Neurotechnology Needs Better Outcomes Measures, Diagnostics – VC Investors
Find how the development and regulatory approval of new drugs and devices for treating diseases of the brain is hindered by the inadequacy of existing diagnostics and outcome measures, according to venture capitalists who spoke at a recent neurotech industry forum.
Full article reprinted from "The Gray Sheet" - May 26, 2008
The development and regulatory approval of new drugs and devices for treating diseases of the brain is hindered by the inadequacy of existing diagnostics and outcome measures, according to venture capitalists who spoke at a recent neurotech industry forum.
Neurotechnology companies "really struggle to know if the people we're treating really have what it is we're trying to treat," De Novo Ventures Managing Director Jay Watkins said during a venture capital roundtable May 8 at the Neurotechnology Industry Organization's (NIO) Investing and Partnering Conference in Boston. "We're trying to understand really what the status of these patients is."
Many neurological diseases lack definitive biomarkers or diagnostics, so researchers trying to develop new therapies must struggle with "soft criteria" and "subjective endpoints," Watkins observed.
Endpoints for neurological device trials are usually scores summarizing a composite of patient-reported symptoms, some of which are not well-defined or easy to compare across trials. "Some of these rating scales are 50 years old or so, with low signal-to-noise ratios," Technology Partners' Roger Quy observed.
Although they all agreed that neurological devices will eventually be a very large commercial opportunity, the venture capitalists at the roundtable acknowledged the recent struggles of several small neurodevice firms that have had difficulty proving the benefit of their products in trials based on symptom scores or patient-reported outcomes.
For example, CMS declined to provide national Medicare coverage for Cyberonics' VNS therapy for treatment-resistant depression in 2007, citing a variety of problems with the clinical trials of the therapy, including clinically ambiguous measures and endpoints, inadequate blinding, unclear exclusion and inclusion criteria and inconsistent reporting of data (1"The Gray Sheet" May 7, 2007, In Brief).
In January 2007, Neuronetics failed to convince an FDA advisory panel that its NeuroStar transcranial magnetic stimulation system is substantially equivalent to electroconvulsive therapy for treatment of major depressive disorder (2"The Gray Sheet" Jan. 29, 2007, p. 3)
This February, Northstar announced that its Renova cortical stimulation system for improving hand and arm function following stroke did not meet the primary efficacy endpoint in the EVEREST randomized pivotal trial (3"The Gray Sheet" Feb. 4, 2008, p. 17).
"If there is an unmet need [in neurotechnology], it is trying to really know better what the status of that patient or that particular disease is, if for no other reason than that it gives us better access to prove that what we've got for therapy either does work or it doesn't," Watkins said.
Creating New Outcome Measures Is Difficult
Many neurological diseases can be assessed only on the basis of patient reports because they are defined solely by their symptoms. "Right now we're treating symptoms. Hopefully we'll [eventually] get to treating underlying disease," Versant Ventures' Managing Partner Kevin Wasserstein said.
In therapeutic areas where existing outcome measurement systems based on patient reports are inadequate, FDA encourages device and drug companies to develop new systems. The agency released 4a draft guidance on patient-reported outcomes in 2006 (5"The Gray Sheet" Feb. 6, 2006, p. 4).
However, Epilepsy Therapy Development Project President Joyce Cramer, who worked with FDA on the draft guidance, warns that developing new patient-reported outcomes that FDA will accept is still very difficult.
"The good is that we got guidance. The bad is that we wrote about it in a very academic way and presented them with the perfect scenario. The ugly is that the guidance requires perfection," Cramer said during the roundtable discussion. "This is unfortunate, because even those of us who helped FDA develop the guidance now say, 'Who can meet that? That's an impossible standard.'
"We're really caught in our own petard after having pushed FDA to develop something very good and now it's very difficult to meet," she said. "It requires years of work to develop a new endpoint in order to use it."
Also, several venture capitalists on the panel warned that VC firms are reluctant to back a company whose product does not yet have a well-defined regulatory pathway through FDA.
"Trying to innovate fundamentally on physiology while at the same time building a company [is] really hard," Wasserstein said. "It's a science project more than a company."
VC firms are especially cautious about investing in companies whose regulatory plans depend on convincing FDA to accept novel outcome measures. "Do we want to invest in a small company that is trying to do a missionary sell on FDA? That's probably a recipe for losing money," Quy said.
Most Money For Diagnostics Won't Be VC
Researchers could avoid relying on vague endpoints and subjective outcome measures in clinical trials if there were better neurodiagnostic tools available to provide objective evidence of disease progression or the benefit of a therapy.
"Why everyone wants a diagnostic is that it would be fantastic to use it as an endpoint in a trial. We'd love not to use symptoms or patient reporting. We'd love to have something objective to point to that the FDA agreed to, and so far we're not there," explained roundtable moderator Casey Lynch. Lynch is a NIO board member and president of the Neurotechnology Development Foundation.
Venture capital investment in neurodiagnostics has grown rapidly in the past two years. According to the 2008 Neurotechnology Industry Report, co-authored by Lynch, total venture investment in neurodiagnostics rose 834% to $84 million in 2007. However, diagnostics still represents only 5% of all VC investment in neurotechnology, with 75% going to drugs and 20% going to devices.
Although venture capitalists recognize the importance of diagnostics to the future development of neurotechnology and neuroscience in general, they do not expect neurodiagnostics to be an especially attractive investment for venture capitalists in the near future.
"There's certainly a rationale for diagnostics, but it's not a focus for us. It's too small." Watkins said. "I think it's important. It's not a big enough piece of the business to call it a trend, but there may be some individual opportunities."
Wasserstein explained that venture capitalists cannot expect much return on an investment in diagnostics that are only useful for research. The commercial potential of a diagnostic test or imaging modality depends largely on the availability of good therapies for the disease that tool is designed to diagnose, he explained. However, "if a diagnostic does lead to a better therapeutic, not just research, then it would be interesting to us."
"It is a classic 'chicken and egg.' Better biomarkers will drive and enable the therapy, but to fund the marker without the therapy is a tough thing to do," Watkins said.
Research Bill Moves Forward
Watkins said that while there will continue to be a limited supply of venture capital for diagnostics, most of the support for neurodiagnostic research will have to come from foundations and the federal government.
Federal support for this type of basic research may soon improve if Congress passes the National Neurotechnology Industry Act, introduced in the House and Senate on May 7. The primary sponsors are Senators Pete Domenici (R-N.M.) and Patty Murray (D-Wash.), and Representatives Patrick J. Kennedy (D-R.I.) and Ileana Ros-Lehtinen (R-Fla.) (6"The Gray Sheet" May 12, 2008, In Brief).
Passage of act has been a major priority of NIO since the organization's founding two years ago. Now that the legislation has been introduced, NIO is attempting to "galvanize the patient advocacy community" to urge passage.
"The people that have come on to sponsor the bill in both the House and the Senate are people who really know how to move brain-related legislation," NIO Executive Director Zack Lynch told "The Gray Sheet." For example, Kennedy recently spearheaded House passage of the Paul Wellstone Mental Health and Addiction Equity Act of 2007 (H.R. 1424). "There's a lot of support for brain research in the House," Lynch said.
NIO hopes both houses of Congress will hold hearings on the act by July.
- Reed Miller
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