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Electroceuticals and Digital Drug Delivery: Neurological Stimulation and Beyond

October 8, 2014
Some of the most experienced executives in biotechnology have begun asking themselves, “Can we foresee the day of diminishing returns from research in traditional molecular biology?” These researchers are investigating alternative modalities of providing therapy that would combine electronic sensing with drug delivery or even stimulating the body through electricity alone to produce a desired response. These “electroceutical,” or “bioelectronics,” approaches have produced exciting results in early clinical trials, particularly related to insulin control and pain management. These innovative approaches suggest opportunities to rejuvenate past drug candidates that might show more effectiveness through the introduction of implantable electronic sensors combined with injectors. Marrying the fast-cycle nature of the electronics industry with the deliberate approach of clinical trials involves risks in execution but great potential returns. A recent National Institutes of Health announcement to create a $248 million fund to support research in electroceuticals endorses the hope in this integrative approach.

Scott Smith, Managing Director and Director of Life Sciences Investment Banking at Wedbush moderated a panel on these topics during the 2014 BIO Investor Forum. The panelists were:

The panel opened with a discussion of the size of the electroceutical, implantable, and digital drug delivery market. Juan-Pablo explained that he considers the unmet needs of a given market to evaluate its potential. He said that as an investor, “when thinking about medical devices and medical electronics, we consider the staging of clinical studies, the ability to affect channels and referral patterns, and the ability to access the markets in a reasonable time frame. There is no dead set formula we use; we consider each opportunity individually.”

Cheryl, speaking from the viewpoint of a small biotech said, “When marketing your electroceutical product to the investment community, it’s different than marketing a biologic, because the sales growth is going to be different, and the success metrics are going to be different. You have to have a plan that goes beyond simply getting your product approved- you also have to consider what kinds of data interesting to investors.”

One benefit that electroceuticals and implantables have over traditional drugs is that they greatly reduce the need for compliance on the part of the patient. In Cheryl’s case, MicroCHIPS is creating an implantable contraceptive that reduces the need for women to take a daily birth control pill, thereby reducing compliance issues and increasing effectiveness. Scott added that electroceuticals can also provide a different mode of delivery that in some cases can reduce the number of injections a patient needs to self-administer, also reducing compliance issues.

Martha spoke encouragingly about what she sees is a bright future for electroceuticals and digital drug delivery devices. She gave the example of how cardiac devices were initially novel therapies to treat value disorders and other types of heart disease, but have now become first line therapies. Speaking of the potential for elecroceuticals to improve treatment for patients, she said, “it’s a new opportunity; it improves patients’ quality of life with lower side effects when you don’t have to take a pill every day.”

The challenge at this stage, Martha explained, is to educate payers about the financial benefits of electroceuticals; while there is often a larger one time upfront fee for implantables, it is often cost effective over the course of 10-15 years. There is also a need to educate a new generation of physicians and surgeons on how to implant the devices. The time of greatest risk comes during the initial surgical procedure, so training physicians is key. Martha predicts that this risk will reduce over time as physicians and surgeons get better at implanting these devices.

Cheryl added that one of the issues that companies producing electoceuticals face when training surgeons is closing incisions during the implantation process in a way that minimizes scarring. Unlike heart surgery patients, many contraceptive implantation patients are young women, and the decision about whether to go with an implantable when choosing birth control is affected by whether or not the procedure will leave a visible scar. Therefore, the success of implantable contraceptive devices in the marketplace depends upon appeasing the concerns of consumers, which requires additional training for surgeons.

When asked as an investor what he looks for when financing electroceuticals, Juan-Pablo says he is interested in externally-powered devices, miniaturization, and other things that would prevent more invasive surgery. There is increasing interest in bioelectronics medicines among investors, as new companies emerge to fill unmet needs in the marketplace.