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MAY 15, 2019Vol. 6, No. 7

MedTech

STRATEGISTMedTech

STRATEGISTDEVICE-PHARMA CONVERGENCELEO Science & Tech Hub:

A New Model for Cross-Industry Innovation Mary Stuart

ORTHOPEDICS

Orthopedic ASC Market Growth Inevitable,

Despite CMS TKA Ruling Wendy Diller

EXECUTIVE INTERVIEW

Hot Topics in Cardiovascular Devices:A Conversation with Michael John

Mary Thompson

START-UPS TO WATCH

Platelet ProductionPlatelet BioGenesis:

Getting Platelets to Patients on Time

and at CostWendy Diller

Pain ManagementSana Health:

Pain Relieved, Not Just Masked

Colin Miller

Vascular MonitoringSonavex:

Post-Op Monitoring in Three Dimensions

Colin Miller

MEDTECH STRATEGIST © 2019 Innovation In Medtech, LLC. All rights reserved.

10 DEVICE-PHARMA CONVERGENCE

Pharmaceutical and medical device companies are aware that beyond a certain relatively small size, their bulk, culture, and the dictates of their commercial man-date stymie innovation. For the past two decades, most of their innovation has tended to come from the acquisi-tion of start-ups that can operate more nimbly to bring novel science and inventions forward. Large companies have also become aware that when they bring these in-novative start-ups in-house, they generally kill, with their many-layered bureaucracies and commercial culture, the goose that lays the golden eggs.

That’s why so many large companies have recently cre-ated external innovation centers in places like Boston, Houston, or Toronto where there are life science clusters, so they’ll have the feet on the ground and the freedom to check out emerging science and technology. In the Boston area, for example, you’ll find Johnson & Johnson Innova-tion and its spin-off JPOD @ Boston; the Merck Explor-atory Research Center, the AstraZeneca Incubator at the Boston BioHub, and—nestled among the big guys—the LEO Science & Tech Hub.

LEO Pharma AS is perhaps unique in adopting this strategy as a mid-sized pharmaceutical company (with revenues of $1.56 billion in 2018) and one that’s focused on only one clinical category: dermatology. In 2016, LEO Pharma created the LEO Science & Tech Hub in Cambridge, MA, with a small team led by vice president Michael Sierra, PhD.

Sierra came to the position after 23 years in drug discov-ery—early in his career, he spent almost 10 years at Glaxo-SmithKline on the discovery of cardiovascular molecules, and in his almost 10 years at LEO Pharma Denmark he’d expanded his focus to more cross-functional activities in external discovery and translational research. Sierra’s hand-picked team in Cambridge originally included George Duenstl, PhD, Chief Scientist, Troels Marstrand, PhD, Chief Data Scientist, and Alex Ignatius Costa, Principal Technol-ogy and Innovation Manager. In recent months, new hires have been brought in to expand the hub’s capabilities.

A small commando team with a goal of driving the sci-ence that supports innovation, the group’s mission is to identify and develop disruptive technologies that could

by MARY STUART

LEO Science & Tech Hub: A NEW MODELfor Cross-Industry Innovation

To realize its goal of accessing external innovation, LEO Pharma faces several challenges; it’s focused solely on dermatology, and as a mid-sized specialty pharma, it has to be choosy about the acquisitions it makes. It’s addressing those challenges through its Cambridge-based LEO Science & Tech Hub, which aims to be the partner of choice for medtech innovators.

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support the future of the dermatology industry, a goal phar-maceutical companies have had limited success achieving internally. “All pharma companies are really good at miti-gating risk, but a lot of disruptive and radical innovations in medtech have high risk, high commercial uncertainty, and potentially high technology uncertainty. Most organizations aren’t able to handle that kind of uncertainty, so the proj-ects get down-prioritized. They never get the investment or resources they need to advance,” Sierra says.

That’s why LEO Pharma created this exploratory unit out-side of the bureaucracy, and gave it the flexibility to inves-tigate risky projects. Its investment in early-stage science creates important relationships with innovators and helps it de-risk future agreements that it might strike with those partners.

LEO Science & Tech Hub is funded by LEO Pharma’s R&D budget, and reports to its EVP of global R&D, who reports to the CEO. The hub will invest between $5 and $10 mil-lion in an unspecified number of companies or academic research programs with a focus on precision medicine. Un-der that banner, LEO has described several areas of interest: minimally and non-invasive biomarkers, imaging, and deep learning/artificial intelligence. To date, 10 agreements, all of an exploratory nature (i.e. they’re not conventional licens-ing agreements) have been forged with start-ups and aca-demic institutions (see Figure 1).

Precision Medicine As it Relates to Outcomes As noted, LEO Science & Tech Hub’s primary investment thesis is precision medicine and novel research technologies. Sierra explains what this does and does not mean to LEO Pharma.

Pharmaceutical companies—and for that matter, medi-cal device companies too—have built their businesses on selling a product for the largest number of patients pos-sible. That’s still largely true, with the exception of oncol-ogy, where the principles of precision medicine (matching the right drug with the right patient at the right time) are in practice. But pharmaceutical companies have essential-ly backed into that patient-specific paradigm in oncology, Sierra says, and that’s not what LEO Pharma is after.

“By the time pharma companies have done big clinical tri-als where they discover that their drug only works in a small subset of patients, they’ve already spent millions of dollars and they don’t want to completely scrap it.” So they’ve gone on to identify mutations and sub-populations in the specific cancers that respond to the drug, he says. They might then create a diagnostic to find the patients in whom the drug will work.

LEO Pharma looks at precision medicine with a slightly dif-ferent twist. “We’re not talking about responders and non-responders, we’re talking about designing a drug from the very beginning for the patient population in which it will work.” And that means going back to a very fundamental understanding of the dermatological diseases LEO serves, psoriasis and atopic dermatitis (eczema) being the two larg-est, by using novel imaging technologies, non-invasive ways of characterizing biomarkers, and biopsy tools that allow for frequent sampling of the skin without wounding, scarring, or creating pain.

Such technologies play a role in improving outcomes, but Sierra emphasizes that it’s important to get clinicians, pa-tients, and payors around the table to make it clear that a particular technology actually lowers the cost of patient care, rather than adding onto the existing cost of treating a patient’s disease. In short, the technologies that enable precision medicine could improve outcomes and lower costs at the same time, and payors are increasingly fram-ing patient care in terms of value bundles, but it needs to be demonstrated that new technology makes a meaningful contribution toward that end.

Sierra points to psoriasis as a case in which precision medi-cine could lower the cost of care. It’s a complex disease of the immune system with flare-ups and episodes of remission. Pa-tients are extremely heterogeneous because their genetics, microbiota on the skin, and environment influence their re-sponse to therapy. Using current medications and tools, it can often take five to seven years to get psoriasis under control.

Clinicians will first prescribe topical medications, followed by systemic medications if the first course of therapy fails, and if there is still no success, they’ll move to the first, then second, then third generation of biologics. It all adds time and money to the equation. This is the best psoriasis drugs can do today, even with the rather low goal of improving the patient’s PASI score (Psoriasis Area and Severity Index), rather than complete clearance of the disease.

Sierra notes that anything lower than a PASI score of 90 represents a poor quality of life for patients. Because of the red, raised, scaly patches that cover so much of patients’ skin, it affects their social life and has an emotional and psy-chological impact. Meanwhile they’re continually suffering from inflammation that might have systemic consequences.

Treatment success rates are not high. “The number of pa-tients that achieve a PASI of 90 is only 50-60%. There is still a large number of patients that don’t get the benefit of qual-ity of life from their treatment,” says Sierra.

Many different kinds of technologies have the potential to aid in the development of more efficacious drugs to which

MEDTECH STRATEGIST © 2019 Innovation In Medtech, LLC. All rights reserved.

12 DEVICE-PHARMA CONVERGENCE

Figure 1

LEO Science & Technology Hub’s Partners to Date

Source: LEO Science & Tech Hub

(Date) Partner Subject of the Collaboration

(4/2019) and (8/2017) Mt. Sinai With the Dudley Lab, which focuses on the development and use of translational and biomedical informatics, exploring novel therapeutic and diagnostic approaches through integration and analysis of molecular and clinical data, and also researching methods to incorporate genomic sequencing data into clinical practice

(4/2019) and (10/2017) Elektrofi Biologic drug delivery; Elektroject microparticle suspension formulation technology enables syringe-compatible injections of high-dose antibody therapeutics. 2019 expansion of earlier partnership to include specific antibodies from LEO Pharma’s drug development pipeline

(10/2018) Wearifi Inc., Center for Bio-Integrated Electronics at Northwestern University

Proof-of-concept study looks for novel biomarkers to enhance drug development and patient treatment, through the continuous analysis of volatile organic compounds from the skin, using Wearifi’s small, battery-free wearable device

(9/2018) Epicore Biosystems, Center for Bio-Integrated Electronics at Northwestern, and Feinberg School of Medicine’s Department of Dermatology

Using Epicore’s non-invasive, wearable sweat sensor to measure prognostic biomarkers in real-time, monitor patient response, and inform treatment decisions, with an initial focus on atopic dermatitis (eczema)

(4/2018) MIT’s Computer Science and Artificial Intelligence Laboratory

A novel “touchless” way of quantifying itching (which currently can’t be quantified by any technology) that measures the reflectance of radio signals off the body and analyzes the signal patterns using machine learning algorithms

(8/2017) MGH Wellman Center for Photomedicine

Research funding for a novel imaging technology that enables non-invasive, high-resolution, real-time pharmacokinetic/pharmacodynamic measurements with the help of the lab’s coherent Raman scattering technology, which enables chemically specific imaging by detecting molecular vibrations native to drugs and tissues

(8/2017) MGH Wellman Center for Photomedicine

In Rox Anderson’s lab, development of a painless, suture-free, disposable microbiopsy device to allow for non-scarring full-thickness skin microbiopsies and frequent skin sampling in clinical studies to help researchers further understand the disease profile

(6/2017) The Karp Lab at Brigham & Women’s Hospital

Two-year collaboration to explore and develop technologies that could enable frequent and minimally invasive assessment of dermal biomarkers to limit painful skin biopsies and provide clinicians with immediate feedback on how well a drug regimen is working

(6/2017) Novopyxis An investment in the start-up, which developed Droplette, a needle-free, aerosol based drug-delivery device that can deliver drugs 60% larger than current treatments over large areas deep into the skin over large surface areas

MAY 15, 2019

13DEVICE-PHARMA CONVERGENCE

patients are adherent and compliant, and LEO Science & Tech Hub has agreements exploring the development of biomark-ers and other measurement tools, new imaging modalities, less invasive skin sampling technologies, and bioinformatics (see Figure 2).

Digital health is a logical solution to the problem of patient adherence and compliance, but Sierra points out that digital health and new business models are the realm of LEO Phar-ma’s LEO Innovation Lab in Denmark. LEO Science & Tech’s efforts feed into that by collecting the relevant data. “We’re working on the hard science of what might become digital platforms. We are focusing on data acquisition—wearables that can acquire information from sweat or gases about what’s going on in the skin; we are doing the exploratory clinical studies to measure things to see if they will actually impact patients.”

Looking in Left Field It’s challenging for established companies to look outside their own skill sets for innovation, but that’s where disrup-tion can happen. Sierra says “Look what Uber has done to taxis, and Airbnb to hotels. Those innovations did not come from their own industries.”

Thus LEO Science & Tech Hub deliberately scouts around for technologies developed for non-pharmaceutical applica-tions that might prove to be useful. This sounds like an elu-sive goal, but located across the street from the Massachu-setts Institute of Technology, Sierra says the hub is part of a spider web of innovation. “If an insect touches a spider’s web, the spider knows about it. We find out about things before they’re even published.” And as part of the web, the community is also aware of LEO’s focus on dermatology. “People come to us now.”

“The innovations don’t have to come from dermatology. I always tell people to look as broadly as possible, that that some of the best ideas come out of left field,” Sierra says.

Indeed, LEO Science & Tech Hub has signed agreements about technology that have emanated from the fields of physics/fluidics, jet propulsion, and telecommunications. For example, its agreement concerning a new way to quantify itching for drug development came out of MIT’s Computer Science and Artificial Intelligence Laboratory (CSAIL).

Itching is a common symptom of many skin diseases, for example, atopic dermatitis and psoriasis, but there is no quan-tifiable way to measure it. So when LEO Science & Tech’ s chief data scientist Troels Marstrand was attending a talk at MIT about a wireless technology for analyzing body movement and physiological signals, he wondered if it might be useful for monitoring and tracking itching. Afterwards, in conversa-tion with the presenter, Dina Katabi, PhD, the Andrew and

Erna Viterbi Professor of Electrical Engineering and Computer Science at MIT and a researcher in its Computer Science and Artificial Intelligence Laboratory, she told him it just might.

That was the beginning of a collaboration between LEO Science & Tech and Katabi’s lab and an April 2018 press re-lease announcing the collaboration quoted Marstrand as say-ing “This project shows that innovation in pharma can come from unexpected places and reinforces the need to look be-yond your own area of expertise for potential solutions.”

It was a personal experience that caused Katabi to adapt the ability to measure radio signals in the environment to a creative application. Her grandfather was injured when he fell at home, and that caused her to look into fall detection. Her feeling was that as a solution, a wearable device that a person is a) supposed to wear (but doesn’t always) and b) activate if there’s trouble, was far from foolproof. Her lab created a system, called Emerald, which uses a modified WiFi router ca-pable of detecting the radio signals that reflect off of people’s bodies. Machine-learning algorithms take those signals and then characterize the patterns of reflectance.

From fall detection, the laboratory went on to monitor gait speed, an important metric for studying diseases like Parkinson’s and multiple sclerosis, and along the way, the re-searchers discovered that the monitor was sensitive enough to pick up minute signals like the pulsing of blood, the heart-beat, breathing, and sleep—not just whether or not a per-son is asleep or awake but the specific stage of sleep. “It is sensitive to any motion, which changes the wireless signal,” Katabi says.

In the case of itching and scratching, Katabi says LEO was instrumental in helping the lab create the inputs from which Emerald would be trained to identify scratching. “They have an understanding of the various ways people scratch, when and how long each itch episode is.”

Katabi says studies were initially done with healthy indi-viduals trained to emulate scratching based on a description provided by a pharmacist and LEO Pharma. “We trained a few people and created a database, and recently we started the second phase of deployment with actual patients.” She adds, “This was the most scientifically satisfying collaboration I have had with any company. They were extremely helpful and avail-able. They were interested in pushing the science, of course in the hope that their drugs will help patients.”

LEO Pharma’s interest in the technology is based on its de-sire to improve the way it conducts clinical trials on therapies for skin diseases. But Katabi sees wide ranging applications for the Emerald platform, which is capable of monitoring a great variety of health related signals as people go about their lives in their homes in a “touchless” manner. “It doesn’t impose any overhead on the users. It’s like your WiFi box. It’s in the

MEDTECH STRATEGIST © 2019 Innovation In Medtech, LLC. All rights reserved.

14 DEVICE-PHARMA CONVERGENCE

background. You don’t have to wear it or charge it,” Katabi says. All of this occurs, of course, within the proper frame-work of patient consent and privacy, she emphasizes.

A Marriage of EqualsWhen approaching collaboration partners, Sierra says, “Most companies want to know what’s in it for them. What will they get out of it?” But partnering should be like a mar-riage. “If you ask what you can put into it, you’ll get a whole different outcome.”

That’s a nice sentiment. But it might also be a way for LEO Science & Tech Hub to be a good partner by providing intan-gible assets to fledgling research groups especially since LEO Pharma doesn’t have the R&D budget of, say, a Pfizer, with its $54 billion in annual revenues, and has to be judicious in its investments. (Sierra notes, however, that LEO Pharma the parent has so far not turned down any projects that the Science & Tech Hub wanted to do.)

Boston-based Elektrofi, the subject of one of LEO Science & Tech Hub’s agreements, testifies that LEO really is such a partner. “LEO didn’t just come in and structure an agreement around their own pharmaceutical pipeline. They wanted to know what scientific milestones they could help us meet in order to advance the technology. They gave us the flexibility to work on what we needed to work on and ultimately that

has benefited both parties,” says Daniel Dadon, Elektrofi’s director of strategy.

LEO Science & Tech Hub crafted an agreement with Elek-trofi not long after the start-up’s founding in 2016 by a group of scientists out of MIT. In 2017, LEO provided funding to help Elektrofi achieve certain scientific milestones on its novel large-molecule reformulation platform, which enables the delivery of large doses of biologic drugs in small volumes so that they can be administered in forms that are more con-venient for patients. In April 2019 LEO Pharma went further, signing a second agreement concerning the development of two monoclonal antibodies in its own drug development pipeline, gaining an option to a pre-negotiated license for new formulations of the antibodies.

Elektrofi is itself an example of the kind of technology con-vergence that LEO Science & Tech seeks out. The company’s co-founders met while at MIT and include a rocket scientist (Chase Coffman, PhD) and an entrepreneur (Jason Norris), along with a staff of colleagues with expertise in biology, chemistry, engineering (chemical, mechanical, and electri-cal), and pharmacology.

At MIT, Coffman and Norris met while in a class called “In-novation Teams.” They kept in touch in the years following the class and Coffman had the idea of migrating over to health- care some electrospray technology he became familiar with at

MIT’s Space Propulsion Laboratory. Electrospray atomization, which results in the ejection of fine and controllable particles, is used in aerospace to enable low thrust electric propulsion rocket engines to move satellites in low earth orbit. A similar type of technology has been used in mass spectrometry. “It was a gentle process,” says Da-don, “and he had a hunch that it could be applied to pharmaceuticals.”

Dadon explains that when formulating bio-logics (for example, Rituxan [rituximab], which is used to treat certain autoimmune disease and cancer), pharmaceutical developers have to make some decisions about the dose the patients need to control their disease, and the impact of the delivery form on their lives—will patients go to a hospital once a month and have it infused for several hours, or are they going to self-inject the biologic into the subcutaneous space at home? Those are the types of tradeoffs pharma companies make because of the physi-cal restrictions of working with biologics.

The higher the concentration of large mol-ecules in solution, the more viscous the solu-tion becomes, to the point where it requires too

Figure 2

LEO Science & Tech Hub Research/Technology Focus Areas

Advancing Biological Science

Minimally/Non Invasive Biomarkers

Imaging

Sensors and Connectivity

Research Platform Technologies

Drug Delivery and Formulations

AI in Drug Discovery

Early Pipeline Assets

Research/Technology focus areas

Next Generation Therapies

Source: LEO Science & Tech Hub

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15DEVICE-PHARMA CONVERGENCE

much force to inject it subcutaneously. While it’s currently possible to administer a large dose intravenously over sev-eral hours, it’s extremely difficult to concentrate that same dose into 1-1.5 ml (the volume of an injection into the sub-cutaneous space). The level of force required to push that material through the syringe would be so high it wouldn’t be feasible.

Elektrofi’s Elektroject platform creates tiny microspheres of almost pure protein in suspension in such a way that they can be highly concentrated in a solution, the viscosity of which is low enough to allow a large dose to be easily pushed through a syringe into the subcutaneous space. “We realized we could turn hours of infusion into a subcutane-ous injection that takes seconds simply by reorganizing the physics of those molecular interactions. Our animal studies to date indicate that this does not alter the way the drug functions,” Dadon says.

Thus, Elektrofi is potentially able to offer patients a more convenient form of dosing. Instead of the inconvenience of spending several hours in an infusion center, patients might be able to use an autoinjector or pre-filled injection device at home. Or, among other potential benefits, instead of us-ing that autoinjector every single week, patients might only need to use it every two weeks, or once a month. “We are highly motivated by the patient impact,” says Dadon.

Those advantages add up to a solid business case as well, given that more than 100 monoclonal antibodies have been approved by the FDA, and more than 500 are currently in preclinical studies. Pharmaceutical companies could create competitive advantages with convenient dosing forms of drugs that generate billions of dollars in revenue per annum, and infusion centers could increase their profits by increasing throughput while maintaining similar reimbursement levels.

While LEO Science & Tech was Elektrofi’s first corporate partner, several other pharmaceutical companies followed (one is Sanofi-Genzyme, the others remain confidential). In fact, LEO’s willingness to announce such agreements is an-other boon for early-stage start-ups looking for the external validation that can get them to the next milestone.

Dadon says “LEO has been a fast moving partner. I met Georg Duenstl [LEO Science & Tech Hub’s chief scientist] early on when we were presenting at an MIT conference. He followed up by asking for a meeting, and then put together an arrangement for an early-stage feasibility type of study, which they funded.”

Elektrofi has been funded up through a Series A round and by SBIR grants from the National Science Foundation. The company plans to raise a Series B round in the fall to acceler-ate its growth and build out the team.

Tech and the Future of Dermatology As a specialty, dermatology has some unique attributes; number one, the skin is readily observable and able to be sampled, so data collection is potentially easier here than it is for other diseases, and that opportunity is ripe for de-velopment.

Steve Xu, MD, is the Medical Director of the Center for Bio-Integrated Electronics and Instructor in the Department of Dermatology at Northwestern University, with which LEO Science & Tech Hub has an agreement on the exploration of a non-invasive technology that analyzes skin gases to see if relevant biomarkers can be developed. Xu, who is both a dermatologist and a biomedical engineer says, “In derma-tology, we are at the frontline of digital medicine. We often depend on surrogate markers or physician graded scales—we fill out a survey, pick numbers on a scale. But these are insensitive instruments, subject to investigator bias.”

There is a great opportunity for the medtech industry, he says, “in making semi-quantitative assessments of skin health objective and measurable, things like activity, sleep, scratching, skin hydration, tissue sampling, and non-inva-sive imaging of the skin.” Sensors and imaging technologies would allow clinicians to see with more resolution so they could better understand the risks and benefits of the inter-ventions with which they’re working. “Data is the conduit for improving every step of the patient experience,” he says, from clinical trials to daily care.

Xu says dermatologists are open to new technologies; they already use a variety of tools, including drugs, lasers, biopsy devices, imaging modalities, and pathology data. Fi-nally, he notes that while dermatologists get teased in med school about doing BOTOX injections, they serve diseases that greatly impact the lives of infants, teenagers, adults, and the elderly. “Because the diseases aren’t fatal, the im-pact is underestimated. But patients with atopic dermatitis experience high rates of depression and suicidal ideation.”

LEO Pharma is doing its part to make sure that the sci-ence that supports good outcomes in patients with skin conditions will see the light of day, not only through the LEO Science & Tech Hub but also through a non-profit group called Advancing Innovation in Dermatology (AID). In 2018 AID created an accelerator fund to support groups work-ing on potential breakthroughs that address unmet clinical needs in dermatology when they’re at their most vulner-able stage—the funding gap between government or other seed funding, and venture capital or partnering. LEO put in $500,000, and the AID put in $500,000 to “help groups ma-ture an asset to the point where it’s interesting to pharma or other partners,” says Sierra.

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