The Assessment and Development of Follistatin As a Gene

THE ASSESSMENT AND DEVELOPMENT OF FOLLISTATIN AS A GENE

THERAPY AND ITS POTENTIAL ORTHOPEDIC APPLICATIONS

Rohit Michael Davis

Submitted in partial fulfillment of the requirements

For the degree of Master of Science

Department of Biology

CASE WESTERN RESERVE UNIVERSITY

January, 2013

CASE WESTERN RESERVE UNIVERSITY

SCHOOL OF GRADUATE STUDIES

We hereby approve the thesis of

Rohit Michael Davis

For the Master of Science degree*.

Dr. Christopher Cullis

______

Dr. Jean Welter

______

Al Hawkins

______

Dr. Roy Ritzmann

______

Date: August 20 th , 2012

*We also certify that written approval has been obtained for any proprietary material contained therein.

Dedicated to my ever-supportive parents

Table of Contents List of Tables ...... 6 List of Figures ...... 7 Abstract ...... 8 1. Scientific Background ...... 9 1.1 Muscular Dystrophies ...... 9 1.2 Duchenne and Becker Muscular Dystrophy ...... 10 1.3 Scientific description of the Dystrophin protein ...... 11 1.4 Myostatin ...... 14 1.5 Current Muscular Dystrophy Treatments ...... 18 1.5.1 Past Treatment Efforts ...... 18 1.5.2 Therapeutic Strategies for Muscular Dystrophies ...... 18 1.5.2.1 Gene Therapy (Excluding Follistatin) ...... 18 1.5.2.2 Cell Therapies ...... 20 1.5.2.3 Pharmacological approach ...... 21 1.5.2.3.1 Aminoglycoside Antibiotics ...... 22 1.5.2.3.2 Maintenance of calcium homeostasis ...... 22 1.5.2.3.3 Reduction of inflammation ...... 23 1.5.2.4 Increasing Muscle Mass ...... 24 1.5.2.4.1 Insulin-like growth factor I ...... 25 1.5.2.4.2 Inhibition of myostatin ...... 25 1.5.2.4.3 Upregulation of utrophin ...... 26 1.6 Follistatin ...... 27 1.7 Adeno-Associated Viral Vectors ...... 33 1.8 AAV1- FS344 Product Description ...... 37 1.8.1 AAV1 (Expressing Follistatin) Vector Construction ...... 37 1.8.2 Production of the Virus Vectors ...... 37 1.9 Preclinical Development ...... 38 1.9.1 In Mice ...... 38 1.9.2 In Non-Human Primates ...... 43 1.9.3 Results ...... 44 1.10 Phase I/II Development ...... 48

1.11 Gene Therapy ...... 49 1.11.1 Historical Challenges to Gene Therapy ...... 52 1.11.1.1 Year 1970 ...... 52 1.11.1.2 Year 1980 ...... 53 1.11.1.3 Year 1990 ...... 53 1.11.1.4 Year 1992 ...... 54 1.11.1.5 Year 1999 ...... 54 1.11.1.6 Year 2000 ...... 55 1.11.1.7 Year 2003 ...... 55 1.11.1.8 Year 2008 ...... 56 1.11.1.9 Year 2009 ...... 57 1.11.1.10 Year 2010 ...... 57 1.11.2 Breakthrough in Gene Therapy ...... 58 2. Market Research ...... 60 2.1 Market Need ...... 61 2.1.1 Orphan Diseases and Drugs ...... 62 2.2 Competition ...... 68 2.3 Potential Orthopedic Applications ...... 71 2.4 Financing Plan ...... 74 2.5 Potential Mergers and Acquisitions ...... 75 3. Conclusion ...... 77 4. Bibliography ...... 78

List of Tables

Table 1: List of competitive/current research in therapies for muscular dystrophy…………67-68

Table 2: Analysis of the potential orthopedic applications of AAV1-FS344………………...... 71

Table 3: List of Mergers and Acquisition in the Orphan Drug Market (Global) 2010……. …….74

List of Figures

Figure 1: The dystrophin glycoprotein complex (DGC). (McNally &Pytel 2007) ...... 12 Figure 2: Examples of skeletal muscle biopsies in patients with muscular dystrophy. (McNally & Pytel 2007) ...... 13 Figure 3: A myostatin deficient Belgian Blue cow, a myostatin deficient whippet and a boy with naturally lower myostatin levels (Sweeney 2004) ...... 15 Figure 4: A model for the role of myostatin in muscle growth. (Thomas et al. 2000) ...... 17 Figure 5: Comparison of wild type and F66/Mstn -/- (Myostatin null mice expressing follistatin). (Se-Jin Lee 2007) ...... 29 Figure 6: A proposed model of mTOR signaling linked with Follistatin-mediated skeletal muscle hypertrophy. (Winbanks et al. 2012) ...... 31 Figure 7: Alternative splicing of Follistatin, generating two isoforms, FS317 and FS344. (Rodino- Klapac et al. 2008) ...... 32 Figure 8: Genome organization of the adeno-associated viruses. (Genetherapynet 2012) ...... 34 Figure 9: Production of the recombinant AAV vectors. (Genetherapynet 2012) ...... 36 Figure 10: Gross muscle mass is increased in all myostatin inhibitors with highest increase visible in FS-344 (Rodino-Klapac et al. 2009) ...... 39 Figure 11: Mass of individual hindlimbs and forelimbs is observed in mice injected with FS-344 (Rodino-Klapac et al. 2009) ...... 39 Figure 12: Total body mass in substantially increased (Rodino-Klapac et al. 2009) ...... 40 Figure 13: Grip strength is increased after the administration of FS-344 (Rodino-Klapac et al. 2009) ...... 40 Figure 14: The gross hindlimb muscle mass increase 180 days post injection of the AAV1 FS-344 in young mdx mice. (Kota et al. 2009) ...... 41 Figure 15: Increase in individual hindlimb and forelimb muscle mass after 180 days after administration of AAV1 FS-344 (Kota et al. 2009) ...... 41 Figure 16: A dose-dependent relation is seen in the increase in strength. (Kota et al. 2009) ...... 42 Figure 17: Macaque right quadriceps after the administration of AAV1-FS344. (Kota et al. 2009) ...... 46 Figure 18: Concentrations of human follistatin in the muscle after 5 and 15 months. (Kota et al. 2009) ...... 46 Figure 19: Increase in quadriceps size after the injection of AAV1-FS344, CMV and MCK. (Kota et al. 2009) ...... 47 Figure 20: The quadriceps enlargement observed at necropsy. (Kota et al. 2009) ...... 47 Figure 21: An overview of the number of designated orphan drugs versus the number of approved orphan drugs globally between 2001 and 2010. (Frost and Sullivan 2011) ...... 65 Figure 22: Number of Orphan approvals since the institution of the Act in 1983. (Quintiles Consulting 2006) ...... 66 Figure 23: Price ranges of 9 orphan drugs.(American Health and Drug Benefits 2010) ...... 67 Figure 24: Participation of large pharmaceutical companies in the orphan drug market. (BCC Research 2010) ...... 68

The Assessment and Development of Follistatin as a Gene Therapy and Its Potential

Orthopedic Applications

Abstract

ROHIT MICHAEL DAVIS

Muscular Dystrophies represent a group of inherited disorders that are characterized by muscle weakness and loss of muscle tissue with the symptoms generally worsening over

time. Most therapies that have been invented and researched until now have aimed at

targeting dystrophin which is the gene that is defective in muscular dystrophy patients.

However, there is substantial clinical evidence that the upregulation of follistatin results in better muscle growth and strengthening. Moreover, the use of adeno-associated viruses

ensures the efficient, specific delivery of the transgenes to the muscle that requires it.

Furthermore, the alternatively spliced variant of Follistatin used in the therapy ensures the prevention of any off-target effects that is a major concern and hurdle in gene therapy

development. In this thesis, an attempt has been made to assess the technology for its

scientific and commercial feasibility in addition to assessing possible therapeutic

applications outside the realm of muscular dystrophies.

1. Scientific Background

1.1 Muscular Dystrophies

Muscular Dystrophies are a group of inherited disorders that are generally characterized by progressive muscle weakness marked by myofiber fibrosis and necrosis and in some cases leads to respiratory and/or cardiac malfunction resulting in premature death. The onset of dystrophic muscle disease is not age-specific. When it appears earlier, the muscular dystrophy is normally associated with loss of muscle function, affecting ambulation, posture and cardiac and respiratory function. (McNally & Pytel 2007)

Muscular dystrophies that appear later are generally milder and associated with slight weakness and an inability to increase muscle mass. This genetic disorder is usually caused by mutations that result in the loss or decreased expression of certain members of the dystrophin associated glycoprotein complex which is a specialized protein network that helps to provide the signaling scaffold needed for the structural foundation of the muscle during contractions. A disruption in this protein network may lead to significant injury that in turn affects muscle growth, tone, regeneration and function. Hence, this protein network needs to be preserved for muscle development, maintenance and repair upon injury. (Handy 2009) Currently there are no known treatments that are available for muscular dystrophy. As of now the main goal of any therapeutic in this area is to control symptoms. Some of the treatments aimed at ameliorating the symptoms are:

• Physical Therapy: Helps patients maintain muscle strength and function

• Orthopedic Appliances: Braces and wheelchairs helps to improve mobility and

self-care ability of the patient

• Surgery: Surgical procedures on the spine or legs may help to improve function.

• Corticosteroids: These are sometimes prescribed for children to help them stay

mobile for as long as possible

The most commonly used treatment as of now is the administration of corticosteroids.

However, the use of these drugs is accompanied with a host of undesirable side effects such as bone loss, cataracts, delayed puberty, weight gain and hypertension. Clearly, there is an unmet need for a specific, non-invasive treatment of these conditions. The financial impact of this unmet need will be discussed in detail later on in this thesis.

1.2 Duchenne and Becker Muscular Dystrophy

The Duchenne and Becker types of muscular dystrophy are two related conditions that primarily affect skeletal muscles that are used for movement. Both of these muscular dystrophies almost always occur exclusively in males.

These conditions have similar symptoms and are caused by different mutations in the same gene. They differ mainly in their levels of severity, age of onset and the rate of progression. In the case of Duchenne muscular dystrophy, muscle weakness tends to appear in early childhood and the disease then progresses rapidly. Some of the symptoms the affected boys would suffer from are, delayed motor skills, such as sitting, standing and walking. By the time these boys reach adolescence, they are already wheelchair- dependent. In the case of Becker muscular dystrophy the symptoms experienced by the

10 affected boys are usually milder and the rate of progression of the disease is much slower.

Muscle weakness appears later in the childhood or in adolescence.

Muscular dystrophies that appear early on are usually lethal due to the associated weakness in the cardiac muscle or respiratory muscle. Duchenne muscular dystrophy

(DMD) represents the most common X-linked inherited disorder. It is caused by a mutation or several mutations in the dystrophin gene on the X-chromosome. A study showed that 40% of DMD patients lack a large gene deletion or duplication. Instead a point mutation is responsible for the disorder. (Howard et al. 2004) These point mutations are in turn responsible for the insertion of novel stop codons and this is the mechanism for the dystrophic phenotype in the mdx mouse model (explained in detail later on).(McNally &Pytel 2007)

In the case of Becker muscular dystrophy, the gene deletions only partially disrupt the dystrophin protein expression and hence result in milder symptoms. Majority of these mutations produce internally deleted dystrophin that lacks spectrin repeats. However, the core actin-binding and carboxy-terminal regions are maintained intact.

1.3 Scientific description of the Dystrophin protein

Dystrophin is a large molecule and a central component to the DGC that provides stability to the sarcolemma (Figure 1). It has a calponin-like-actin binding domain at its amino terminus and 24 spectrin repeats interrupted by four hinge points. (Koenig &

Kunkel 1990) The carboxyl terminus of dystrophin binds β-dystroglycan directly.

(Ibraghimov-Beskrovnaya et al. 1992) The amino terminus and the regions along the spectrin repeat rod domain bind to cytoplasmic γ-actin, forming a mechanically strong

11 link. (Rybakova et al. 2000) The absence of dystrophin causes muscle contraction to enhance membrane disruption and produces myofiber damage. Membrane disruption that is caused by the loss of dystrophin leads to an increase in intracellular calcium content which in turn promotes a series of pathogenic events including calcium-activated proteolysis and sarcomere dysfunction. (Alderton & Steinhardt 2000)

Figure 1: The dystrophin glycoprotein complex (DGC). (McNally &Pytel 2007)

In DMD, myopathic changes with myofiber degeneration and regeneration are observed from muscle biopsies (Figure 2). As the disease progresses, increased fatty replacement and endomysial fibrosis can be seen in the muscle. The absence of the normal sarcolemmal staining for dystrophin can be demonstrated by immunohistochemistry. The immunostaining biopsies of DMD patients for the remaining DGC components reveal secondary deficiencies in the sarcoglycans, dystroglycan, and the syntrophins, as evidence of the incomplete assembly of the remaining DGC in the absence of dystrophin.

In contrast to this, BMD patients’ biopsies changes develop at a much more slower pace, and immunohistochemical staining only shows deficient staining for certain domains of the protein.

Figure 2: Examples of skeletal muscle biopsies in patients with muscular dystrophy. (McNally & Pytel 2007)

a,b: Biopsies from two brothers. The difference in the morphological changes is clearly visible with more severe fibrosis and fatty replacement.

c: The absence of staining for dystrophin is depicted. The inset depicts the normal continuous membranous staining in the control tissue.

Simply put, Duchenne and Becker muscular dystrophies are inherited in an X-linked recessive pattern. The gene responsible for the diseases is found on the X chromosome that is one of two sex chromosomes. Since males have only one X chromosome, an

13 alteration in one copy of the gene is sufficient to cause the disease. In contrast to this, in females, both copies of the gene would have to be altered for the disease to manifest and since this is rare, X-linked recessive disorders occur more frequently in males than females. That being said, a special characteristic of X-linked recessive disorders is that the father cannot pass the X-linked traits to the son. In almost 70% of the cases, males inherit the mutation from the mother (carrier of the altered gene). In some cases, although the mother is only a carrier, she does occasionally experience mild muscle weakness and muscle cramping. (NIH, Muscular Dystrophy 2012)

1.4 Myostatin

Myostatin is a protein that is secreted and has been identified as a negative regulator of skeletal muscle mass. It is member of the transforming growth factor-β (TGF-β) that is a superfamily of genes that encode secreted factors which are responsible for regulating embryonic development and tissue homeostasis in adults. (Thomas et al. 2000) A research group (McPherron et al. 1997) described myostatin as a part of this superfamily and showed that it was expressed in developing and adult skeletal muscle. Several other research groups/articles have made an effort to demonstrate the effect and function of myostatin. One group demonstrated that myostatin-null mice showed a dramatic increase in musculoskeletal mass that was attributed to an increase in the number of muscle fibers

(hyperplasia) and the thickness of the fibers (hypertrophy). Several other groups have explained the increased muscle mass (double-muscling) in Belgian Blue and Piedmontese breeds of cattle, as a result of mutations in the myostatin coding sequence. (Grobet et al.

1997) Hence, it can be observed that it is well established that myostatin functions as a regulator of muscle mass.

Figure 3: A myostatin deficient Belgian Blue cow, a myostatin deficient whippet and a boy with naturally lower myostatin levels (Sweeney 2004)

Some of the characteristics of myostatin that is specific to the TGF-β superfamily are:

• The presence of a hydrophobic core of amino acids that are near the N-terminus

and functions as a secretory signal.

• A conserved proteolytic processing signal of RSRR (cleavage site) in the C-

terminal half of the protein.

• The facilitation of the formation of a “cysteine knot” structure by the presence of

nine cysteine residues in the C- terminal region. (Thomas et al. 2000)

Myostatin proteins are synthesized in the skeletal muscle as 375-amino acid propeptides which are proteolytically processed at the RSRR site, giving rise to a 26 kDa active processed peptides. (Thomas et al. 2000) Studies on myostatin have shown that its gene expression appears to be developmentally regulated. (McPherron et al. 1997) Myostatin gene expression is first detected in myogenic precursor cells of the myotome compartment of developing somites and the expression is continued in adult axial and paraxial muscles with each of them having different levels of myostatin expression.

Initially, reports described the expression of myostatin gene in a way that suggested myostatin expression was exclusive to skeletal muscle. However, recent publications (Ji et al. 1998) have shown that myostatin mRNA or protein is detected in other tissues such as, cardiomyocytes, Purkinje fibers of the heart and mammary glands.

With the use of genetic models, the functional role of myostatin in the control of muscle mass has been well established. However, the mechanism by which myostatin controls muscle fiber number is not yet fully understood. (Thomas et al. 2000) The loss of functional myostatin leads to hyperplasia and hypertrophy of skeletal muscle. One research group made an effort to elucidate the mechanism by which myostatin regulates the muscle mass. They hypothesized that since increased muscle fibers can result from increased myoblast proliferation and delayed differentiation, myostatin would have to have a role in controlling myoblast proliferation and cell cycle progression. Hence, through several experiments they showed that myostatin indeed regulates the cell cycle progression of myoblasts by controlling the G 1- to S- phase and G 2- to M- phase transition. (It is a "point of no return" beyond which the cell is committed to dividing

(Wikipedia 2012)) The model that this research group proposed is described in Figure 4.

Figure 4: A model for the role of myostatin in muscle growth. (Thomas et al. 2000)

1.5 Current Muscular Dystrophy Treatments

1.5.1 Past Treatment Efforts

There have been many clinical trials in Duchenne Muscular Dystrophy since the 1980’s.

(Dubrovsky et al. 1998) However, most of these trials were flawed due to poor methodology and a lack of genetic homogeneity in the patients that were being enrolled.

What did come out of these many trials is that it was theoretically established that being multicentric was the best organizational approach and this was especially true for rare diseases. Unfortunately, discrepancies in the clinical evaluation were still a big obstacle to overcome. In spite of that, over recent years a lot more parameters could be studied in clinical trials and this made the process more complex but provided more insight in contrast to earlier days. Specific efforts in gene therapies will be discussed in more detail in further sections.

1.5.2 Therapeutic Strategies for Muscular Dystrophies

1.5.2.1 Gene Therapy (Excluding Follistatin)

Gene therapy targeted to correcting muscular dystrophies could be viral, plasmid and oligonucleotide. The main aim of any possible gene therapy for muscular dystrophies would be to deliver DNA encoding dystrophin or any other therapeutic genes. Many studies using mdx mice have shown that this approach is indeed an effective one.

Moreover, it has also been established that the level of dystrophin expression is not really critical as long as the threshold levels of the therapeutic gene is achieved. (Tinsley et al.

1996) The biggest challenges with delivering the dystrophin gene is its large size, larger

18 than the cloning capacity of most of the available viral vectors, the immune response to the protein, the antigenic response to the viral vector and the difficulty in delivery of the vector to the skeletal muscle and the heart. (Bogdanovich et al. 2004) Efforts have been made to use mini-dystrophin genes (a large portion of the rod domain is deleted), that retains some level of function and is within the viral cloning capacity. However, systemic delivery still remains a challenge.

Plasmid DNA and plasmid DNA-liposome complexes have also been identified as suitable techniques for delivery of genes to the skeletal muscles specifically. Some of the advantages of this technique are that the plasmid DNA does not appear to trigger immune response and postmitotic myofibers can sustain the episomal expression of plasmids for extended periods of time. (Wolff et al. 1992) Here, the biggest challenges are inefficient transfection and the inability to introduce the plasmid DNA into a sufficiently high proportion of myofibers to actually have a phenotypic recovery affect in vivo.

Two other genetic techniques have been used in an effort to find a treatment to muscular dystrophy. Injecting chimerical RNA or DNA oligonucleotides has been successful has shown some level of efficacy in inducing specific base changes in genomic DNA of muscle cells in mdx mice and dystrophic dog models of Duchenne muscular dystrophy.

(Rando et al. 2000) Another approach is the use of antisense oligonucleotides that are complimentary to intron/exon boundaries to induce exon skipping of the mutant regions of the dystrophin protein, i.e., point mutations. A recent study using muscle cells that were derived from the patient has shown that this approach could be very specific.

(Deutekom et al. 2001)

1.5.2.2 Cell Therapies

One of the earlier approaches was cell therapy. Since myoblasts are immature muscle cells they can be theoretically be grown ex-vivo. This would mean that healthy myoblasts could be transplanted from a healthy donor into a patient affected by Duchenne muscular dystrophy. However, all the clinical trials conducted with this concept since the late

1980’s have been failures due to the high rate of cell rejection. In addition to cell rejection, the potency of the myoblasts was questionable too. From the myoblasts that did survive, most were unable to fuse or produce dystrophin in vitro. (Urtizberea 2000)

Simply put, the introduction of normal precursor cells (myoblasts) into the dystrophic muscle has shown that it results in their incorporation into the myofibers in such a way that a proportion of the nuclei in each newly formed myofiber carry at least one copy of the functional dystrophin gene. One study demonstrated that this approach was successful in explaining the relocalization of dystrophin to the sarcolemma in mdx muscle.

(Partridge et al. 1989) The experiments helped in confirming the fact that immunity was a factor in death of the myoblasts. They were able to come to this conclusion after observing a partial improvement in myoblast survival with the use of immunosuppressive medications.

Stem cell transplantation has always been a therapy of interest due to its high therapeutic potential. Primarily, the ability of the transplanted stem cells to adapt to a specific tissue phenotype is of great therapeutic potential. Studies have already shown that these kinds of cells can contribute effectively to muscle repair in mice that have undergone bone marrow transplantation. (Ferrari et al. 1998) In another study (Gussoni et al. 1999), it was demonstrated that stem cells that were derived from a person with functional dystrophin,

20 have contributed to dystrophin-positive muscle and cardiac tissue in mdx mice in vivo. In addition, it has also been shown that bone marrow transplantation from a dystrophin- positive donor to a Duchenne muscular dystrophy patient is a viable mean by which to deliver these cells to the muscle. (Gussoni et al. 2002) The biggest challenge to these procedures is the low efficiency of the procedures and that currently precludes clinical use.

1.5.2.3 Pharmacological approach

Most of the pharmacological approaches that are targeted towards Duchenne or Becker muscular dystrophies are not aimed at altering the underlying genetic defect that causes the disease. Instead, a majority of these treatment approaches employ the use of drugs to improve the disease phenotype by specifically targeting certain components of the pathophysiology. Some of the common biological endpoints are increasing muscle progenitor differentiation, the maintenance of calcium homeostasis, or the up-regulation of genes that encode compensatory proteins like utrophin. (Bogdanovich et al. 2003) The biggest advantage of the pharmacological approach is that all the drawbacks of cell and gene therapies can be overcome by this approach. However, this also means that a majority of these therapeutic approaches target a specific pathological defect and hence a combination of these therapies would have to be used and this would then increase the probability of adverse drug interaction and complications during the clinical studies.

Some of the current areas of research into pharmacological approaches are highlighted below.

1.5.2.3.1 Aminoglycoside Antibiotics

This is a novel strategy for the treatment of Duchenne muscular dystrophy. This approach arises from the ability of gentamicin, which is an aminoglycoside antibiotic, to interfere with the ability of the ribosome recognize a given stop codon. This allows translation to occur past a mutation in a given gene. This technique was found useful in allowing the read through of cystic fibrosis mutation both in vitro and in vivo. (Hamilton 2001) (Wilschanski et al. 2000)

This approach has been suggested to be useful in the small sub segment of

Duchenne muscular dystrophy patients that have truncated dystrophin from premature stop codons. (Bogdanovich et al. 2003) An increase in dystrophin expression and functional improvement has been observed in gentamicin-treated mdx mice. However, gentamicin trials in humans showed no increase in expression of dystrophin. (Wagner et al. 2001)

1.5.2.3.2 Maintenance of calcium homeostasis

The reason for considering this approach is that a number of studies have shown that calcium homeostasis is dysregulated in dystrophic muscles. The drawback though is that this mechanism is not fully understood yet. (Gillis 1999) Research groups have hypothesized that muscle activity results in microlesions in the dystrophic membrane which causes disruptions in the homeostasis mechanisms due to abnormal Ca ++ influx. The research group also observed that the clinical and pathological sparing of the extraocular muscle could possibly be due to a better maintenance of the calcium homeostasis. (Fischer et al. 2002) Many different pharmacological approaches using calcium channel blockers like

22 diltiazam / nifedipine to maintain calcium homeostasis in dystrophic muscle have been attempted and a pilot study using dantrolene that prevents the release of calcium from the sarcoplasmic reticulum has shown some positive effect.

(Johnson and Bhattacharya 1993) Downstream targets of calcium dysregulation such as the calpain inhibitor leupeptin have been effectively targeted in mdx mice.

In addition, crossing the mdx mice with transgenic mice (overexpressing calpastatin) has shown to cause a decline in necrosis. (Spencer & Mellgren 2002)

That being said, there are still not many groups pursuing this therapeutic route due to limited understanding of the underlying mechanism.

1.5.2.3.3 Reduction of inflammation

There are several lines of evidence that suggest the inflammatory process plays a significant role in the pathogenesis of Duchenne muscular dystrophy such as specific subsets of cellular exudates in muscle. (Arahata &Engel 1984) Therefore, it is no surprise that reduction of inflammation has long been considered as a target in Duchenne muscular dystrophy therapy. The use of steroids in the treatment of DMD has been established for over 40 years now and it is believed that its benefit arises from its effects on modulating immunity. (Griggs et al. 1993)

Some of the known beneficial effects of steroid therapy in patients with DMD are

(Bogdanovich et al. 2003):

• Reduction of tissue inflammation

• Suppression of cytotoxic cells

• Improved calcium homeostasis

• Stimulation of myoblasts and increase in muscle strength (up to 25%)

Again, partly attributed to their broad range of effects on cellular metabolism, the exact mechanism by which steroids act still remains unclear. The biggest drawback in the use of steroids is the host of systemic side effects that are generally observed with its use. Some of these side effects are weight gain, cataracts, hypertension, diabetes and behavioral changes. Hence, the only way to make this pharmacological approach more beneficial is to optimize and monitor the corticosteroid dose administration and manage the possible side effects.

1.5.2.4 Increasing Muscle Mass

Since decline in muscle strength is one of the most prominent features observed in

Duchenne muscular dystrophy, it makes sense to directly target pathways that are involved in muscle cell generation and regeneration. The sharp decline in muscle mass and strength in DMD patients occur mainly due to the inability of the dystrophic muscle to adequately repair and/or regenerate in the case of mechanical stress and disease progression. (Bogdanovich et al. 2003) Hence, a number of approaches have been aimed at increasing muscle mass via stimulation of pathways activate or increase the commitment of satellite cells or inhibition of the negative regulators of these processes. (Zammit & Partridge 2002) Some of the pharmacological approaches that have been aimed at increasing muscle mass/strength are as follows:

1.5.2.4.1 Insulin-like growth factor I

This is an example of a positive regulator of muscle growth. IGF-I has a significant effect on muscle precursor activation and proliferation. Lower levels of IGF-I has been observed in elderly patients and the overexpression of IGF-I has demonstrated a prevention of aging related loss of muscle mass and function which can be attributed to hypertrophy and increased muscle strength. (Bogdanovich et al. 2003) Hence, the delivery of this growth factor should theoretically lead to an increase in muscle mass. The beneficial effects, functional improvement and restoration of muscle strength, has already been observed by the delivery of IGF-I in mdx mice. (Barton et al. 2002) Clinical trials are yet to be conducted in humans.

1.5.2.4.2 Inhibition of myostatin

As mentioned earlier myostatin is a member of the transforming growth factor (TGF) β superfamily and is a negative regulator of functional muscle mass. Apart from the genetic approach of blocking myostatin using follistatin (that is being discussed in this thesis) there have also been pharmacological approaches to blocking myostatin via anti-myostatin antibodies and other myostatin blockade strategies. Studies by a research group (Bogdanovich et al. 2002) have shown that by blocking endogenous myostatin using anti-myostatin antibodies, an improvement in the anatomical, physiological and biological state is observed in the dystrophic phenotype in mdx mice.

1.5.2.4.3 Upregulation of utrophin

Another approach that has been studied extensively is the upregulation of

utrophin. The potential therapeutic benefit in DMD patient is believed to

be relatively high based on the analysis of level of improvement using

transgene-mediated utrophin upregulation. Theoretically, utrophin

upregulation could be achieved by different methods in dystrophin-

deficient muscle since the utrophin protein has been described to be

sensitive to intracellular degradation and hence inhibition of proteases is a

potential method of stabilizing the pre-existing utrophin that is within the

muscle. There has not been sufficient research in the regulatory

mechanisms that controls utrophin expression. (Bogdanovich et al. 2003)

However, recent progress in understanding promoter activation using

peptides, signaling molecules and transcription factors involved in the

expression of utrophin still makes this a promising future avenue for DMD

drug development.

As can be observed from these several approaches, there are still many obstacles that have to be overcome such as limited understanding of the underlying mechanisms, delivery method, undesirable side effects, lack of localized method of delivery, etc.

Almost all of these obstacles have been addressed and overcome by the adeno-associated virus mediated delivery of follistatin. The technology is described and assessed both scientifically and commercially in further sections.

1.6 Follistatin

Follistatin is the gene that is delivered in the technology employed by Milo

Biotechnology. In this section the structure and function of follistatin will be explained in detail.

Follistatin was first extracted from follicular fluid and was described to be a single-chain gonadal protein that had a primary function of specifically inhibiting the follicle stimulating hormone (FSH). Hence, it was previously called FSH-suppressing protein

(FSP). It is now established that the primary function of the protein is the binding, negative regulation/bio neutralization of members of the TGF-β superfamily. Follistatin is produced by the folliculostellate cells of the anterior pituitary gland. These cells make a number of contacts with endocrine cells of the anterior pituitary. One of the primary targets for follistatin is activin. Activin is known to have a significant role in cellular proliferation. Hence, follistatin in turn regulates against uncontrolled cellular proliferation in addition to facilitating cellular differentiation. (Ueno 1987) As can be seen, both of these roles are critical in rebuilding and repair of tissues, which could be a reason for its abundance in the skin.

Most of the current research that is being carried out on/with follistatin is with respect to its function as a regulator of muscle growth. This is due to the realization of the tremendous potential that follistatin has in inhibiting myostatin and its potential as a therapeutic in muscular degenerative disorders like muscular dystrophies.

As mentioned earlier, myostatin has been established as a negative regulator of skeletal muscle mass. (McPherron et al. 1997) This was observed in mice that were homozygous

27 for a deletion of the myostatin gene, with an exhibition of dramatic and widespread increase in muscle mass as a result of a combination of increased fiber number and muscle hypertrophy. This identification of myostatin and its biological function as a negative regulator of muscle growth, led to the realization that inhibition of the myostatin would be an effective strategy for increasing the muscle mass and strength in patients that were afflicted muscular degenerative disorders, like muscular dystrophy. Follistatin has been shown to be able to bind directly to myostatin and inhibit its activity in receptor binding and reporter gene assays in vitro . (Rodino-Klapac at al. 2009) Another research group in London (Amthor at al. 2004) conducted several experiments to further understand the interaction between follistatin and myostatin at a molecular level. They found that follistatin and myostatin are actually expressed close to each other or in overlapping domains which suggested their possible interaction during muscle development. Furthermore, they conducted other interaction experiments in different models and found that myostatin and follistatin interact directly with each other during muscle development. They also found that a single domain of follistatin was unable to associate with myostatin which led them to believe that the entire protein (follistatin) was required for the interaction. Finally they discovered that myostatin causes the drastic decrease in expression of two key myogenic regulatory genes, Pax-3 and MyoD.

However, they did resolve that in the presence of follistatin, myostatin is unable to block these two key myogenic regulatory genes. This study is helpful in understanding the mechanism of action behind the increased muscle mass in the presence of follistatin.

In addition to this, recent research has shown that follistatin may have more than just a myostatin inhibition function in the muscle growth pathway. This was observed when a

28 research group (Se-Jin Lee 2007) experimented with myostatin null mice. They found that the muscle size in the myostatin null mice carrying a follistatin transgene was four times the muscle size in myostatin null mice (wild type) as can be seen in Figure 5. This led them to believe that there were other regulators of muscle mass and the effect of follistatin extended to more than just inhibiting myostatin.

Figure 5: Comparison of wild type and F66/Mstn -/- (Myostatin null mice expressing follistatin). (Se-Jin Lee 2007)

A more recent research group (Winbanks et al. 2012) has made an attempt at explaining the extended function of follistatin in regulating skeletal muscular growth. After conducting several experiments they found that the increase in muscle mass with the systemic delivery of follistatin was concomitant with increased protein synthesis mammalian target of rapamycin (mTOR) activation. Further they observed that inhibition of mTOR resulted in the attenuation of these effects. They also deduced that Smad3 was a very important intracellular link that facilitated the effects of follistatin on mTOR signaling. They experimented by consecutively expressing active Smad3 and found that skeletal muscle growth induced by follistatin and follistatin-induced mTOR signaling were both significantly suppressed. An important aspect to be noted is that these events

(mTOR signaling and Smad3 regulation) by follistatin both occurred independently of overexpression or knockout of myostatin. Hence, it was concluded that Smad3 in fact had a critical role in the follistatin-mediated skeletal muscle growth and that it was independent of myostatin-driven mechanisms. (Figure 6) (Winbanks et al. 2012)

Figure 6: A proposed model of mTOR signaling linked with Follistatin-mediated skeletal muscle hypertrophy. (Winbanks et al. 2012)

A key feature of the product developed by the research group at Nationwide Children’s

Hospital (Kota et al. 2009) is the use of an alternatively spliced isoform of follistatin. The follistatin gene contains six exons and alternative splicing of the gene generates two different isoforms, i.e. FS317 and FS344. (Rodino-Klapac et al. 2008)

Figure 7: Alternative splicing of Follistatin, generating two isoforms, FS317 and FS344. (Rodino-Klapac et al. 2008)

The isoform that is used by the Nationwide Children’s Hospital group is FS-344. This is very important as it is the method by which the problem of off-target binding is prevented.

The FS-344 variant undergoes peptide cleavage to produce the FS-315 isoform in contrast to the other variant FS-317 that gives rise to the FS-288 isoform. The human FS-

344 variant only generates the serum circulating FS-315 isoform of follistatin and also

32 includes a c-terminal acidic region. (Shimasaki et al. 1988) The FS-317 isoform lacks this

C-terminal acidic region and hence shows preferential localization to the ovarian follicular fluid and also shows high tissue binding affinity through heparin sulfate proteoglycans. This in turn could affect reproductive capacity and bind to off-target sites.

(Lin et al. 2003) FS-288 is the membrane bound form of follistatin (Sugino et al. 1993) and shows high affinity for the granulosa cells of the ovary. Hence, FS-344 is the ideal gene for this application as it does not exhibit any off-target binding or affinity to any other sites which is one of the major concerns for gene therapy. Historically, this has proven to be a major obstacle in the clinical application of gene therapies as will be discussed in further sections.

1.7 Adeno-Associated Viral Vectors

Basically, adeno-associated viruses (AAV) are small, non-enveloped, single stranded

DNA viruses that require helper viruses to allow efficient replication. (Xiao et al. 1998)

The specialty of these viruses is that it can insert genetic material with almost 100% certainty. “Adeno-associated viruses are 4.7 kb long and are characterized by two inverted terminal repeats (ITRs) and two sets of open reading frames that encode the Rep and Cap proteins.” (Xiao et al. 1998) The main function for both of these proteins is to regulate the AAV replication and integration. Both of these ITRs are the only cis elements that are essential for all the steps in the life cycle for the AAV. (Figure 8)

Figure 8: Genome organization of the adeno-associated viruses. (Genetherapynet 2012)

AAVs have been found in a variety of animal species such as humans, non-human primates, canines and fowls. There are many serotypes of AAV that have been extracted from different animal species:

• AAV-1 has been isolated from primates

• AAV-2, AAV-3 and AAV-5 have been isolated from humans

• AAV-6 has been isolated from a human adenovirus preparation

The most characterized primate serotype is AAV-2 because its infectious clone was the first one to be made. (Samulski et al. 1982) Most primate AAVs exhibit more than 80% homology in nucleotide sequence.

There are several reasons why AAVs are considered an efficient and promising vector for human gene therapy. They are not associated with any kind of human disease and are mostly not considered pathogenic. The biggest advantage of wild-type AAV is that it is capable of integrating into the chromosome of the host in a site specific manner. (Kotin et al. 1990) If the Rep proteins are provided in trans (in contrast to the general cis conformation), the recombinant AAV can integrate into tissue culture cells at chromosome 19. (Balague et al. 1997) Several publications have also shown that transduced genomes of AAV confer long-term gene expression in several different tissues such as muscle, liver, brain and retina. (Fisher et al. 1997) (Kaplitt et al. 1994)

Initially a major hurdle in the use of adeno-associated viruses was the production of lower titer. However, with the advent of new methods of producing high-titer rAAV that obstacle is now easily overcome. A pictorial description of the recombinant AAV production process is provided in Figure 9.

One possible reason for choosing AAV-1 in this study is that only AAV-1 and AAV-4 are considered to be simian viruses, since they were isolated from non-human primates.

No monospecific antibodies to the virus have been detected in the human serum yet due to this characteristic. This makes AAV-1 a perfect candidate for use in human gene therapy to avoid immune response and in patients that have developed anti-AAV-2 neutralizing antibodies (NAB) due to naturally acquired infection. (Xiao et al. 1999)

Hence, an important consideration for chronic diseases is the effect of humoral immune response to the AAV vectors on human applications of gene therapy. It has been observed that AAV expression persists for a prolonged period of time in most target organs. In situation where it may be necessary to re-administer the vectors more frequently over a short period of time, other strategies may have to be researched to blunt the initial humoral immune response. (Xiao et al. 1999)

Figure 9: Production of the recombinant AAV vectors. (Genetherapynet 2012)

1.8 AAV1- FS344 Product Description

1.8.1 AAV1 (Expressing Follistatin) Vector Construction

The research group at Nationwide Children’s Hospital purchased the cDNA for

the human follistatin-344 from Origene (Rockville, MD) and then sub cloned it

into two different AAVI vector plasmids. (Handy 2009) One of them contained

the MCK (muscle creatine kinase) promoter and this AAV1-MCK-FS was sub

cloned into the KpnI/XbaI (restriction) sites of the AAV-ITR (Inverted terminal

repeat) vector plasmid. The second one contained the CMV (cytomegalovirus)

promoter and this AAV1-CMV-FS was sub cloned into the EcoRI/XbaI sites of

the AAV vector plasmid.

1.8.2 Production of the Virus Vectors

According to the Chalonda Handy (member of the research group at Nationwide

Children’s Hospital), “the recombinant AAV (rAAV) vectors were produced

using triple transfection calcium phosphate precipitation in human embryonic

kidney carcinoma HEK293 cells. Single stranded AAV2-ITR based MCK or

CMV vector with a plasmid encoding Rep2Cap9 sequence was used to produce

AAV1. Next, for virus purification, clarified 293 lysates were obtained by

sequential iodixanol gradient purification and ion exchange column

chromatography using linear NaCl salt gradient employing vector services from a

company called Virapur, LLC (San Diego, CA). Virus was then dialysed against

phosphate buffered saline (PBS) and formulated with 0.001% Plutonic-F68 to

prevent virus aggregation and stored at 4 oC.” (Handy 2009)

1.9 Preclinical Development

This section includes a description of the preclinical development achieved by the research group at Ohio State University and Nationwide’s Children Hospital.

1.9.1 In Mice

The first experiment was performed to test for an optimal gene product to then be

clinically advanced. To achieve this, follistatin had to be first compared to other

genes that have also shown to be myostatin-inhibitory. The two genes that were

tested were growth and differentiation factor-associated serum protein-1 (GASP-1)

(Hill et al. 2003) and the follistatin-related gene (FLRG) (Tsuchida et al. 2000).

Under the control of a strong cytomegalovirus (CMV)-based promoter, three

different AAV-1 vectors were prepared that encoded for FS-344, GASP-1 and

FLRG. These vectors were then injected into the quadriceps and tibialis anterior

muscles of wild-type mice. Increase in body mass and muscle enlargement was in

fact seen in all the three transgenes that were tested. However, the highest

increase of muscle mass was observed in mice that were injected with FS-344

(Figure 10, 11). Furthermore, increased muscle mass was specifically seen around

the site of injection in the hindlimbs muscles and surrounding areas as far as the

triceps (Figure 12). This led them to believe that, originating from the site of the

injection, the inhibitors were secreted into circulation throughout the hindlimbs.

Functional improvement in the form of increase in hindlimb grip strength (Figure

13) was observed in addition to increase in muscle size. Regarding safety, no

detrimental effect was observed on the cardiomyocytes, nor was there any change

in reproductive capacity or activity in the mice treated with the AAV1 carrying

the FS-344 transgene. Since follistatin modulates the gonadal tissue it would be

expected to see some alterations in those tissues. However, no pathological

alterations were observed in the gonadal tissues, heart, liver or kidneys of the

mice that were treated with the FS-344 transgene (compared with controls).

Figure 10 : Gross muscle mass is increased in all myostatin inhibitors with highest increase visible in FS- 344 (Rodino-Klapac et al. 2009)

Figure 11 : Mass of individual hindlimbs and forelimbs is observed in mice injected with FS-344 (Rodino- Klapac et al. 2009)

Figure 12 : Total body mass in substantially increased (Rodino-Klapac et al. 2009)

Figure 13 : Grip strength is increased after the administration of FS-344 (Rodino-Klapac et al. 2009)

A second experiment was conducted to evaluate the potential of AAV1 FS-344 to increase in the muscle mass and strength in addition to delaying muscle degeneration in mdx mice. At 3 weeks, the quadriceps and tibialis anterior muscles were injected and then followed for 5 weeks before necropsy (Rodino-

Klapac et al. 2009). The mice that received a high dose exhibited a 15-fold increase in its serum follistatin while those that received a low dose exhibited a 6 fold increase. Similar to the previous study, greatest increase in muscle size was observed in the mice that that were injected with follistatin. In addition, a dose

40 dependent relationship was observed with increase in muscle mass and strength occurring with an increase in dose. This can be observed in Figures 14-16.

Figure 14 : The gross hindlimb muscle mass increase 180 days post injection of the AAV1 FS-344 in young mdx mice. (Kota et al. 2009)

Figure 15 : Increase in individual hindlimb and forelimb muscle mass after 180 days after administration of AAV1 FS-344 (Kota et al. 2009)

Figure 16 : A dose-dependent relation is seen in the increase in strength. (Kota et al. 2009)

The last experiment conducted on the mice was to establish the therapeutic effect of follistatin delivery in older mdx mice. The genes were injected at 210 days of age and these mice still demonstrated significant increase in muscle strength after the administration of FS in the quadriceps and tibialis anterior muscles. They demonstrated this continuous increase for 60 days after administration after which a plateau in the increase was reached, with the increased strength persisting for the whole 560 days over which the study was conducted. Interestingly, reduced inflammation and endomysial connective tissue in the diaphragm was observed which, as previously predicted, could be other potential therapeutic applications for follistatin.

1.9.2 In Non-Human Primates

Very often, preclinical studies in smaller animal models like mice, does not translate accurately into clinical studies. Hence, it is beneficial to carry out tests in larger animal models like non-primates before going into humans, since the results from these tests correlate to human a lot better than in smaller animal models.

Since the research group at Nationwide Children’s hospital achieved such positive results in their study in mice, they decided to then test the injection in a larger animal model before going into humans. The group chose the cynomolgus macaque for the experiments. First, under the control of the ubiquitously strong cytomegalovirus promoter (CMV-FS), the AAV1-FS344 was injected into the right quadriceps muscle of six normal cynomolgus macaques. (Kota et al. 2009)

The CMV promoter ensures the specific gene expression into the muscle. Every animal received three 500 microliter doses of the vector into the midpoint of the quadriceps muscle. Each dose consisted of 1x10 3 vector genomes and the product of the human transgene FS-344 had a 98% homology with follistatin in the non- human primate in this study. In these experiments the contralateral non-injected quadriceps served as the control. Another control to ensure no remote effects of naturally occurring follistatin was that parallel studies were conducted in same age, untreated macaques. In addition to that, since gene transfer can sometimes be compromised by the immune system, which has been previously been documented in preclinical development (Sabatino et al. 2005) and human gene therapy trials (Manno et al. 2006), so the animals were maintained with

43 immunosuppressant, tacrolimus and mycophenate mofetil, 2 weeks before the administration of the vectors. (Kota et al. 2009)

1.9.3 Results

All three CMV-FS treated monkeys (injected with AAV1-FS344 and necropsied at 5 and 15 months) demonstrated significant increases in follistatin unlike the minimally elevated levels seen in the muscles of monkeys that were injected with the MCK-FS vectors. (Figure 17) In addition to this, the external circumference of the macaques’ quadriceps was measured every 4 weeks over 20 weeks. The macaques that were treated with the CMV-FS vectors exhibited a 15% increase in quadriceps muscle external circumference at 8 weeks after treatment. The muscles that were treated with the MCK-FS too showed a 10% increase in quadriceps external circumference. However, this was much more delayed than with the

CMV-FS (12 weeks vs. 8 weeks). After a few weeks there was an overlap in the circumference of the MCK-FS treated quadriceps and the untreated control quadriceps. Furthermore, it was observed that increase in circumference of the quadriceps treated with AAV1-FS344 was not just temporary but lasted until the tests were carried out at 60 weeks. Hence, it was concluded that expression of the

FS344 transgene under the ubiquitously strong control of the CMV promoter resulted in significant increase in follistatin, relatively much more than was achieved by the treatment of the muscles with the MCK promoter.

Another important experiment that was performed was to prove the absence of immune response. Initially the macaques were administered with

44 immunosuppressant to effectively uptake the gene vectors. Hence, the research group could not be sure there indeed was an absence of immune response to the

AAV1 vectors. To confirm this fact, they used the ELISpot technique, which is the enzyme-linked immunospot assay, to detect any kind of antigen-induced secretion of cytokines by T-cells that were isolated from the peripheral blood mononuclear cells (PBMCs) monthly. Throughout this study, the research group did not find any antigen specific responses to either follistatin or the AAV1 vectors in both the CMV-FS and MCK-FS groups. This suggests that no immune response was elicited by the adeno-associated viral vectors with the expression of the FS-344 gene.

The last test that was conducted on the macaques was for long term toxicity and thereby the safety of the product. The research group performed various hematological and biochemical tests every 4 weeks for the whole of the 15-month study period. No abnormal changes were observed in either the CMV-FS or the

MCK-FS groups from the baseline in the liver, kidney, muscle function or in hematopoiesis. Even reproductive capacity and ability was maintained at normal levels, the female macaques all maintained normal menstrual cycles as well the male macaque sperm having the same motility and count. (Kota et al. 2009)

The only drawback of this study is that the macaques that were chosen did not have any kind of muscle degenerating disorder. Hence, although the preclinical experiments demonstrate the long term safety and proof that the follistatin actually does modulate the growth patterns of muscle, it still does not serve as sufficient proof for clinical efficacy. This stage of development however focuses

more on the above achieved targets rather than showing clinical efficacy which is

what the Phase I/II clinical trials are in place for.

Figure 17 : Macaque right quadriceps after the administration of AAV1-FS344. (Kota et al. 2009)

Figure 18 : Concentrations of human follistatin in the muscle after 5 and 15 months. (Kota et al. 2009) 46

Figure 19 : Increase in quadriceps size after the injection of AAV1-FS344, CMV and MCK. (Kota et al. 2009)

Figure 20 : The quadriceps enlargement observed at necropsy. (Kota et al. 2009)

1.10 Phase I/II Development

Now that preclinical trials and development showed all positive results, the next step for the research group at Nationwide Children’s Hospital was to start the testing the possible therapeutic in humans. To achieve this, a Phase I clinical trial for the intramuscular gene transfer of rAAV1.CMV.huFollistatin344 to patients with Becker Muscular Dystrophy and Sporadic Inclusion Body Myositis is underway at Nationwide Children’s Hospital.

The clinical trial is currently employing 6 patients with Becker Muscular Dystrophy and

15 patients with sIBM. One may consider this to be a low sample set for a clinical trial.

However, the FDA recognized the rarity of these disorders (orphan disease- will be discussed in more detail in further sections) and does not expect to see a high number of patients tested for these conditions. The main objective of this trial is to establish safety in humans and thereby demonstrate its efficacy in humans too.

The design of the clinical trial will be very similar to the preclinical development since it has already demonstrated efficacy. rAAV1.CMV.huFollistatin344 will be injected directly into the quadriceps of patients with BMD and sIBM. The dosing regimen will be chosen based on the pre-clinical dose escalation studies. According to the research group the low dosage gene transfer would be 2 x 10 11 vg/kg and would be initially injected into the quadriceps of one leg of the first batch sIBM patients. This dose would then be diluted to 6ml and 0.5 ml from that solution would be injected at 12 different locations on the thigh. Depending on the outcome (adverse effects) from this round of dosing, the next batch of 6 patients will be treated with a higher dosage 3x10 11 vg/kg and then again if there are no adverse effects observed the next level of dosage of 6x10 11 vg/kg will be administered to the patients.

Apart from the primary outcome of safety there are several secondary outcomes that will be measured from these experiments too. These are as follows:

• Muscle function and strength – This will be measured using the 6-Minute Walk

Test, improved time for stair climbing, step up, time up and go (TUG) and

MVICT (isometric force measure) that are all standard tests for this outcome.

• The MRIs of the quadriceps would be taken at baseline and then at 180 days.

• Muscle biopsies on the quadriceps muscles (baseline on one leg and after 180

days on the opposite leg) and several other indicators will be measured and

analyzed to assess efficacy of the follistatin delivery.

• Thigh circumference measurement would also be performed at baseline and after

180 days, post gene transfer.

This study is planned to for a two-year period. Patients in the study will be tested at baseline and then return for follow up visits at 7, 14, 30, 60, 90 and 180 days. In addition, immune response studies will also continue throughout the duration of the study by obtaining blood samples of the patients (Collected locally and then shipped to

Nationwide).

1.11 Gene Therapy

Gene therapy is basically the alteration of genes inside the body to prevent or cure a disease. Genes contain DNA that codes for most of the body’s form and function. The information held within the genes is used to manufacture proteins that carry out several different functions in the body such as growth and regulation of body systems. These genes are either turned on or off to regulate cell activity.

Aberrations in the genes can cause diseases. Hence, the main target of gene therapies is to replace or add a new gene to make up for the loss of the existing gene and make changes in the body that help combat the disease more effectively. As a high level overview, the three currently accepted and attempted modes of action via gene therapy are (Mayo

Clinic 2010):

• Replacing the missing or mutated gene – This is probably the most common gene

therapy approach in current times. In diseases that have been caused due to the

permanent shut down of a gene, this approach is especially helpful. A good

example of this is the common tumor suppressor gene that is called p53. This

gene generally prevents the growth of tumors in the body. Many instances of

cancer have been traced back to a defective or missing p53 gene. Hence,

theoretically, if the p53 gene could just be replaced it would mean that the cancer

cells would die.

• Modulating the regulation of the gene – This would mean the down-regulation of

mutated genes that cause the disease and up-regulation of genes that are healthy

and prevent the onset of disease or its symptoms.

• Highlighting the diseased cells to the immune system – There are some cases in

which the immune system does not attack the diseased cells simply because it is

unable to recognize the diseased cells as antigens or ‘intruders’. In these cases, it

would be possible to introduce genes into the mutated cells in such a way that the

mutated cell becomes more recognizable to the immune system.

On the other hand though, there are several risks involved in the use of gene therapy. The first and biggest challenge with gene therapy is the delivery mechanism. The genes

50 cannot simply be inserted into the cell and requires a vector for its expression in the cell.

The most commonly used one at this time are viruses because they can recognize specific cells and carry the genetic material into the cells’ genes. Some of the specific risks with this delivery technique are (Mayo Clinic 2010):

• Immune response – The body’s immune system may recognize the introduced

viruses as foreign bodies and attack them. Apart from rejecting the gene therapy

itself, this may also cause inflammation, toxicity and in some severe cases organ

failure.

• Spread of the virus – Due to the capability of viruses to attack more than one type

of cells, there is always a possibility of viral vectors infecting off target cells and

possible damaging healthy cells, causing more diseases including cancer.

• Regaining infectious capability – Another dangerous possibility is that once the

virus is introduced into the body it may reverse to its original form and cause

disease within.

• Tumor inducing capability – In the event of the gene being delivered to wrong

cell or wrong spot in the genome there is always a possibility that this may lead to

tumor formation. This has actually a few times in clinical trials.

Apart from this there are several other risks of the new DNA inserted into the body, affecting reproductive capacity, i.e. the egg cells in women and the sperms in men. A more detailed description of the downfalls faced over the years in gene therapy is listed in the next section.

1.11.1 Historical Challenges to Gene Therapy

In this section an attempt has been made to list and describe the historical pitfalls of gene therapy in clinical attempts from as early as 1970. This helps to put into perspective the difficulties that gene therapy trials have faced and how each obstacle has been methodically overcome. More importantly it will also be explained how the current technology being discussed in this thesis (AAv1-FS344) has overcome those issues, with reasons why it could specifically be successful.

The journey of gene therapy research has been a slow and trudging one due to certain serious mishaps which lead to discouragement of inventors researching in this field. However, encouraging human efficacy results in a long list of inherited conditions such as X-linked adrenoleukodystrophy (ALD), β-thalassemia, Leber’s congenital amaurosis and severe combined immunodeficiency that have previously been considered untreatable, has reignited the hope that gene therapy is still a viable solution in these and many other cases. Some of the important failures/ milestones observed in the path of gene therapy from when it was first conceptualized are listed (Sheriden 2011).

1.11.1.1 Year 1970

Before the establishment of DNA recombinant tools, Stanfield Rogers and

his team in Tennessee administered wild-type Shope papillomavirus to 2

young girls that were severely handicapped by a nitrogen metabolism

disorder called hyperargininemia. Unfortunately, this was a failed attempt

52 due to the wrong assumption that the girls’ genetic aberration would be corrected by the virus that expressed an arginase enzyme.(Friedmann 1992)

1.11.1.2 Year 1980

The first gene therapy trial using recombinant DNA was conducted by

Martin Cline of UCLA (University of California, LA). This experiment involved the extraction of bone marrow cells form two patients, in Italy and Israel, who had inherited the disorder that caused insufficient hemoglobin levels called β-thalassemia. These cells were then isolated and transformed with the human β-globin gene. In a strange turn of events, the review committee on reviewing the protocol revealed that they had not been informed of the delivery of recombinant DNA and hence Cline was later sanctioned by the NIH, found to be in breach federal and NIH regulations.

1.11.1.3 Year 1990

The first approved gene therapy trial was awarded by the NIH to French

Anderson and his research team. The group conducted a retroviral- mediated transfer of the gene encoding ADA into the T cells of two children with severe combined immunodeficiency. (Blaese et al. 1995) Of the two patients, one girl demonstrated only a temporary response while the other patient’s response was even lesser.

1.11.1.4 Year 1992

The next milestone was the first human gene therapy trial that involved genetically modified stem cells for the treatment of SCID. Claudio

Bordignon and his team conducted these experiments in two infants with

SCID. The method was to co-administer autologous peripheral blood lymphocytes and hematopoietic stem cells, both of which had undergone retroviral-mediated transfer of the ADA gene. The outcome was the reconstitution of the subjects’ immune system and correction of growth failure, although enzyme replacement therapy was required in conjunction.

(Bordignon 1995)

1.11.1.5 Year 1999

This year was marked with the first severe negative outcome for gene therapy trials and took gene therapy research down a few notches. Jesse

Gelsinger who was an 18 year old with a mild form of ornithine transcarbamylase (OT), a nitrogen metabolism disorder, was the first person to die of a gene therapy trial because of vector-associated toxicity.

(Sheridan 2011) After undergoing an adenoviral vector mediated infusion of the gene encoding OT to his liver, Jesse experienced a severe inflammatory response. This led to a lung failure which then led to multiple organ failures. After significant amount of investigation it was uncovered that there were several protocol violations and failures to report previous adverse events that would have ruled Jesse out of the study due to his liver condition. The case ended with the investigators being either

54 suspended or issued some other form of punishment, fines were levied on the university and it also led to the uncovering of several other cases that were underreporting their adverse events. (Branca 2005)

1.11.1.6 Year 2000

The next event again was almost as disappointing as the previous year.

Two researchers at the Necker Hospital for Sick Children reported substantial clinical improvement in two children with the X-linked SCID.

These patients had their bone marrow cells modified by the transfer of the gene encoding the interleukin-2 receptor gamma chain encoded by a murine retroviral vector. (Cavazzana-Calvo et al. 2000) It was considered as the first smooth success in the field. However, this was short lived as, of the twenty children that involved in the treatment, 5 of them developed leukemia soon after and one of the children died due to the activation of proto-oncogenes that promoted T-cell proliferation by an enhancer sequence encoded by the vector. (Sheridan 2011)

1.11.1.7 Year 2003

This year was marked by the approval for commercialization of Gendicine, a gene therapy targeted at head and neck cancer developed by Shenzhen

SiBiono GenTech. Gendicine is a modified adenovirus vector encoding p53 tumor suppressor genes. Two years later another Chinese company achieved approval for their gene therapy H101, which is based on Onyx-

15 a recombinant oncolytic adenovirus. This gene therapy, developed by

Sunway Biotech in Shanghai, is also targeted towards p-53 deficient tumor cells. (Sheridan 2011)

In the same year, the first human trial involving a lentiviral vector was performed. (Levine et al. 2006) The aim of the phase I study that was conducted in HIV patients who had failed antiviral therapy, was to assess the safety of a conditionally replicating HIV 1-derived vector expressing an antisense sequence against the HIV-1 envelope gene (Sheridan 2011)

1.11.1.8 Year 2008

5 years later Introgen Therapeutics filed the first biologics license application for Advexin (contusugene ladenovec) to the FDA. Advexin is a modified adenovirus vector carrying the p53 tumor suppression gene and was originally granted the fast track designation, in head and neck cancer, by the FDA. However, the FDA refused the company’s request to review and stated the reason as incompleteness. The company, soon after, filed for bankruptcy.

Another event that year that was notable in gene therapy research was the

European approval of Cerepro (sitimagene ceradenovec) for the treatment of malignant glioma. However, only a year later, the Committee for

Human Medicinal Products cited a negative risk-benefit profile due to insufficient efficacy and the risk of hemiparesis which is the slight paralysis of one side, coupled with seizures.

1.11.1.9 Year 2009

This year saw the successful trials of an AAV mediated transfer of a gene encoding retinal pigment epithelium-specific 65 kDa protein (RPE65).

Jean Bennett from the University of Pennsylvania reported an eight year old boy with Leber’s congenital amaurosis, attaining normal eyesight after the administration of the aforementioned gene therapy. This disorder causes severe vision loss and all patients that were enrolled in the trial gained some improvement in eyesight. (Maguire et al. 2009)

1.11.1.10 Year 2010

The next major event was the filing of the marketing authorization application in Europe for Glybera (alipogene tiparvovec) by the company

Amsterdam Molecular Therapeutics. The gene therapy is aimed at treating a very rare genetic disorder characterized by high levels of blood glycerides, called Lipoprotein Lipase Deficiency. This condition often results in regular and sometimes fatal attacks of pancreatitis. More details of this technology will be discussed in the next section due to the latest developments and immense potential for gene therapy that it poses specifically to the gene therapy being discussed in this thesis, i.e. AAV delivered Follistatin.

Apart from the Glybera approval, the most recent advancement in gene therapy has been the positive results obtained from a trial to treat β- thalassemia. According to the report“Philippe Leboulch from the

University Paris Descartes and his team reported that a young adult

suffering from a severe case of the disease did not require the normal

monthly blood transfusions after ex vivo modification of his bone marrow

cells with a self-inactivating lentiviral vector expressing the β-globin gene.”

(Cavazzana-Calvo 2010).

1.11.2 Breakthrough in Gene Therapy

As can be observed from the history of gene therapies, many efforts have been made to get the therapies out of clinical trials and into the market. In spite of the many obstacles and challenges faced in testing and commercializing gene therapies, the developmental efforts have definitely improved through the years and it was evident that a gene therapy was finally going to make it to the market.

In 2004, Glybera (alipogene tiparvovec) was granted orphan designation by the

European Commission. This is because the therapy’s initial target is an orphan disease, lipoprotein lipase deficiency (LPL) (Orphan diseases and drugs will be discussed in further detail in later sections). LPL is an extremely rare inherited disorder that only affects 1 or 2 people per million. Patients affected with this disorder cannot produce enough LPL which is an enzyme that is responsible for breaking down fats. The company Amsterdam Molecular Therapeutics (AMT)

(Now owned by UniQure B.V.) have been developing this possible therapeutic from a very long time and submitted marketing authorization applications in both

December 2009 and June 2011, to The European Medicines Agency for

Medicinal Products for Human Use (CHMP) for marketing in the European

Union. Another committee that works closely with the CHMP for the scientific analyses is the Committee for Advanced Therapies (CAT). Both these agencies adopted negative opinions at the time. Their reason for the refusal was that the studies conducted by AMT did not show a consistent, long-lasting benefit of

Glybera. In addition to this, they were not convinced that there was a significant reduction in the rate of pancreatitis, which is a major complication of LPL deficiency. The company, in October 2011, then requested the re-examination of the negative opinion maintained by both the CAT and CHMP but to no avail. The

CAT did state these concerns could be addressed with additional post marketing studies. The CHMP however maintained its negative opinion. Early this year, at the meeting of the Member States Standing Committee on human medicinal products, the European Commission asked the Agency to re-evaluate the application of Glybera in a restricted group of severely affected patients (severe or multiple pancreatitis attacks). This was considered in April 2012. After several detailed scientific discussions in both the CAT and the CHMP, the CAT finally adopted a positive draft opinion in June 2012 which was followed by a positive opinion by the CHMP shortly thereafter. This positive opinion from the CHMP will now be forwarded to the European Commission for the adoption of a marketing authorization.

How is this of any significance or relevance to the adeno-associated virus delivered follistatin (AAV1-FS344) that is developed by the group at Ohio State

University and Nationwide Children’s Hospital?

• This approval marks the first and closest that any gene therapy has ever

gotten to being commercialized.

• Glybera is being used to target an orphan disease (LPL deficiency).

AAV1-FS344 is being developed to treat orphan diseases too such as

Becker Muscular Dystrophy, Duchenne Muscular Dystrophy and

Inclusion Body Myositis.

• Glybera is delivered via an adeno associated viral vector and so is AAV1-

FS344.

• Finally, Glybera is being administered via an injection into the upper

thigh muscles or quadriceps and that is the same route of administration

that AAV1-FS344 is following in the phase I/II trials too.

As can be observed from these facts, there would be a lot of encouragement for

the AAV1-FS344 product and may even serve as clinical precedence in its

commercialization in the European Union.

2. Market Research

First, it is important to note that the technology developed by Nationwide Children’s

Hospital and Ohio State University has been exclusively licensed to Milo Biotechnology

LLC which is a Cleveland, Ohio-based startup company. The patent application that is licensed to Milo Biotechnology is “myostatin inhibition for improving and or enhancing muscle function”. The development and fundraising for the technology hereafter is performed by Milo Biotechnology.

The market research portion of this thesis is an attempt to answer the following questions:

• Is there a real need for this gene therapy?

• Is the scientific approach feasible and innovative?

• Is there a benefit to cost and if so what is the economic impact of that benefit?

• Is the technology competitive and what barriers to entry is the technology

creating?

The scientific approach of this technology has been discussed at length in previous sections and it has been established from the several experiments conducted that the technology is indeed feasible. The several pitfalls in previous attempts in gene therapy research for muscular regeneration have been overcome, as mentioned earlier, by this technology making it innovative as well as beneficial from a scientific standpoint.

2.1 Market Need

Milo Biotechnology plans to initially target two diseases with its AAV-FS344,

Duchenne and Becker muscular dystrophy. According to a report by GlobalData,

an industry analysis specialist, the global muscular dystrophy therapeutics market

is estimated to grow at a compound annual growth rate (CAGR) of 22.8%, from

$33 million in 2010 to $170 million in 2018. It is estimated that the future market

will experience high value growth because of the high cost of therapy associated

with therapeutics in this arena. According to the report, some of the other factors

that will affect the growth in this market space are the high number of diagnoses

and treatment rates and the increasing disease awareness. (GlobalData 2010)

However, the biggest market driver still remains to be the absence of any

approved therapies targeting muscular dystrophy. This unmet need in the market

61 encourages new and established companies alike to enter the market that has almost no market barriers currently.

2.1.1 Orphan Diseases and Drugs

To understand the market size for muscular dystrophies it is important to

understand the meaning of orphan diseases and orphan drugs.

The Orphan Drug Act in 1983 was the precursor to all development in

orphan diseases. In the US, orphan diseases are characterized as those

diseases that affect fewer than 200,000 patients. This Act was initiated

because larger pharmaceutical companies were not incentivized to

research treatments for these diseases due to the small market size and

long and expensive approval process associated with it. Currently there are

6,000-7,000 orphan conditions affecting nearly 25 million Americans in

total.

The exact U.S. Becker Muscular Dystrophy population is uncertain but

two studies have attempted to estimate regional prevalence:

• A study of BMD by the CDC (Centers for Disease Control and

Prevention) revealed that its prevalence was 1 in every 18,518 male

births. If that is extrapolated for the current U.S. male population of

156.5 million (assuming male to female ratio is 1:1), it would set the

prevalence of BMD at 8450 patients. (CDC Study 2007)

• Another set of statistics produced by the University of Maryland’s

Medical Center puts the BMD prevalence at 3-6 out of every 100,000

males. That would mean a U.S. population range of 4700-9400 BMD

affected males.

In the case of Duchenne Muscular Dystrophy (DMD), occurrence is estimated at 1 in 3500 male births which is approximately 2.9 per 10,000.

If this is extrapolated for the US male population of 156.5 million, that would set DMD prevalence at approximately 45,000.

Apart from an accelerated and faster route for approval through the FDA there are several other incentives provided to encourage research in treatments for orphan diseases.

• Seven years of market exclusivity: This is a very lucrative

incentive to inventors. The FDA basically guarantees seven years

of market exclusivity which means it will not allow another

manufacturer to market a drug that treats the same rare disease for

seven years. This however becomes void if the drug does not meet

the patient’s requirement.

• Access to non-dilutive funding and tax credits: The IRS offers 50%

of the cost of clinical trials as tax credits to the company

developing an orphan drug. In addition to this, the Orphan

Products Grants Program provides funding for conducting clinical

trials too. Companies have access to $200,000 to $300,000 per

year for up to three years, of non-dilutive grants.

• Fee Waivers: The FDA Modernization Act brought the latest

incentive of applications fees being waived for companies

developing orphan drugs. The waiver is not just limited to

application fees but also includes establishment and product fees

during the drug registration process too.

These and many other advantages of this market have fueled a drastic increase in the research and number of companies in this space. In 2009, the recorded revenues for the year in the orphan drugs market space was

$85 billion and is expected to grow at a CAGR of 6%. That would mean revenues of almost $110 billion in the year 2015. Although there has been a drastic increase in the number of orphan designation by the FDA the increase in the number of orphan drug approvals is relatively gradual

(Figure 21).

According to a recent report by Frost and Sullivan, more than 2,100 compounds have attempted to achieve orphan designation while more than

350 have actually achieved regulatory approval (Figure 22).

Regarding price of these orphan drugs and cost to the patient, as of now there seems to be a benefit to all the parties involved, i.e. patients, companies selling the drugs and insurance companies reimbursing for its use. Orphan drugs are typically higher priced than other drugs. This is due

64 to the fact that the markets for orphan diseases are very limited and for companies to make a return on their investment the profit margins on these drugs would obviously have to be high.

Figure 21 : An overview of the number of designated orphan drugs versus the number of approved orphan drugs globally between 2001 and 2010. (Frost and Sullivan 2011)

Figure 22 : Number of Orphan approvals since the institution of the Act in 1983. (Quintiles Consulting 2006)

The typical price range of orphan drugs is depicted in Figure 23. Despite the fact that these treatments commonly cost over $100,000 annually, manufacturers of these drugs have seldom faced any obstacles with regard to reimbursement from patient of public insurers. Until now patient access to orphan drugs has rarely been a cause for concern. However, with the increased number of orphan approvals and trend of healthcare plans in the

US, shifting more costs to the patients, access to these drugs may be an issue in the future.

Another trend that has been observed over the past two decades is the entry of large pharmaceutical companies in the orphan drug market. In

2009, 43% of the orphan drug approvals by the FDA were awarded to big

pharmaceutical companies and over 70% of the market share was claimed

by these companies (Figure 24). This is not necessarily bad news for the

smaller companies because it is clear that the larger companies have the

orphan drugs in their strategic decisions which would help more of the

smaller start-ups find strategic partners to facilitate mergers and

acquisitions (one of the most common exit strategies for most start-ups).

Figure 23 : Price ranges of 9 orphan drugs.(American Health and Drug Benefits 2010)

Figure 24 : Participation of large pharmaceutical companies in the orphan drug market. (BCC Research 2010)

2.2 Competition

In this section, an attempt has been made to list all the ongoing research that is being conducted throughout the country in muscular dystrophies specifically.

Milo Biotechnology’s product AAV!-FS344 has many competitive advantages over several other technologies under research. The vector that is being used, the route of administration, the alternate splice variant of Follistatin and the developmental pathway are all innovative and provide significant barriers to entry for competitive products. Table 1 compares current technology in muscular dystrophy on the basis of stage of development and mode of action

(EndDuchenne 2012).

Table I: List of competitive/current research in therapies for muscular dystrophy.

Product/ Target Company/ Research Stage of Mode of action Group Development Ataluren PTC Therapeutics Phase II Cells to read-through nonsense mutations AVI-4658 AVI BioPharma Phase II Exon skipping PRO-044 Prosense Phase II Exon skipping GSK 2402968 GlaxoSmithKline Phase III Exon skipping ACE-031 Acceleron Phase II Binding to proteins that signal through the activin receptor, ActRIIB SMT C1100 Summit PLC Phase I Utrophin upregulation Increlex Cincinnati’s Phase II Insulin-like growth factor-1) Children’s Catena Santhera Phase III Increasing mitochondrial function

Revatio ®(Sildenafil) Kennedy Krieger Phase II Blocking phosphodiesterase Research Institute 5 Cialis® and Viagra® Cedars-Sinai Phase I Blocking phosphodiesterase 5 Losartan Nationwide Phase I ACE inhibitor, reduced Children’s production of TGF-β molecules (myostatin) Isosorbide Dinitrate University of Milan Phase I Increase nitric oxide and Ibuprofen production in cells Biostrophin™ Asklepios Phase I AAV mediated delivery of minidystrophin Myoblast Transplant Tremblay Phase I Transplant of immature muscle cells from healthy donors

Mesangioblast Gulio Cossu Phase I Stem Cell- heterologous Transplant transplantation of mesangioblasts Myostatin Inhibitor PTC Therapeutics Preclinical Small molecule to block myostatin Laminin III Prothelia Preclinical Upregulation of utrophin and α7β1 integrin. Biglycan Tivorsan Preclinical Recombinant human biglycan to increase utrophin Carmeseal™ Phrixus Phase II Inert polymer to fix tears in the muscle caused by lack of dystrophin Utrophin PTC Therapeutics Preclinical Small molecule to increase Upregulator utrophin

From the list above it can be observed that Milo Biotechnology’s approach is absolutely unique and innovative. The science and preclinical development further strengthens Milo Biotechnology’s approach to developing a therapeutic against muscular dystrophy. In addition, the patent that Milo Biotechnology has exclusively licensed from Nationwide Children’s Hospital encompasses the applications of follistatin in the treatment of muscular dystrophy and other related conditions. Finally, the orphan drug designation will give Milo 7 years of exclusivity in the market space. Hence, the barriers to entry that Milo has created should be sufficient for its successful commercialization.

2.3 Potential Orthopedic Applications

A research group in the University of Pittsburgh recently reported that follistatin positively alters the trajectory of skeletal muscle healing after an injury or disease via an interaction with muscle regeneration, angiogenesis and fibrosis. (Zhu et al.

2011) Hence, one could assume that follistatin, in addition to its application in preventing the onset and ameliorating the symptoms of muscular dystrophy, could also be used to promote skeletal muscle healing after an injury. To this effect, an effort has been made to elicit the common orthopedic injuries that would warrant the need for a drug to speed up the musculoskeletal healing process. As discussed earlier, due to limited market size and the need to achieve a substantial ROI for the investors in the company, it should be noted that the therapy developed by

Milo Biotechnology would be priced higher. As depicted earlier on, orphan drug therapies normally range from an annual per patient cost of 50,000 to several hundred thousand. Since the price points have not been set for the company’s product yet, for the purpose of this analysis, it is assumed that the therapy would cost as low as $20,000 per patient annually. (Note that this is only an assumption and the real price could be much higher than $20,000 a year, depending on how many times the patient would need to be injected annually)

As can be observed from Table 2, total knee arthroplasty, inverterbral disc repair, lumbar and cervical spinal fusion, orthopedic trauma from military blast injuries and hip replacement procedures warrant the use of Milo Biotechnology’s AAV-

FS344 and can benefit from its use in the treatment. Although all these procedures require muscle strengthening after the surgery (if a surgical procedure is involved)

71 it should be noted that this analysis is only based on the cost of the procedure and it justifies the addition of the extra and quite significant expense of the gene therapy. Also the therapy may cost a lot more than $20,000 and in that case a lot of these situations may not warrant its use. Also there are several other factors that need to be taken into account such as scientific feasibility and reimbursement factors.

Another factor that is generally considered while assessing possible application is obviously the market size. All of these orthopedic procedures are very common and the market size for each of these procedures is relatively large. These conditions would definitely not fall under the orphan drug arena and a new IND would have to be filed for these applications. Preclinical development would be relatively easier due to the established safety profiles. However, new models would have to be used for the experiments to specifically simulate orthopedic injuries in contrast to muscular diseases.

Table 2: Analysis of the potential orthopedic applications of AAV1-FS344

Is the cost of Does it require Average Orthopedic Injury/ AAV1- musculoskeletal cost of the Surgical Procedures FS344 healing/strengthening? procedure justifiable?

Sprain/Strain NO $500-$1500 NO

Fracture Repair (Hip, $10,000- YES NO Femur, Tibia, Pelvis) $30,000

Total Knee $45,000- YES YES Arthroplasty $75,000

$2,500- Dislocation/subluxation YES NO $10,000

Shoulder Impingement YES $7,000 NO Syndrome

Tennis elbow/ Lateral $10,000- YES NO Epicondylitis $16,000

Inverterbral Disc $30,000- YES YES Repair $40,000

Lumbar and Cervical $60,000- YES YES Spinal Fusion $100,000

$2,500- Osteoarthritis YES NO $6,000

Orthopedic Trauma, YES Unknown YES Military Blast Injury

Hip Replacement YES $40,000 YES

For example, the market study of one of the possible applications uncovered the fact that one of the most common injuries is blunt force trauma due to improvised explosive devices (I.E.Ds). Blast injuries have become common in military conflicts. As of December 2006, 63% of injuries sustained in combat were the result of explosive munitions including bombs, grenades, land mines, missiles, and mortar/artillery shells. (Spotswood 2006) The lifetime cost of providing treatment, disability payments and healthcare to war veterans sustaining such injuries was estimated to be between $300 and $600 billion. (Bilmes 2008)

2.4 Financing Plan

Milo Biotechnology has currently secured a $600,000 grant from the Parent

Project Muscular Dystrophy. These funds have supported and will continue supporting Milo Biotechnology’s development of AAV-FS344 through Phase I/II trials. Milo has also secured a $250,000 funding from Jumpstart, Inc., a nationally recognized non-profit accelerating biomedical company development. According to the company the next steps for dilutive financing would be a $4-5 million round to fund the phase II trial. On the non-dilutive funding side, Milo

Biotechnology plans to access funds from:

• Muscular Dystrophy Association Venture Philanthropy Fund – up to $3

million.

• NINDS NEURONEXT SBIR – up to $2 million.

• FDA Orphan Grants – up to $800,000.

• Neuromuscular disease foundations – up to $500,000

• Peer Reviewed Orthopedic Research Program (PRORP) – Idea

Development Award

The PRORP – Idea Development Award is a Department of Defense (DOD) initiative to promote and accelerate research that could have some therapeutic potential for military specific technology (cures, enhancement etc.)

To qualify for this award, the technology would have to address one of the ‘Focus

Areas’. AAV1-FS344 gene therapy addressed the following Focus Area:

“Mitigation of the musculoskeletal and physiologic effects of reduced mobility for polytrauma patients, excluding spinal cord injury and behavioral/psychological effects”

The pre-application supporting documents have already been submitted to the agency.

2.5 Potential Mergers and Acquisitions

At present, there are only a few companies that have been able to develop and commercialize therapies that serve orphan diseases. Some of the more prominent mergers and acquisitions that have occurred in the past few years in the orphan drug market are listed in Table 3.

Milo Biotechnology would be prepared for a strategic alliance/ merger/ acquisition after it completes the human proof of concept studies that are ongoing.

Depending on the results, Milo Biotechnology would be able to position itself favorably for an attractive exit.

Table 3: List of Mergers and Acquisition in the Orphan Drug Market (Global)

2010

Target Acquirer Deal Value Description ($ Million) Isis GlaxoSmithKline 1,500 Rare Diseases – Pharmaceuticals Antisense Delivery Platform Cellzome Limited GlaxoSmithKline 690 Inlammatory Diseases Acrux Limited Eli Lilly 335 Arixon – Drug for Hypgonadism Aton Pharma Valeant 318 Variety of drugs target Pharmaceuticals orphan diseases Micromet Inc. Boehringer 73 Bi-specific T-cell Ingelheim Engager (BiTE) antibodies for multiple myeloma Genzyme Corp. Sanofi-Aventis 20.1 Treatment of Lysosomal Storage Disorders (LSDs)

3. Conclusion

The benefits for Milo Biotechnology seem to be twofold. On the scientific side, the preclinical and clinical development has been extremely successful till date with no hiccoughs in its developmental pathway. Most companies have been known to fail much before the stage that Milo Biotechnology is currently in, especially in the arena of gene therapy. As discussed earlier considering the tremendous number of obstacles that gene therapy development has to face, Milo Biotechnology has successfully overcome many of them and seems to be on route to smoothly overcoming the rest. Moreover, with the many incentives that the FDA has to offer for companies in the orphan drug market, the approval process and initial marketing phase should be much easier as compared to other companies that go through the regular process. Furthermore, the recent commercialization approval of Glybera in Europe is a major event in gene therapy research and commercialization and it marks the beginning of a new era for orphan drugs and gene therapies as a whole. With the stellar and experienced management team that the company currently possesses, the future looks rather optimistic for Milo

Biotechnology.

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