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Where biotech and high-tech meet
Author  Gali Weinreb

Executives in Israel for the MIXiii conference tell "Globes" about the future of medicine.

From Globs

2014 is positioned to go down in history as one of the stormiest years for biomed. The Nasdaq Biotechnology Index has risen sharply, by tens of percentage points, since the beginning of the year - a process that opened the door to dozens of IPOs - but has recently lost ground.

Pfizer is in talks to acquire AstraZeneca for more than $100 billion, the pharmaceutical and biotech companies continue to launch groundbreaking products, and the field of medical technology is in the throes of a revolution.

Senior industry executives from around the world who participated in the MIXiii Israel Innovation Conference (which combined the Israel Advanced Technology Industries annual international biomed conference with a high-tech conference for the first time), spoke to “Globes” about the latest breakthroughs, gave forecasts for the future, and explained what brought them to Israel.

According to Pitango Venture Capital General Partner and MIXiii Biomed Co-Chair Ruti Alon, “The forecast in the field of biomed is fundamentally complicated, due to of the interaction between political trends, such as globalization and different modes of distribution that bring Western diseases to new countries, and technological trends, such as genomics.

“In light of this, we can expect continued pressure to lower prices, significant changes in marketing systems, broader use of Internet, and the continued rise in prominence of the consumer as a factor in decision making. In Israel, there is a deep understanding of what is required to develop HealthIT products, that will connect the medical community.”

DFJ Tel Aviv Venture Partners General Partner and MIXiii Biomed Co-Chair Dr. Benny Zeevi said: “I believe the transitions from hospital care to remote care, from general care to personalized care, from treatment-based care to more preventive care, and higher patient involvement in treatment, will translate into a more pleasant patient experience, and greater commitment to maintaining therapeutic regimes as a result.”

”More holistic diagnosis and care”

Boehringer Ingelheim (BI) seems to be one of the less familiar among the 20 big companies, but only because it is not publicly traded. The company has 50,000 employees, and invests 20% of its revenue in R&D, with an emphasis on internal R&D.

The company has, in the past, been in talks to acquire an Israeli company, and has recently established a branch in Israel, headed by Orna Fiat Steinberger. The branch is responsible for running the company’s clinical trials in Israel.

The company was established 129 years ago. It was founded by, and is managed still today, by the Boehringer family, and Ingelheim is the German city in which the company was founded. Today, the company has a rich pipeline of products. Chief Medical Officer Prof. Klaus Dugi points in particular to the new cancer drug Volasertib, a small molecule inhibitor that prevents cancer cells from dividing by attacking the PKL1 protein. The company is testing the product for leukemia treatment, and is currently in Phase II clinical trials.

According to Dugi, the most significant scientific breakthrough of recent years is the recognition of the role that the mix of live organisms living in and on our bodies has in causing and preventing illness. “Today, using genome sequencing technology, we can know precisely what the genomes of our intestinal bacteria are. These genes, which are not exactly part of our bodies, apparently affect not only diseases of the intestine, but others as well. This knowledge can lead to entirely different medical diagnoses and treatments from those we know today - more holistic diagnosis and care.”

Dugi claims that the patent cliff troubles the industry, but not BI, and it is likely to be less problematic for the industry in the future. “In a world where most newly approved products are biological, which are harder to duplicate, it is possible that patent expiry will be regarded differently, and less seriously, in the future.”

The real industry crisis is not an R&D crisis, in his opinion is, but rather a budget crisis - governments are unable to maintain the health budgets necessary to create significant continued growth in biotech and pharmaceuticals, and drugs will soon need to prove that they save not only lives and suffering, but also money (as is the case for medical devices today). In order to do this, it will be necessary to improve existing patient monitoring data systems, and to match the best treatment to each patient.

Fiat Steinberger says that: “The fact that BI is a private company allows it to invest in R&D without thinking about how the analysts will look at the bottom line next quarter, or even next year, and, therefore, we have many long-term plans.” The company has 90 research projects, and it classifies ten products (in eight categories) as “pre-launch,” which means they are either in advanced Phase II with good results in previous trials, post-Phase III, or they have already been approved.

BI also has a venture capital fund that seeks out biomed companies to invest in, including companies in early stages of development that are not yet suitable for traditional venture capital funds. In 2014, the fund invested in a company called Metabomed, which at the same time received investments from the Merck Serono incubator in Yavne, from the Pontifax fund, and from the Technion technology transfer company. The company deals in treatments based on cancer metabolism - treatment through the resources that the cancer consumes.

Using stem cells to regenerate tissue

Over the past decade, Takeda Pharmaceuticals has gone from being a Japanese pharmaceutical company to being a global giant, competing head to head with the biggest global players. The company’s Israel office is headed by Arie Kramer. Following its acquisitions of US company Millennium Pharmaceuticals, which is developing a cancer treatment, and veteran European pharmaceutical company Nycomed, Takeda has become one of the most significant global powers in the pharmaceutical industry.

Despite the acquisitions, Takeda, like all the major pharmaceutical companies, has been forced to contend with the patent cliff: the expiry of patents on leading products, while R&D fails to produce new products at the expected rate.

“The patent cliff troubles the pharmaceutical companies and the investors,” said Takeda Head of R&D Tetsuyuki Maruyama, who was tasked with finding a solution to the problem, and has succeeded in doing so.

“It seems that the worst is behind us,” he says, “And I believe that the industry has learned from it: to place less emphasis on bestselling drugs, and to vary the product offering.

“A decade ago, large pharmaceutical companies avoided anything ‘difficult,’ like cancer, or rare diseases. The smaller companies proved that these are attractive markets, and now the big companies are scurrying to close the gap. We believe that this will happen also for the brain, so as larger companies leave this field, we focus on it.”

What are the developments that are likely to have the most significant impacts on the future of medicine?

“I believe in a combination of drugs and antibodies, where the antibodies lead the drugs directly to specific targets. Our company has such a product that should reach the market soon, after having waited for years for the right combination.

“Using such technology, together with products that use the immune system to treat cancer, I believe that the medical world will actually reach a cure for cancer, and I am not the only one who believes this.

“Another exciting technological development is the bacTRAP platform, which we loved so much that we bought the company that developed it. This is technology that allows us to look at changes in gene expression in specific cells in tissue that has many different kinds of cells, where each one expresses genes a little differently.

“Using this focus, we can develop far more accurate drugs. This is true for many areas, but most of all the brain, which has a mix of cells. I believe that the field of regenerative medicine, using stem cells to regenerate sick tissue, will lead to breakthroughs.”

Maruyama notes that Takeda owns a group called New Frontiers Science Team, which seeks technologies in advanced development stages and whose representatives were at the conference as well.

What are the most interesting products in your pipeline?

“We just now launched our first cancer drug based on a combination of antibodies and drugs. We are waiting on the launch of a new drug to treat Crohn’s disease and irritable bowel syndrome, which is most effective for patients for whom existing treatments don’t work. We are focusing on the digestive system.”

“Israel has an ideal mix”

Becton Dickinson (BD) is a medical device supplier that deals in a broad range of products, including hospital lab equipment. The company specializes in cheap medical equipment that is manufactured in large quantities.

“I have been with the company for 11 years,” said BD Director of Business Development Al Lauritano, “First, I headed the life science new business incubator in North Carolina, and I have basically held the same job ever since, only the job has grown.”

Incubator? That must have been revolutionary, at the time.

“We had an incubator from 1998 to 2008, into which we accepted mostly companies from academic institutions, but it wasn’t so successful. The business model was that after our initial investment, more investors were meant to join in, financial institutions, but, in order to attract such investors, the companies were forced to change their business models in directions that interested us less, as strategic investors. So we didn’t get what we wanted out of them.

“We never really shut the incubator down, but we became very picky. In the beginning of this year we decided to establish a ‘virtual incubator.’ We won’t host the companies, instead, we will support them wherever they are. We won’t only invest money - we will also send our people. That way, we will be able to get to know the companies well.”

In the coming year, BD will announce its first incubator company. “This is one of the reasons I am in Israel” says Lauritano.

“We believe that Israel has an ideal mix of entrepreneurs, technology, financing, and operational infrastructure, including the support of the chief scientist. In April, we announced our participation in a collaborative project between the chief scientist and the international corporations. This summer, we will put out a call for opportunities in Israel,” says Lauritano, who worked at Israeli company D-Pharm in the past.

Lauritano is particularly interested in combinations of information technologies in daily medical products. “Therefore, it makes sense for us that the conference brings high-tech and biotech together,” he says. He notes that many BD products are in competitive markets, where the product is manufactured by the millions (syringes and catheters, for example).

“How can we bring added value to such a product? Adding information technology in or around it is one method. We see that hospitals need to improve their workflows, in order to prevent mistakes in drug administration and to make sure that patients follow through on the treatments that are prescribed to them. So we want as much information as possible to be entered into medical records automatically from our medical devices.”

In the future, the company intends to help healthy people as well, “For example, diabetics, who are at the forefront of the population that monitors and manages its health regularly, every single day. Why shouldn’t all the healthy people, or people with chronic diseases, monitor themselves in such a manner in order to maintain optimal health? Our goal is to make a business of this.”

What is the most interesting product you have launched in the past two years?

“We surprised the industry this year when we announced that were opening a generic drug department. We have always had syringes that added value to drugs, and now, instead of selling them only to companies, we will incorporate generic drugs ourselves.”

Published by Globes [online], Israel business news - www.globes-online.com - on May 26, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

 Taken from Globes - Where biotech and high-tech meet

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Dedicated biotechnology departments are rare anywhere, but there are three among Israel’s seven main universities. Biotech research is funded from the annual $140 million research budget at Israel’s universities and is comprised of external competitive research grants (36%); the regular budget of the universities (36%); and industry and government research grants and contracts (28%). Technology transfer Israel has 12 technology transfer organizations, seven of them university-based and five in its leading research hospitals. They are highly effective: the Hebrew University’s Yissum, for example, founded in 1964, generates more revenue than its counterparts at MIT, Harvard or NYU in its management and licensing of thousands of patents developed within the institution. More successful still is the Weizmann Institute’s Yeda, which has been named the world’s third most profitable technology transfer organization.Incubators Based on Israel’s high-tech experience, incubators have been created to nurture young biotech companies. There are both public and private incubator organizations, but all offer fledgling entrepreneurs skilled and experienced management, suitable R&D facilities, technical, financial, administrative and logistic support, administrative services (secretarial, accounting, legal, acquisition) and business guidance.The Technological Incubators Program, established in 1991 for high-tech and administered by the Chief Scientist’s Office, includes a number of biotech startups. BiolineRx was set up in 2003 by Teva, Hadassah’s technology transfer company Hadasit and two leading venture capital funds as a clinical-stage, publicly-traded, biopharmaceutical development company. It licenses promising early-stage projects and develops them as far as Phase I clinical trials. Rad-Biomed Accelerator is another interface between biomedical research and Israel’s biomedical industry. It provides physical infrastructure, seed capital, business development and a wide range of related services to help entrepreneurs establish companies that will join the flourishing Israeli biomedical industry.International partners  Throughout most of biotech’s history, small companies have been the hotbed of innovation. These small firms, however, generally lack the development capital to fund the costly clinical trials and launch of new therapeutics. Biotech has, therefore, long depended on partnerships with large, profitable pharmaceutical companies.For Israel, this paradigm means that the fruits of Israeli research go largely to foreign companies – with the large partner selling the final product and capturing the lion’s share of the profits.The unraveling of interferon’s mechanisms and isolation of the human Interferon-beta gene, for example, which began at the Weizmann Institute, was eventually sold to Swiss pharmaceutical giant Ares-Serono Group in 1979.Growing numbers of Israeli companies today, however, are searching for funding that will allow them to develop their own intellectual property, rather than sell to the multinational pharmaceutical companies.Venture capital Israel’s venture capital (VC) industry, born in the late 1980s, received a major boost in 1993, when the government launched the company Yozma to help finance high-tech and, later, biotech startups.During the 1990s, local venture capital companies that specifically targeted biomedicine were formed. Medica, Columbine, Innomed of Jerusalem Global Ventures, Denali and Vitalife were among the first.Pontifax, 7 Health Ventures and Poalim Medical III followed.With most of these funds now fully invested (or no longer active), local investment in life sciences today comes largely from general VCs, not dedicated to biotech.Clal Biotechnology Industries (an Israeli investment company but not a VC) has a portfolio of 16 young biotech firms. A number of foreign VC investors have targeted Israel’s life sciences in recent years – among them NGN Capital, Onset Ventures, Schroder Ventures Life Sciences, Three Arch Partners and Ziegler Meditech Orbimed, a US firm that invests in the healthcare sector and has been active in Israel for the past decade, expanded its investment team into Israel in April 2010.
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