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)
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)
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.
Editor's Note: This article
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