Author Archives: Viren Konde

The Innovation in India

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The current issue of Nature Biotechnology contains a news brief, which can be found here, that focuses on the commercialization of clot-specific streptokinase by Institute of Microbial Technology (IMTECH), based in Chandigarh, India.

Coincidentally, I attended a Biosummit organized by the Confederation of Indian Industry with the support of Government of Maharashtra and MCCIA in Pune on 18 January 2011. IMTECH Director Dr. Girish Sahni mentioned in his lecture about the clot-specific recombinant STK becoming ready for commercialization.

Up to this point all of the clot-buster drugs used in India, and in fact for most of the developing world, have been imported and relatively expensive (streptokinase costs about $100 per dose, while tissue plasminogen activator [tPA] is about $1,000 per dose). But the first clot buster available in India, which was a natural streptokinase, was developed by IMTECH and commercialized by Cadila Pharma in 2002 for about $20 per dose. Later in 2009, recombinant streptokinase (rSK) by IMTECH was commercialized by Shasun Drugs & Chemicals for about $50 on the open market, but Shasun said it would supply to hospitals at a 50% rebate.

However, structure-function studies in 2006 on the mechanism of human plasminogen activation lead to the design of improved versions of clot-specific streptokinase (CSSK) by IMTECH, which signed a technology licensing agreement with the US-based firm Nostrum Pharmaceuticals for clinical development and commercialization. This CSSK had advantages, such as reduced systemic reactions (in other words, less side-effects), localized plasminogen activation and decreased doses/economic benefits (greater efficacy at low doses).

Looking at it historically, IMTECH’s patenting has gone like this:

  • Patent No. 183828, for “An Improved Process for the Simultaneous Preparation of Extracellular Streptokinase and Its New Analogus”; grant date: 15/12/2000 in India.

And for Clot-specific SK:

  • Patent No. EP 1024192, for “Novel Clot Specific Streptokinase Proteins Processing Altered Plasminogen Activation Characteristics and a Process for the Preparation of Said Proteins”; grant date: 02/08/2000 inEurope.
  • Patent No. 190822, for “A Process for the Preparation of Clot-Specific Streptokinases Processing Useful Plasminogen Activation Characteristics”; grant date: 23/12/2005 in India.
  • Patent No. 7163817, for “Clot-Specific Streptokinase Proteins Possessing Altered Plasminogen Activation Characteristics and a Process for Their Preparation”; grant date: 16/01/2007 inU.S.A.
  • Patent No. 7250503, for “Nucleic Acid Molecules Encoding Clot-Specific Streptokinase Fusion Proteins Possessing Altered Plasminogen Activation Characteristics”; grant date: 31/07/2007 in U.S.A.

These incremental jumps made by IMTECH beg the question of whether this is the type of innovation likely to keep occurring inIndia. In essence, the firm has made a biobetter. It’s also worth asking if European and US-based firms will continue to be the ones picking up the most innovative discoveries at Indian research institutions. After all, IMTECH’s first products were commercialized by Indian companies, but then a foreign partner (though Nostrum Pharmaceuticals is owned by a person of Indian origin) is handling the clot-specific drug, probably in an attempt at a better return on investment. Will the Indian biopharmaceutical space grow enough to handle worldwide commercialization of the country’s truly breakthrough discoveries?
Regardless, IMTECH is readying the next-in-class clot buster – a pegylated streptokinase, a polyethylene glycol-(PEG) fortified enzyme that liquefies blood clots. It’s set to cost around $1,000 a dose, which is considerably reduced from competitors while still being potent, targeted, easy-to-deliver and eliciting fewer allergic reactions. To me, this stands as a validation of the Indian government’s two policy initiatives:

  1. The Small Business Innovation Research Initiative (SBIRI) for early-stage funding of small and medium enterprises.
  2. The Biotechnology Industry Partnership Program (BIPP) for gap funding of larger, higher-risk projects by enterprises of any size.

These policies have helped Indian research find funding and thus, clinical progress.  The type of innovation seen with CSSK – both incremental improvement and affordability – can also be called “micro-innovation,” and it is what India is already known for: adapting existing biotechnologies to meet local needs.

Viren Konde

India’s Vision 2020 – BioPharma Strategy – R&D

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In order for India’s biopharmaceutical players to compete effectively on the global scale for biosimilars market by 2020, the private sector as well as Government of India (GOI) will have to invest a considerable amount of capital in building the manufacturing capacity and skills base to provide the necessary enabling environment. The Department of Pharmaceuticals, GOI in partnership with Association of Biotechnology Led Enterprises (ABLE) and PricewaterhouseCoopers (PwC) have attempted to address this opportunity and provided the key recommendations into six broad sections, which you can read about here.

The first section is focused on the research & development area of the biopharmaceuticals sector which is divided into seven sub-sections.

1. Build protein characterization laboratories and GLP-certified animal study facilities

The biopharma product development process includes both the method of manufacture and high-end bioanalytical product characterization to verify the equivalence in quality to the original drug. Foreign regulatory authorities require evidence to the applicable standards as part of the regulatory submission. The validated product (bioanalytical-proof) is then tested in a GLP-certified animal laboratory and the data from bioanalytical studies and animal tests are submitted to the regulator for permission to conduct a clinical trial.

India currently has very few GLP-certified animal laboratories and only one GLP-certified protein characterization laboratory at the National Centre for Biological Sciences (NCBS) in Bengaluru. The country needs at least four more GLP-certified laboratories. The GOI should therefore fund the construction of the necessary facilities in national scientific institutions and laboratories, as well as in CROs. It should also promote collaboration between academia and industry. In addition, the GOI should offer duty waivers or other incentives to encourage existing service providers to branch into biologics development, using the Research-as-a-Service (RaaS) model – which would, in turn, attract multinationals wanting to outsource such activities and improve revenue generation. India’s public institutions are not equipped to provide such services because they do not have sufficient understanding of the regulatory requirements.

2. Create a national animal breeding facility

India needs a National Animal Breeding Facility to produce high-quality animals for preclinical studies and to generate certified data that meet international standards and scrutiny. Recently, the GOI announced plans to establish a large centre to breed dogs and monkeys for use in clinical research, and the Department of Pharmaceuticals has invited expressions of interest from both public and private institutions with relevant biomedical expertise. However, at least one rodent facility and two large-animal facilities are required to develop MAbs and biosimilars by the biopharma industry in the country. The Committee for the Purpose of Control and Supervision of Experiments on Animals (CPCSEA), acting under the aegis of the Department of Forestry, currently controls all animal facilities, including registrations, but lacks the expertise to conduct proper scientific inspections and is understaffed. Therefore, the GOI need to intervene to better equip the CPCSEA to match the international standards.

3. Provide financial assistance for ensuring compliance with global standards

All facilities for characterizing proteins, breeding animals, conducting animal studies and performing viral testing will need to operate to international standards. Therefore, the GOI needs to provide financial assistance with the cost of hiring consultants to advise the global regulations.

4. Expand viral testing and evaluation facilities

India does not have enough facilities for testing and evaluating the viral safety of biologics derived from characterized cell lines of human or animal origin, in compliance with International Conference on Harmonization guidance ICH Q5A (R1). The GOI will have to consider constructing more testing and evaluation facilities. At the same time, the Indian regulatory agencies need to ask for the ‘viral clearance’ as a pre-condition for approval of all domestic biomanufacturing plants.

5. Promote the development of preclinical service providers

Consider the fact that the market for toxicology and bioanalytical services is worth about $12 billion and only 15% is outsourced. The GOI could provide credit and/or tax incentives to help preclinical service providers establish such facilities in the country. There are not many facilities for offering such services other than bioanalysis and toxicology studies to speed up the number of early drug candidates being developed by companies and to outsource these activities.

6. Provide practical support for conducting clinical trials worldwide

Any Indian biosimilars company that wants to sell a biosimilar in a regulated market will be required to conduct clinical trials of that biosimilar against the reference product in the country concerned. This represents a major financial risk, therefore, the GOI could provide assistance in engaging consultants to design and execute world-class trials.

7. Simplify the procedures for importing and exporting biologics

The procedures for importing comparator drugs, test materials, Genetically Modified Organisms (GMOs) and Living Modified Organisms (LMOs) into India for research purposes, and for exporting biologics out of India, for clinical studies in other countries, are very cumbersome. India also lacks cold storage facilities (and most biologics are heat-sensitive).

The GOI should therefore simplify the process for importing biological samples and participate in negotiating government-to-government treaties for handling biologics (which would make it easier to export biosimilars that are manufactured in India). In addition, it should encourage the construction of cold storage throughout the supply chain and mandate faster clearance times at customs to avoid loss of material in transit.

In the next blog post, I will discuss the manufacturing and commercialization aspects of the biopharmaceuticals sector, as it pertains to India’s vision 2020 strategy.

Viren Konde

India’s 2020 Vision

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If India’s biopharmaceutical players are to compete effectively on the global scale and capture 10% of the global biosimilars market by 2020, India’s private sector will have to invest a considerable amount of capital in building the necessary manufacturing capacity and skills base. At the same time, the Government of India (GOI) will also need to provide the necessary enabling environment. India’s biopharma sector consists primarily of vaccines, monoclonal antibodies, recombinant proteins and diagnostics, and the guidelines for biosimilars are already in place. All India needs to take market share is entrepreneurship.

The GOI’s Department of Pharmaceuticals, in partnership with the biotechnology industry body ABLE and PricewaterhouseCoopers have taken up the task of addressing this opportunity and provided recommendations into the following six sections: R&D; manufacturing and commercialization; human capital; the regulatory framework; innovation; and intellectual property.

1 Research and Development

• Build protein characterization laboratories and GLP-certified animal study facilities

• Create a national animal breeding facility

• Expand viral testing facilities

• Provide financial assistance for ensuring compliance with global standards

• Promote the development of pre-clinical service providers

• Provide practical support for clinical trials

• Simplify the procedures for importing and exporting biologics

2 Manufacturing and Commercialization

• Create a single-window system for approvals and clearances

• Introduce flexible pollution controls

• Invest in better transport links and cold-chain facilities

• Provide fiscal incentives

3 Human Capital

• Expand India’s capability in toxicity studies

• Foster a trilateral relationship between industry, academia and government

• Improve and expand the workforce development pipeline

• Establish exchange programmes, “finishing schools” and scholarships

• Increase public awareness about career opportunities in the industry

• Provide more training for existing employees

4 The Regulatory Framework

• Simplify the procedure for approving biologics

• Create an independent inspection facility

• Modify the regulations on process validation

5 Innovation

• Provide seed funding for innovation

• Construct biotechnology clusters

• Promote translational research

6 Intellectual Property

• Protect innovation

• Approve the bill liberalizing the commercialization of intellectual property generated in state-funded institutions

In the next few blog posts, I will be discussing these six sections of India’s Vision 2020: BioPharma Strategy.

Viren Konde

Russia-India Biotech Network

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In order to improve and encourage bilateral trade between India and Russia, the two countries have signed the Russia-India Biotech Network (RIBN) agreement to enhance collaboration in the biotechnology sector. The RIBN is jointly developed by the Federation of Asian Biotech Associations (FABA) and Russian Biotech Association. This development holds immense significance for Indian small and medium enterprises (SMEs) in the biotech sectors, which are likely to be encouraged by these developments to partner with Russian biotech companies for further business expansion. RIBN will be a dedicated online platform to effectively facilitate collaboration between the Russian and Indian biotech communities.

This exclusive online platform is the first-of-its-kind, and might prove to be a useful tool to accelerate the cross-border collaboration between India and Russia. RIBN will act as a dynamic platform to bring together the biotechnology and pharmaceutical companies, scientists, university students of Russian and Indian biotech communities, in both science and business. Later, other countries could join this platform, making it the first global professional networking system. The interested companies would be able to browse through the profile of their counterparts, and interact with them to understand their activities in detail and vice versa. Thus, RIBN is intended to facilitate business partnering throughout the year, in addition to offering business support services like databases, online seminars, placements, exchange programs, facility visits, and trade delegations.

The concept was mooted during BioAsia-2010 conference held in Hyderabad this year. The first phase of the platform would be functional by October and become fully operational during BioAsia 2011.

Objectives of RIBN:

1. The RIBN is likely to facilitate business partnering between India and Russia through database support, online seminars, placements, exchange programmes and facility visits, among other services.

2. This collaboration is intended to provide the right environment, infrastructure and encouragement to leading biotech companies to establish their units in the Genome Valley, Biotech Park.

3. RIBN should allow Indian SMEs in the biotech sector to explore business opportunities in Russia because trade barriers in this sector are likely to decrease through the agreement.

4. To support mutual efforts and collaborations in joint research and product development, with special focus on agricultural biotechnology, pharmaceuticals and vaccines.

Viren Konde

The Business Model of Biotechnology Incubators

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Biotechnology incubators support entrepreneurs and early stage start-up companies by either competing or cooperating with other companies in the search of the most interesting, valuable and viable start-ups. Along with venture capitalists, business angels, consulting companies and institutional investors, incubators provide financial and managerial support. The incubation of technology-based start-up ventures has been dependent on the nature of R&D projects. Incubators constantly face high uncertainties regarding future technologies, potential markets, and team development. Returns on investments in specific start-ups could be generated through equity shares in the start-ups and to some extent by providing training and services to the desired clients. Therefore, an incubator is both a service firm and risk investor that supports early-stage technology start-up companies through strategic business guidance and direct equity investment. Ultimately, the effective risk management across the innovation pipeline becomes the biotechnology incubator’s business model.

These biotechnology incubators have differentiated themselves by the source of their evolvement, competitive scope, strategic objective, and the service models. The main purpose of these incubators is to speed up the business development by providing the start-up risk capital, reducing the uncertainty in the early phases of development, and shortening the ‘time-to-market.’ Entrepreneurs have varied reasons for starting up with an incubator, based on the type of an investor, region, profit-making strategy or strategic partner. There are several kinds.

University-based incubators

Typically, the university-based incubators are sponsored by academic institutions and give preference to faculty and student entrepreneurs from their same university or institutes. Others establish close relationships with universities and colleges. These incubators use universities as a technology source and as a means to provide opportunities for their client firms to leverage university research in their commercialization efforts.

Region-specific incubators

The goal of the region-specific incubator is to partner with area leaders in their efforts to diversify the region’s economy by creating a strong high-tech industry base and also to assist them in technology transfer activities to build a strong entrepreneurial culture. Geographical focus is a natural competitive factor for regional business incubators, since their mission is to support new businesses locally. Network access is a crucial element of successful incubation. Since networks are usually limited to certain regions, many incubators strive to establish a good local presence early in their development.

Industry-specific incubators

Some incubators focus on a particular industry because of the past experience, competencies of the incubator managers, preference to other similar entrepreneurs to create a network among incubating entrepreneurs, or due to the need of business facilitation services such as funding, office space, IT infrastructure, and training from the consulting firms.

For-profit or Not-for-profit incubators

Incubators also differ in their strategic objective for supporting start-ups: whether they are offering their products, technologies or services for-profit or not-for-profit purposes. What separates the successful from the unsuccessful incubators? Is success dependant on their being for-profit or not-for-profit type of incubators?

Now, considering the nature of uncertainty in the entrepreneurial life cycle at the early stage of start-up development, there is no guarantee that a particular start-up is going to be successful. Generally, these different types of incubators operate at the highly uncertain stage when business plans are not finalized, markets are uncertain, and technologies are underdeveloped. The inherent complexity and unpredictability of incubation makes it difficult to support all the start-ups. Therefore, it is important to understand that, theses incubators generally make investment decisions across a portfolio of different but ‘ought-to-be-successful’ start-ups in order to maximize operational and investment returns while minimizing portfolio risk.

Viren Konde

Funding and biotech parks

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In my last post I talked about how to select the biotech sector to focus on, and how to become attractive to acquirers.

Today I want to talk about looking for government funding. Indian biotech start-ups, besides raising PE/VC capital, should start to look for government money, once they pass the proof-of-concept phase. For the high risk, IP sensitive, product companies (in the category of drug discovery, diagnostics, and clinical trials) with long thirst for funding, there’s now public money available for radical research. The Department of Biotechnology (DBT) as part of a comprehensive biotech development strategy for the life sciences, has launched the SBIRI (Small Business Innovative Research Initiative) as an early stage, and Biotech Industry Partnership Programme (BIPP), as a later-stage support scheme to concentrate on science and innovations and to rescue and fill the funding gap for early-stage investment and business support to biotech and medical device start-ups in the country. In addition, under the 11th Five-Year-Plan and the new legislation, the country’s DBT has kept aside 30% of its annual budget to fund public-private collaborations on new drug development. DBT has also sponsored Biotechnology Industry Research Assistance Programme (BIRAP) in partnership with ABLE and Biotech Consortium India Limited (BCIL) with an objective to assist and promote emerging biotech entrepreneurs and facilitate innovative research and development in existing small, medium as well as large industries. Enzene, a start-up that uses silk worms to develop therapeutic proteins and Navya Biologicals, which develops a complex biological technology platform, received early funding from the DBT.

Collaborate with global companies

Indian biotech start-up cannot leapfrog to global scale, as it has to evolve by creating value locally and then leveraging it globally. For example, biosimilars segment would offer huge potential for out-partnering with large biotech and pharma to call back molecules. Collaboration with a global company that has successfully built the biotech business would help a company enter in its markets by anticipating challenges and making strategies to overcome legislative hurdles in the emerging markets by building business development capability overseas. The recent Russia-India Biotech Network (RIBN) agreement holds immense significance for Indian SMEs in the biotech sector. Several global investors are evaluating Indian biotechnology startups’ intellectual property assets. Foreign investors are capitalizing on cross-border investment opportunities by allocating their assets in markets in India to ensure a well-balanced and diversified portfolio. Recently, Bangalore-based Cellworks Group Inc. raised about $8 million -$10 million from a California-based private equity investor. Investors would be more likely to provide capital and clinical expertise in exchange for licensing of a biotech’s pipeline under the collaborative development financing model.

Use a biotech park incubator

Government and industry have invested significantly in setting up biotech parks and incubation centers. They include Shapoorji Pallonji Biotech Park and ICIC Knowledge Park in Hyderabad, Rajiv Gandhi Biotech Park, Pune, TICEL Biotech Park, Tamil Nadu, etc. Catalyz, a stem cell therapeutics-based startup began at the Entrepreneurship Development Cell & Extension Centre of Technopark Biotech Incubator in Bangalore. Navya Biologicals was incubated at the University of Agricultural Services, Dharwad incubation facility. These biotech parks and facilities can provide the access to infrastructure at a low cost, noticeable to investors, and are regionally available.

Viren Konde

Financing Know-Hows for Biotech Start-ups in India

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The early stage life science companies are an important engine for medical innovation and economic growth across the country. The Indian biotech industry is mainly dependent on private equity (PE) and venture capital (VC) funds. While Indian biotech has shown astounding growth, funding for the high-risk models have continued to be a challenge. In recent years, Indian start-up biotech companies have been threatened by the decline in early stage funding, as private investors move to later-stage investment strategies, due to the closed exit market and a lack of money to invest in new and risky projects. Irrespective of the business model, biotech startups require infrastructure, such as laboratories and manufacturing facilities, as well as skilled people  power, and legal and regulatory knowledge. They also will face serious challenges in finding early stage investment capital. To obtain financing, startups raise venture capital, partner with big pharma or rely on initial capital from angel investors or government grants.

In India, small and medium-size enterprises (SMEs) make up the bulk of the biotech industry that is either involved in basic R&D or is coupled to contract services. But there are a few important ways to close this critical funding gap and offer attractive investment opportunity for investors, given the business models of Indian biotech firms.

Early stage investing is a resource-intensive business, where every entrepreneur needs to build partnerships with local and global investors, and with corporations and government entities, hoping to gain enough runway to validate their business model, create value and become cash flow positive, before they look for additional funding.

Typically, the entrepreneurs leaving academia and wanting to start a company would have to:

Select a low-risk, high potential sector

With almost no angels, and just a handful of VC/PE firms proactive in Indian biotech, choosing an appealing area (drug discovery, vaccines, medical devices and diagnostics) becomes a priority for early stability. In the present market conditions, the funds are mostly focused on low-risk growth capital opportunities. In the post-genomic era, rational drug discovery is a major approach for discovering and designing new drugs. Academic institutes are invaluable sources of new therapeutic targets for diseases and biological assay techniques. For the early stage biotech to effectively move into the global biosimilars/ follow-on-biologics business, will have to collaborate with public institutions to leverage strengths in targeting a key therapeutic area or sub-segments.

This would attract the necessary early stage recognition for investment capital. Companies such as NovaLead, Indus Biotech, Sphaera and Incozen are involved in innovative medical research, and private investors such as Reliance, MPM Bioventures, ICICI Venture and Citigroup Venture Capital International are interested in innovative startups. The VCs in India lack the confidence to fund a startup to take its product to a next stage, and/or later license it to a big pharma company.

Become an attractive incubation target

Many pharma companies have acquired biotech companies, in the process solving the funding challenges of the early stage biotech. Similarly, in recent times, large Indian pharma companies have been taking interest incubating 4-5 years old, early stage biotech ventures. Generally, the biotech start-ups have a better track record in early stage scientific research and product development; but limited expertise in funding clinical trials, managing regulatory bodies and taking drugs to the market. Therefore, the symbiotic co-existence of Indian pharmaceutical and biotech companies would help both in attracting funds and necessary expertise from a common investor. Incubating a biotech company implies that the pharma company can add new products, product platforms and technologies, which would be more economical than to start from scratch.

Network with investors

The Association of Biotechnology Led Enterprises’ (ABLE) recent flagship networking conference, BioInvest’2010, was held in Ahmedabad, Gujrat, and mainly focused on life science companies, institutional investors and investment bankers on a common platform. Investment and partnership opportunities were explored for collaboration and growth by leaders from industry verticals (agbiotech, vaccines, and platform technologies). For example, Nadathur Holdings and Investments Pvt. Ltd. are promoters of Lifespring Ventures, which recently funded five drug discovery and development start-ups in India. SMEs that attended Bio-Asia’2011 in Hyderabad likely benefited from interactions with foreign investors. Networking during BIO International Partnering Conference in India will allow biotech companies to connect with big pharma companies, venture capitalists and bankers, and service providers from around the globe. India Innovation Fund (IIF) led by IT industry body Nasscom and ICICI Knowledge Park Trust is looking to invest in innovation-driven, early stage Indian companies focused on healthcare and IT sectors. Recently, it has invested about $0.75 million in Bangalore-based Mitra Biotech, a spin-off from MIT focused on personalized treatment of cancer, where Accel Partners and Kitven (Karnataka government-backed fund) are co-investors. Kitven has raised funding from a host of investors, including Karnataka State Industrial Investment & Development Corporation Ltd. (KSIIDC), Karnataka State Financial Corporation (KSFC), Small Industries Development Bank of India (SIDBI) and Karnataka Bio-technology & Information Technology Services (KBITS). It targets investments in IT, biotechnology, nanotechnology and other knowledge-based industries in Karnataka.

In my next post, I’ll discuss government funding and collaborating with global companies.

Viren Konde