SHANGHAI – Innovative Cellular Therapeutics Co. Ltd. (ICT), of Shanghai, a leader among China's pack of emerging CAR T oncology companies, has struck a partnership deal with Vericel Corp., the first biotech to receive FDA approval for a tissue-engineered autologous cell scaffold.

The deal moves ICT beyond oncology and CAR T, to give the Chinese firm a portfolio of four cell therapies for the treatment of knee cartilage repair, burn victims and heart failure patients. The deal also means ICT has the Asia rights to three FDA-approved assets and one under clinical study.

"This is the first U.S. FDA cell therapy deal with a Chinese company," said Jimmy Wei, ICT CEO. "In China, we are increasing our standard of quality and we think cell therapy should be more globally standardized."

A clinical-stage. VC-backed company, ICT has two clinical programs running in China for its 19CAR series to treat late-stage leukemia and lymphoma as well as numerous self-discovered CAR T oncology candidates. (See BioWorld Today, May 25, 2016.)

Last year, ICT went hunting for late-stage or approved cell therapy products outside of China. With the help of a consulting firm, it came up with a list of 20 potential companies, but Vericel quickly rose to the top due to its number of FDA-approved therapies. Vericel had acquired its technology from Sanofi Genzyme, where its knee cartilage therapy had been tested on patients in China. (See BioWorld Today, March 11, 2016, and Dec. 15, 2016.)

The deal gives ICT the right to develop and distribute four candidates – Carticel, MACI, ixmyelocel-T and Epicel – in Greater China, South Korea, Singapore and other counties in Asia. The company also will be responsible for funding the development, manufacturing and commercialization in that territory.

"MACI, Epicel and Carticel are FDA-approved products and have successfully treated thousands of patients in United States," said Lei Xiao, ICT chairperson. "Ixmyelocel-T has been evaluated in a phase II study in the U.S., and the encouraging data suggest that it may be a treatment option for millions of heart failure patients."

Vericel will receive a $6 million up-front payment from ICT and is eligible to receive $8 million in development and commercial milestones. Vericel may also receive tiered royalties from ICT equal to a percentage of net sales of each licensed product in the low to middle double digits.

ICT will also purchase $5 million worth of stock in Vericel. Intended to be more than a licensing agreement, the equity arrangement will set the foundation for a long-term partnership, Wei said.

Vericel will issue to ICT a warrant, exercisable for the number of shares of Vericel's common stock equal to $5 million less any withholding tax payable divided by Vericel's closing price on May 9, 2017, with an exercise price of $0.01 per share.

STILL AWAITING COMMERCIAL CLARITY

Currently, the commercial pathway for cell therapies in China is still uncertain. Biotechs like ICT are able to conduct small-scale clinical trials under the oversight of the National Health and Family Planning Commission (NHFPC) – China's health ministry – and are able to collect clinical trial data in a much quicker fashion than the CFDA-regulated process for new drugs. But getting authorization to charge for cell therapies is not permitted, although some companies find ways to charge hospitals in a process that is difficult to scale.

But that grey area makes it a buyer's market for forward-thinking Chinese biotechs on the hunt for China rights to global assets, at least for the time being.

"We should see more clarity with the regulatory pathway this year," Wei said. "After that, we can quickly launch the products. But once the pathway is more clear, the price of [in-licensing] those products will be much more expensive. . . . After the pathway is set, you will never get the price we got."

He said there are currently three regulatory models for China to consider: the U.S. system, in which the FDA approves cell therapies similarly to the way it approves drugs; a system like Japan's, where cell therapies are regulated by the MoH as a technology; or a hybrid of the two systems, a way that could work well in China if it could balance cost-effectiveness with tight manufacturing quality control.

MANUFACTURING PLATFORM

Manufacturing is a serious bottleneck for scaling autologous cell therapies, which require extracting a patient's cells to be processed before being reinserted into the patient's body. ICT has chosen to focus on building a logistics and manufacturing platform shared across cell therapies rather than stick strictly to a specific therapeutic area, such as oncology.

"We think the future for cell therapy companies is to build a core in manufacturing. There needs to be a cost advantage based on doing more than one product in order to achieve an economy of scale," said Wei. "There is a lot of similarity across therapies. The manufacturing process and systems that we will put in place [from Vericel] will be very helpful even for our CAR T product."

ICT hopes to take advantage of Vericel's quality control system that follow U.S. FDA standards in anticipation that China's guidelines could closely resemble those of U.S.

The company also is looking to bring its portfolio of CAR T candidates to U.S. and Europe and is currently in talks with potential partners.

MEETING AN UNMET NEED IN CHINA

In the end, Wei said he is optimistic that the benefits of Vericel's therapies – particularly for burn victims and heart patients who currently have few options in China – will win over the regulator concerns. Lacking detailed market data, it is predicted that the Chinese patient population for those two groups is four to five times as large as in the U.S.

FDA-approved Epicel therapy treats severe burn patients with more than 30 percent of their total body surface area burned using cultured epidermal autografts, or CEA. Vericel recently presented data demonstrating an 84 percent survival rate from the Epicel clinical experience databases in more than 950 patients with a mean total body surface area of 67 percent, which continues to support a probable survival benefit of Epicel in severe burn patients.

Ixmyelocel-T is an investigational autologous expanded multicellular therapy manufactured from the patient's own bone marrow using Vericel's highly automated, fully closed cell-processing system.

That process selectively expands the population of mesenchymal stromal cells and alternatively activated macrophages, which are responsible for production of anti-inflammatory and pro-angiogenic factors known to be important for repair of damaged tissue. It has been designated as an orphan drug by the U.S. FDA for use in the treatment of dilated cardiomyopathy (DCM).

The ixCELL-DCM trial was a multicenter, randomized, double-blind, placebo-controlled phase IIb study designed to assess the efficacy, safety and tolerability of ixmyelocel-T compared to placebo when administered via transendocardial catheter-based injections to participants with end-stage heart failure due to ischemic DCM, who have no reasonable revascularization options (either surgical or percutaneous interventional) likely to provide clinical benefit. All participants were on maximized pharmacological heart failure treatment and had an automatic implantable cardiac defibrillator or cardiac resynchronization therapy. The primary endpoint is the number of all-cause deaths, cardiovascular hospital admissions, and unplanned outpatient and emergency department visits to treat acute decompensated heart failure over the 12 months following administration of ixmyelocel-T compared to placebo.

MACI (autologous cultured chondrocytes on porcine collagen membrane) is an autologous cellular scaffold product that is indicated for the repair of symptomatic single or multiple full-thickness cartilage defects of the knee with or without bone involvement in adults. The MACI implant consists of autologous cultured chondrocytes seeded onto a resorbable type I/III collagen membrane. Autologous cultured chondrocytes are human-derived cells which are obtained from the patient's own cartilage for the manufacture of MACI.

An autologous chondrocyte implant, Carticel is used to treat cartilage defects in the knee in patients who have had an inadequate response to a prior arthroscopic or other surgical repair procedure.