stratified medicine

Stratified and Personalized Medicine:

An overview

1

Table of contents

• Executive summary p. 3• Context, definitions and benefits to Stakeholders p. 6• The role of biomarkers & diagnostics p. 13• Market breakdown p. 22• Main marker drivers p. 30 • Key challenges p. 41• Commercial subsector overview p. 50• Overview of translational research base p. 72• Summary and conclusions p. 84

2

Objectives of Insight Report

• The purpose of this Insight report is to provide a broad overview of stratified medicine covering the main markets, technologies, and clinical and technology market drivers.

• It will describe relevant Scottish strengths in both the academic and the company subsectors impacted by stratified & personalized medicine.

• This report will focus primarily on the more immediate market opportunities in mainstream based stratified medicine using of specific genomic, proteomic and imaging biomarkers.

• It will also anticipate future developments in the transition to fully personalized medicine based on whole genome sequencing of patient genomes.

3

Executive Summary

• Stratified and personalized medicine are two related sectors of great immediate and long term significance to the health and competiveness of the Scottish medical and life sciences sector. This applies across the board to the NHS, academic research base and key sectors of the life science company landscape most notably CROs, diagnostics, research tools and IT/bioinformatics.

• Stratified medicine describes the current transitional situation where patient populations are now increasingly stratified during drug discovery clinical trials using a range of biomarkers. Some of the diagnostic biomarkers subsequently become “companion diagnostics” mandated and co-marketed with the therapy.

• At the moment the bulk of the market of around $20 billion p.a. resides in the provision of biomarkers, with associated products and services, for drug discovery as opposed to post market-launch products co-marketed with the therapy.

• The benefits of stratified medicine are reduced time and cost of drug discovery and more targeted efficacious drugs which have fewer side effects.

• When the biomarker use is extended to clinical practice, NHS and healthcare providers also benefit from overall reduced costs from better drug treatment and patient disease management.

• Personalized medicine anticipates a future where a much greater amount of information is available, in particular patient specific whole genome data, to inform and personally tailor and target the selection of more therapies to the specific needs of the patient.

4

Executive Summary

• The advent of stratified medicine, which uses only a small fraction the potential available genomic and other “omic” biomarkers has already been profound.

• It has produced a very rapid convergence of diagnostics and therapeutics companies facilitating major pharma and in vitro diagnostics collaborations. There has been hugely increased emphasis on new biomarker discovery and validation in both research and commercial sectors.

• The very process of drug discovery itself is now significantly dependent upon response monitoring biomarkers which may evolve into marketed companion diagnostics. These changes have created major new challenges and opportunities for CRO service companies and hugely increased demand for effective IT and bioinformatics services.

• The delivery and economics of medicine itself, particularly the integration of genomic and other data to create much more tailored and individualized treatments is having to be reexamined with particular emphasis on data security.

5

Executive Summary

• All of these trends are set to intensify as the plummeting cost of sequencing make the widespread availability of affordable whole genome sequencing a technical reality within the medium rather than long term.

• The very recent announcement by Life Technologies of the provision of a system which can deliver a whole genome sequencing solution for $1,000 Genome vividly illustrates the very high rate of technical progress which is driving this field.

• Scotland’s life science and medical landscape mix of leading translational research, strong in vitrodiagnostic, pharma, CRO and research tools companies means that it will be increasingly affected by these trends.

• It is clear that the future international competiveness of the translational research base and the long term profitability of major life sciences subsectors will be significantly affected by their response to the major challenges and opportunities presented by Stratified and Personalized Medicine.

• It is also clear that given the strength of this research base and the the well established corporate and SME base in multiple key subsectors (notably research tools, IVD, pharma with CROs & imaging), stratified and personalized medicine represents a major strategic opportunity for Scotland.

Context, Definitionsand Benefits to Stakeholders

7

Definitions I

• There is unfortunately no universally agreed definitions in this emergent area with the terms Personalised Medicine Theranostics and Stratified Medicine all being to a large extent interchangeably.

• “Personalized medicine” : “a tailored approach to patient treatment” Based on the molecular analysis of genes proteins and metabolites” Davis Nature Drug Discovery 2009

• “Personalized” “ tailored” or “stratified medicine” : “these therapies combine a drug with a companion diagnostic to select or exclude patients for treatment. ... By targeting patients on the basis of distinctive biological characteristics enriched subpopulations that respond differently to treatment are identified thereby generating more favourable benefit risk profiles” Trusheim et al Nature Reviews 2011

• “Personalized medicine” : “the tailoring of medical treatment to the individual characteristics of each patient. It does not literally mean the creation of drugs or medical devices that are unique to a patient, but rather the ability to classify individuals into subpopulations that differ in their susceptibility to a particular disease or their response to a specific treatment. Preventive or therapeutic interventions can then be concentrated on those who will benefit, sparing expense and side effects for those who will not. ... Critically, it also involves the development, validation and use of companion diagnostics to achieve the best outcomes in the management of a patient’s disease or their predisposition” ABPI UK White Paper 2009

• “Predicting in advance which groups of patients will respond to a particular therapy and providing treatment accordingly is known as stratified medicine (or personalized medicine ) “Stratified Medicine in the UK Vision and Roadmap TSB 2011

8

Definitions II

• In this report the following broad terms will be used:

– Stratified medicine: the process of using biomarkers to select groups of patients for clinical trials is called stratification and the science thereof labelled ”stratified medicine” . These biomarkers are used in to monitor response for the purposes of evaluation of a response further upstream and earlier in the drug discovery process. Biomarkers used for such “response evaluation” in clinical trials may progress to become companion diagnostics co-marketed with the drug.

– Using this definition stratified medicine includes biomarkers used in the drug discovery process as this constitutes the largest market of relevance to Scottish companies and researchers. It is also in effect a pipeline of new biomarkers platforms and services of which only some will migrate eventually into the clinic.

– Companion diagnostics: (CDx) will refer to the diagnostic test that has been developed for a specific therapy and the combination of the specific therapy (Rx) and companion diagnostic. These specific (Rx-Dx) have usually been developed in parallel and have passed through the regulatory process as a package. The clinical use of the therapy requires the use of the specific diagnostic test. At the present time this is most commonly a molecular diagnostic test and drug. However other more physiological based diagnostic modalities (i.e. imaging) and non drug therapies (i.e. radiation, surgery, rehabilitation, nutrition/wellness) in principle fall within this category.

– Personalised medicine: is in effect the ultimate destination for stratified medicine enabling a very high level of tailoring of therapeutic intervention to the unique genetic make-up of the patient. It will use many of the techniques and processes developed at a group level in stratified medicine. One of the defining medium term features of personalised medicine will be the availability of full genome sequence data of the individual patient.

9

Stratified & Personalised Medicine is a Continuum

• Stratified and personalised medicine are positioned on a continuum rather than discrete processes that can be neatly defined. The diagram below attempts to convey this and the possible future trends.

Conventional medicine: “Blockbuster” or “one size fits” all drugs prescribed to all patients diagnosed with a specific disease. This is associated with relatively high rates of non-efficacy and adverse effects due to lack or predictive biomarkers during the discovery process of companion diagnostic post launch.

Stratified medicine : Genomic and other biomarkers increasingly used in the drug discovery process and some pioneering companion diagnostics launched. One size fits all blockbuster drugs become rare commercial exception.

2000 2010 2020

Genomic personalized medicine : Personal and Affordable Genomics becomes a commercial reality and increasingly influences all treatments options.

20301980 1990

Landmark Exemplar Therapies

New Chemical Entities Biologics Monoclona ls Stratified Therapies

Zantac Ibuprofen Vioxx Epogen Avasitin Herc etptin .. …?

PCR SNPs Human genome sequenced u nder $1000 genome is feasible > deployed > exploited

Non-genomic stratified medicine:

Proteomics & advanced imaging

Key genomic advances

10

Stratified Medicine in Context: Biomarkers

• The general trends described are all towards ever more detailed biological information being used in a diagnostic manner to stratify patients into narrower sub groups for both development and prescription of new therapeutics. This allows treatments to be customised (personalized) to the needs of the individual.

• Clinical biomarkers, in particular predictive biomarkers, are central to this process.

• Predictive biomarkers are measurements which prospectively indicate the probable response to therapeutic drug or intervention within a selected subpopulation of patients. They can be used to select patients for a particular treatment where benefit is likely or to select out patients unlikely to respond favourably to the therapy.

• In some cases, a predictive biomarker may subsequently be developed as a “companion diagnostic” with a mandatory regulatory approved linkage to the prescription of a therapeutic. To date predictive biomarkers have been genomic in nature and tied to drugs as the therapy.

• The processes underlying stratified medicine apply more widely than genomics and drug combinations.

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Non-Genomic/ Non-Drug Based Stratified Medicine

• The predictive biomarker could be non DNA/RNA molecule such as a protein or a metabolite.

• The predictive biomarker could be a cellular phenotypic marker or a physiological biomarker measured by imaging or other analytical techniques.

• A predictive biomarker, if identified in advance from preclinical research, can be used as an important element within a prospective clinical trial.

• Alternatively a predictive biomarker can be identified through retrospective analysis of “all comers”clinical trials where there is no stratification step within the trial design.

• The stratified medicine approach, employing predictive biomarkers, can in principle also be applied to non-drug based therapies such as specialist surgery or radiation.

• The technical regulatory and market challenges which have been experienced in developing the current commercial genomic/drug based stratified medicine products are all applicable non-genomic and/or non-drug based stratified medicine.

• Thus genomic based stratified medicine is a good model for considering the scope for longer term opportunities emerging from alternate stratified medicine models.

• The major difference is that for non-drug based stratified medicine the appropriate and viable business models are even less clear than drug-based stratified medicine.

12

Clinical Translational Medicine

Advanced Imaging

Rx-DX

Linked

Products

Proteomics

Metabolomics

Stratified Medicine in Context : Translational Rese arch

Pharmacology

Fundamental

Research

Genomics

Stratified medicine

Applied In Drug Discovery

& Development

Research Products

• It is important to note that stratified medicine lies centrally within a wider context of translational medicine.

IVD Diagnostics

The role of Biomarkers & Diagnostics

14

Stratified Medicine Applies at All Levels and Emplo ys a Wide Range of Analytical Technologies.

Primary DNA Gene Markers (Genes & SNPs) (Sequencing and Microarray technologies)

Primary Gene Expression Analysis Messenger RNA

Secondary Gene Expression Elements (miRNA piRNA)

Metabolomics (Mass Spec and Chromatography)

Cell & Tissue Markers

Secondary DNA Markers Epi-genetics

Physiological Markers Whole Body & Organ

measburements & Imaging

Immunological Markers

Proteomic Biomarkers (Mass Spec and Chromatography)

Genotype

Phenotype

15

The Conventional Role of Diagnostics in Medicine

• Diagnostics is the foundation of medicine

• Patient presents to GP with symptoms

• GP Evaluates symptoms

Prescribes treatment on symptoms alone or:

Orders diagnostic tests

Diagnostic tests are principally in vitro diagnostics, functional testing or imaging or

Refers to a specialist – (who orders diagnostic tests)

Diagnosis is made

• Appropriate therapeutic treatment is prescribed usually from a variety of options and suppliers

• Therapies include both drug based, and not drug based treatments, such as surgery, implants, devices, radiotherapy, physiotherapy, cognitive etc.

• Patient is monitored

• Stratified medicine will significantly alter the ro le of diagnostics for many more diseases and treatments

16

New Drug Diagnostics Test (Dx-RX) Relationships

Multiple Diagnostic

Test Provider

Multiple Therapy

Providers

High Competition

Similar Outcomes

Low Margins

Highly Specialised Tests with Close or Mandatory Link to Therapy

Lower Competition

Unique Outcomes

High Margins

17

Diagnostics & Therapeutic Continuum

Stratified medicine aims to maximise number of treatments with positive clinica l outcomes primarily by increasing the proportion of prescribed therapies and drugs which are clinically effective. It can also reduce prescription of therapies and drugs which cause adverse effects.

Diagnosis Prescription Outcomes Clinical Outcome

Cost effectiveness

Correct Diagnosis

Effective drug Prescribed

Disease treated Positive High

Correct Diagnosis

Effective drug Prescribed

Adverse effects Mixed Medium

Correct Diagnosis

In-Effective drug prescribed

Disease untreated & progresses

Negative Low

Correct Diagnosis

InEffective drug prescribed

Disease progresses and adverse effects

Highly negative

Very Low

Wrong Diagnosis


Disease untreated May progress

negative Low

Wrong Diagnosis


Disease progresses and adverse effects

Highly Negative

Very Low

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Implications for Diagnostics and Biomarkers

• There will be much greater demand for biomarkers and companion diagnostics.

• Better knowledge of therapeutic target yields prospective genomic proteomic or physiological biomarkers which can be incorporated into clinical trials.

• This means that the process of biomarker validation must be closely integrated into the overall drug discovery and the companion diagnostic development and clinical trials processes.

• This adds a great deal of complexity and increased technical regulatory and market risk: if the biomarker encounters technical problems, regulatory challenge or cannot be commercially viable then the linked therapeutic also fails to progress.

• Only a few companies, most notably Roche, have both strong diagnostic and therapeutic divisions now bolstered by the possible acquisition of a major research tools company (Illumina), which have sufficient expertise to successfully develop companion diagnostic tests and new therapies in house.

• For the most part new stratified medicines with a companion diagnostic test are an outcome of strategic relationship between therapeutic developers and diagnostic companies each working in a different technical market and regulatory and reimbursement environment.

• In the “pre-stratified medicine” era this was not an issue. There was a clear check list of challenges: efficacy ADME-Tox, bio-availability, preclinical and clinical trials required for regulatory submission.

• It was also very clear that therapeutic developers ultimately paid either through in house capability or outsourcing to CROs.

• This raises the fundamental question in stratified medicine: who takes the risk and pays to discover and more importantly validate the biomarker ?

19

Biomarker Discovery and Validation: Business Models

• There are several routes to funding biomarker discovery & validation:

1) Spin off from basic academic. It is less likely that such biomarkers funded by research grants will be fully validated in the absence of a commercial partner.

2) Pre-market funding programs such as Technology Strategy Board Stratified Medicine platform and pharma–academia strategic alliances such as TMRI.

3) Pharma and specialist companies carrying out in-house prospective biomarker discovery in anticipation of future clinical needs from their own discovery program.

4) Pharma companies outsourcing prospective biomarker discovery and validation to speciality providers and CRO’s.

5) Pharma companies retaining retrospective biomarker discovery in house.

6) Pharma companies outsourcing retrospective biomarker discovery in house and validation to speciality providers and CRO’s.

• Companies in this sector typically engage in several of these activities for example hybrid business model of having an in-house discovery program and taking on contract research for third parties.

20

Integration of Biomarkers

• The key feature of stratified medicine is that the biomarker and CDx development process must be closely integrated into the drug (or other therapeutic) development process.

Adapted from Frost & Sullivan - Personalised Medicine Market in Europe 2011

21

Summary

• Stratified medicine has and will continue to increase the relative importance of diagnostics in the discovery development and delivery of new drugs and therapies.

• It will necessitate greater convergence between diagnostics and pharma companies and major changes to the drug development process, clinical trials and regulatory approval.

• New biomarker discovery and in particular validation is becoming the rate limiting step.

Market Breakdown

23

Biomarkers and Stratified Medicine

• Biomarkers are the central enabling technology for Stratified & Personalised Medicine.

• Presently products used by medical practitioners to determine treatment such as CDxrepresent the clinical tip of a much a larger biomarker market iceberg.

• This market is driven primarily by the pre-clinical needs of the pharma sector for new biomarkers, platforms processes and services in drug discovery.

• Their application encompasses:

– Safety and toxicity

– Dose selection and optimisation

– Therapeutic efficacy determination– Markers of clinical outcome and surrogate markers

– Early stage clinical trials

– Late stage clinical trials

– Post marketing applications (CDx)

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Stratified Medicine in Clinical use

Includes Predisposition Screening Staging & Monitoring & CDx

~ $5.4 Billion

Stratified Medicine: Relative Sizes of Impacted Mar kets

Companion Diagnostics

Sales of existing Dx-Rx products

~ $0.2 Billion

Drug Development R&D

~ estimated $86 billion

Drugs on market Assumes 15% current sales affected by biomarkers ~ estimated $150 Billion

Stratified Medicine Biomarkers

drug discovery & development

~ $20 Billion

25

Stratified Medicine in Clinical Use – Market Subsect or Growth

• Stratified medicine which has been applied in clinical practice covers a wide range of assays where the testing is personalised to the patient or the specific strain of the disease infecting the patient for example HIV.

• In this regard many of these tests overlap with specialised end of the diagnostics market.

• The dividing line between stratifying the disease and stratifying the patient’s likely response to the treatment is somewhat fluid and flexible. This is best illustrated in cancer where stratified medicine encompasses surveillance, staging, risk and CDx.

Category of Product Typical Examples of Tests Market % 2008 2012 Surveillance/Screening HPV test, HIV test, Pap smear,

thrombophilia 46 38

Disease Monitoring HIV viral load/AlloMap/HCV viral load 26 26

Diagnostics/Staging Lipid panel, Bacterial typing, Various FISH/IHC

18 15

Predisposition & risk assessment

PreDx,BRCA1/2, MLH1/MSH2/ MSH6 5 6

Companion Diagnostics Her2 test/ Oncotype Dx/p450/UGT1A1 5 15

$ Billion p.a.

Overall Market Size 3.5 5.4

26

Therapy selection

(KRAS test, Her2 test): when a specific drug will be prescribed according to a specific biomarker

Companion Diagnostics (CDx) Market Breakdown

Prognosis

(Oncotype Dx, MammaPrint): when a test predicts the possible risk for disease such as breast cancer recurrence

• Companion diagnostics (CDx) at CAGR 15% is the fastest growing subsector of stratified medicine which has reached the clinician. This is likely to remain so as the use of biomarkers becomes routine in drug discovery and as a consequence the “upstream pipeline” of prospective companion diagnostics increases.

• It should be noted that not all biomarkers used in the drug discovery and development phase are necessarily suited to become a companion diagnostic test – however a significant proportion are.

• The four main subsectors of CDx are listed below:

Toxicity/eligibility

(VKORC1): when the amount of a drug, such as Warfarin, is prescribed according to specific genetic mutation

Toxicity/eligibility

(UGT1A1): when toxicity of the drug is monitored by genetic background.

27

Biomarkers Market and Stratified Medicine

• Genomics is by far the fastest growing subsector in the biomarker market (CAGR >25%) with proteomics providing a significant but secondary market.

• Medical imaging will continue to grow steadily from a strong base of provision through major med-tech companies.

• Bioinformatics also will grow quickly from a small base serving the rapidly increasing needs for data analysis integration and clinical interpretation generated from all of the above sectors.

• Over time more of these biomarker related technologies and services will migrate into frontline clinical use through companion diagnostics, patient data handling and decision support services.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

$ Millions

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Global Biomarker Markets(Adpated from BCC Research 2010)

Other

Bioinformatics

Proteomics

Imaging

Genomics

28

Biomarkers & Stratified Medicine - Oncology

• Oncology is by a wide margin, the disease area which has lead the application of biomarkers to clinical applications in stratified medicine.

• It will retain that leadership position as fully personalised genomic based medicine becomes a reality.

• In Oncology all three key factors were all present :

– Technical viability through good predicative Biomarkers (Genomic);

– High Clinical need for improved outcomes;

– Economic Impact - the high cost of the cancer related therapeutics meant that significant cost savings could be realised

Oncology Market by Therapeutic Class *

0.05.0

10.015.020.025.030.035.040.0

Hormonal Targeted Cytotoxic

$ B

illion 2001

2011

* Adapted from Strategic Analysis of the European Markets for Theranostics 2009

• The graph above shows how the availability of targeted therapies transformed the market landscape within a decade of the first products launched.

• This “therapeutic transition” from “one size fits all” to targeted therapies is still ongoing within Oncology.

• It is likely that similar transitions will occur for several other major disease indications.

29

Summary

• Stratified and personalized medicine markets can be thought of as a hierarchy with CDx at the top which is 100% defined by stratified medicine and sales of therapeutics, which are impacted more indirectly, forming the base.

• At the tip of the hierarchy are CDx and a relatively narrow range of specific therapeutics (around 75) which have an associated and mandatory companion diagnostic test.

• At the other extreme there is a much broader base of drugs and other therapeutics impacted by the use of biomarkers in the drug discovery or clinical trial process. Presently this represents around 10% by sales which is somewhat larger than the R&D spend in the overall drug discovery market itself.

• Between these are the biomarker market and stratified medicine in clinical use which are wholly within the stratified medicine definition.

• There are four take home messages from these markets:

− There is significant growth in all sectors;

− Some sectors, and disease indications such as oncology are growing much faster than others;

− The range and proportion of therapeutics impacted by stratified medicine is rapidly increasing;

− These trends are long term and likely to persist.

Main Market Drivers

31

Market pull and investment from the major pharma and biotech therapy developers and providers

Stratified Medicine: Market Drivers & Leverage

Biomarkers and CDx companies and academic researchers provide technologies: biomarkers, enabling platform technologies, services and informatics which enable the effective use of biomarkers.

Technology push

Market Pull

At the moment stratified medicine and personalised medicine is largely driven and financed by the demand generated from the Major pharma companies for new technology solutions which meet their needs.

Biomarker use is now routine in drug discovery and CDx is becoming increasingly important in more disease areas lead by oncology.

Ultimately both trends leverage greater value from the therapeutic they are aligned with in drug discovery or marketing.

CDx

Biomarkers

Therapeutics

32

Market Drivers for Stratified Medicine: Commercial Need for New Products

• The Threat: : By far the major commercial driver is “patent cliff” affecting all major pharma. Pharma has traditionally relied on the “blockbuster model” where specific applications directed at mass clinical markets generated huge revenues.

• The Opportunity: The commercial success of companies such as Genzyme, which focussed on relatively well protected and defensible albeit significantly smaller markets and has provided both an alternate businesses model and inspiration for other pharma.

• The response: There is widespread recognition that this model is no longer viable and in future a much greater degree of segmentation of patient populations and tailoring of drug to the patient will be required - hence the major drive towards Stratified Medicine.

Adapted from Frost & Sullivan - Strategic Analysis of the European Market for Theranostics 2009

33

Market Drivers for Stratified Medicine: Costs Press ure on Healthcare Systems & Poor Drug Effectiveness

Healthcare Costs UK *

0

20

40

60

80

100

120

140

1985 1990 1995 2000 2005 2010 2015

GB

P B

illio

n

• The left hand panel shows the rapid absolute growth of healthcare costs in the last decade now estimated to be just under ₤124 Billion p.a.*

• As a proportion of GDP healthcare has risen from 5.2% of GDP in 1895 to a peak of 7.7% in 2012.

• Growth is predicted to be less than 3% until 2015 and healthcare will decline to 7.0% of GDP.

• Medicine costs account for approximately £12 Billion ** (10%) of the NHS budget.

• As the right hand panel indicates, depending on disease a significant proportion of drugs prescribed are ineffective.

• There is clearly scope for cost saving and better outcomes by applying stratified medicine to reduce prescription rates of ineffective therapies.

* http://www.ukpublicspending.co.uk/* http://2020selection.wordpress.com/2012/01/06/nhs-england-drug-expenditure-top-10/

+ve Variable +ve -ve response






0% 20% 40% 60% 80% 100%

HBP (ACE)

CHF (B-Blocker)

Anti-depressants

Statins

Asthma

Oncology

Variability of response to drugs **

34

Market Drivers for Stratified Medicine : The Age of Affordable Universal Genotyping

Implications • One of the major technical challenges to personalised medicine, the sequencing challenge to

generate individual sequence data has almost already been solved. The major challenges actually come down stream of this.

• Genomic and by extension mass application of stratified medicine will become a technically achievable reality much sooner that most people generally realise and most likely far in advance of the ability of healthcare systems to evaluate and effectively adopt.

• In so far as there are fundamental technical challenges and bottlenecks outstanding they relate to much more information technology specifically:

− Secure Information Capture and storage.

− Biomarker validation

− Clinically meaningful interpretation of complex data sets and systems biology information.

• At long term trend rates of progress the $1,000 genome was predicted to be attained within two years in 2014

• It actually arrived in Jan 2012 ! with Life Technologies Ion Torrent system providing $1,000 genome cost on a $150K system

• The $100 genome will likely be commercially available and reality in before 2020

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Diagnostics

Is Stratified and Personalized Medicine Driving the Creation of a Different Class of Companies: “Life Science Majors” ?

Diagnostics

Tools

(Millipore)

GSK

Life

Technologies

Therapeutics

Partnership

Therapeutics

Devices

J&J

• As Genomics is recognised to be strategically important it is already driving consolidation among major Life Sciences companies.

• Roche may well become to be recognised as the first of a new class of “Life Science Majors”effectively integrating the 3 key sectors of Rx-DX and Genomics.

• The advent of such integrated companies will in turn act as a powerful market driver enabling technical synergies and economies of scale.

Therapeutics

Diagnostics

ABBOTT

Therapeutics

MERCK

ROCHE 2012Tools

(Illumina)

36

Market Drivers for Stratified Medicine : Collaborat ions

Selected Collaboration History

1998 Dako Diagnostics HercepTest immunohistochemistry assay used to identify patients with HER2-positive metastatic breast cancer.

2007 DxS TheraScreen, the first CE-marked diagnostic for detecting mutations inNon-small cell Lung cancer

2007 DxS Launch of K-RAS mutation detection kit colorectal cancer followed by partnership with Amgen 2008 for Vectibix(also relevant to Erbitux)

2008 Merck Celera collaborative deal providing Merck with access to up to ten cancer targets forRNA interference-(RNAi) based therapeutics.

2009 Genentech and Dako agreed to submit for FDA approval both HercepTest and Dako's HER2 FISH pharmDx test for Herceptin in the treatment of advanced HER2-positive stomach cancer.

October 2011 GSK & Life Technologies announce partnership in which Life Technologies will develop qPCR companion diagnostic for MAGE GSK Immunotherapy for lung cancer.

November 2011BioCartis raises $100 Million USD to develop companion diagnostics platforrm bases upon Philips Compactmolecular diagnostic (MDx) to drive the widespread adoption of personalized medicine.

• In this sector most pharma companies with the notable exception of Roche lack in house diagnostics expertise.

• Therefore a clear business model has been established in which pharma collaborate closely with other partners developing biomarkers platforms or tools.

• The partnerships encompassed are wide in terms of scale, nature of partnership and technologies supported.

• A key challenge is to be able to negotiate and manage complex development projects between disparate partners.

• A key opportunity is that stratified medicine innovation and development is to a large extent open and outsourced by pharma.

• This favours companies and countries used to engaging with and providing services to the pharma sector.

37

Market Drivers for Stratified Medicine : Continued Grant Funding

Selected Grant Funding Announcements

Oct 2008 Epi-genomics of Human Health and Disease NIH $8 million allocated

2009 MARCAT Biomarkers & Molecular Tumour Classification IMI/EFPIA $12.9 Million

2009 IMIDIA Project Improving diagnostic biomarkers for Diabetes IMI/EFPIA €26 Million

2009 SUMMIT Surrogate Vascular Biomarkers for Innovative Diabetes Treatment IMI/EFPIA €25.8 Million

2009 U-Biopred Unbiased Biomarkers - Prediction of Respiratory Disease Outcomes IMI/EFPIA $28.5 Million

2011 Technology Strategy Board - Stratified Medicine Innovation Platform £200 Million

Nov 2011 Gates Foundation - $9 Million Biomarker Discovery for Infant Health

Dec 2011 BIS Dept of Health UK - £130m for Stratified Medicines and mechanisms of disease in people

• Significant Grant Funding for Stratified Medicine has been available for the last decade at UK EU and international level.

• Much of this grant funding, such as TSB and IMI is devoted to promoting applied translational research in biomarkers or related technologies.

• There is a strong trend towards promoting major industry, (Pharma & SME) – academia funding collaborations.

• This has been most notable from the European Innovate Medicines Initiative IMI co-funded by the European Federation of Pharmaceutical Associations (EFPIA).

• As evidenced recently by Aridhia’s success in leading a TSB bid this funding stream can provide a valuable launch pad for new companies.

• Significant funding of this nature likely to continue in the UK given recent UK Govt announcements.

38

Market Drivers for Stratified Medicine : Strategic Pharma / Academic R&D Partnerships

• There have been a number of high-profile long-term strategic relationships developed between major pharma companies and clinical research centres or consortia which focused on biomarker discovery and or validation

• These have included:

− TMRI Wyeth-Scottish Universities 2005-10 (£50 Million)

− Quintiles - London Genetics 2010 (no funding disclosed)− Pfizer Centers for Therapeutic Innovations (CTI) New York ,San Francisco, Harvard

− Pfizer - Sanford Burnham Medical 2011 (Genomics)

− Pfizer - AstraZeneca - Cancer Research UK 2011 (£5.5 Million)

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Market Drivers for Stratified Medicine : the Future Clinical Evolution Is Clear

Medium to long term(3-10 yrs)

• Diabetes

• Pulmonary Disease (COPD)

• Alzheimer’s Disease

• Thrombosis/Stroke

• Chronic Pain

Long term (>10 years)

• Depression

• Dementia

• Neurodegenerative

• Cardiovascular

• Metabolic

Short term (< 3 years)

• Oncology

• Major solid and blood cancers

• Autoimmunity/inflammation

• Rheumatoid Arthritis

• Acute Asthma

• There is a clear consensus in the UK of the most likely evolution of Stratified Medicine. This is based on the relative perceived technical needs and on the tractability of different disease areas (below). This is already evident in UK strategy via Technology Strategy Board calls. A clearly defined clinical consensus and a TSB roadmap of this nature acts a an important market driver by substantially reducing the risk of strategic R&D in Stratified Medicine by investors and companies.

40

Marker Drivers Summary

• All of the key indicators examined indicate that the use of stratified and personalized medicine is likely to continue and intensify due to a range of powerful market drivers.

• Very recent events (Q1 2012) in the Research Tools sector indicate not only that affordable Genomics based medicine will be technically feasible in the very near future but that this is already profoundly affecting strategy within leading Life Sciences Corporations.

• The medium to long term impact of these accelerating trends on the competiveness on major segments of the Scottish life science company base is likely to be significant.

• The same applies to both the NHS and Academic research base.

Key Challenges

42

Key Challenges to the Future Development of Stratif ied Medicine

• Science and Technology– The key problems are the provision of high quality molecular sub-phenotyping data to stratify

complex diseases and the slow speed of clinical validation of genomic-based molecular biomarkers and diagnostics. Given its novel, high risk and high cost status, industry cannot plan and conduct this key fundamental and translational work alone, especially when considered in conjunction with the other productivity and environmental challenges it faces today.

• APBI Recommendations*– Public/private partnerships. Development of a public/private sector “Personalised Medicine

R&D Roadmap” for coordinating relevant discovery and translational research activities.

– Development of a process to identify and prioritise diseases that could benefit from the application of genomics-based technologies.

– Establishment of a capability to share standardised bio-specimen repositories to support personalised medicine research.

– Establishment of a joint funding programme for biomarker standardisation and validation study design.

– Development of a large population cohorts for long-term follow up of genetic and environmental health effects.

* The stratification of disease for personalized medicine, Association of the British Pharmaceutical Industry (ABPI) White Paper April 2009

43

Key Challenges : Regulatory Requirements

• The regulatory frameworks needs to adapt to support earlier registration with a with a smaller, restricted patient population.

• In particular Regulators and developers will need to work together in order to*:

– Agree the criteria for the early/conditional licensing of personalised medical products and their post-approval risk management, on the basis of an anticipated pre-registration data set smaller than suggested by the current regulatory paradigm.

– Establish guidelines that define regulatory standards for study design and sensitivity/specificity parameters for diagnostic products.

– Establish guidelines for the co-development of diagnostics and therapeutics.

– Develop an approach for the incorporation of the use of diagnostics in therapeutic products labelling.

– Ensure regular communication to articulate projections of the number and type of products in the development pipeline that are based on personalised medicine technologies.

* The stratification of disease for personalized medicine, Association of the British Pharmaceutical Industry (ABPI) White Paper April 2009

44

Key Challenges : Data and Legal Requirements

• Information Technology– Fully interoperable standardised electronic medical records and clinical decision support tools.

• Intellectual Property– A stable and robust IP environment will be essential for the bioscience sector to have confidence

to commit the necessary high-risk investments for the R&D of all novel products.

• Privacy– A need to establish and maintain robust database security and controls on data use building

upon the procedures in place for confidential patient data.

– Develop mandate and deploy key technologies and standards for the encryption, password protection, auditing and access coding of data, their use and control.

• Standardisation – Shared standardised bio-specimen repositories and standard operating procedures.

– An informed consent process that allows for the testing of anonymous samples for genetic markers not known or anticipated at the time of collection.

45

Key Challenges : Reimbursement The Stratified Medicine Commercial Paradox

• There are potential technologies and services which may well improve stratification of the patient population and potentially lead to better clinical outcomes which will not be supported by pharmadue to perceived technical or more commonly market risk.

• Fundamentally, stratified medicine presents a commercial paradox, it seeks to create a new increased return by reducing the size of the patient pool eligible for a particular therapy or drug.

• Estimating the commercial viability that this trade-off generates is extraordinarily difficult and complex for even large pharma to evaluate.

• There are three main considerations on the part of pharma:

– Technical and regulatory risk : There must be a reasonable prospect of clinical success, and clear strategy to overcome the additional technical and regulatory barriers involved in incorporating new biomarkers and/or companion diagnostics into the therapy development process.

– Market risk: There must be a reasonable prospect of the final product being able to command a premium on margins that healthcare providers will pay for based on improved clinical outcomes.

• Significant uncertainly on any of these issues will block investment – at the present time market risk, particularly the lack established business models for new stratified medicines, is the greater barrier. This applies to both major pharma and SME’s.

46

Key Challenges : Valuation modelling for Stratified Medicine

• A very simplified indication of the types of factors involved and the complexity of the analysis required is given above.

• The need for support for the development of new business models and more importantly development of business opportunity valuation models has been recognised by both NIH and TSB.

• Enabling access to such expertise to Scottish companies, particularly SME’s and technology transfer offices, will be a very important factor in the development of this sector.

• Without being able to at least model value for new biomarkers, commercial investments valuations cannot be estimated and investment decisions will be deferred.

-2000%

-1000%

0%

1000%

2000%

3000%

RelativeeNPV

Oncology Valuation Model Estimated value of Non-stratf ied"all comers" Strategy (=100%)

Increase from favourablepricing/reimbursement

Increased value from longertreatment duration

Market increased share gainedfrom better therapy targeting

Marker value loss from reducedoverall number of patients

Shorter development timegained by using biomarker

Low er development costgainedby using biomarker

Increased value gained fromCDx biomarker

Estimated Value of a StratifiedBiomarkers Strategy

Adapted from Trusheim et al Nature Reviews 2011

47

The Stratified Medicine Commercial Paradox: Genomic s

Adapted from Strategic Analysis of the European Markets for Theranostics 2009

• The commercial Paradox of Stratified Medicine will significantly affect genomics based medicine when it becomes an affordable option for healthcare providers. In the first instance the availability of individualised whole genome data will make a whole series of currents tests for individual DNA markers or sets of markers obsolete. It is likely that the provision of sequencing platforms services will create a large and rapidly growing market, but one which will be quickly commoditised. Commercial efforts to develop higher value products will quickly be driven towards data management and interpretation services and products, mirroring the hardware software content distinctions in the computing sector.

48

Pharma Driven Mainstream Stratified Medicine

• At the present time the major pharma and biotech companies dominate and to a large extent dictate commercial activity within the stratified medicine market place.

• They are the ultimate route and the main source of funding and demand to support the development and validation costs of new stratified methods in drug discovery and targeted therapeutic products.

• Products and services which meet the pharma companies present perceived needs for better stratification technologies therefore have a route to fund validation of their technology. This creates a significant commercial opportunity for Scottish companies and research partners to participate in the growth of Stratified Medicine through the provision of specialist technology or services.

• The opportunities arise in two main areas

Cost effectively accelerate or improve the quality of the therapeutic drug discovery and development process.

Cost effectively improve the quality and delivery of the final therapeutic through a a companion diagnostic assay or technique.

• These opportunities will only be supported if the Pharma company can justify the investment on the grounds that the new product or service will meet these criteria

49

Key Challenges: Summary

• The great variety of the challenges that have been identified as critical to the future development of stratified and personalized medicine underlines several important messages.

• Effective progress will require effective collaboration among multiple agencies and disciplines.

• Specific technical or procedural problems can act as a brake on the whole sector but this also creates commercial opportunities.

• Difficulties arising from determining business models and realistic valuation modelling may also act as a brake preventing or delaying what would otherwise be justifiable investment decisions.

• Given these uncertainties and the emergent nature of the field there is a big role for pre-competitive intervention.

• Thus agencies such as Technology Strategy Board or Scottish Enterprise which can launch calls for targeted funding proposals, or specific interventions such as Health Science Scotland will continue to have a big impact priming collaborations and commercial activity.

High Level Life SciencesSubsector Overview

51

Stratified Medicine : Market Fundamentals

Biomarker

Technology

Services Providers

Major Partner

Therapy Provider

PHARMA BioTech

Medtech

Healthcare Providers

Patients

Conventional Strategy

“ Collaborate closely with Therapy Provider ”

“Alternative” Strategy “develop in house”

• The fundamentals of this market are relatively simple. In most case a provider of a useful biomarker partners closely with a major partner company on product development. This is usually a major pharma company but not always. In this model the interests of the biomarker provider and therapy are agreed and relatively aligned.

• Typically the biomarker is used either in drug development and/or developed as a Rx-Dxproducts. In either case the major partner takes the product through the regulatory and marketing process. The primary customer is the health care provider.

• An alternate route exists whereby a new CDxbiomarker can be produced independently of a major partner and marketed to the healthcare provider to save costs.

Regulatory

52

Scottish Stratified Medicine Overview

Research Tools Companies

MedTech: IVD Companies *

MedTech: Imaging Companies *

Pharma CRO Companies *

Clinical & Life Sciences

Translational Research Base

MAJOR

PHARMA

Funding

Discovery

Development

Market launch

of

Targeted

Therapeutic products

Using

CDx & Biomarkers

Regulatory

Authorities

Healthcare Providers

Patients

Bio- informatics Companies

Scottish Technology Collaborative

and Services Providers Opportunities Principle Partner

(Health Science Scotland)

MedTech: Devices Companies *

Drug Discovery SME’s

Products

• Key Issues − Specific subsectors involved

in stratified & personalized medicine

− The central importance of having a major therapy development partner

− Collaborative opportunities between companies and research base

− The strategic role of HSS

Key Sectors Life Science Strategy 2010http://www.lifesciencesscotland.com/media/46442/scottish_medtech_landscape_overview_nov_11.pdf

53

Research Tools Subsector Overview

• Overall global market – The global research tools market was $43

billion in 2011 and is expected to be $81 billion in 2016.

– Projected Global CAGR is high around 13.5%

– The leading market segment is DNA/RNA technologies and reagents over 50% followed by cell based and protein based technologies.

– Cell based reagents and tools will grow most quickly at CAGR 19%.

• Relevance of stratified medicine to the sector– The growth of personalised medicine is a

very important driver in this market. – The increasing emphasis on genomics

proteomics and cell based models in both academic research and commercial research accounts in large part for the healthy and predicted continued rapid growth in the sector.

• Scottish landscape

Corporate presence: Life Technologies, Millipore, Thermo-Fisher, Agilent

SME base: SAFC, Cyclogenix, Dundee Cell Products, Avanticell, Arrayjet, Lab 901. Link Technologies, Cypex, Immunosolv Destina, Ubigent, NCIM E&O Labs, Sistemic

Academic strengths: Broadly based strengths in translational medicine to both evaluate and act as source of new research tools.

Relative importance to Scotland: The research tools sector is a small (estimated around 7-8% of turnover) but highly significant sub-sector due to the presence of some major corporate sites most notably but not exclusively Life Technologies. There is also a healthy SME base producing a wide range of products often combined with related CRO services.

54

Research Tool Subsector - Scottish Opportunities

• This sector represents one of clearest opportunities for Scotland to benefit from the growth in stratified and personalised medicine. Both major corporate players and a healthy SME base co-exist with a very highly developed and competitive research base.

• The corporate presence could be exploited both to gain early access to next generation genomics and other technologies into the research and SME base.

• Similarly the corporate presence could act as a route to market for SME technologies over and above an acquisition lead strategy.

• There is a clear alignment of interests between large corporations, SMEs and the translational research base, for companies to position themselves to exploit immediate opportunities for growth presented by providing new tools and reagents into the rapidly growing stratified and personalised medicine market.

• There is therefore scope for increased collaborative interaction between the company base in general and the translational research base.

• The recent collaboration between ArrayJet and Generation Scotland illustrates the potential for effective brokering of collaborations to accelerate market entry by SME’s through effective interaction with the research base.

55

In Vitro Diagnostics Subsector Overview

• Overall global market – The global In vitro diagnostics market was $46

billion in 2010 and is expected to be $62 billion in 2015

– Projected Global CAGR is healthy and around 6.2 %

– The leading market segment is lab based centralised diagnostic testing with point of care and molecular diagnostics representing the two fastest growing subsectors.

• Relevance of stratified medicine to the sector– As will be clear from the previous discussion

the growth of companion diagnostics is at the moment a relatively small segment of the overall diagnostics market.

– However companion diagnostics is seen as an important area of new growth within the industry and has prompted a an increasing number of Pharma and diagnostics collaborations and alliances.


Corporate presence: LifeScan (J&J), Alere*, Genprobe, Biorad, Renishaw, Rhone-Poulenc

SME base: Axis-Shield *, BBI*, Omega, ADL, Avacta, Mode, Alba

Relative importance to Scotland: The in vitro diagnostics sector is similar in scale (~10% of turnover) and structure to research tools sub sector. A strong, and now dominating corporate sector, provides global products serving in particular diabetes and cardiovascular markets with a healthy SME base fed by new technologies particularly platform technologies often arising from the from the research base through POC funding.

Academic strengths: There is a very strong tradition of infectious disease, immunology and analytical platform based research within the Scottish academic community. A significant proportion of proof of concept project have been diagnostics related.Source: Health Research International, 2011

Opportunities in Global Medical Devices and Diagnostics

56

In Vitro Diagnostics - Scottish Opportunities

• With the emergence of CDx and the opportunity to charge a premium on margins due to the linkage of the diagnostics with therapeutics, significant new commercial opportunities will open up for the significant in vitrodiagnostic cluster of companies in Scotland.

• That cluster’s bias towards diabetes (Lifescan) and cardiovascular products (Alere) aligns well with the medium term disease roadmap for stratified medicine. Similarly the strengths and focus on point of care platforms of these two major companies and many of the SME’s is a long term strength in the context of stratified medicine.

• The newly developed Point of Care diagnostic device to monitor BNP cardiac biomarkers in patients with heart failure at home and thereby direct medication is a classic example of how all of these Scottish strengths can align with the trends towards stratified medicine.

• This device was developed by Alere at Stirling and tested in partnership with Cardiologists in Glasgow University and has recently been launched in the Nordic markets. This same project also highlights many of the technical and market risks in the sector and the level of funding required (>$100 Million) in order to develop a globally competitive product.

• In the same vein Omega diagnostics has created a highly competitive product monitoring highly individualized responses of patient to food allergies.

• A potential weakness is that, with notable exceptions such as Genprobe, most of the Scottish company IVD product range is protein or other non-molecular analyte based. Similarly and with some notable exceptions such as Mode diagnostics there is relatively little emphasis on oncology diagnostics or biomarkers.

• However these caveats aside, the IVD sector in Scotland is potentially well positioned to take advantage of opportunities emerging from stratified medicine.

• The sector has the scale of operations, depth of R&D and manufacturing capability and marketing experience to do this.

• It may, at the moment, lack a deep level of engagement with stratified medicine opportunities as evidenced by lack of participation in the last TSB call for biomarkers and (with the exception of ArrayJet) relatively little interaction with Generation Scotland and other biobanks. These are issues which are being addressed in the IVD action plan.

57

Medical Imaging Subsector Overview

• Overall global market – The global market for Medical Imaging was $24

billion in 2012 and is expected to be $37 billion in 2015.

– Global CAGR is moderate around 6 % – X ray imaging at 24% still retains its long

established market leadership just from a clutch of major competitors Ultrasound MRI & CT each with around 20%. Cardiac imaging and nuclear medicine comprise smaller sectors. There is a long term trend away from X rays and a more recent one of combining imaging techniques in particular functional modalities such as CT with structural modalities MRI & PET. A further significant subsidiary market which supports imaging is in the provision of imaging agents and tracers.

– This market is highly concentrated dominated by top tier major systems providers: GE, Philips, Siemens Hitachi and Toshiba.

• Relevance of stratified medicine to the sector– Medical imaging is an interesting market with

respect to stratified medicine in that most major medical research centres have an installed base of advanced imaging technologies which can be used for patient stratification given the appropriate biomarker.


Corporate presence: Toshiba Medical Systems

SME base: Optos, Expert eye Edinburgh Instruments, Golden photonics, Diagnostic Sonar BCF

Relative importance to Scotland: The medical imaging company base sector in Scotland is relatively small with (<2%) and has only one significant corporate site: Toshiba. There is localised niche strengths in the SME base notably in ocular related applications (Optos) and spectroscopy.

Academic strengths: SINAPSE – Imaging consortium of 5 universities across Scotland Royal Observatory Edinburgh Highly sophisticated transferable image analysis and sensors capabilities.

IMSaT – “Diagnostic & Therapeutic Imaging” –collaboration between Dundee and St Andrews

Stanford-Scotland Photonics Innovation Collaboration

Source: Health Research International, 2011, Opportunities in Global Medical Devices and Diagnostics

58

Imaging Companies - Scottish Opportunities

• This sector represents a strong opportunity for the translational research base to exploit the growth in stratified medicine but a more limited opportunity for the company base.

• There is a high degree of collaboration among all of the major centres.

• The Innovation opportunities in this sector are principally: − New imaging platforms or combinations such as PET - CT and SPECT -CT − New Imaging reagents tracers or markers particularly real time MRI in preclinical testing.− Advances in photonics and fibre optics are giving rise to novel optical based technologies

- such as optical coherence tomography, hyper spectral imaging, near infra red spectroscopy

− Data analysis and interpretation algorithms and software.− Specialist imaging services to NHS and for clinical trials

• Development of new platforms and reagents faces technical regulatory and market difficulties on scale similar to new drug development.

• Major Platform development is highly expensive and dominated by a select group of major companies: GE, Philips & Toshiba.

• The cost of developing and proving safety for a new imaging tracer is very expensive and highly regulated.

59

Imaging Companies Sector: Scottish Opportunities

• As Optos has demonstrated, it is possible for a Scottish based company with a technology lead in a niche area to be highly successful.

• However, for most imaging related opportunities partnering with a significant partner is essential to take the technology through development, validation, regulatory requirement and to gain sufficient marketing exposure.

• Against this background the presence of Toshiba in Scotland is highly significant.

• There may be scope for identifying opportunities for Scotland at the interface of medical imaging and stratified medicine and UK initiatives, notably the GSK Hammersmith Imperial collaboration (£48 Million) provide a potential model.

• Imaging based technologies to stratify patient populations are already used de facto in selecting cancer therapeutics influencing not only drug basedtherapies but also instrument based therapies most notably radiation treatments.

• The opportunities for the life sciences imaging sector will be further investigated in more detail within a separate report.

60

Medical Devices Subsector Overview

• Overall global market – The medical devices market, which includes

Imaging and IVD, is a major global market growing steadily driven by the twin major long term trends of ageing and expansions of developing country markets. For these purposes IVD and Imaging are considered separately.

– The market was estimated to be $327 billion and projected to grow to $327 billion (2015)

– It is dominated by several major players such as Medtronics, Covidien & GE.

– Global CAGR 5.4%

• Relevance of stratified medicine to the sector– At the moment the impact of stratified and

personalised medicine on medical devices is very limited. This may change in future if for example biomarker based stratification methods can be extended from other therapeutic classes to guide deployment decisions on a specific medical device or implant.

– This is most likely to be initiated in clinical application areas such as the cardiovascular sector where high value devices can be linked with accessible predicative biomarkers.


Corporate presence: Johnston & Johnston, Vascutek, Karl Stortz, Siemens

SME base: Haemonetics (UK), Peri-dent, BDF, Wright Health Group, Promedics, Orthopaedics, Oticon, Touch Bionics, BioSil, Aircraft Medical, W Munro, Cascade Technologies, Axsys Technology, BioFilm, Buchanan Orthotics Relief Orthotics, Kare Orthopaedics, LojigmaMobility, Omega Critical Care, Plastech Group, Ocutec, Juzo UK, KLZ Optics, Vascular Flow Technologies, Mpathy Medical Keeler, Point to Point, SureSensors, Ohmedics, Biomedical Monitoring, Caledonian Medical Capital HPLC, Carbon Filter Technology CardioPrecision, Culzean Medical, Dan, Medical, Dental Technology Services, Digitimer, Elcomatic, Emblation Medical, Funky Moves, GM Instruments, JMW Medical, Lombard Medical, Optriq, RA Laboratories, Salts Healthcare, Second Skin, Sentient Medical Smiths Medical, Viopti.

Relative importance to Scotland: MedTech is designated a key sector within the SE Life Sciences Strategy and contributes approximately 27% to the Scottish turnover of which 10% can be attributed to IVD and 5% to Imaging the balance being primarily devices and related services.

Academic strengths: IMSAT

Source: Health Research International, 2011Opportunities in Global Medical Devices and Diagnostics

61

Medical Devices

• In the absence of imaging technologies and in vitro diagnostics, the near term growth opportunities generated within the medical devices sector are somewhat limited.

• However, given the overall size of the medical devices market and the relatively high costs of many of its therapeutic interventions, even a relatively small influence of stratified or personalised medicine could generate a significant market impact.

• The most obvious areas where one would expect to see this begin to happen would be in guiding decisions on high value cardiac, CNS or orthopaedic implants.

• Clearly imaging technologies are already used to guide such decision making and to that extent stratified medicine is already applied to medical device therapy.

• However, in future it is plausible that genomic or other molecular biomarkers (appropriately validated) may influence device based therapeutic interventions.

• At the present time these opportunities may be best supported by pre-competitive basic research and proof of concept mechanisms of support.

62

CRO Subsector Overview

• Overall global market – The global market for outsourced service to the CRO

company base was $26 billion in 2012 and is expected to be $37 billion in 2015

– Global CAGR is moderate around 6% – The major market for all of these companies is the

outsourcing of R&D and services both preclinical and clinical trials related services from the major pharma.

– The CRO base is one of Scotland’s critical strategic strengths in life sciences with a good representation from the main corporate players.

– There is a healthy SME base which is continually renewed through the presence of a deep pool of staff from existing SME and corporate facilities leading to prompt new company formation. The fact that new CRO’s can be established and generate early revenue means that they are feasible investments for the Business Angel investment community in Scotland.

• Relevance of stratified medicine to the sectorAlthough overall in house pharma R&D on drug discovery has been declining, the pharma companies continue to outsource their services generating steady growth within the CRO market. As the use of biomarkers in drug discovery, clinical trials and CDx becomes increasingly prevalent the CRO companies have to adapt accordingly in order to remain competitive.


Corporate Presence: Quintiles, Aptuit, Charles River, PPD, Astra-Zeneca

Relative Importance to Scotland: The CRO subsector in Scotland is highly significant contributing approximately 16 % of life Sciences turnover significant corporate site. Major corporate presence is is accompanied by a group of highly innovative and adaptive SME’s. This strategically important nature of this sector is explicitly recognised in Scottish Enterprise strategy which names Pharma Services alongside MedTech as its two priority areas. Stratified Medicine is important in its likely significant impact on the ability of Scotland to anchor build and grow these companies

Academic strengths: The truly outstanding quality and impact of Scottish academic research in pharmacology is evidenced by the Dundee and Aberdeen departments being ranked 1st and 2nd by citation in the world with Glasgow and Strathclyde ranked 7th and 20th within Europe*.

http://www.timeshighereducation.co.uk/story.asp?storyCode=410026&sectioncode=26

63

CRO Sector: Scottish Opportunities

• Stratified medicine poses significant and immediate challenges to but also offers great opportunities for CRO companies.

• The challenges are that as stratified medicine becomes more embedded into the drug discovery development and clinical trials processes technical and regulatory complexity will increase significantly.

• As discussed above new biomarker development validation and testing will become an early phase in drug discovery and development and the design and management of clinical trials significantly more complex.

• On balance this should be a highly positive development for the Scottish CRO base.

• Scotland’s CRO USP, successfully executed over many years, has been to provide leading edge services and technical solutions at the high end of the outsourced value chain.

• Major new trends such as stratified medicine which drive demand for more complex high value products and innovation should play to Scotland’s strengths providing that:

– Both corporate sites and SME’s recognize the challenges early and can retain their international competitive edge against other SME’s and internally within the major CROs.

– In practice this means that potential bottlenecks, both general and those specific to stratified medicine which may impose a relative disadvantage to Scotland must be identified and mitigating action taken.

– These could include, changes in; the cost of operations; Regulatory environment; disruptive technical change driven by genomics and/or bioinformatics, access to NHS etc

– Identification and Analysis of these challenges and bottlenecks, incorporating the impact of Stratified and personalized medicine on the CRO base is a central part of a Pharma services strategy.

64

Bioinformatics: Subsector Overview

• Overall Global Market – Bioinformatics is a small but very fast growing market

sector with revenues in the region of $1.5 billion expected to be $3.0 billion 2015

– Global CAGR is very high around 25% – This market can be divided roughly into three main

parts: 1) Primarily informatics focused companies who have customized their products too handling biological information but could in principle handle other types of data. 2) Companies which use specialized algorithms for large specialist biological data sets for example DNA microarray data, protein structure or image analysis.

– Bioinformatics companies which utilize proprietary software and “curated” databanks to allow users to place their experimental results in a wider biological context through advanced pathway analysis.

• Relevance of Stratified Medicine to the sector– Bioinformatics companies will be one of the primary

beneficiaries of the growth in stratified and personalised medicine. Both of these trends massively increase the quantity of data and the relative value of software, analytical algorithms and curated databases which can extract and add value to this data.

• Scottish Landscape

SME base: Aridhia, Fios Genomics, INPS

Relative importance to Scotland: At the present time this is a very small sector within Scotland with only a few companies. However given the rate of growth of the global market and the availability of supplementary funding from public sources of funding there is a good case to expect and target rapid growth from these companies.

Academic strengthsThe Division of Pathway Medicine University of Edinburgh and allied associated researchers with other Universities members Scottish Bioinformatics Forum. The strong clinical translational research infrastructure and they more integrated level of electronic medical record handling within Scotland are further competitive advantages.

65

The Bioinformatics Opportunity

• Despite the very small size of the boinformatics company base in Scotland, it is potentially one of the most promising areas of opportunity in stratified and personalized medicine in Scotland as:

− The very high rates of growth predicted and the emergent nature of the field mean that prospects for high growth start-up companies are higher than in more established sectors

− In principle the combination of the academic excellence in pathway medicine and the acknowledged strengths in medical records management in NHS Scotland are highly significant advantages.

− Aridhia’s recent launch and success in TSB funding application provides some evidence for the potential competiveness of Scotland as a base for Bioinformatics companies.

− There are clear precedents for attracting interest from the major ICT companies into this sector. For example Google has invested directly in 23andme a Genomics company IBM in DNA sequencing analysis.

• The case for crafting initiatives tailored specifically to developing and attracting companies of scalein the Bioinformatics field may be worth consideration.

66

Pharma R&D : Subsector Overview

• Overall global market – Major pharma R&D is a large market segment

$86 billion and will be impacted by stratified medicine however it may well have peaked in absoluter terms in recent years with any growth driven by stratified medicine outsourced either to CRO’s or strategic academic research partners.

– The market is dominate by the internal R&D groups within the major pharma however there is still a significant fraction accounted for medium or start-up drug discovery companies.

– Global CAGR is flat or negative driven by consolidation of pharma R&D and outsourcing to CROs.

• Relevance of stratified medicine to the sector– As described above stratified medicine through

the use of biomarkers will impact upon all stages of the drug discovery and development through clinical trials and into CDx related marketing.


Corporate presence: GSK, Piramel

SME base: Companies with in-house drug discovery R&D potentially more impacted by stratified medicine.

GlycoMar, NovaBiotics, Antoxis, EctoPharm, Cyclacel, NeurocentRx, UBS Pharma, Crusade Laboratories, Grannus Biosciences, SyntroPharma, Nucana

Relative importance to Scotland: Pharmacompanies are clearly an important and high value sun-sector within the Scottish Life Sciences company base contributing approximately 10% of overall turnover. Stratified medicine will impact most on the small cluster of early stage drug discovery SMEs.

Academic strengths: Strategic R&D partnerships between major pharma and Scottish academic. The use of biomarkers and CDx in these programs will be highly significant and represent an important indirect mechanism through which stratified medicine will impact upon Scotland.

67

Big Pharma no More – How Critical a Setback ?

• In principle everything is in place within the Scottish company and a translational research landscape to take advantage of the rapid growth in personalised medicine including companion diagnostic except a major Pharma R&D presence or major strategic partnership focused on biomarkers or CDx.

• The recent closure of the of Scotland’s only major Pharma R&D centre, following Merck’s acquisition of Schering Plough site at NewHouse, removed the only commercially operated drug discovery and screening facility in Scotland.

• This site has however recently been acquired by Nottingham Biocity with a view to developing the facility as a science park utilising the world class infrastructure left by Merck.

• The $80 million TMRI- Wyeth translational research initiative was a clear example of the strength of the Scottish academic research base and its relevance to biomarker and stratified medicine applications being recognised by Pharma.

• Following Pfizer’s acquisition of Wyeth this partnership was not renewed along with a major scaling back of Pfizer’s R&D in the UK.

• There has however been some continuation of collaboration projects with members of the original TMRI consortia through the Pfizer Grand Challenges process.

• There is no doubt given the scale of these retrenchments these were significant setbacks for the Scottish pharma sector.However, in each case the effect has been mitigated by significant ongoing biomarker R&D with Pfizer and the creation of a new pharma oriented science park on the former Merck Site in Newhouse.

• This underlines the resilience of the sector in Scotland of which TMRI and Merck although significant, were only a part.

68

The Presence of Strategic Relationships with Pharma

• Scotland still has a very high level of interaction within major Pharma through a series of other strategic collaborations and major clinical trials.

• DSTT (Division of Signalling Transduction Therapy) : a world leading collaboration between Dundee University and a consortium of Industry (Boehringer Ingelheim, GSK, AstraZeneca, Merck-Serono & Pfizer)

• The Scottish Institute for Cell Signalling: a major new research initiative from Scottish Funding Council.

• Dundee Drug Discovery Unit: an internationally recognised unit for high throughput drug discover with a recognised focus on tropical and neglected disease.

• The CRO base in Scotland is also very significant and includes sites of both the international majors such as Aptuit, Charles River and Quintiles and PPD, as a well as many smaller specialist CROs.

• All of these companies’ primary markets are the major pharma companies with which they have a long established network of close relationships.

• A setback such as the closure of a major pharma R&D site presence or strategic partnership (TMRI) while significant is not critical to Scotland’s overall ability to interact with pharma and exploit opportunities in stratified medicine given a dense network of high quality relationships.

• The critical question for Scottish “micro-pharma companies”, as with the pharma oriented CRO base is their ability to recognise and adapt to exploit new opportunities presented by stratified & personalized medicine.

69

Illustrative Scottish Companies and Institutions Re levant to Stratified Medicine Translational Medicine

CRO Companies Research Tools Diagnostics

Drug Discovery R&D Services Kits & Reagents In vitro Diagnostics DDU : Dundee SCILLs : Dundee Pharmalinks/SULSA

Aptuit, Quintiles BioReliance Charles River

Life Technologies Millipore Agilent, BioRad

LifeScan Alere Genprobe

Cyclacel Aquapharm Ubigent

Vitrology, Avanticell Scottish Biomedical

Biopta Sistemic ArrayJet

Omega Renishaw Mode

BioMarker Discovery Clinical Trials Bio-informatics Imaging

PPD Fios Aridhia Toshiba Clintec INPS Optos

In depth academics translational medicine base Pathway Medicine

Edinburgh

Illustrative Stratified Medicine Companies

• The table above provides illustrative examples of companies and institutions relevant to stratified & personalized medicine. It shows clearly that many of the corporate, SME and academic players capable of exploiting growth opportunities in stratified & personalized medicine are already present in Scotland. The following slides attempt to estimate the relative size of the market opportunities within these sub-sectors.

70

Global Growth Opportunities: Variable Impacts on S ubsectors

• In the upper panel the bubbles are scaled to the relative size of the expected global growth (the opportunity) while the lower panel shows the same data set with the bubble scaled to the relative presence of the specific sub-sector in Scotland (a crude measure of ability to respond).

• From this analysis the Research Tools sector stands out as combining high growth with strong Scottish presence.

• IVD CRO and to a lesser extent imaging are attractive subsectors in that significant growth coincides with significant Scottish presence.

• The medical devices sector is less likely to be greatly affected by stratified medicine opportunities but given its scale of presence is worth monitoring in the long term particularly for niche opportunities.

• The small cluster of Scottish “micro pharma” engaged in new drug discovery like the “pharma majors” will be significantly impacted by stratified medicine.

• Niche opportunities are possible where a specific SME’s drug target development could be significantly accelerated by appropriate biomarkers. This also applies to the highly industry oriented drugs screening and discovery units in the academic sector.

• Finally the potential for rapid growth in the Bioinformatics sector is obvious. The small scale of the company base is not necessarily a major handicap given the emergent nature of this sector and if the strong academic strength can be effectively exploited.

Global Grow th Opportunities scaled to present size oof sub-sector presence in Scotland

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

-5,000 0 5,000 10,000 15,000

$ Million

CA

GR

Medical Imaging

Research Tools/Biotech

In vitro diagnostics

Bio- Informatics

CRO

Pharma Drug Discovery R&D

Medical Devices (NotIVD/Imaging)

Glo b al Gro wt h Op p or t uni t ies scaled t o Glo bal Gro wt h in sub - sect o r

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0 5,000 10,000 15,000

$ M i l l i ons

Medical Imaging

Research Tools/Biotech

In vitro diagnostics

Bio- Informatics

Medical Devices (NotIVD/Imaging)

CRO

Pharma Drug Discovery R&D

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Summary of Market Opportunities for Subsectors

• Stratified and personalized medicine will be broad ranging in its impact affecting significantly all of the subsectors described above.

• It will affect different subsectors to different extents and at different times.

• The ability of the Scottish company base to respond will be determined to some extent by the presence of existing capabilities and where the control of these capabilities lies.

• Of the subsectors examined research tools, CRO and in-vitro diagnostics may be the most promising established sectors for growth and impact in Scotland.

• Bioinformatics represents a very promising area of growth but requires rapid build up of scale

from a small company base.

• The academic research base represents a significant area of commercially oriented growth in its own right and a powerful collaborative resource base for Scottish companies.

Overview of Translational Research Base

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Stratified Medicine: Scottish Fit with Predicted C linical Evolution

Medium to long term (3-10 yrs)

• Diabetes

• Pulmonary Disease* (COPD)

• Alzheimer’s Disease

• Thrombosis/Stroke

• Chronic Pain

Long term (>10 years)

• Depression

• Dementia

• Neurodegenerative

• Cardiovascular

• Metabolic

Short term (< 3 years)

• Oncology

• Major solid and blood cancers

• Autoimmunity/inflammation

• Rheumatoid Arthritis

• Acute Asthma

• There are essentially 5 broad areas of disease research which are going to dominate the development of Stratified Medicine: Oncology , Immunology, Metabolism/Diabetes, Neurological and Cardiovascular .

• The following slides illustrate the strong alignment between institutional based R&D capability and these five disease areas. These also comprise 5 out of the 6 major therapeutic areas targeted by the newly formed Health Science Scotland (formerly SAHSC).

COPD & autoimmunity

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Oncology

Glasgow Oncology •Cancer Research UK West of Scotland Cancer Centre

•Beatson Institute for Cancer Research •Translational Research Centre (due to open in 2012)•Centre for Oncology and Pharmacology, University of Glasgow•Cancer Research UK Formulation Unit (University of Strathclyde)•Beatson West of Scotland Cancer Centre (Gartnavel)

•Paul O’Gormon Leukemia Research Centre (Gartnavel)•Cancer Research UK Clinical Trials Unit

ABERDEEN

DUNDEE

GLASGOW

EDINBURGH

Major Research Capabilities in Oncology & Immunolog y

Scottish Wide Programs & Initiative

CACTUS Cancer Clinical Trials Unit Scotland

Aberdeen •Cancer Medicine Research programme, Institute of Medical Sciences, University of Aberdeen.•Bone and Musculoskeletal Group, Division of Applied Medicine, University of Aberdeen

Oncology Immunology

Glasgow Immunology •Division of Immunity, Infection and Inflammation, •College of Medicine Centre, Univ of Glasgow)•Neurovascular Inflammation Group (a collaboration between University of Glasgow and the University of the West of Scotland)•Centre for Rheumatic Diseases (Glasgow Royal Infirmary)•Respiratory Medicine Department (Gartnavel Hospital)

Dundee•Cancer Research UK Dundee Cancer Centre •The Scottish Institute for Cell Signalling

•The Division of Cell Signalling and ImmunologyCollege of Life Sciences

Edinburgh• MRC Centre for Inflammation Research•Edinburgh Cancer Research UK Centre

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Glasgow•Institute of Neurosciences and Psychology, University of Glasgow includes:•Centre for Translational Research in Neuroscience and Clinical Psychology•Centre for Stroke and brain imaging research•Glasgow Experimental MRI Centre•Centre for Cognitive Neuroimaging (CCNi) •PsyRING - Psychiatric Research Institute of Neuroscience in Glasgow

ABERDEEN

GLASGOW

EDINBURGH

Major Research Capabilities in Neuroscience

Aberdeen •Translational Neuroscience Research programme, Aberdeen Clinical Neuroscience Department Aberdeen

• Biomedical Imaging Centre Aberdeen Neuroscience

Scottish Programmes & InitiativesSINAPSE – Brain Imaging 6 University network

Scottish Mental Health Research Network

DUNDEE

Edinburgh•Euan MacDonald Centre for Motor Neurone Disease•Anne Rowling Regenerative Neurology Clinic•Division of Clinical Neurosciences MRC •UK Brain Bank Network•Scottish TSE Network

Dundee•Centre for Neuroscience University of Dundee•Alzheimer's Research Centre UK

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ABERDEEN

GLASGOW

EDINBURGH

Major Research Capabilities in Metabolic Disease an d Diabetes

Scottish Programmes & InitiativesScottish Diabetes Research RegisterScottish Care Information : Diabetes ColllaborationScottish Diabetes Research Network

DUNDEE

Inverness •Highlands diabetes Institute •LifeScan Diabetes Research Institute(Centre for Health Sciences)

Dundee•Diabetes research centre (26 research teams)

Aberdeen•Diabetic neuropathy (research theme )

Glasgow•Vascular Biochemistry Lipid Research•Division of Cardiovascular Research

Edinburgh•BHF Cardiovascular Research Centre

INVERNESS

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ABERDEEN

GLASGOW

EDINBURGH

Major Research Capabilities in Cardiovascular Resea rch

Aberdeen • 31 Cardiology Research Group

Scottish Programmes & Initiatives

WOSCOPs Clinical Trial

Scottish Stroke Research Network (SSRN)

DUNDEEDundee • 30 Institute of Cardiovascular Research

Edinburgh•BHF Cardiovascular Research Centre

Glasgow •BHF Cardiovascular Research Centre

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ABERDEEN

GLASGOW

EDINBURGH

Aberdeen•UK Biobank

Scottish Wide Programmes & Initiatives

SBF Scottish Bioinformatics Forum (Nexxus)

UK Bio-Bank members

Generation Scotland (BioBank)

SHIP Scottish Health Informatics Platforms

NHS Permissions Co-coordinating Centre

Health Science Scotland (HSS)

DUNDEE

d

Fundamental Infrastructure for Stratified Medicine In Scotland

Dundee•Post Genomic Molecular Interaction Centre•UK Biobank

Edinburgh•BHF Centre for Cardiovascular Science•Division of Pathway Medicine•UK BioBank•Edinburgh Bioquarter

Glasgow•Head Office Health Science Scotland • Wellcome Functional Genomics Facility •Robertson centre for Biostastistics•UK Biobank

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Competitiveness of Research Base – Publication impac t

Rank C oun try Pape rs Cita tio ns C ita tio ns /pap er 1 US A 725,599 12,555,647 17.30 2 E nglan d 171,841 2,682,198 15.61 3 Germ an y 177,162 2,275,824 12.85 4 Jap an 166,752 1,740,012 10.43 5 C anada 91,288 1,549,857 16.98 6 F rance 113,160 1,476,267 13.05 7 Ita ly 102,870 1,457,706 14.17 8 Ne ther lan ds 68,795 1,228,318 17.85 9 Au stralia 63,589 899,131 14.14 10 S w eden 47,119 796,105 16.90 11 S w itzer lan d 42,282 723,814 17.12 12 S pa in 55,383 663,192 11.97 13 Be lgium 32,595 568,636 17.45 14 Denm ark 24,496 443,589 18.11 15 S co tlan d 23,863 420,256 17.61 16 F in land 22,461 414,671 18.46 17 P .R . Chin a 50,360 397,326 7.89 18 Au str ia 26,425 364,346 13.79 19 Israe l 26,676 320,027 12.00 20 No rw ay 16,416 273,952 16.69

National Rakings in Clinical Medicine 1999-2009 (Thomson–Reuter ScienceWatch)

The Scottish research base is internationally competitive as independently evaluated by citation index ranking.

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Competitiveness of Scottish Research Base – IMI Part icipation

• The Innovative Medicines Initiative (IMI) is a public-private partnership between the European Union, represented by the European Commission, and the pharmaceutical industry, represented by the European Federation of Pharmaceutical Industries and Associations (EFPIA).

• Research focuses on finding better methods for predicting the safety and efficacy of new medicines in disease areas such as brain disorders, inflammatory, metabolic and infectious diseases, and cancer, while some projects aim specifically to improve knowledge management or education and training in biopharmaceutical research.

• Total Budget 2 Billion Euros: 50% from EU via FP7 allocation, 50% from Industry via contribution from EFPIA.

• Success in IMI project is a good proxy for overall competitiveness of Scottish & UK research base in clinical translational medicine and stratified medicine.

• 23 Projects funded to date in IMI rounds 1 & 2

• UK Research institutes and companies participated in 19 of these calls as partner with Industry

• Top performing UK Institutes by participation:– Manchester: 6 Projects – Edinburgh Imperial KCL & Cambridge: 4

Projects – Dundee: 3 Projects – Glasgow: 2 Projects

• Dundee University leads MARCAT € 13.3 oncology project with CXR as SME partner

• Glasgow Edinburgh & Dundee dominate UK representation on € 16 EH4CR electronic record sharing project

• Glasgow University Scottish representative on € 38 Million Euro Rheumatoid Arthritis Project the largest IMI project.

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Scottish Bioinformatics Forum : Technical Capabilit y

• The Scottish Bioinformatics Forum founded in 2001 has been supported by Scottish Govt., Scottish Funding Council and Scottish Enterprise act as the primary locus and network for academic and a resource for companies within Scotland requiring access to Bioinformatics expertise.

• Its founding vision was:

– “To establish Scotland as a globally recognised and leading location for conducting cutting edge bioinformatics research and sustainable commercial activity”

– To this end funding has been directed since 2001 to building upon Bioinformatics capability in four main University centres: Edinburgh, Glasgow, Aberdeen and Dundee.

– A much wider network of approximately 500 member principally academic (85%) has been built up over the years.

– The technical capability which now exists within this network is extensive.

– A recent independent assessment of the initiative (EKOS 2010)* and the degree concluded that degree of networking and interaction and integration within the bioinformatics community in Scotland is now much enhanced however its engagement with the commercial base is somewhat less than anticipated.

– In the context of Scotland’s competitiveness and future involvement in stratified medicine the build-up existence of an integrated research base and network of bioinformatics expertise is a great advantage given the critical importance of bioinformatics to effective implementation of stratified medicine.

* Evaluation of Scottish Bioinformatics Forum EKOS 2010

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TMRI & Health Science Scotland

• The fact that the SE-TMRI-Wyeth initiative and major investments in stratified medicine took place is very important. It is indicative of the drive by big pharma to develop effective working relationships with countries and major research centers for clinical translational research.

• In each case the underlying driver for these partnerships has been to develop mechanisms whereby major pharma can access world class research excellence for accelerated drug discovery and progression through clinical trials.

• This major driver, is still active, with a general move towards “outsourcing of innovation” and significant elements of R&D by many major pharma.

• The legacy of TMRI is extremely significant in that :

− It independently validated Scotland as a site for a major translational clinical research initiative focusing specifically on biomarker discovery and validation.

− it built up a body of clinical research expertise, relationship operating procedures and infrastructure which is still largely intact and can be further developed by HSS and other initiatives.

• These capabilities are now incorporated within Health Services Scotland which represents the mechanism for continued interaction between the clinical research base and industry.

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Summary: Scottish Strengths in Stratified Medicine

• Scottish translational clinical research strengths in major disease categories align almost exactly with predicted ongoing development of stratified medicine.

• An experienced cohort of translational researcher still persists after scaling back of TMRI/TMRC.

• Some continuation of stratified medicine biomarker projects still ongoing via Pfizer Grand Challenges.

• Mechanism in place via Health Science Scotland to provide continuity and attract new stratified medicine projects to Scotland.

• Wider network of biobanks in place to support stratified medicine.

• Integrated approaches to medical records and patient recruitment in place.

• Strong biomedical imaging capabilities within Scotland.

• Strong IVD commercial cluster for commercialization of new biomarkers.

• Strong academic and emerging commercial strengths in data analysis and bioinformatics.

• Very strong and active working relationship with all major pharma through HSS, major drug discovery centres.

• Emerging interest from IVD & research tools companies in Scotland.

• Strong presence of CRO company base with highly active market relationships with major pharma.

Summary and Conclusions

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Summary of Scottish Strengths Relevant to Stratifie d Medicine

• A strong presence of major international research T ools companies: Major research tools company are implanted in Scotland (Life Technologies, Gen-Probe, Millipore now Merck, Agilent and a number of SMEs). This cluster is capable of developing and manufacturing kits and services which provide stratified medicine tools for a global pharma and biotechnology market

• An internationally competitive cluster of pharma CRO ’s with presence of majors such as Charles River, Aptuit & Quintiles: As with the research tools companies this cluster is competitiveand capable of adapting its processes and services to exploit the growth of stratified medicine.

• A vibrant group in vitro diagnostic (IVD) and imaging companies: Scottish IVD and imaging companies have the technical capability of developing and providing companion diagnostics co-marketed with new pharmaceuticals. To date most marketed CDx products have been molecular biomarker based tests using DNA/RNA or proteins. However in future other diagnostic modalities such as imaging based CDx tests will be deployed..

• An internationally competitive clinical translation al research base: Scotland clinical translational researchers are working on most of the disease areas that stratified medicine is predicted to impact upon in the coming decade. The major Wyeth TMRC investment created infrastructure, and moreimportantly a cohort of clinical researchers (now within Health Science Scotland), with extensive experience of industry lead stratified medicine development.

• Other notable initiatives which will support stratified medicine include biobanks notably Generation Scotland, significant initiatives in bioinformatics through Scottish Bioinformatics Forum (SBF) and coordinated mechanism of patient recruitment through the Scottish Health Informatics Partnership (SHIP).

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Summary of Industry Needs and Opportunities

• Validated biomarkers : New technical breakthroughs have produced a huge pipeline of prospective biomarkers all of which require better and faster methods of validation, a major opportunity for Scottish CRO base and translational research base.

• Data Handling (IT & bioinformatics): The two major needs and opportunities are for seamless and secure medical records and data recording systems to efficiently deal with the sheer volume of data. This is an opportunity for Scottish IT companies to specialise in medical related data handling. Related to this are opportunities to statistically analyze data and put the data in a context relating biomarker changes to underlying biology.

• Adaptation to changes in the regulatory Processes: Stratified and Personalised Medicine is going to produce major changes in regulatory authorities requiring more complex data submission packages which incorporate biomarker data within a regulatory submission for a new drug. There is an opportunity for Scottish companies, particularly specialist CRO’s and consultancies, to gain market share by anticipating and adapting to these changes quickly.

• Development of new business models & processes: New Therapeutics have traditionally been priced by value – where a perceived monetary value is assigned to the impact of the treatment. In contrast diagnostics have been priced according to production cost with a margin added. This has created an as yet unresolved business challenge between the in vitro diagnostics providers and pharma partners. Similarly optimised processes to effectively incorporate novel biomarker and diagnostics development into the drug development process are required.

• Adaptations within healthcare provider systems: Change in clinical evaluation bodies (equivalent to NICE in UK) to evaluate cost effectiveness of new personalised medicines are needed. Adapting NHS and other healthcare systems to deliver stratified and personalised medicine, in particular handling of genomic data and long term education of clinicians and patients is required and will create new opportunities for prepared companies.

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Scottish Stakeholders Analysis – Who Will Take the L ead ?

Rapid and intense re-engineering of processes/services

Cost : moderate Benefits: High Risk : exclusion if fail

High Imperative to adapt to compete in long term

High New growth markets

CRO Companies& Drug Discovery

“Wait and see”Proof of principle in Niche opportunities

Costs : HighBenefits : moderateRisk : technical

Low – long term opportunity as link to genomics & Business models unclear

Low – long term opportunity as Business models unclear

MedTech Companies (Devices)

Closer Global alliances knock on Scottish site product impact

Cost : Moderate Benefit : DX-RX strategyRisk : Market exclusion

Moderate to low Indirectly important as background to diagnostic

Moderate to High New high growth marketsbut smaller & fragmented

Diagnostics & Imaging Companies

Key Global strategy &Strategic Partnershipswill impact Scotland

Cost : High but bearable Benefits : CompetivenessRisks : Market exclusion

Very High Already dominant in sequencing platforms

Very High Major new markets

Research Tools Companies

Adapt Strategy Catalytic role with HSS/NHS/Industry ?

Cost : Globally High Benefits : Scottish USP Risks : long lag to GVA

High Logical follow through from Strat/Med & Life

High : highly relevant to translational research strategic focus IVD & Pharma services

Scottish Enterprise& LiSAB

UK traditionally late adopter and lower margins Rx & Dx

Cost :High when earlyBenefit : drug cost savingsRisk : resource wastage

Moderate to low ModerateHigher in Scotland ?

UK NHS/GovtScotland NHS/Govt

High investment Consolidation of strengths into major research hubs

Cost : High R&D funding Benefit : maintain UK/EU ranking & leadershipRisk : spread to thin

Very High Very high Already early adopters

Scottish Funding CouncilResearch Councils UK Technology Strategy Board & EU (FP7 & IMI)

Likely OutcomeCostBenefits Risk Considerations

Incentive to adopt Genomics Based Personalized Medicine

Incentive of Key Sectors to Lead in Stratified Medicine

Stakeholder Group

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Conclusions

• Stratified & personalized medicine is going to impact significantly upon the Scottish company base and academic research base.

• The present composition of the company base, and in particular the presence of major corporate sites, means that Scotland is potentially well placed to exploit opportunities in this sector.

• This ability is significantly enhanced by the strength in depth of the academic research base and its close alignment with the disease areas impacted by stratified medicine.

• The relatively advanced level of medical records and data handling within Scotland NHS is a further potentially crucial competitive advantage for Scotland.

• A crude ranking of opportunity, based upon likely market growth and present Scottish presence, would indicate the greatest opportunities in research tools and IVD & CRO followed by imaging.

• There are also opportunities for rapid growth from a small base for emerging Scottish bioinformatics and to a lesser extent small drug discovery companies.

• There is a strong case for carefully considering the benefits of developing a long term and cohesive strategy for stratified and personalized medicine aligning the interests and activities of main Scottish agencies, NHS Scotland and company base around a common programme.

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Further Details

• If you are interested in additional information about any of the areas covered within this document, please contact:

Dr. John Gordon

Life Science Industry Team

[email protected]

February 2012

Scottish Enterprise

OPPORTUNITIES

stratified medicine

Health & Medicine