A nice analysis of 21st Century Cures Act and relevancy to regenerative medicine

President Obama Signs 21st Century Cures Act - Implications For The Stem Cell Sector

New law creates distinct designation for "regenerative advanced therapy".

Provides access to expedited approval pathways for certain cell therapies.

Requires new FDA guidance for autologous cell therapy devices.

Yesterday, President Obama signed into law the 21st Century Cures Act, a piece of legislation that had rare overwhelming bi-partisan support. The White House issued this statement about the legislation as it passed through Congress on November 30th:

This critically important legislation will get states the resources they need to fight the heroin and prescription opioid epidemic. It invests the $1 billion the President has repeatedly said is necessary to help communities that have seen far too many overdoses. It also responds to the Vice President's call for a Moonshot in cancer research by investing $1.8 billion in new resources to transform cancer research and accelerate discoveries. Plus, it invests nearly $3 billion to continue the President's signature biomedical research initiatives, the BRAIN and Precision Medicine Initiatives, over the next decade to tackle diseases like Alzheimer's and create new research models to find cures and better target treatments.

Yet even with overwhelming bipartisan support, the legislation was not without some high profile vocal critics ...

Buried in this 1,000-page legislation, but not making any headlines, are new provisions that will have important implications for companies in the stem cell sector. These new rules will be the focus of this article.

Regenerative Medicine Therapy Defined

One of the most significant attributes of the new law for the stem cell sector is that the term

"Regenerative Medicine Therapy" has now been added to the Public Health Service Act as a separate and distinct category of medicine. It has been defined as follows:

(8) DEFINITION.-For purposes of this section, the term 'regenerative medicine therapy' includes cell therapy, therapeutic tissue engineering products, human cell and tissue products, and combination products using any such therapies or products, except for those regulated solely under section 361 of the Public Health Service Act and part 1271 8 of title 21, Code of Federal Regulations.''.

Section 361 had been the section of the act that had been often referenced by stem clinics operating in the U.S. as justification for the legality of their business. However, relatively recent FDA guidance had made it clear that stem cells, as they are generally used in these clinics, do not meet the criteria for section 361 due to the methods of their extraction and use:

A product eligible for regulation as a 361 HCT/P solely under Part 1271 is not subject to premarket clearance or approval.

An HCT/P is regulated solely under section 361 of the PHS Act and the regulations under 21 CFR Part 1271 if it meets all of the following criteria under 21 CFR 1271.10:

1. The HCT/P is minimally manipulated;

2. The HCT/P is intended for homologous use only, as reflected by the labeling, advertising, or other indications of the manufacturer's objective intent;

3. The manufacture of the HCT/P does not involve the combination of the cells or tissues with another article, except for water, crystalloids, or a sterilizing, preserving, or storage agent, provided that the addition of water, crystalloids, or the sterilizing, preserving, or storage agent does not raise new clinical safety concerns with respect to the HCT/P; AND

4. Either:

i. The HCT/P does not have a systemic effect and is not dependent upon the metabolic activity of living cells for its primary function; OR

ii. The HCT/P has a systemic effect or is dependent upon the metabolic activity of living cells for its primary function; AND

a) Is for autologous use;

b) Is for allogeneic use in a first-degree or second-degree blood relative; OR

c) Is for reproductive use.

One of the implications of this new definition may be to bring about the unceremonious end to the autologous private pay market. In a recent study, it was widely reported how hundreds of stem cell clinics are operating in the U.S. without FDA approval. However, only a few of these clinics have been shut down. If there was any ambiguity about where stem cell clinics fit in the Public Health Service Act, that ambiguity will no longer exist. Hundreds of stem cell clinics currently operate in the U.S. due to a lack of FDA enforcement, combined with the pressure from a desperate public advocating for the availability of stem cell therapies. Although the FDA is currently reviewing public comments on Section 361 guidance as they relate to regenerative medicine and the regulation of these clinics, given the enactment of this new bill it is difficult to see how guidance on the stem cell therapies used at these clinics could become more lax.

The Upside of the 21st CENTURY ACT for the Stem Cell Sector

The most important benefits of the legislation for stem cell investors are related to a new term referred to as a Regenerative Advanced Therapy. The term is defined as follows:

CRITERIA.-A drug is eligible for designation as a regenerative advanced therapy under this subsection if:

[A] the drug is a regenerative medicine therapy (as defined in paragraph (8));

[B] the drug is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition; and

[C] preliminary clinical evidence indicates that the drug has the potential to address unmet medical needs for such a disease or condition.

If a therapy receives this designation from the FDA, the company sponsoring the therapy benefits in two significant ways that are designed to speed up the approval process. The first benefit is called "priority review." This is an excerpt from the FDA Manual of Policies and Procedures that discusses the topic:

· Priority review designation is assigned to applications for drugs that treat serious conditions and provide significant improvements in the safety or effectiveness of the treatment, diagnosis, or prevention of serious conditions compared to available therapies.

· A priority review designation is intended to direct overall attention and resources to the evaluation of applications for drugs that, if approved, prov

ide significant improvements to public health as noted above.

· Standard review designation is assigned to applications for drugs that do not meet the priority review designation criteria.

· A priority review designation will set a goal date for taking action on an application within 6 months of receipt.

· A standard review designation will set a goal date for taking action on an application within 10 months of receipt.

· Original NDAs, original BLAs, and efficacy supplements will receive a review designation. Other types of supplements will not (i.e., manufacturing supplements, many types of labeling supplements), but may be subject to other mandated review timelines.

The second, more significant benefit, comes with the availability of a path to "accelerated approval" for Regenerative Advanced Therapies, related to:

- surrogate or intermediate endpoints reasonably likely to predict long-term clinical benefit; or

- reliance upon data obtained from a meaningful number of sites, including through expansion to additional sites, as appropriate.

Accelerated Approval is described in simple terms in this FDA video.

There is also an interesting provision that seems to open the possibility for a conditional or temporary approval of a Regenerative Advanced Therapy with additional post-approval requirements:

POSTAPPROVAL REQUIREMENTS.-The sponsor of a regenerative advanced therapy that is granted accelerated approval and is subject to the postapproval requirements under subsection may, as appropriate, fulfill such requirements, as the Secretary may require, through-

the submission of clinical evidence, clinical studies, patient registries, or other sources of real world evidence, such as electronic health records;

the collection of larger confirmatory data sets, as agreed upon pursuant to subsection (3); or

postapproval monitoring of all patients treated with such therapy prior to approval of the therapy.

How this provision is actually implemented is unclear.

Nonetheless, the implications of this easier path to approval could be significant as it will provide a less expensive and lower bar to FDA approval for the unmet medical needs of serious or life threatening diseases. Many of the diseases and afflictions that the stem cell sector is pursuing would seem to fit this definition. Here is a sampling of U.S. stem cell clinical programs that may qualify for the new Regenerative Advanced Therapies designation:

Athersys (NASDAQ:ATHX) - Stroke, Acute Myocardial Infarction, Acute Respiratory Distress Syndrome, Graft vs. Host Disease (allogeneic)

Asterias Biotherapeutics - (NYSEMKT:AST) - Spinal Cord Injury (allogeneic)

BioTime (NYSEMKT:BTX) - Age Related Macular Degeneration (Dry AMD) (allogeneic)

BrainStorm Cell Therapeutics - (NASDAQ:BCLI) - Amyotrophic Lateral Sclerosis (Lou Gehrig's disease) (autologous)

Capricor Therapeutics (NASDAQ:CAPR) - Duchenne Macular Dystrophy, Heart Failure, Myocardial Infarction (allogeneic)

Cesca Therapeutics (NASDAQ:KOOL) - Critical Limb Ischemia (autologous)

Cytori Therapeutics - (NASDAQ:CYTX) - Scleroderma Associated Hand Dysfunction (autologous)

Mesoblast - (NASDAQ:MESO) - Chronic Heart Failure, Chronic Pain Related to Disc Degeneration, Graft vs. Host Disease, Rheumatoid Arthritis, Diabetic Neuropathy (allogeneic)

Pluristem - (NASDAQ:PSTI) - Intermittent Claudication (allogeneic)

TiGenix - (Pending:TIG) - Complex Perianal Fistulas in Crohn's Disease Patients (allogeneic)

From a practical matter, to what extent each of these companies benefits from this new legislation is a function of the depth of data behind each of the respective therapies and the ability of the management to work with the FDA. More importantly, the company must be able to execute a sound business plan including financing, manufacturing and marketing that brings these therapies to commercial success. This is not an easy task.

From my perspective, with all else being equal, those companies pursuing an allogeneic, or off-the-shelf model, are more likely to succeed than those pursuing an autologous model that requires the extraction and processing of stem cells from each patient treated.

With regard to autologous models, the new legislation requires that the FDA clarify and streamline the regulation and use of the devices that isolate and process regenerative cells. However, that process will take a few years so do not expect an immediate impact:

SEC. 3034. GUIDANCE REGARDING DEVICES USED IN THE RECOVERY, ISOLATION, OR DELIVERY OF REGENERATIVE ADVANCED THERAPIES.

DRAFT GUIDANCE.-Not later than 1 year after the date of enactment of the 21st Century Cures Act, the Secretary of Health and Human Services, acting through the Commissioner of Food and Drugs, shall issue draft guidance clarifying how, in the context of regenerative advanced therapies, the Secretary will evaluate devices used in the recovery, isolation, or delivery of regenerative advanced therapies. In doing so, the Secretary shall specifically address-

(1) how the Food and Drug Administration intends to simplify and streamline regulatory requirements for combination device and cell or tissue products;

(2) what, if any, intended uses or specific attributes would result in a device used with a regenerative therapy product to be classified as a class III device;

(3) when the Food and Drug Administration considers it is necessary, if ever, for the intended use of a device to be limited to a specific intended use with only one particular type of cell; and

(4) application of the least burdensome approach to demonstrate how a device may be used with more than one cell type.

FINAL GUIDANCE.-Not later than 12 months after the close of the period for public comment on the draft guidance under subsection, the Secretary of Health and Human Services shall finalize such guidance.

There are other related provisions in the new law, such as the requirement of the FDA to establish standards in regenerative medicine and the issuance of reports to Congress. However, priority review and accelerated approval provisions are most critical and should make the sector more attractive to large pharma companies looking for drug development opportunities.

New Japan Laws Ignited Interest From Big Pharma

The implementation of streamlined regenerative medicine laws in Japan a couple of years ago led to several lucrative Japanese partnerships with small stem cell biotechs. Earlier this year Athersys and Healios reached an agreement to bring a stroke stem cell therapy to Japan. Healios is backed by large organizations in Japan. More recently, an agreement between TiGenix and Takeda (OTCPK:TKPHF) for the rights to a fistula treatment in Japan was also announced. Coincidentally, just this week the biggest stem cell transaction of the year came to fruition, as Bayer AG announced it was funding a startup stem cell venture in the U.S. with $225,000,000. The new entity will focus on therapies using induced pluripotent stem cells.

It seems reasonable to expect to see a renewed interest from Big Pharma in potential blockbuster indications for off-the-shelf regenerative cell therapies in 2017 and this new law will only help.

Disclosure: I am/we are long ATHX.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: These are the personal views of Wall Street Titan Research and should not be relied upon for your investment decisions. All investors should always do their own due diligence.

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http://seekingalpha.com/article/4030399-president-obama-signs-21st-century-cures-act-implications-stem-cell-sector

Republicado por:RM Consult