Glimmers of Hope for Innovation Support in Europe

Obscured beneath bigger-and grimmer-news in a world overcrowded with events, an annual European Union policy event in mid-September might have seemed irrelevant to pharmaceutical executives. But the 2017 State of the Union address by the President of the European Commission contained more than a few nuggets that drug industry strategists are now starting to take seriously-aided by a few injections of real money too.

There was only one direct reference to health in Jean-Claude Juncker’s 6,000-word speech. Just a paragraph on equality. But that was powerful enough to jar a few preconceptions about Juncker’s attachment to health.

“In a Union of equals, there can be no second-class citizens,” he said, denouncing as “unacceptable” that in 2017 there are still children dying of diseases that should long have been eradicated in Europe. “Children in Romania or Italy must have the same access to measles vaccines as other children right across Europe. No ifs, no buts,” he said.

Juncker underlined that the Commission is working with all member states to support national vaccination efforts. “Avoidable deaths must not occur in Europe,” he said. And he announced his intention to come forward with a joint action plan on national vaccination policies.

 In itself, this determination provides an illuminating gloss to Juncker’s thinking, since he has in the past tended to duck health issues, and has provoked concerns in Europe’s healthcare community about neglect and even abandonment in future Commission planning.

Trade agenda

But the bulk of Juncker’s remarks also offered some glimpses of an approach that could equally play to the interests of the drug industry. The emphasis that Juncker has frequently put on boosting Europe’s ability to compete in the world market was even more evident in his outline of how he sees the future for the EU. Among the top priorities he spelled out were strengthening Europe’s trade agenda, making its industry stronger, and deepening the single market so that it maximized support for innovation.

Trade, he said, “is about jobs, and creating new opportunities for Europe’s businesses big and small,” expressing satisfaction with the trade agreement with Canada that is now entering into force, with agreements reached with Japan, Singapore, and Vietnam on new economic partnerships, and with the prospect of doing the same with Mexico and South American countries by the end of the year and opening trade negotiations with Australia and New Zealand. The EU’s trade ambitions have been strongly supported by most of Europe’s pharma sector, as opening up market opportunities and enhancing, in some cases, intellectual property protection beyond Europe.

On strengthening industry and the internal market, there was still more music to the ears of pharma executives pursuing investment and innovation. Europe’s global leadership in high value-added and sophisticated products and services has been built on a large single market with 500 million consumers, strong value chains, a skilled and talented workforce, and a world-class science base, Juncker acknowledged. But adjustments are needed or a new industrial age, he warned: the future of Europe’s industry-and of its workforce of 32 million people-will depend on continuous adaption and innovation, “by investing in new technologies and embracing changes brought on by increased digitization.”

Accompanying his speech, the Commission released a new industrial policy strategy, offering “a new boost for jobs, growth, and investment initiatives to be launched and/or completed by end 2018.” This will respond to deficiencies that Juncker admits to in Europe’s “enabling environment,” and will “ensure that its risk-bearing disruptive innovations will create new markets and industrial leadership in Europe rather than outside.” Action is also needed, he said, to accelerate and improve the uptake of technologies, particularly among smaller firms.

 He also highlighted the need for flexibility in regulatory frameworks that will allow innovation to develop. “We must learn to consider the perspective of innovators,” Juncker said, committing the Commission to take into account the impact on research and innovation in developing regulation in all policy areas. Carried through into the current debates on adaptive pathways for new medicines authorizations, that sort of thinking may well help to counter resistance among regulators to evolution. And within the Horizon 2020 program, that already funds the Innovative Medicines Initiative, he is creating a $3 billion Innovation Pilot scheme “to more effectively support projects focused on market-creating innovation,” with a focus on “highly promising but also potentially risky innovations.”

Backed by action

Juncker’s words coincided with some deeds that offer some tangible confirmation of intentions. The EU has just announced a series of investments in companies conducting innovative medical research, through its European Fund for Strategic Investments-the so-called “Juncker plan” introduced in 2015 to boost  competitiveness in the European economy.

One of the agreements, a $90 million loan to Evotec of Germany, breaks new ground in risk-sharing finance.  This unsecured loan facility is the first contingent investment guaranteed by the fund, meaning that the fund shares the risk of Evotec’s research and development success. It is also the first large equity-type investment by the fund in any industry anywhere in Europe. The money is being provided as long-term financing “to finance drug discovery and the development of new treatments for serious illnesses and diseases,” said the Commission at the signing ceremony for the deal. The demand for new therapies “requires innovation in drug discovery in a capital-efficient manner as well as through innovative financing models.”

The Commission highlighted the potential of Evotec’s drug discovery, such as its integrated patient-derived induced pluripotent stem cells platform, and innovative collaboration models such as its BRIDGE initiatives from Academia to Pharma.  “Since 2010, Evotec has built a pipeline of over 80 partnered product opportunities through such partnerships, spin-offs, or equity investments,” the Commission said.

Just days earlier, an agreement was finalized with German medical device company MagForce to develop new treatments for brain cancer. MagForce has developed NanoTherm therapy for local treatment of solid tumors by introducing magnetic nanoparticles and heating them in an alternating magnetic field. The financing, which permits the company to borrow up to $45 million over the coming three years subject to achieving a set of agreed performance criteria, will support NanoTherm’s Europe-wide rollout for brain cancer treatment, and European and global approval for prostate cancer.

 Austrian Apeiron Biologics is also to receive financing of $30 million to support its work in immuno-oncology, particularly in rare pediatric cancer treatments. Dinutuximab beta, its product for neuroblastoma, was recently granted marketing approval in the EU. The company is developing additional cancer immunotherapy projects based on targeted, tumor-specific approaches and on stimulation of the immune system via novel modes of action, such as unique checkpoint blockade mechanisms.

Measure of progress

In his speech, Juncker took credit for the plan, which has triggered $275 billion worth of investment so far across European industry, through loans to over 445,000 small firms and more than 270 infrastructure projects. And there is more to come. On the eve of his speech, the European Parliament and EU member states reached an agreement in principle on EFSI 2.0, extending and reinforcing the plan. The intention now is to win swift adoption of this expanded version, which will widen still further access to financing, particularly for smaller firms. EFSI’s timeline is to be extended to 2020 and the target for triggering investment is increased from $400 billion to more than $600 trillion.

Of itself, the Juncker speech does not resolve all of European pharma’s problems. But it does hold out some hope of a more constructive attitude to innovation and investment-and offers a welcome counterbalance to the pervasive atmosphere of gloom induced by a daily diet of North Korean threats, Russian meddling, and Brexit.

Reflector is Pharmaceutical Executive’s correspondent in Brussels