains, so that we don't have to wait for a new vaccine to be produced in response to a pandemic strain.  

Because such development programs take years, many of these vaccines are not yet fully tested and may not prove ready for this round. Yet these firms—along with a host of health agencies, regulators, and government funding sources—kept their eyes on the target long after the fear of an avian flu pandemic ceased to make headlines. And it is because of their work that the rest of us—including the unappreciative public—can have some peace of mind.  

So to all of you engaged in the fight against this and every potential new viral strain, my hat is off to you. Thank you for getting us prepared. Thank you for being on the wall, staring down the enemy. 

From the Editor

The truth is, we should have been afraid of H1N1, because the threat of a flu pandemic is real.

Facing Down the Enemy

In the past five years, analytical testing performed at contract laboratories has increased significantly in the pharmaceutical sector. As biopharmaceutical companies seek to reduce cost, optimize speed, and increase the flexibility of their research and development, this trend will only continue. Pfizer Global Biologics has been using contract organizations for analytical testing for the past five years. This strategy has proven critical in meeting our portfolio demands and has allowed an increase in the total number of drug development projects we manage at any one time.  

This article discusses the risks and pitfalls associated with outsourcing analytical testing and effective strategies to circumvent or mitigate these risks and pitfalls. In this article, we will be using the term 

 to refer to the group outsourcing the work. 

Analytical outsourcing must be approached in a systematic manner to ensure that the sponsor receives the greatest possible return on investment as it pertains to time, effort, and overall cost. When choosing a contract analytical laboratory, therefore, the sponsor must keep a series of questions in mind, such as:   

By following key strategies, companies can reduce the risk and increase the benefits of outsourcing analytical development and testing

BioPharm International-07-01-2009

BioPharm International, July 2009 (PDF)

How to Shift from Reactive Compliance to Strategic Quality Management

Site-Directed Engineering of Defined Chromosomal Sites for Recombinant Protein and Virus Expression

Moving Toward a Biosimilars Pathway: The Lines are Drawn in Congress

Biotech Shows Glimmer of an Upward Trend

Facing Down the Enemy

Use of Contract Analytical Laboratories: A Pfizer Global Biologics Perspective

High-Cell-Density Culture to Produce Plasmid DNA for Gene Therapy in E. coli

Ensuring Product Quality and Managing Risk: Validate, Verify, Implement

Extended Risk Management Proposals Challenge Manufacturers