Of all diseases, neurological ills are perhaps the most devastating. Heart diseases and cancers kill, relatively speaking, fairly rapidly. Neurological diseases also kill but they are more often marked by lingering patient disability and slow decline — qualities that not only impact the afflicted patient but have broad negative repercussions among friends and families.

It would seem that because such illnesses are associated with the activities of the brain — an anatomical territory that is vastly complex and seemingly impervious to exploration — this sector has been resistant to technology. But recent developments in implantable devices and fueled by new computer insights and technology (plus no small advances on the pharma side of the equation) suggest that neurotechnology may be the most important area of med-tech development over the next 50 years of this century and beyond.

These perceptions are the basis for the formation of a new association, the Neurotechnology Industry Organization (NIO; San Francisco), and its rapid enrollment of members indicates both the need for such a group and its importance for future development of the neuroscience and neurotechnology sectors.

“There definitely seems to be a very strong trend in neurotechnology of coming together to create a community and a collective voice to move the industry forward,” Zack Lynch, the founder and executive director of NIO, told Biomedical Business & Technology. And NIO’s founding members agree.

“The time is right for something like this,” Susan Ballati, vice president for strategic planning and development for The MIND Institute (Albuquerque, New Mexico), told BB&T. The MIND Institute is a non-profit neuroscience research center and a founding member of NIO, and Ballati said that formation of NIO “is a great opportunity to keep abreast of what’s going on in the field. The field of neuroscience and neurotechnology is a broad umbrella. There’s the pharmaceutical side of things, the device side of things, the research side and the clinical side. So this sort of wide rubric, or umbrella, is a place where we will be able to interact with others that are like us or similar to us and those who are different.”

Representing a broad spectrum of companies involved in neurotechnology, neuroscience research centers and brain disease advocacy groups, NIO began accepting members on Aug. 1. Its mission is to accelerate cures for brain and nervous system diseases by promoting the industry’s progress, advocating the industry’s position to government officials and providing business development services to its members.

As managing director of NeuroInsights (San Francisco, California) — a company that tracks the neurotechnology industry and provides analysis, conferences and advisory services — Lynch said he saw a need for a unified voice for the commercial neuroscience community. “I really noticed that although they’re all focused on the brain and nervous system they’re really fragmented in their ability to push forward a cohesive agenda so we created NIO to act as an umbrella for the neurotechnology industry,” Lynch told BB&T.

The neurotechnology field is one that is close to Lynch personally, he said, because he has a family history of brain/nervous system related illnesses. He also is known, according to NeuroInsights, as an economic and social forecaster who advises organizations on the impact of neurotechnology on businesses, government and society. He is the publisher of the company’s monthly investor newsletter, Neurotech Insights and is the editor of Brain Waves, a blog providing commentary on the intersection of neuroscience and society.

Because brain complexity makes neuroscience research longer and more expensive, Lynch said NIO is pushing for an R&D tax credit as well as lobbying for expanded government funding. More than 1.5 billion people worldwide and nearly 100 million Americans suffer from a brain or nervous system illness, according to NIO.

The organization also notes that in 2005 the neurotechnology industry generated $110 billion and includes more than 450 companies working on new treatments for needs ranging from anxiety and depression to Alzheimer’s, multiple sclerosis and Parkinson’s.

MedImmune case has patent implications

The Supreme Court last month heard a patent case that could have industry-wide implications if the justices deem it permissible for a licensee to challenge its licensor’s intellectual property without breaching their contract. Such a scenario likely could lead to a wave of patent challenges, some legal observers said, and translate to higher licensing costs. The issue has arisen as a result of challenge by MedImmune (Gaithersburg, Maryland) of intellectual property – the so-called Cabilly patent — that it licenses from Genentech (South San Francisco).

“Should you be able to challenge the validity of the patent that you’ve just licensed?” asked Mark Wilson, a lawyer at Alston & Bird’s Charlotte office. “That’s an interesting question” — and one fraught with a range of ramifications, because licenses essentially represent patent settlements without involving the courts.” He added: “It’s a resolution to an actual or potential dispute,” thereby implying that the matter is resolved once a license is in place.

The Federal Circuit ruled against allowing suits by licensees in interpreting a requirement in the Declaratory Judgment Act that there must be a case of actual controversy. The requirement stems from Article III of the Constitution, which says there must be an actual problem before the courts can issue a declaratory judgment.

“You have to have that case of controversy; you have to have some conflict there,” Wilson told Biomedical Business & Technology. “If you’re a licensee, where’s the conflict? You’re not going to get sued. Because you have a license, the patentee could never sue you, unless you violate your license agreement. That’s a completely different matter.”

But MedImmune has not broken its license to the patent, which it uses in producing Synagis (palivizumab), its top-selling drug for preventing respiratory syncytial virus in high-risk infants. Nevertheless, the company has been fighting Genentech’s extension of the patent well beyond its original expiration date through an agreement a couple of years ago. Still, the Supreme Court is hearing the challenge, perhaps because of its recent interest in reforming the patent system.

“I think that they could leave the door open for people that resolve cases for business reasons to potentially challenge those same patents,” Wilson said, “and try to rid the world of what they consider to be an invalid patent.”

If a majority of justices rule in MedImmune’s favor, the decision would swing legal powers away from patentees because licensors would be able to bring suit at their discretion without breaking their deals. Presently, patentees can file first when charging infringement, but they wouldn’t be able to file against licensees because of their license agreements. “It shifts the power completely over to the other side,” Wilson said, “to control the location of the case and when the case is filed.”

To fix that, future licensing deals likely would be drafted with provisions allowing licensors to terminate any agreement if licensees seek to challenge the licensed patent in court. In addition, it’s probable that license fees would climb to compensate for the costs of potential lawsuits.

Editorial adds to new DES questions

In the wake of recent concerns about the long-term safety of drug-eluting stents (DES), including presentations last month at the World Congress of Cardiology (WCC; Sophia Antipolis, France), a guest editorial published in mid-October on the web site of the American College of Cardiology (ACC; Washington) will add fuel to that fire. It charges that 2,000 patients are dying needlessly each year as a result of DES use.

The editorial, “Drug-eluting Stents: An Ounce of Prevention for a Pound of Flesh,” said patients face a lower risk if treated with older, bare-metal stents (BMS) that might work, in many cases, just as well. Written by Sanjay Kaul, MD, and George Diamond, MD, of Cedars-Sinai Medical Center (Los Angeles), this is the latest expression of concern about the risks of fatal blood clotting and serious heart attacks associated with DES.

”I think the debate here is not the drug-eluting stent vs. the bare metal stent,” Kaul told BB&T. “There’s a bigger debate here, and that is our obsession with revascularization as the primary therapy for treating stable angina.” He said that drug therapy should be the first avenue for treating chronic stable angina “and only in those who don’t respond to [drug] therapy should revascularization therapy — whether stenting, angioplasty or bypass surgery — be offered.” He said that in a “quick fix society,” patients demand that approach, and “we are too eager to please them.”

Last month at the WCC meeting, results of a meta-analysis of past clinical trials of first-generation DES showed that DES-implanted patients had a greater risk of heart attack or death than patients BMS-implanted. The increased risk was greatest for the Cypher stent from Cordis (Miami, Florida), at a statistically significant 38%, said Edoardo Camenzind, MD, of University Hospital (Geneva, Switzerland). For the Taxus stent made by Boston Scientific (Natick, Massachusetts) the increased risk was 16%, a figure not meeting statistical significance.

The actual risk of death or heart attack was still low in both groups, at 6.3% for patients given Cypher and 2.6% for Taxus. But because DES is so widely used, thousands of patients could be affected, Camenzind noted.

Kaul said that research suggests the use of the DES increases the risk of clotting by 0.6% annually, compared with BMS-implantation. “It’s eerily reminiscent of Vioxx,” Kaul told the New York Times, referring to the popular painkiller that Merck (Whitehouse Station, New Jersey) withdrew from the market in 2004 after being linked to heart attacks. “Initially we didn’t see the signal because the incidence is so rare.”

With more than 1 million Americans annually receiving the stents, and at least 80% of them getting DES devices, this works out to an additional 2,160 deaths each year, the doctors calculated. The figure assumes that 45% of the people who suffered such clots had died.

Kaul said that DES is proper treatment for many patients, but that the devices are used far too often in cases where clinical data suggests that BMS use or long-term drug therapy is safer. Only about 20% of DES devices are being inserted in patients who have the kinds of conditions studied in the clinical trials that led federal regulators to approve them, he said.

Kaul told BB&T that he is, by nature, a skeptic and that he never got caught up in the DES hype. He noted that the clinical benefits of DES relative to restenosis and target vessel revascularization (TVR) have been overestimated. For example, he said the TVR rates in the BMS control group were nearly 50% higher in the DES trials than that observed in contemporary interventional trials or in “real-world” clinical practice.

FDA to eliminate ‘R word’

Thanks to a tremendous amount of confusion over the meaning and implications of the word “recall,” the FDA has announced that it will look into whether the term creates more problems than it solves. Still left to be answered is the question of whether the agency can legally do this without help from Congress. However, at least one association and one Capitol Hill staffer say that any such change can be dealt with via regulations and requires no statutory address.

The issue surfaced again with last month’s roll-out of a new set of recommendations by the Heart Rhythm Society (HRS; Washington) concerning the language and methods for reporting hearth rhythm device malfunctions. Dwight Reynolds, MD, president of HRS, said “recall” carries a pejorative ring and has resulted in the explantation of perfectly serviceable rhythm devices from patients. HRS wants the FDA to eliminate its use of the word in connection with implantable defibrillators altogether and substitute an expression such as “Class I advisory.”

By some accounts, the agency has issued alerts and notifications of various kinds for more than 300,000 defibrillators and pacemakers since 1990, but the rate of replacement of pacemakers due to malfunctions has been less than 5 per 1,000 and 21 per 1,000 for defibrillators.

According to the Prudential Equity Group (New York), defibrillator implantations have dropped by about 8% in the past 12 months. However, given that doctors implanted roughly a quarter of a million defibrillators in 2005, the need for a recall by one name or another is unlikely to vanish any time soon, regardless of the approach the agency takes.

Amy Melnick, vice president for health policy at HRS, told BB&T that “[w]e had an attorney look at this, and the opinion we received was that FDA can do this without congressional approval.” To make the change, she said, “there are challenges, but it can be done.” Melnick nonetheless noted that congressional input would help.”

HRS’s interest in this verbiage is restricted to implantable rhythm devices, and it does not believe that the agency would have to implement a similar change of wording across all the products it regulates. Melnick said that in HRS’s talks with the agency, “they did not raise the issue of other products.”

The advantages of being private

Rom Papadopoulos, a managing partner with The Intuitus Group (Atlanta), opened a session at last month’s George Life Sciences Summit in Atlanta by discussing the “good news and bad news” regarding financing life science firms. In the third quarter, venture capital funds have “raised an extraordinary amount of money,” indicating the strong investor appetite for the sector. During the second quarter, he said, there were 856 deals and $6.3 billion invested. First-year financings “reached a five-year high,” he said.

But then he delivered the bad news: The public markets are “hibernating” and many VCs that have been through several rounds of financing are now asking, “Where’s the exit?” But is a public market exit desirable at all?

Panel member Jessica Chutter, a managing director with Morgan Stanley & Co. (New York), said there are advantages to remaining private. Privately held companies have “a lot more flexibility on the deal side,” she said, citing the opportunities for milestones and “carve-outs” like the May buyout by Biogen Idec (Cambridge, Massachusetts) of Conforma Therapeutics, which allowed for a Conforma product to be spun out into the startup Cabrellis Pharmaceuticals (San Diego).

Bruce Robertson, a managing director with H.I.G. Ventures (Miami), said today’s M&A exits are “dramatically superior” to IPOs. The average capital raised before an exit is $58 million, and the average exit value for an IPO is $190 million, he said, but the average exit by acquisition of $280 million. M&As also are attractive because a company doesn’t need to build the “big infrastructure” needed for an IPO. Robertson said that when he considers investing in a firm, he doesn’t eye the public market, but rather looks at whom likely buyers would be.

It’s not easy to attract investors and it is “pretty much a full-time job to raise the money you need,” said Mark Colonnese, executive vice president of commercial operations and CFO of AtheroGenics (Alpharetta, Georgia). He stressed the need “a good front man”to explain both the product and the science behind it. “What you can’t skimp on,” Papadopoulos added, “is getting your message out well.”

Although Robertson said H.I.G. describes itself as 10x investors, Schwarz said that “return expectations” for investors “have come down.” There has been more hedge funds placing money into the sector, and Chutter hopes that will allow “companies to remain private for longer” and receive a higher valuation if and when it does go public.