Business Environment

STRATEGY

STRATEGY

Business Environment

In response to the global threat of increasingly difficult-to-treat infections, many government incentive programs have emerged to encourage the development of new treatments, making infectious disease both an increasingly appealing social and business value-driver that benefits patients and the health system alike.

Funding

Significant private/public sources of funding have emerged for both broad (multidrug resistant antibiotics) and specific (bioterrorism or globally endemic threats) programs.

Regulatory Incentives

Major improvements have emerged in the regulatory environment, including transferable priority review vouchers and additional years of market exclusivity to protect development investment. Additionally, anti-infectives are often eligible for ‘priority review’ and ‘fast track’ designation to expedite the regulatory process, accelerating the time-to-market for novel agents.

Global Awareness

There is an increased global awareness of the problems related to diseases and biodefense. The U.S. Centers for Disease Control and Prevention (CDC) has issued reports analyzing the ‘security threat’ of infectious diseases and bioterrorism, and designating the development of treatments as a top priority for global public health.

Priority Review Vouchers (PRV)

The PRV program is an incentive for companies to invest in new drugs for underserved patient populations through the granting of transferable vouchers. Once issued, a PRV can be used by its holder to accelerate the review of subsequent drug submission and reduce NDA review time to as little as six months. Voucher eligible programs include

Novel agents for the treatment of neglected tropical diseases, including leishmaniasis
New vaccines and therapies targeting major biodefense threats such as anthrax, tularemia, and smallpox

Appili believes that ATI-1701 and ATI-1801 may be eligible for a priority review voucher PRV, if approved by the FDA. Once issued, a PRV can be used by its holder to accelerate the review of a subsequent drug submission. PRVs are transferrable and the secondary market for PRVs is well established with over 20 transactions reported publicly and recent transactions often exceeding US$100 million.

Dedicated Funding

The National Institutes of Health’s (NIH) National Institute of Allergy and Infectious Diseases (NIAID) provides additional dedicated funding for costs related to early development activities, including preclinical development,
The CARB-X program provides $350M U.S. in funds for early development costs for new antibiotics to address today’s largest bacterial threats. manufacturing, and Phase 1 clinical, safety and pharmacokinetic evaluation

The 21st Century Cures Act

The U.S. Congress passed the 21st Century Cures Act to:

Provide additional regulatory incentives to promote the development of infectious disease therapies and vaccines
Expand the Priority Review Voucher program to include medical countermeasures for biodefense pathogens
Introduce the Limited Population Antibacterial (LPAD) regulatory pathway, which:
- Allows smaller clinical trials and increased reliance on preclinical data during regulatory review
- Provides an additional pathway for streamlined antibiotic development distinct from the pathogen-focused development process outlined in the GAIN Act.

GAIN Act/QIDP Designation

The Generating Antibiotics Incentives Now (GAIN) Act defines a Qualified Infectious Disease Product (QIDP) as a new “antibacterial or antifungal drug for human use intended to treat serious or life-threatening infections, including those caused by an antibacterial or antifungal resistant pathogen, including novel or emerging infectious pathogens.”

QIDP sponsors may benefit from:

Five years of market exclusivity in addition to the periods of exclusivity for which they would otherwise qualify
Priority review that would shorten the review period to six months
Fast track designation that enable early and frequent communications with the FDA, in addition to the typical review opportunities
A specific timetable for the FDA to develop and issue final updated guidance on antibiotics clinical trials

New Technology Add-On Payment (NTAP)

The New Technology Add-On Payment (NTAP) is a Centers for Medicare & Medicaid Services (CMS)-led system that partially reimburses hospitals for the costs of new technologies, like novel therapeutics, when these costs exceed the diagnostic related group (DRG) reimbursement rates. NTAP fills the time-gap between the implementation of the innovative technologies, and the adjustment of the DRG rates to reflect the costs of these new technologies.

For a drug to be given an NTAP designation it must both be new and be an improvement over other treatment options. The program was first launched in 2001, and until recently has covered up to 50% of the costs associated with treating a patient in-excess of the DRG rate. In April 2019, CMS proposed increasing the reimbursement amount to cover 65% of the costs of new technologies. NTAP speeds up adoption of novel therapies and other technologies, greatly benefiting both patients and innovative drug development companies.

Reference: Department of Health and Human Servies, Federal Register Vol. 84, No. 86

(1) Sources
Regeneron Press Release – Jul. 30, 2014
Knight Press Release – Nov. 19, 2014
Retrophin Press Release – May 27, 2015
United Therapeutics Corporation Press Release – Aug. 19, 2015
Gilead Form 8-K February 07 2017
Sarepta Therapeutics Press Release – Feb. 21, 2017
Viiv Healthcare Press Release – Jun. 1, 2017

Teva Form 6-K Filing
BioMarin Press Release – Nov. 27, 2017
Ultragenyx Press Release – Dec. 18, 2017
Spark Therapeutics Press Release – Apr. 30, 2018
Ultragenyx Q2 2018 Financial Results and Corporate Update
Kyowa Kirin Fiscal 2018 Interim Results Presentation
Siga Technologies Form 8-K Oct. 31, 2018
GW Pharmaceuticals Press Release – March 18, 2019
AstraZeneca Press Release – Aug. 22, 2019

STRATEGY