Australia is riding a wave of R&D, thanks to generous government tax incentives, as well as the quality of contract research and speed of performing clinical trials.

The incentives provide businesses investing in eligible R&D, including clinical trials, with: 

• A 43.5% refundable R&D tax offset for a company with a total annual revenue of less than $20-million (Australian) and that incur a loss;
• A 43.5% non-refundable R&D tax offset for companies with a total annual revenue of less than $20-million and that incur a profit;
• And a 38% non-refundable R&D tax offset for companies with total annual revenue of more than $20-million, irrespective of profit or loss.

“The Australian government wants to encourage innovative companies to set-up and perform R&D in Australia,” according to a 2016 study by Frost & Sullivan. 

“The current 43.5% refundable R&D tax incentive is lucrative by world standards and assists biotech companies to lower their cost of innovation and R&D,” the study points out, adding that this makes Australia a “very cost-effective jurisdiction to carry out clinical trials.”

In addition, there is the currency exchange advantage that can reduce the cost of an early-stage trial in Australia to 60% below a comparable U.S.-based study after the tax incentives.

Cameron Johnson, CEO of Nucleus Network

But Cameron Johnson, CEO of Nucleus Network, a leading Phase 1 contract research organization in Australia, contends that there are more than tax incentives attracting U.S., European and Asian clients to Australia.

In an interview, Mr. Johnson says Australia is internationally recognized for its “superior clinical research and healthcare infrastructure, world-class research capabilities and highly skilled researchers – all critical prerequisites for early-phase clinical trials.”

The quality of contract research is first rate, he adds, noting that the FDA and European Medicines Agency accept clinical trial data generated in Australia.

According to Frost & Sullivan, Australia has more than 40 universities, some linked to teaching hospitals, while many focus on clinical research; Australia has more than 50 independent medical research institutes, many operating in close partnership with universities and teaching hospitals, providing a direct interface between laboratory research and clinical practice; and Australia has more than 50 clinical trial networks that can facilitate access to both patients and clinical trial-ready infrastructure.

In recent years, pharmaceutical, medical device and biotechnology companies have conducted more than 1,000 research projects have been conducted in Australia, spending more than $1-billion on clinical trials.

According to Frost & Sullivan

“We are able to have the first patient in the clinic in four-to-five weeks, which is huge in reducing trial costs”

Mr. Johnson also points out that a simplified regulatory framework can dramatically shorten the time required to begin an early-phase clinical trial in Australia. “We are able to have the first patient in the clinic in four-to-five weeks, which is huge in reducing trial costs,” he adds.

Rather than having to file a detailed IND prior to starting a Phase 1 trial and having the documents reviewed in detail by the FDA, most commercially sponsored clinical trials in Australia are conducted under a clinical trial notification (CTN) scheme, which reduces the regulatory burden on clinical trial sponsors. 

Under the CTN, all clinical trial materials, including the trial protocol, are submitted directly to an institutional ethics committee. The ethics committee assesses the scientific validity of the trial design, safety and efficacy of the medicine or device, ethical acceptability of the trial process and trial protocol. 

Mr. Johnson also notes that the Therapeutic Goods Administration (TGA), which is the Australian equivalent of the FDA, is notified of a clinical trial after it has received site approval. The TGA does not review any data relating to the trial but has the authority to audit and enquire into the management of a clinical trial.

“The CTN scheme eliminates the duplication of processes, enabling sponsors conducting clinical trials in Australia to save both time and money,” he adds. 

Mike Watson, Nuclear Network’s Senior Director of Business Development for North America

Mike Watson, Nuclear Network’s Senior Director of Business Development for North America, says he has helped early-stage companies that were unable to finance the cost of a Phase 1 trial and were “getting ready to close their doors” to move their clinical testing to Australia, where the trial cost was about half of what was needed in the U.S.

In another case, he recalls a U.S. company that was deciding on which of its two compounds to move into the clinic. “They were able to begin Phase 1 testing of both compounds in Australia because of the cost advantage and speed of the regulatory process,” he adds.

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Russell Cox, CEO

Vital Therapies (NASDAQ:VTL) expects to report top line data from its ELAD pivotal study, known as VTL-308, in patients with severe alcoholic hepatitis (sAH), an acute form of liver failure, by the end of the third quarter of 2018.

“Our technology seeks to use the power of human liver-derived cells to promote liver recovery,” CEO, Russell Cox, says in an interview with BioTuesdays. “Our mission is to save lives because mortality in the U.S. and Europe from this acute form of liver failure is up to 50%, even with best available standard of care.”

Liver transplant currently is the only therapy proven to increase survival but the surgery is severely limited by cost and donor availability, and is not recommended for most sAH patients under current clinical guidelines. There is no other known bio-artificial liver in clinical trials in the U.S. or Europe, he adds.

According to Mr. Cox, sAH is associated with episodes of binge drinking, often after a traumatic event in a person’s life, which can lead to severe liver inflammation and dysfunction. “This can progress through increased morbidity to death.”

In an earlier VTL-208 clinical trial, he says younger patients with liver dysfunction and failure fared better after an ELAD treatment than those that also had multi-organ failure. “As a result, we have transitioned into our VTL-308 pivotal trial to study only those patients under the age of 50 with liver dysfunction and failure,” he adds.

Mr. Cox explains that ELAD is a human cell-based, bio-artificial liver support system designed to improve survival in acute forms of liver failure. Four hollow-fiber ELAD cartridges contain several hundred billion human liver-derived cells, or VTL C3A cells, weighing about one pound per treatment.

“We can grow VTL C3A cells in large quantities and we own the cell banks to create them,” he adds. 

The workhorse of the liver is the hepatocyte cell. In addition, endothelial cells are key contributors to liver regeneration. sAH patients experience increased death in both cell types from oxidative stress, steatosis, inflammation and cholestasis, among other things. 

Mr. Cox says VTL C3A cells have been shown to secrete factors that block hepatocyte and endothelial cell death in vitro.

During treatment with the ELAD system, blood is drawn from a patient and separated to isolate the plasma. The plasma then passes into the four cartridges where it contacts VTL C3A cells, allowing two-way transfer of toxins, metabolites and nutrients, which mimics liver function. 

The treated plasma is then reconstituted with blood cells and returned to the patient via a central venous line. A single treatment is continuous for about five days and certain generated proteins have been shown to circulate in a patient for up to 90 days. 

The ELAD® System: Human-cell Bio-Artificial Liver

Mr. Cox points out that VTL C3A cells have the potential to produce more than 300 identified proteins, many of which are critical to life, and carry out multiple metabolic functions. 

“Most of our work has been on the mechanism of action of proteins involved in a reduction in inflammation and promotion of cell survival, although we have identified proteins involved in physiological and metabolic support,” he contends. “You couldn’t give any one of these proteins and really help a patient in this state; you need to provide a complement of things that are required to get the liver going again.”

So if a patient has a very inflamed liver, “one of the things we’ve seen is an immediate increase in interleukin-1 receptor antagonist, a well known and potent anti-inflammatory protein, as well as other well-defined factors, including alpha-1-antitrypsin, complement C3, gelsolin and interleukin-8 that combat inflammation,” he adds.

The same holds true if cells in the liver are dying, he says. “We’ve seen a dramatic increase of proteins that aid in liver regeneration, such as amphiregulin, vascular endothelial growth factor, placental growth factor, platelet-derived growth factor-BB and growth/differentiation factor 15.”

Mr. Cox says another important discovery was ELAD’s impact on bilirubin, which he calls a true biomarker of a healthy liver. Bilirubin is formed by the breakdown of red blood cells in the body and the liver helps to excrete it. High levels of bilirubin are associated with jaundice, which is easily recognizable as a yellowing of the skin or eyes.

In three earlier studies, he says ELAD treatments resulted in significantly lower levels of bilirubin, suggesting that the liver is starting to recover. 

ELAD Associated with Improvement in Bilirubin*

Vital hopes to enroll at least 150 sAH subjects in its pivotal VTL-308 trial, with overall survival as the primary endpoint. The trial, which has enrolled 147 patients as of March 12, 2018, is being conducted at 43 clinical sites in the U.S. and Europe. Top line data are expected around September this year.

“The enrolment criteria is based on what we learned in the VTL-208 study, namely that a subset of patients under the age of 50 and without multi-organ failure, had the best overall survival,” Mr. Cox claims.  

Specifically, in the 60-patient subset in the VTL-208 study that would have met the enrolment criteria for VTL-308 trial, 93% of ELAD patients were alive after 91 days, compared with 61% in the control group. The 180-day survival for ELAD patients was 89%, compared with 48% in the control group, while the 365-day survival for ELAD was 82%, compared with 41% for control.

In a new research report, analyst Katherine Xu of William Blair said the enrolled patients have baseline characteristics tracking closely to the subset from VTI-208 that is expected to benefit significantly from ELAD, and the review of death events by a team of independent statisticians led to the conclusion that no upsizing is needed. 

“This suggests to us that VTL-308 conduct has likely been optimal, and it is well positioned to test the hypothesis of ELAD’s benefit in this patient population,” she added.

There are approximately 60,000 sAH patients across the U.S. and Europe each year. While sAH is Vital’s lead indication, the potential addressable market to be explored includes all acute and sub-acute forms of liver failure, including fulminant hepatic failure and surgery-induced acute liver failure. Citing a potential price range of $150,000 to $275,000 for an ELAD treatment, Mr. Cox suggests that a 20% to 30% market share would lead to a multi-billion-dollar market opportunity. 

By comparison, the only existing life saving therapy for acute forms of liver failure is a transplant with an estimate total cost of more than $800,000 in the U.S., and which is not recommended for patients with sAH under current clinical guidelines.  This reflects ELAD’s potential to offer significant value to the healthcare system.  

Rest of the world also represents a large market opportunity. In China alone, Mr. Cox says there are 130 million annual cases of hepatitis B, resulting in two million liver dysfunction and liver failure cases a year. “This is a health care crisis in China because there is really nothing they can do for these patients today.” 

Elsewhere, approximately 2% of the population in countries like Russia, Brazil, the Middle East and Japan is affected with hepatitis B, which translates into large numbers of liver failure cases that need attention as well, he adds.

“If VTL-308 is successful, ELAD will have shown durable improvement in overall survival in a market that is highly concentrated and lacks competition, and is clearly an unmet medical need,” Mr. Cox contends.

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Erez Raphael, chairman and CEO

DarioHealth's (NASDAQ:DRIO) diabetes managed care platform covers all facets of the disease, with a blood glucose device coupled directly to a patient's smartphone to provide 100% data-capturing, real-time insights, personalized health guidance and professional coaching.

"We are one of few solutions in the market that have a full comprehensive diabetes management platform that addresses a full coverage of data-driven monitoring, disease management and personalized coaching," Erez Raphael, chairman and CEO, says in an interview with BioTuesdays.

"This is how we guide people through their daily challenges with diabetes and how we differentiate ourselves from competing data monitoring and cloud applications," he adds.
 
The platform also can be customized to cover all facets of management and care for Type 1, Type 2, and gestational diabetes.

Mr. Raphael explains that DarioHealth, which was founded in 2011, invented a very small piece of electronic that fits into a smartphone and can turn a smartphone into a blood glucose monitor for 100% real-time data capture. 

The MyDario kit, which has received regulatory approval in the U.S., Canada, Europe and Australia, includes the electronic device, proprietary testing strips and a lancet to draw a pinhead amount of blood.

The personalized logbook and statistics can provide personalized digital guidance for a patient's insulin dose, for example, and user-controlled sharing with healthcare providers for what a patient should do next.

In addition, he says the company's managed care solution offers cloud storage of all data and automated data-drive guidance to improve patients' outcomes. And the final facet of the platform includes collaboration with professional coaching.

"We are moving from periodic data collection to continuous data, from general treatment to personalized treatment, and from theory-driven solutions to adapted data, and artificial intelligence and machine learning technology," he points out.

The approach seems to be working. DarioHealth reported revenue of almost $1.4-million for the third quarter of 2017, up from $1.2-million for the second quarter. 

Mr. Raphael says the company is guiding for 2017 revenue of about $5-million, up from $2.8-million for 2016, and will see growth continue in fourth quarter results. "We have multiple growth drivers and are forecasting strong sequential revenue growth going forward."

The MyDario kit is fully reimbursed in the UK, Australia, Canada, Italy and the Netherlands, with partial insurance coverage in the U.S., where the kit sells for an average price of $59. The company also recently launched the product in Germany.

“The Dario app is the best data management system that I’ve seen. ”

In a 2018 survey, Top Ten Reviews selected Dario has having the glucometer with the best data management app. The app is well designed and easy to navigate, Top Ten said, adding that it has animations that let you know it's reading your sample, and the display is only limited by the size of your smartphone's screen. 

"This makes it far superior to other glucometers in terms of visibility - the numbers are big, and the screen is colorful but with enough contrast that it's not distracting," the product review site said.

According to an American Diabetes Association survey in 2013, an individual with diabetes plus complications can cost the health care system almost $21,000 a year.

"Studies have shown that Dario's 1% reduction in HbA1c (a three-month average of blood glucose levels) can yield substantial savings to insurers of $80-to-$100 per patient per month," Mr. Raphael suggests.

The Journal of mHealth named DarioHealth to its Global Digital Health 100 for 2017, which recognizes health technology companies that are demonstrating the greatest potential to change the way that health care is delivered.

Last month, the company agreed to run and track the blood glucose readings of participants in a pharmaceutical company's clinical study to obtain FDA clearance for a new drug to manage diabetes. 

Mr. Raphael says the initial adoption of the company's blood glucose monitoring system in clinical study contract will not only broaden its revenue stream beyond the device and strip business, but will enable the company to continue developing new product and services.

"Our vision for the future includes more solutions that pick up where our monitoring system ends and assisting a pharmaceutical company in their clinical study will help us launch this," he contends.

The company initially began selling MyDario directly to consumers and then expanded its sales channels to pharmacies, and physician and employer groups in the U.S. "Our near-term growth strategy is to increase sales of products and services through additional B2B employer markets and health partners," Mr. Raphael says.

Dario is a personalized, pocket-sized, all-in-one glucose meter coupled with a robust real time mobile app to manage diabetes quickly, efficiently and accurately

The company's current subscription services averages $25 a month and includes the device and three-month shipments of test strips, which is competitive with most insurers' co-pays.

"Service is becoming an increasing contributor to revenue," Mr. Raphael suggests, adding that by 2019, DarioHealth hopes to generate $35-to-$55 a month from the average user by offering a coaching platform to employers and insurers plus additional digital services as well as offering the open platform to clinicians.

"We currently have access to 11% of the diabetes population globally and our growth strategy through 2019, is to expand our footprint in Europe," he says. Beyond that, DarioHealth hopes to support additional chronic conditions, such as heart disease, obesity, prediabetes and weight loss, to significantly expand its market opportunity.

Mr. Raphael says the company also plans to capitalize on a massive reservoir of data it collects for users each year. "We have developed Dario Intelligence to transform Big Data and build predictive models and artificial intelligence to meet the demands of intelligence-driven healthcare providers in the 21st century. This opens major opportunities in the area of chronic disease management for researchers and technology innovators, including management of electronic medical records, to harness the power of real-time and predictive-based health solutions."

Growth Strategy Overview

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Hezkiah Tsoory, founder and CEO

Closely-held liberDi plans to initiate in the first half of 2018 the first-in-man clinical trial of its Smart Peritoneal Dialysis System, a small, portable and automatic dialysis device, which is designed to improve patient's quality of life, and reduce treatment costs and complications.

"Patients with end-stage renal disease (ESRD) mostly travel to a dialysis center three times a week for a typically three- to five-hour procedure, while our system can complete fluid exchange in approximately 20 minutes at home, at the office or while traveling," founder and CEO, Hezkiah Tsoory, says in an interview with BioTuesdays.

"The low utilization of home dialysis is a lost opportunity to improve patient's quality of life and decrease healthcare costs," he adds, quoting from a journal article published last year.

ESRD is defined as a drop in kidney function below 10% of normal function. The treatment options for these patients are either a kidney transplant or dialysis.

There are two treatment modalities in dialysis: hemodialysis, which involves cleaning a patient's blood through a filter outside the body; while peritoneal dialysis involves introducing special fluid through a catheter into the peritoneal cavity. The peritoneal membrane around the abdomen acts as a blood filter to absorb waste products from blood vessels and removes excess fluid.

“with unique design of this product patients can safely and easily perform PD in their home. In my opinion liberDi’s product is much better than PD systems which are in the market”

According to Mr. Tsoory, only 11% of patients worldwide receive peritoneal dialysis at home because existing devices have significant limitations for patients and physicians, as well as a risk of peritonitis, an inflammation of the peritoneum that lines the inner wall of the abdomen and covers and supports most abdominal organs.

In addition, current peritoneal home dialysis systems are bulky and require a particularly cumbersome setup and complicated regimen, making this treatment unsuitable for many patients. 

He suggests that physicians are also reluctant to encourage existing home dialysis treatment because of compliance issues (as high as 30%), a lack of monitoring to verify treatment outcomes for a therapy that requires a sterile environment to avoid the risk of infection. 

Among other things, Mr. Tsoory says the liberDi system was designed to reduce infection through less handling of dialysis tubing. "Our system disinfects the tubing with each connection." There is also real-time feedback for patient and doctor, enabling good control on the treatment regimen and compliance.

To begin a liberDi dialysis cycle, Mr. Tsoory said the patient follows a few simple steps: "Open the device cover and insert a disposable cartridge, which contains a pump and disinfection unit. Attach the dialysis fluid tubing and close the cover. Attach the catheter tubing to the device to start the disinfection cycle. After 30 seconds, the patient is instructed to open the catheter valve and fluid exchange begins." 

liberDi’s Smart PD System

Following the procedure, the patient is instructed to close the catheter valve and remove the tubing from the machine. The disposable pump, disinfection unit and exchange fluid are discarded. The catheter tip which is part of the preinstalled catheter, is reused.

Mr. Tsoory says the liberDi system has the potential to be safer for patients and healthcare providers, and would allow more patients to take an active role in performing peritoneal dialysis at home. 

"Besides allowing more patients to enjoy the benefits of dialysis at home, peritoneal dialysis provides additional potential benefits such as a longer survival period than hemodialysis (up to 5 years), better preservation of residual kidney function, decreased risk of sepsis, reduced blood pressure, needle-free treatment and fewer side effects, such as nausea, cramping and weight gain," he adds.

Mr. Tsoory says that the liberDi Smart Peritoneal Dialysis System is a class 2 medical device in the U.S. and Europe. The company will be required to conduct safety and usability studies to register the product for a CE Mark in Europe and a 510(k) regulatory pathway with the FDA.

"There are reimbursement codes already established for automatic peritoneal dialysis equipment in the U.S.," he adds.

In 2017, he says the company completed design and initial testing of a second prototype device in order to begin clinical testing in the first half this year. The study will enroll about 10 patients for a study in Israel.

Following regulatory submissions, liberDi together with a dialysis service provider will conduct a global post-marketing study, leading to a possible product launch in the second half of 2019, he adds.

Time table

Mr. Tsoory suggests that liberDi's business model would consist of selling dialysis machines, disposables and software to manage patients effectively, through a medical service provider. "We also have a strong cost saving argument," he adds.

Citing 2012 figures, Mr. Tsoory says the annual cost per patient in the U.S. for hemodialysis was $87,500 and $66,750 for peritoneal dialysis, compared with about $55,000 for the liberDi system. With 414,000 patients on hemodialysis in the U.S., he figures liberDi has the potential to save the U.S. healthcare system $13.5-billion a year.

There are an estimated 3.2 million ESRD patients worldwide, including 630,000 in the U.S., of which 2.5 million are undergoing dialysis. The size of ESRD patient population is expected to grow at a compound annual growth rate of 6.2% over the next five years driven by the rise of diabetes, hypertension, obesity and other chronic conditions. 

"Virtually all patients with ESRD are candidates for peritoneal dialysis at home," Mr. Tsoory contends. "Home care should be the default."

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