A REVIEW OF PRICING AND REIMBURSEMENT FOR

ABEONA THERAPUETICS’ GENE THERPAY PRODUCTS TO

TREAT SANFILIPPO SYNDROME

By PUJA GOPINATH

Submitted in partial fulfillment of requirements

For the degree of Master of Science

Department of Biology

CASE WESTERN RESERVE UNIVERSITY

August, 2017

CASE WESTERN RESERVE UNIVERSITY

SCHOOL OF GRADUATE STUDIES

We hereby approve the thesis/dissertation of

Puja Gopinath

candidate for the Master of Science degree*.

Committee Chair

Robin Synder, PhD

Committee Member

Christopher A Cullis, PhD

Committee Member

Kaye Spratt, PhD

Committee Member

Emmitt Jolly, PhD

Date of defense

24 April, 2017

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

Acknowledgement

I would like extend my gratitude to the entire team at Abeona Therapeutics for giving me this opportunity to intern with the company, the CEO, Tim Miller for interviewing me and bringing me on board. Thank you Kaye Spratt, for guiding me as my thesis advisor and helping me with the editing process. Thank you Michelle Berg and Steve Goden, for being my mentors and constantly supporting and encouraging me throughout my internship and Andre’a Lucca for sending me constant updates. I would like to thank Adam, Amit and Linas for helping me with understand the science behind my thesis better.

I would like to thank my family in the U.S, my uncle- Deepak and my aunt-Swetha for being my constant pillars of support throughout my Master’s degree. Rina Masi, nani and mummy, thank you for believing in me and supporting my decision to study in the United States.

I would like to thank my friends Riddhiman, Ashmita, Arvind, Shailendra and Nivedita for helping me with the last minute edits and changes. My friends and family, thank you for always being there for me.

Special thanks to Dr Jankowski, for introducing me to Tim from Abeona. This would not have been possible without you. Special thanks to Julia Brown for being like a mother to me.

My extreme gratitude is extended to my thesis committee Dr. Chris Cullis, Dr. Emmitt Jolly, Dr.

Kaye Spratt and Dr. Hillel Chiel for their constant patience and support.

Dedicated to my beautiful grandmother, who has always believed in me.

List of contents

Title Page number Gene therapy …………………………………………………………………………………… 1-4 Somatic gene therapy Germ line gene therapy History of gene therapy……………………………………………………………………. 5-7 Orphan drugs and rare diseases……………………………………………………….. 7-11 Viral and Non-viral mediated gene transfer………………………………………. 11-15 Some viral vectors in gene therapy Lysosomal Storage disorders…………………………………………………………….. 16-20 Mucopolysaccharidosis (MPS) III or Sanfilippo syndrome…………………. 21-30 Genetic aspects Biochemical aspects Incidence Diagnosis Prenatal diagnosis Disease progress and symptoms Patient and family perspective Current treatment options Ethical issues and concerns regarding gene therapy…………………………. 31 Abeona Therapeutics………………………………………………………………………. 31-44 Viral vectors used in MPS III A and B Viral vector production for gene therapy Clinical trial- MPS III A and B ABO-102 ABO-101 Pricing and Reimbursement in gene therapy……………………………………. 44-60 Reimbursement models suggested for gene therapy Strategy for Pricing and Reimbursement for the gene therapy developed for Sanfilippo syndrome by Abeona………………………………… 60 -67 Market and Competitor Analysis………………………………………………………. 67-68 Intellectual Property………………………………………………………………………… 68 Go-to-market strategy……………………………………………………………………… 69 Collaborators……………………………………………………………………………………. 69 Potential Exit Strategy………………………………………………………………………. 69 References……………………………………………………………………………………….. 70-74

List of Figures

Title Page number Somatic gene therapy types……………………………………………………………… 2 Ex vivo gene therapy in humans……………………………………………………….. 3 Types of gene therapy……………………………………………………………………… 4 Timeline of gene therapy with some important milestones……………… 5 Number of Orphan drug designation requests by year……………………… 9 Number of Orphan Designations by year………………………………………….. 10 Number of approved orphan products by year…………………………………. 10 Vectors used in gene therapy clinical trials……………………………………….. 14 Types of genes transferred in gene therapy clinical trials………………….. 14 Phases of gene therapy clinical trials………………………………………………… 15 Stepwise degradation of heparan sulfate showing the enzymes required at various steps………………………………………………………………….. 25 Difference in gene expression between single stranded rAAV vectors and scAAV vectors……………………………………………………………………………. 33 Triple-plasmid transfection method used for rAAV production…………. 35 Regulatory Milestones for MPS III A…………………………………………………. 38 Urinary Heparan Sulfate GAG molecule content after ABO-102 administration………………………………………………………………………………….. 40 Urinary Total GAG molecule content after ABO-102 administration…. 40 Cerebrospinal fluid Heparan Sulfate content after ABO-102 administration…………………………………………………………………………………. 41 Reduction in liver volume after administering ABO-102…………………… 42 Reduction in spleen volume after administering ABO-102……………….. 42 rAAV9 mediated rapid rNAGLU expression in the CNS and somatic tissues in MPS IIIB and WT mice………………………………………………………. 44 Responses to the potential price reference in gene therapy…………….. 51 Cash flow diagram for funding of a Consumer/Health Consumer Loan 54 Example of pay-for performance drug- Entresto by Novartis…………….. 56 Orphan disease Therapeutics Global Market……………………………………. 67

List of Tables

Title Page number Viral vectors and their advantages and disadvantages……………………… 13 Lysosomal storage disorders classified based on their causal/main storage substance…………………………………………………………………………….. 16-20 Sanfilippo syndrome or Mucopolysaccharidosis type III classified based on their gene mutations and enzyme deficiencies………………….. 22 The different types of mutations found in the SGSH and NAGLU genes in patients diagnosed with MPS III A and B respectively…………. 23 Price Setting Factors for Gene Therapy…………………………………………….. 49-50 Difference between Protein replacement therapies and Organ Transplant as a price reference for gene therapy……………………………… 52 Examples of pay for performance drugs…………………………………………… 57 Factors driving yearly costs associated with MPS III A and B…………….. 63-66

List of Abbreviations

AAV- Adeno-associated virus ABA- Applied behavioral Analysis ABR- Auditory Brainstem Response ACA- Affordable Care Act ADHD- Attention-Deficit/Hyperactivity Disorder BLA- Biological License Application Bp- Base pairs CBC- Complete Blood Count CMV- Cytomegalovirus CSF- Cerebrospinal Fluid CVS- Chorionic Villus Sample DMB- Dimethylmethylene Blue DNA- Deoxyribonucleic Acid EEG- Electroencephalogram ERT- Enzyme Replacement Therapy FDA- Food and Drug Administration GAG- Glycosaminoglycan HEK293- Human Embryonic Kidney Cells ICER- Incremental Cost-Effectiveness Ratio ICP- Intracranial Pressure IDDD- Implanted Intrathecal Drug Delivery Device ITR- Inverted Terminal Repeats IV- Intravenously MPS- Mucopolysaccharidosis MSRA- Methicillin-resistant Staphylococcus Aureus NAGLU- N-Acetyl-Alpha-Glucosaminidase NIH- National Institute of Health OMIM- Online Mendelian Inheritance in Man ORF- Open Reading Frames OT- Occupational Therapy OTCD- Ornithrine Transcarbamylase Deficiency PedSQL- Pediatric Quality of Life Inventory PT- Physical Therapy QALY- Quality of Adjusted Life Years RNA- Ribonucleic acid rAAV- Recombinant Adeno-associated virus scAAV- Self-complementary Adeno-associated Virus SCID- Severe Combined Immunodeficiency ssAAV- Single stranded Adeno-associated Virus SGSH- N-Sulfoglucosamine Sulfohydrolase Vg- Vector Genome

A Review of Pricing and Reimbursement for Abeona Theraputics’ Gene Therapy

Products to Treat Sanfilippo Syndrome

Abstract

By

PUJA GOPINATH

Gene therapy has still not been approved in the USA. Many companies are currently conducting clinical trials for gene therapy. Abeona Therapeutics is one such clinical-stage biopharmaceutical company that is conducting gene therapy clinical trials for life-threatening rare genetic diseases that especially affect children. They are currently developing two gene therapy products ABO-102 and ABO-101 targeting the missing enzymes SGSH and NAGLU respectively. ABO-102 is being developed to treat MPS III A and ABO-101 is being developed to treat MPS III B, both of which are rare lysosomal storage disorders that affect children between the ages of 2-6 years.

Glybera, a gene therapy which was approved in Europe had a price tag of almost $1.4 million. This raises many concerns and questions regarding the high cost of gene therapy and the justification for this high cost. All these gene therapy companies are trying to come up with a pricing and reimbursement strategy simultaneously as they conduct their clinical trials. However, none have openly discussed their strategy to arrive at the estimated cost of gene therapy.

Complications for setting the price of gene therapy include the fact that it is a one-time treatment and that the long-term effects of gene therapy and the disease free period are unknown. If the

estimated cost of most of the gene therapies turn out to be close to, or over a million dollars, then a one-time payment would be difficult to afford, not only for patients but insurance companies. This thesis will explore several payment and reimbursement models such as the annuity model, consumer loan and pay for performance models, to be applied to gene therapy for the Sanfilippo syndrome. (MPS III and B)

Gene Therapy

The US FDA defines gene therapy as “products that mediate their effects by transcription and/or translation of transferred genetic material and/or by integrating into the host genome and that are administered as nucleic acids, viruses, or genetically engineered microorganisms.

The products may be used to modify cells in vivo or transferred to cells ex vivo prior to administration to the recipient”. The field of gene therapy has been in existence for approximately 25 years. Recent clinical successes in monogenic disorders, blood disorders, oncology, ophthalmology and infectious diseases have renewed interest in this field. To date, in the USA, somatic cell gene therapy is only approved for clinical trial use, while germ line gene therapy is not permitted. Germ line gene therapy involves the transfer of the corrected copy of the genetic material into the patient’s germ cells (egg or sperm) and transmitted to offspring

(Hanna, K., 2006). To date, germ line gene therapy has not been practiced on due to very real ethical concerns, but has been tested in animal species like mice. (Nayerossadat, N et al.,2012)

Since the gene therapy administered to a parent is transmitted to the offspring, in case of germ line therapy, there is an argument about whether parents should have the right to make these decisions for their children. For the purposes of this discussion, this document focus will be somatic cell gene therapy.

Somatic gene therapy- is related to the somatic (body) cells. The disease correction can be done by treating certain somatic cells in the affected subjects. Somatic cells are non-reproductive, which means that once the person is treated, the cells are not passed to the offspring. However, due to the nature of the treatment, repeat administration may be required. This is because of

1 cellular turnover and loss of the relevant gene therapy vector due to cell division. However, somatic gene therapy is being carried out in the gene therapy clinical studies for disease conditions like cystic fibrosis, muscular dystrophy, cancer, and certain infectious diseases. (Griffiths, A.J.F et al., 2000)

Somatic gene therapy can be accomplished by ex vivo and in vivo gene transfer, as displayed below:

Somatic

Ex vivo- outside the body. In vivo- Use of a viral or

The patient's cells are non-viral vector to infused with the correct transfer genetic

gene in a laboratory (in material into the target vitro) and infused back into cells/tissue.

the patient’s target tissue.

Figure 1: Somatic gene therapy types (Nayerossadat, N et al.,2012)

2

Figure 2: Ex vivo gene therapy in humans (NIH History., 2010)

Germ line Gene therapy- This involves the transfer of the correct copy of the genetic material into either the patient’s germ cells (egg or sperm). These changes can be passed onto the offspring (Hanna, K.,2006). Until now, germ line gene therapy has never been practiced on humans because of ethical concerns, but has been tested in some animals like mice.

(Nayerossadat, N et al.,2012)

3

Figure 3: Types of gene therapy (Griffiths, A.J.F et al., 2000)

4

History of gene therapy

Figure 4: Timeline of gene therapy with some important milestones. (Wirth, T et al.,

2013)

As seen from the above figure, Gene therapy dates back to the first experiment that was performed by Griffith where he transformed a non-virulent pneumococcal bacterial strain into a virulent one. This was followed by the experiment by Avery, MadLead and McCrathy to determine the substance that caused transformation in Griffith’s experiment, which was then described as DNA or deoxyribonucleic acid. Watson and Crick further used a ball and stick model to represent that DNA had a double helix structure. (Wirth, T et al., 2013)

Other events like the successful transfer of genes to mammalian cell lines and virus mediated gene transfer, followed the discovery of the DNA structure. In the year 1990, a four- year-old girl with severe Adenosine Deaminase deficiency, became the first patient to be treated

5 via gene therapy in the USA. (Hirschler., B and Heavens, L., 2015) White blood cells (WBC’s) were taken from this girl and the corrected copy of the genes for the production of adenosine deaminase were added into these WBC’s. This was done on September 14, 1990 at the NIH

Clinical Center by Dr. W. French Anderson when he worked at the National Heart, Lung, and Blood

Institute. (NIH History, 2010)

The death of Jesse Gelsinger, in the year 1999, following his gene therapy administration, made many people lose faith in the treatment. (NIH History, 2010) Jesse was a part of the gene therapy clinical trials for OTCD or ornithrine transcarbamylase deficiency, a disorder in which people are unable to process nitrogen in the blood. The blood of the people suffering from this disorder, becomes poisoned with nitrogen, when they consume protein rich food. In the gene therapy clinical trials for OTCD, the patients were given corrected copies of the gene encased in a dose of attenuated cold virus (a recombinant adenoviral vector) via injection to the hepatic artery. However, in Jesse’s case, he developed a fever of 104.5 degrees and his blood tests revealed abnormally high levels of coagulation factors, which meant that he had severe immune reactions to the vector used for the delivery of gene therapy. He died four days after the administration of the gene therapy. This was the first known case of death due to gene therapy.

(Sibbald, B., 2001)

Another incidence where gene therapy produced adverse effects was back in 2002/2003.

Four out of the nine patients treated for Severe combined immunodeficiency (SCID), also called

'Boy in the bubble syndrome’ in France, developed Leukemia somewhere between 3-6 years after the gene therapy treatment. (Journal of Clinical Investigation, 2008)

6

The FDA took a precautionary measure after this incident and halted all the gene therapy trials that were using retroviral vectors as a medium for gene transfer at that time. There were about 27 trials being carried out at that time, which used retroviral vector to insert correct gene copies into hematopoietic stem cells (Marwik, C., 2003)

Later studies carried out by the researchers who were involved in the trials in France revealed that, in one patient, the gene and vector used in the SCID clinical trial integrated into the part of the genome that contained LMO2 and activated the gene for leukemia. In the other patient, the gene and vector used in the SCID clinical trial integrated into part of the genome that contained a gene known as CCND2 and activated the gene for leukemia. (Journal of Clinical

Investigation, 2008)

Orphan Drugs and Rare diseases

The FDA defines orphan drugs as “drugs and biologics which are intended for the safe and effective treatment, diagnosis or prevention of rare diseases/disorders that affect fewer than

200,000 people in the U.S., or that affect more than 200,000 persons.” (U.S Food and Drug

Administration, 2017)

Rare diseases or orphan diseases are ones that affect very small number of people. The number varies from country to country but in the United states rare diseases are those that affect fewer than 200,000 people. In Australia this number is 2000 and in Japan it is 50,000. (Aronson,

J.K., 2016) Thus, orphan drugs are the ones that are used to treat orphan diseases. The orphan drug status as quoted by the FDA “is assigned to drugs and biologics which are defined as those intended for the safe and effective treatment, diagnosis or prevention of rare diseases/disorders

7 that affect fewer than 200,000 people in the U.S., or that affect more than 200,000 persons but are not expected to recover the costs of developing and marketing a treatment drug.” (U.S Food and Drug Administration, 2017)

The FDA Office of Orphan Products development helps in advancing the development and evaluation of drugs, biologics that show promise for treatment and diagnosis of these rare/orphan disease conditions. The Office of Orphan Products also offers incentive to the sponsors to aid them in developing products in the form of drugs, biologics etc. that can help in the treatment of these rare diseases. Through their persistent efforts about 575 drugs and biologics have been successfully been developed and marketed since 1983. About 55 products have gained marketing approval through the Orphan Grants Program. (U.S Food and Drug

Administration, 2017)

An Orphan status can be granted to a drug/biologic upon request by the sponsor, only if it meets the pre-requisites stated in the Orphan Drug Act and FDA’s implementing regulations at

21 CFR Part 316. This program also ensures that the sponsor gets a variety of development incentives and tax credits for clinical testing for the products that receive orphan designation.

(U.S Food and Drug Administration, 2016)

In the year 2016, FDA granted about 333 orphan drug designations from a pool of 582 orphan drug designation requests. This fell short of those in 2015 by 21 requests. Also, the year

2016 fell short by 9 orphan drug approvals when compared to the previous year. Since the year

1983, FDA has received 5800 granted orphan drug designation requests, granted 4000 orphan

8 drug designations, and has approved 600 orphan drugs. These are summarized better in the figures below. (Karst, K. R., 2017)

Figure 5: Number of Orphan drug designation requests by year (Karst, K. R., 2017)

9

Figure 6: Number of Orphan Designations by year (Karst, K. R., 2017)

10

Figure 7: Number of approved Orphan products by year (Karst, K. R., 2017)

Viral and Non-Viral Mediated Gene Transfer

Viral and non-viral mediated delivery systems are used for gene somatic gene transfer.

Some of the non-viral systems used for gene transfer include naked DNA, gene gun, liposomes, electroporation, cationic polymers and lipid-polymer hybrids. (Nayerossadat, N et al., 2012) Non- viral vectors for gene transfer are usually cheaper and easier to produce for large scale use. They are also much safer and have minimal immunogenicity when administered to a person. However, they have a lower efficiency of gene transduction compared to viral vectors. (Mali, S., 2013) For the purpose of this thesis, we will focus on the viral vectors for gene therapy because Abeona uses viral vectors for transferring the transgene in their gene therapy products.

Some viral vectors used in gene therapy

Virus particles are defined as “biological entities that can penetrate into the cell nucleus of the host and exploit the machinery of the cells to express their own genetic material and replicate it, then help it spread to other cells.” (Ibraheem, D., 2013) These viruses are generally modified by genetic engineering, so that they can be used as a medium for transportation of the genetic material, which are then delivered into the nucleus of the target cells. This step exploits the properties of the viral coat proteins with the help of which the virus is able to enter a target cell. Usually, the pathogenic part of the virus is replaced by the target therapeutic gene.

(Samulski, R.J and Muzyczka, N., 2014) (Ibraheem, D., 2013) Recently transgenes are being

11 transferred by the use of viral vectors that have specific cell receptors, by virtue of which they can enter and target cells which are not their natural targets. (Nayerossadat, N et al.,2012) There are many types of viral vectors used in gene therapy, some of which are described below:

Retroviral vectors – These retroviral vectors are used for transfer of genes in both somatic and germ line gene therapies. (Nayerossadat, N et al.,2012) They are small RNA based viruses that replicate through DNA intermediates. Interactions take place between the viral envelope protein and the target cell’s surface receptor, where the virus RNA is reverse transcribed into a double standard DNA which will ultimately integrated into the host cell genome. (Robbins, D.P., and

Ghivizzani, S.C., 1998)

Lentivirus vectors — They generally infect replicating and non-replicating cells. (Giacca, M and

Zacchigna, S., 2012) They are mostly used in ex vivo gene therapy in the central nervous system.

They have a long time stable expressions of transgenes, low immunogenicity and they can accommodate larger transgenes. (Nayerossadat, N et al.,2012)

Herpes simplex virus – This viral vector is one of the most recent viruses used in gene therapy or gene delivery. Their most striking feature is the fact that they can affect non-dividing cells. It is again one of the most suitable candidates for nervous system gene therapy transfer and can be used in the treatment of diseases like Parkinson’s and Alzheimer’s. (Robbins, D.P., and Ghivizzani,

S.C., 1998) This viral vector can transfer up to 150 kb transgenic DNA. (Nayerossadat, N et al.,2012)

Adenovirus vectors – These are currently being used in gene therapy clinical trials in cancer and cystic fibrosis and can transfer up to 38 kb of DNA. (Robbins, D. P., and Ghivizzani, S. C., 1998)

12

There are about a 100 different serotypes of this virus. The most common types are type 2 and type 5, which can be used for infecting both replicating and non-replicating cells. Depending on the type, nature of the virus and its viral coat protein structure they can be used to produce ubiquitous expression in vivo (e.g Type 2). (Giacca, M and Zacchigna, S., 2012) They have short term gene expressions since they do not integrate into the host genome. (Nayerossadat, N et al.,2012)

Adeno-associated vectors— It effects non-dividing or non-replicating cells, to integrate into the specific locus on chromosome 19. (Robbins, D. P., and Ghivizzani, S. C., 1998) They are not pathogenic and they can cause long-term expressions in vivo. They have been used to treat cystic fibrosis, Hemophilia B etc. The major shortcomings of this vector are that they have complicated vector production methods and can transfer smaller amounts of up to 4.8 kb of DNA. (Mali, S.,

2013)

The major advantages and disadvantages of the most commonly used viral vectors are listed below.

13

Table 1: Viral vectors and their advantages and disadvantages

(Ibraheem, D., 2013)

VECTORS USED IN GENE THERAPY CLINICAL

Herpes simplex TRIALS Other vectors Unknown virus 3.2% (n=80) 3.6%(n=89) 7.7% (n=191) Adenovirus Poxvirus 21.4% (n=532) 4.3% (n=106) Lipofection 4.6% (n=115) Lentivirus 5.8% (n=144)

Retrovirus Vaccinia virus 18.2% (n=452) 6.9% (n=172) Adeno-assciated Naked/Plasmid DNA virus 17.2% (n=427) 7% (n=173)

Figure 8: Vectors used in gene therapy clinical trials (Wiley, J., 2016)

14

TYPES OF GENES TRANSFERRED IN GENE Unknown 2.3% (n=56)THERAPY CLINICAL TRIALS Other categories Antigen 14.9% (n=359) 19.30% (n=466) Oncolytic virus 3.10% (n=75) Replication Cytokine inhibitor 15.60% (n=377) 3.8% (n=92)Suicide 7.1% (n=171) Growth factor 7.1% (n=172) Tumor supressor Receptor Deficiency 10.4% (n=250) 7.90% (n=191) 8.3% (n=200)

Figure 9: Types of genes transferred in gene therapy clinical trials

(Wiley, J., 2016)

PHASES OF GENE THERAPY CLINICAL Phase 3 Phase 4 TRIALS Single subject 3.8% (n=91) 0.1% (n=3) 0.20% (n=5)

Phase 2/3 1% (n=23)

Phase 2 17.3% (n=417)

Phase 1/2 20.30% (n=490)

Phase 1 57.3% (n=1380)

Figure 10: Phases of gene therapy clinical trials (Wiley, J., 2016)

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Lysosomal storage disorders

Lysosomes are sub-cellular organelles containing approximately 50 different enzymes, each breaking down varied substrates including proteins, nucleic acids, carbohydrates and lipids.

The compounds that these lysosomes degrade are either brought into the cell, or they are obsolete compounds present in the cells. (Cooper, G.M., 2000)

Lysosomal storage disorders translate to metabolic diseases occurring by virtue of mutations in lysosomal genes. (Clarke, J.T.R., 2016) This causes a buildup of a variety of substrates within the lysosome, leading to various inflammatory and/or apoptotic (characteristic changes in the morphology of the cell leading to cell death) responses in the body. Clinical problems associated with these include hepatosplenomegaly and skeletal dysplasia. (Pastores, G. M., and

Maegawa, G. H. B., 2013) Currently up to 50 different types of diseases are caused due to the substrate accumulation and/or faulty functioning of the lysosome. (Greiner-Tollersrud, O.K. and

Berg, T., 2013)

The table below lists the lysosomal storage disorders and the storage of the substance that causes them.

Gene OMIM Disease Defective protein Main storage materials and reference locus number

Sphingolipidoses Fabry α-Galactosidase A Globotriasylceramide GLA 301500

16

Xq22

Ceramide ASAH1

Farber Acid ceramidase 228000 8p22

GM1 ganglioside, Keratan sulphate, PSAP 230500 oligos, glycolipids

Gangliosidosis GM1-β- 10q22. 230600 GM1 (Types I, II, III) galactosidase 1

230650

GM2 ganglioside, HEXA Gangliosidosis oligos, glycolipids β-Hexosaminidase GM2, Tay-Sachs 272800 A Variant 15q23

GM2 ganglioside, HEXB Gangliosidosis Oligos, glycolipids β-Hexosaminidase GM2, Sandhoff 268800 A + B Variant 5q13

Glucosylceramide GBA 230800

1q21 230900 Gaucher (Types I, Glucosylceramidas

II, III) e

231000

Galactosylceramide GALC β-

Krabbe Galactosylceramid 14q31. 245200

ase 3

Sulphatides ARSA Metachromatic Arylsulphatase A 250100 Leukodystrophy 22q13. 33

17

Sphingomyelin SMPD1 257200 Niemann-Pick (type Sphingomyelinase 11p15. A, type B) 607616 4

Mucopolysaccharid oses (MPSs) Dermatan sulphate, IDUA 607014 heparan sulphate

MPS I (Hurler, 4p16.3 607015 Scheie, α-Iduronidase

Hurler/Scheie)

607016

Dermatan sulphate, IDS heparan sulphate Iduronate MPS II (Hunter) 309900 sulphatase Xq28

Heparan sulphate SGSH MPS III A Heparan 17q25. 252900 (Sanfilippo A) sulphamidase 3

Heparan sulphate NAGLU MPS III B Acetyl α- 17q21. 252920 (Sanfilippo B) glucosaminidase 2

HGSNA Heparan sulphate Acetyl CoA: α- T MPS III C glucosaminide N- 252930 (Sanfilippo C) acetyltransferase 8p11.2

1

Heparan sulphate GNS N-acetyl MPS III D glucosamine-6- 252940 (Sanfilippo D) 12q14. sulphatase 3

18

Keratan sulphate, GALNS Acetyl chondroiotin 6-sulphate MPS IV A (Morquio galactosamine-6- 253000 A) sulphatase 16q24.

3

Keratan sulphate GLB1 MPS IV B (Morquio β-Galactosidase 253010 B) 3p22.3

Acetyl Dermatan sulphate ARSB MPS VI galactosamine 4- 253200 (Maroteaux-Lamy) sulphatase

(arylsulphatase B) 5q14.1

Dermatan sulphate, heparan sulphate, GUSB chondroiotin 6-sulphate MPS VII (Sly) β-Glucuronidase 253220

7q11.2

1

Hyluronan HYAL1

MPS IX (Natowicz) Hyaluronidase 3p21.3 601492

1

Olygosaccharidoses

(glycoproteinoses)

Aspartylglucosamine AGA Aspartylglicosamin Glycosylasparagin 208400 uria ase 4q34.3

Glycoproteins, glycolipids, Fucoside- FUCA1 rich oligos Fucosidosis α-Fucosidase 230000

1p36.1

1

19

MANS Mannose-rich oligos A α-Mannosidosis α-Mannosidase 248500 19p13.

2

MANB Man (β1 → 4)GlnNAc A β-Mannosidosis β-Mannosidase 248510 4q24

Sialylated/asialoglycope NAGA N- ptides, glycolipids Schindler acetylgalactosami 609241 22q13. nidase 2

Oligos, glycopeptides NEU1

Sialidosis Neuraminidase 6p21.3 256550

3

Glycogenoses

Glycogen GAA Glycogenosis α1,4-glucosidase 232300 II/Pompe (acid maltase) 17q25.

3

Lipidoses Cholesterol esters LIPA

Wolman/CESD Acid lipase 10q23. 27800

31

Table 2: Lysosomal storage disorders classified based on their causal/main storage substance (Pastores, G. M., and Maegawa, G. H. B., 2013)

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Mucopolysaccharidosis III A and B or Sanfilippo Syndrome A and B

Mucopolysaccharidoses (MPS) are lysosomal storage disorders that are caused due to the deficiencies in enzymes that are responsible for the breakdown of Glycosaminoglycan (GAG) molecules. These enzymatic deficiencies exist because of the mutations in the genes coding for these enzymes. (Neufeld, E and Muenzer, J., 2001)

Proteoglycan molecules present in the extracellular matrix undergo proteolytic cleavage to generate GAG molecules, that enter lysosomes to undergo intracellular degradation. These

GAG molecules can serve as substrates for four different degradation pathways depending on the type of biomolecule required by cell namely- heparan sulfate, keratan sulfate, dermatan sulfate and chondroitin sulfate. (Coutinho, M et al., 2012)

For the purpose of my dissertation we will be focusing on MPS III A and B, also known as

Sanfilippo syndrome A and B, as Abeona Therapeutics aims to treat these two specific disorders.

MPS III A and B are a part of the larger family of MPS III disorders also known as the Sanfilippo

Syndrome. MPS III is a family of lysosomal storage disorders caused due to the buildup of the heparan sulfate. There are four types of Sanfilippo syndrome (A, B, C and D), each caused by a different gene mutation that ultimately causes a deficiency in different enzymes that work at different stages in the breakdown of the heparan sulfate molecule. This is listed in the table below.

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Gene mutated Enzyme deficient Type of Sanfilippo syndrome caused SGSH Heparan N-sulfatase MPS III A (Sanfilippo A) HGSNAT Acetyl-CoA transferase MPS III C (Sanfilippo C) NAGLU N-acetyl glucosaminidase MPS III B (Sanfilippo B) GNS N-acetyl glucosamine 6-sulfatase MPS III D (Sanfilippo D)

Table 3: Sanfilippo syndrome or Mucopolysaccharidosis type III classified based on their gene mutations and enzyme deficiencies (Greiner-Tollersrud, O.K. and Berg, T.,

2013)

Genetic aspects

Mutations in the SGSH are responsible for the deficiencies in the heparan n-sulfatase enzyme causing MPS III A and mutations in the NAGLU gene are responsible for the deficiencies in N-acetyl glucosaminidase enzyme causing MPS III B. (Greiner-Tollersrud, O.K. and Berg, T.,

2013)

These mutations can be either missense, nonsense, insertions, deletions, splicing errors and many more. Anthony Fedele conducted a study to gather data from the Human Gene

Mutation Database to understand the incidence of these different mutations in the NAGLU and

SGSH genes. Misense mutations are caused when one amino acid is substituted by another, nonsense mutations are caused when a stop codon replaces an amino acid, deletions and

22

insertions are caused due to amino acid deletions and insertions respectively, and indels are

caused due to both insertion and deletion of nucleotides. Splicing mutations are caused either

by insertion, deletion or changes in number of nucleotide sequences at the splice site when

messenger RNA is being formed from it’s precursor. (Lodish et al., 2000) The table containing the

number and type of mutations in SGSH and NAGLU is listed below.

(Fedele, A.O., 2015)

Gene Number of mutations types mutated

Missense Non- Small Small Small Splicing Gross Gross Complex

sense deletion insertion indel deletion insertion rearrangement

SGSH 93 11 17 9 1 2 3 1 0

NAGLU 90 14 23 13 1 5 4 3 0

Table 4: The different types of mutations found in the SGSH and NAGLU genes in

patients diagnosed with MPS III A and B respectively (Fedele, A.O., 2015)

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Biochemical aspects

For my dissertation, I will be focusing on the heparan sulfate molecule, since Abeona is developing therapies for Sanfilippo syndrome A and B or MPS III A and B, which are caused due to expression deficiencies in the proteins that mediate heparan sulfate’s degradation.

Heparan sulfate is a type of GAG molecule present in almost all human cells and is an essential component involved in various processes including bone and cartilage formation and development and maintenance of the lungs, brain, kidneys and mammary gland. Many cell signaling molecules like growth factors and cellular morphogens employ heparan sulfate to modulate their tissue distribution, signaling and turnover. (Kreuger, J., & Kjellén, L., 2012).

Heparan sulfate is made up of repeating disaccharide units of uronic acid with alpha- linked glucosamine residues that are alternatively present. (Valstar, M.j et al., 2008) There are various modifications that heparan sulfate can undergo during its formation from a UDP-glucose molecule in the golgi network and after it has been used by the cell for various processes it is transported to the lysosome for degradation. (Kreuger, J., & Kjellén, L., 2012) In MPS III A and B, the genes SGSH and NAGLU coding for Heparan N-sulfatase and N-acetyl glucosaminidase respectively, are mutated and thus the heparan sulfate is partially degraded and gets built up in the lysosome. The steps outlining the general degradation of heparan sulfate are displayed in the figure below. This mechanism is similar in all cell types.

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Figure 11: General stepwise degradation of heparan sulfate showing the enzymes required at various steps (Fenzl, C.R et al., 2015)

First, the enzyme iduronate 2-sulfatase causes the hydrolysis of N-acetyl-D-glucosamine residues from heparan sulfate, which is followed by the hydrolysis of alpha-L-iduronosidic linkages of the heparan sulfate by the enzyme alpha-L-iduronidase enzyme.

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The SGSH coded heparan-N-sulfatase enzyme acts at the third step as shown above and hydrolyses another sulfate molecule from N-sulphoglucosamine residue of the heparan sulfate.

This is the enzyme that is missing in MPS III A patients because of the mutated SGSH gene.

(Neufeld, E and Muenzer, J., 2001) Hence, Abeona aims at replacing this faulty gene with a functional copy.

Acetyl-coA and acetyl-transferase then act on the heparan sulfate to further acetylate another terminal N-glucosamine molecule. The NAGLU coded Alpha-N-acetyl glusoaminadase further causes a hydrolysis of the N-acetyl-D-glucosamine residue from heparan. This is shown in the fifth step of heparan sulfate degradation. This is the enzyme that is deficient in MPS III B patients because of the mutated NAGLU gene. Hence, Abeona aims at replacing this faulty gene with a functional copy.

Glucoronate sulfatase causes the further hydrolysis of the heparan sulfate residue, followed by the Beta-glucuronidase enzyme that hydrolyses glucoronate from the linker chain and finally N-acetly- glucosamine 6-sulfatase removes sulfate from the hydroxyl moiety of the N- acetylglucosamine residues of heparan sulfate.

To summarize the above figure- The deficiencies of enzymes in step 1 causes MPS II or the Hunter’s syndrome, step 2 enzyme deficiency causes MPS I or Hurler, Hurler Scheie and

Scheie syndromes, step 3 enzyme deficiency causes MPS III A or Sanfilippo syndrome A, step 4 enzyme deficiency causes MPS III C or Sanfilippo syndrome C, step 5 or MPS III B or Sanfilippo syndrome III B, step 7 enzyme deficiency causes MPS VII or Sly syndrome and step 8 enzyme

26 deficiency causes MPS III D. The enzyme in step 6 in the figure above has still not been associated with a disease/disease is still not known. (Neufeld, E and Muenzer, J., 2001)

Incidence

The incidence of MPS III (A, B, C and D) is approximately 1 in 70,000 births worldwide.

These are autosomal recessive disorders. Type C and D are rare, whereas type A is common in

Northwestern Europe and Type B is common in Southeastern Europe. (Fenzl, C.R et al., 2015)

(MPS Society., 2011)

Diagnosis

Generally, MPS III is detected by the presence of larger GAG levels in the urine, when compared to those of normal individuals who do not suffer from the disease. However, in some patients the levels are only a little above the normal levels and these give rise to false negative test results. (Tomatsu, S et al., 2013) Enzyme assays of cultured fibroblasts and leukocytes can be done to identify the subtypes (A, B, C, D), if higher concentrations of heparan sulfate are identified.

The DMB assay test is one of the most popular tests conducted for MPS III right now. It is based on the binding of GAG molecules to the dye dimethylmethylene blue (DMB), followed by the analysis of this spectrophotometric assay. (Valstar, M.J et al., 2008)

Enzyme assays which are biochemical genetic tests, can also be conducted, which is the measure of the enzyme activity in the blood or skin cells. These are used to identify the minute changes in the structure between the compounds manifested as changes in their non-reducing

27 ends (Tomatsu, S et al., 2013). Molecular genetic testing can be done to identify this disease among the relatives and siblings of the person affected with MPS III, only after this test has already been done in the affected individual to observe the DNA and mutations in it. (NIH report on rare Diseases., 2014)

Prenatal Diagnosis

It is very essential to conduct prenatal diagnosis for MPS III in the parents of the affected child, after consulting with a genetic counselor or doctor, to ensure that preventive measure may be taken to avoid the next child from suffering. (Tomatsu, S et al., 2013) This can be done by testing for pathological mutations in the chorionic villus samples (CVS). Qualitative analysis of the

GAG molecules in the amniotic fluids can be done in later pregnancy stages. (Valstar, M.J et al.,

2008)

Disease progress and symptoms

The changes in the affected children is usually very gradual and the clinical symptoms start manifesting between the ages of 2-6 First phase is in children between 1-4 years where development delays are noticed. These predominant symptoms of cognitive decline, motor dysfunction etc., usually occur due to the accumulation of these GAG molecules within the central nervous system, including the brain and spinal cord. Delays in speech development are also notice and some of them never learn to speak. (Nuefeld, E.F and Muenzer, J., 2001) Second phase is between the ages of 3 and 4 where the children develop serious mental deterioration and many behavioral problems and this finally leads to dementia. In the final stages, there are

28 swallowing problems and motor retardation, with most children dying in the end of the second and beginning of third stage. (Valstar, M.J et al., 2008)

There are many behavioral problems which include being restless, destructive, anxious, aggressiveness, which usually starts at the age of 3-5 years. Sleep disturbances are noticed in majority of these MPS III patients and these are very frequent. (Fenzl, C.R et al., 2015) (Valstar,

M. J et al., 2008) Many issues with vision and hearing may develop and seizures maybe observed in older children. (Nuefeld, E.F and Muenzer, J., 2001)

Patient and Family perspective

The parents of children with Sanfilippo syndrome go through a lot of stress. The children experience many sleepless nights and irregular sleep patterns. They tend to be hyperactive and lack focus. Parents face challenges trying to balance between taking care of their children and focusing on their full-time job. It is very hard for them to maintain and lead a normal and happy family life. Citing the rarity of the disease, doctors and parents find it difficult to seek health care insurance providers who are willing to reimburse the cost involved in various treatments and diagnosis. (Rare disease report., 2017)

Current treatment options

There is no cure at the moment for MPS III A and B, however bone marrow transplants have been done earlier, with not much success. A study conducted by Vellodi and colleagues observed a set of twins suffering from MPS III B, for up to 9 years after they underwent an allogenic bone marrow transplant. These two twins showed increased leukocyte N-acetyl glucosaminidase activity and evidence of engraftment was shown through the conversion of the

29 tissue type and blood group antigen to that of the donor mother. However, this rise in the enzyme levels had been low throughout after an initial rise post bone marrow transplant and out of the two twins, one showed a steady decline in behavior and had lesser than therapeutic levels of enzyme in the body. Vellodi and colleagues however felt that the procedure was not only risky to perform, owing to the complications that might arise due to the donor cell rejection by the body but they also felt that the benefits from the therapy outweighed the risks. (Vellodi., A et al.,

1992) Another similar bone marrow transplant was carried out in a 7-month old boy diagnosed with MPS III A syndrome. This transplant was done using his mother as the donor. He developed acute graft-versus-host disease, which was treated with the help of steroids. For about 7 years, the heparan N-sulfatase enzyme levels in his blood were maintained at levels similar to that of his donor mother but he continued to deteriorate neurologically. However, at the age of 8, his clinical condition was found to be similar to that of his untreated older sister, who was also suffering from MPS III A. (Sivakumur, P and Wraith, J.E., 1999)

Currently, apart from Abeona Therapeutics working on gene therapy for MPS III A and B, clinical trials are being conducted for enzyme replacement therapy for MPS III A. This study is being carried out by Shire Human Genetic Therapies and it was first started back in February,

2011. It is estimated to be completed by October 2021 and is being conducted in children who are 3 years or older.

They are currently developing a sulfamidase enzyme replacement therapy (ERT)rhHNS for patients with MPS IIIA. This is being administered into the cerebrospinal fluid (CSF) via a surgically implanted intrathecal drug delivery device (IDDD). It has been shown that when rhHNS is being administered intravenously(IV) it does not cross the blood brain barrier. (Clinical Trials, 2016)

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Ethical issues and concerns regarding gene therapy

There has always been a constant debate about whether gene therapy trials should be allowed to be carried out or not. This dates back to the 1900’s when the Eugenics movement was started in the United States, where eugenicists tried to force the poor into sterilization as an attempt to get rid of their ‘undesirable traits’ or in other words to stop them from reproducing.

(Bounche, T., and Rivard, L., 2014) The death of Jesse Gelsinger sparked off a series of debates as to whether gene therapy trials should be allowed to be carried out and if they are absolutely necessary. (Sibbald, B., 2001) The idea of germ line gene therapy and the ethics of conducting this are still being considered. Should anyone be given the right to alter someone’s genetic makeup? This is especially true in the case of a children, where the parents have to make this decision. A recent discussion conducted in London by the Committee on Human gene editing think otherwise. They believe that germline gene editing should be permitted in certain cases where the parents are carriers of inherited diseases, in order to ensure that their children do not suffer from the disease. (Moran, N., 2017) There is always going to be people who oppose any kind of alteration to the genetic makeup of an organism. However, with the first gene therapy only 12-24 months away from approval in the US, we can only hope that there are no serious adverse effects caused by this.

Abeona Therapeutics

Abeona Therapeutics is a biopharmaceutical company that is in the clinical stages. They are working on developing therapies for life-threatening rare genetic diseases which particularly affects children.

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There are about 7000 rare diseases that affect less than about 25 million people in the

United States and 30 million people in Europe. About half of these (50%) affected people are children and these account for about 35% of deaths in the first year of life. 80 % of these are genetic in origin. Their products are categorized into two types: 1) Gene therapy 2) Plasma-based therapeutics

They are currently developing numerous gene therapies for diseases like Sanfilippo syndrome A (ABO-102) and B (ABO-101), Juvenile Batten (ABO-201) and Fanconi Anemia (ABO-

301), to name a few. Since the focus of this thesis is the gene therapy for Sanfilippo syndrome, the gene therapy for that will be discussed in detail.

Viral vectors used in MPS III A and B

As mentioned above, ABO-102 aims at restoring Heparan N-sulfatase enzyme levels to healthy ranges and ABO-101 aims at restoring the N-acetyl glucosaminidase enzyme to healthy levels. ABO-102 targets the faulty SGSH gene in the body of the patient and ABO-101 targets the faulty NAGLU gene. Both the SGSH and NAGLU genes are present on chromosome 17. The size of the SGSH mRNA is 1638 bp and the size of NAGLU mRNA is 2452 bp. (NIH GenBank sequences)

The vectors used in gene therapy of MPS III A and B are the Self-complementary AAV

(scAAV) and single stranded AAV (ssAAV) vector respectively. ssAAV vectors require the synthesis of a complementary DNA strand for gene expression, which can be circumvented by using scAAV vectors. These two DNA strands carried by the scAAV vector anneal into a double stranded molecule after un coating from the viral vector sheath and further continue the gene expression process explained in detail below. (McCarty, D.M., 2008). In an scAAV vector, the vector construct

32 size in this is reduced to approximately 2500 base pairs and the dimeric inverted repeat (ITR) is similar to that of a normal AAV vector. However, scAAV vector only has a transgene carrying capacity of 2.4 kb which is half that of the ssAAV vectors. The scAAV vector construct size is not enough to accommodate the size of the NAGLU gene and hence, we use the single stranded AAV vector for transmission of the NAGLU enzyme. Thus double-stranded scAAV is a viral vector constructed from a recombinant adeno associated virus (rAAV) which packages the DNA in its double stranded form and this helps overcome the disadvantages associated with gene therapy using a single DNA strand as in the ssAAV vector.

Figure 12: Comparison of DNA strand synthesis mechanism in ssAAv and scAAV viral vectors (Daya, S and Berns, K.I., 2008)

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Viral vector production for gene therapy

Wild type AAV vectors can infect the host cell in the presence of Adenovirus co-infection.

The viral gene is replicated and expressed, followed by production of virions. In the absence of

Adenoviral infection, the AAV undergoes latency and integrate into chromosome 19.

AAV vectors do not replicate in the host cell. AAV vectors have been used in several gene therapy studies done in animal models and this vector has not been associated with pathogenicity in humans or animals. There are twelve different serotypes which are known to differ in the capsid amino sequence levels, namely, AAV-1 to AAV-12. (Daya, S and Berns, K.I.,

2008) Abeona Therapeutics uses the AAV9 serotype for creation of their recombinant vectors, because of its ability to cross the blood brain barrier. It is speculated that this is due to the viral vector coat protein and the interaction that this vector has with the cell surface receptors.

(Abeona Corporate presentation., 2016) This was proved in a study conducted by Foust and his colleagues, where peripheral intravascular administration of rAAV9 vector in neonatal and adult mice resulted in a widespread transduction of this in either the brain or spinal cord.

(Manfredsson, F.P et al., 2009)

The triple plasmid transfection method is one of the most widely used methods for production of viral vectors used in gene therapy (Samulski, R.J and Muzyczka, N., 2014) and this is the method employed by Abeona Therapeutics for the production of ABO-101 and ABO-102.

The AAV genome has inverted terminal repeats (ITR’s) present on either side of its single stranded DNA opening reading frames (ORF). The ORF contains the rep and cap proteins. The rep proteins are regulatory proteins involved in the virus gene expression and the cap proteins are

34 involved in capsid formation. (Daya, S and Berns, K.I., 2008) The AAV virus also requires a helper

Adenovirus, herpesvirus or baculovirus for its propagation. (Samulski, R.J and Muzyczka, N., 2014)

Figure 13: Triple-plasmid transfection method used for rAAV production (Samulski,

R.J and Muzyczka, N., 2014)

As displayed in the figure above, in the transfection method has HEK293 cells are co- transfected with three plasmids containing E1a and E1b helper genes of the Adenovirus. One plasmid has the transgene for gene therapy along with its own enhancer, promoter, poly(A) and splice signals for gene expression, finally flanked by the ITR’s of the AAV vector. Thus, the ITR’s are the only cis-active sequences used in the AAV vector production. Since the rep and cap genes

35 of the virus are removed, there is very less/minimal enhancer activity. The second plasmid contains AAV2 rep protein and AAV8 cap protein and finally the third plasmid contains just the

Adenovirus helper genes that would be required by the rAAV vector for delivering the gene and integrating into the host cells. The other components like rep and cap proteins are eliminated to avoid it from contaminating the rAAV vector product. (Samulski, R.J and Muzyczka, N., 2014)

The final rAAV products containing the transgene are purified from the empty capsids and unwanted elements by filtration or centrifugation. Commonly used purification methods to separate the rAAV from cell lysate include precipitation by use of polythene glycol or centrifugation using cesium chloride or iodixanol. (Kotin, R.M., 2011) The rAAV transgene vector then enters the cells by binding cell surface receptors sugars following which it undergoes endosomal uptake, existing episomally in the cell as a head-to-tail concatemer. (Samulski, R.J and

Muzyczka, N., 2014) (Daya, S and Berns, K.I., 2008)

In the triple-plasmid transfection method for recombinant vector production for ABO-

101, Abeona Therapeutics uses a recombinant AAV9 vector plasmid to produce a single strand rAAV9-CMV-hNAGLU viral vector. This contains AAV2 terminal repeats, SV40 splice donor/acceptor signal, human NAGLU coding sequence, human cytomegalovirus (CMV) immediate-early promoter and BGH polyadenylation signal. This was carried out in HEK293 cells and purification of viral vector was done using cesium chloride gradient centrifugation and dialysis was then performed in a Tris-buffered saline (pH 8). Titration was then done using PAGE gel silver staining, followed by dot blotting. NCH Viral Vector Core-Clinical Manufacturing facility and Wu-Xi- Apptech further tested the vector to see its purity. (Meadows, A.S et al., 2015)

36

The only changes in the protocol to manufacture ABO-102 were that the human SGSH coding sequence is used in place of the NAGLU, a murine small nuclear RNA (U1a) promoter is used instead of the human CMV promoter, and an scAAV9 vector plasmid is used to produce the scAAV9-hSGSH viral vector. (Fu, H., 2016)

Clinical trial results- MPS III A and B

Abeona Therapeutics has decided to use the scAAV vectors for their gene therapy trials in MPS III A because they have proven to be 10-100 times more efficient in their gene expression in all areas of the brain and peripheral tissues compared to the single stranded rAAV vector. All these trials are conducted at Nationwide Children’s hospital in Columbus, Ohio. It is also said to have a stable gene expression for years along with successfully having crossed the blood brain barrier. (Abeona corporate presentation., 2016) There are two clinical trials that are currently being undertaken for two of their gene therapy products:

ABO-102— gene therapy for MPS III A- Abeona recently completed the dosage for the low dose cohort and they have started the high dosage. ABO-102 targets the missing enzyme SGSH. The clinical trial identifier number for this is NCT02716246.

ABO-101— gene therapy for MPS III B- They will be recruiting participants for this gene therapy dosage soon. ABO 101 targets the missing enzyme NAGLU.

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Figure 14: Regulatory Milestones for MPS III A (Spratt, K., 2017)

ABO-102

ABO-102 has been granted the fast track designation by the FDA for Sanfilippo syndrome

Type A. This was in addition to the Orphan Drug Designation granted by the FDA and European

Union and also the Rare Pediatric Disease Designation. (Abeona corporate presentation., 2016)

The grant of this designation requires that the company engages in more frequent written communication, meetings, and submission of completed sections of the Biological License

Application or New Drug Application for review instead of waiting till the entire document is completed. (FDA, 2014) The low dosage of 5 X 1012 vg/kg (vg is vector gene) for ABO-102 was carried out in 3 patients and the high dosage of 1 X 1013 vg/kg was carried out in 3-6 patients in three sites including Australia, Spain and USA. The gene therapy was intravenously injected. The purpose of this study is to determine the safety and efficacy of the gene therapy. This can be done by determining several key results which include reduction in GAG or heparan sulfate

38 content in the urine and Cerebrospinal fluid, Leiter International Performance Assessment carried out 6 months after treatment, SGSH enzyme activity levels in the leukocytes, Pediatric

Quality of Life Inventory 4.0 (PedsQL), timed functional motor tests, and parental rating assessments using Vineland Adaptive Behavior Assessment System and Child Behavioral

Checklist.

The patients first receive a 1mg/kg/day dose of oral prednisolone elixir and the next day it is followed by the gene therapy which is carried out under sedation within a span of 15 minutes.

The subjects are monitored for the first 48 hours and then discharged on the oral prednisolone elixir. (Abeona corporate presentation., 2016)

Figure 15: Urinary Heparan Sulfate GAG molecule content after ABO-102 administration (Abeona corporate presentation., 2016)

39

Figure 16: Urinary Total GAG molecule content after ABO-102 administration

(Abeona corporate presentation., 2016)

As observed from the figures there was a reduction in total GAG and Heparan Sulfate molecules in the urine after administration of ABO-102.

Figure 17: Cerebrospinal fluid Heparan Sulfate content after ABO-102 administration (Abeona corporate presentation., 2016)

40

The above figure illustrates that the ABO-102 gene therapy crosses the blood brain barrier because of the reduction in the cerebrospinal fluid heparan sulfate content/fragment. This also acts as an evidence of biopotency. Down regulations of the inflammatory response and onset of repair mechanisms are also estimated to occur if there are continuous, sustained reductions in the cerebrospinal fluid heparan sulfate content are observed.

Figure 18: Reduction in liver volume after administering ABO-102 (Abeona corporate presentation., 2016)

41

Figure 19: Reduction in spleen volume after administering ABO-102 (Abeona corporate presentation., 2016)

The liver and spleen volumes show an increase or expand in the affected MPS III A individuals, due to the GAG molecules being accumulated there. After the administration of ABO-

102, it was observed that there was a percentage reduction in the liver and spleen volumes

(positive results), since this means that there was a reduction in GAG molecule accumulation post gene therapy. MRI was used to assess the volumes in these two organs.

To summarize, the ABO-102 has shown significant reduction in liver and spleen volumes, especially in cases of hepatosplenomegaly, where patients experience recurring respiratory and digestive issues. There has been a significant reduction in heparin sulfate GAG molecule content in the cerebrospinal fluid, 6 months after administering gene therapy in the low dose cohort.

There also been a significant improvement in the neurocognitive assessments measured via the

42 various tests which showed improved non-verbal IQ score improvement and slowing of the disease progression. (Abeona corporate presentation., 2016)

ABO-101

ABO-101 has received Orphan Drug Designation in the European Union for use in

Sanfilippo Syndrome Type B. The phase 1/2 clinical trials have commenced for ABO-102, with the low dose cohort being administered a 2 X 1013 vg/kg dose for gene therapy and the high dose cohort being given a dose of 5 X 1013 vg/kg of gene therapy. As in the ABO-102, these trials were conducted in three sites- Australia, Spain and USA, with the 3 patients in the low dose cohort and

3-6 patients in the high dose cohort.

The pre-clinical data assessed in mice shows that the GAG contents of mice treated with a single intravenous dose of ABO-102 was similar to those of unaffected mice in a range of tissues

(with the exception of the kidney).

Figure 20: rAAV9 mediated rapid rNAGLU expression in the CNS and somatic tissues in MPS IIIB and WT mice. (Meadows, A., 2015)

43

The above figure shows rNAGLU expression mediated by rAAV9, in the MPS III B and Wild type (WT) mice. An IV injection of 2 × 1014 vg/kg rAAV9-CMV-hNAGLU was injected in the MPS III

B mice and also the wild type littermates, all of which were males. NAGLU activity was analyzed

6 weeks post infection and on Day 5. The different treatment groups were WT-NT or non-treated

WT mice; MPS-AAV, rAAV9-treated MPS IIIB mice; WT-AAV, rAAV9-treated wild type mice.

In summary, higher levels of NAGLU were detected in all tissues that were tested in the rAAV9-treated Wild type mice, when compared to the MPS III B mice, with the exception of the heart 6 weeks post infection. We observed differences in the expression pattern of NAGLU in the heart and muscles between wild type and MPS III B. (Meadows, A.S., 2015)

Pricing and Reimbursement in gene therapy

As discussed in the abstract and introduction sections, gene therapy is more of a personalized treatment for patients. Owing to its customizable nature, it is challenging to implement a standardized pricing and reimbursement strategy that is applicable to all gene therapy types. Here we evaluate the factors that contribute to the complexity of pricing and reimbursement decisions involved in gene therapy. These factors include:

Faith in the long term effects - Gene therapy, a potential one-time treatment, raises several concerns about the durability of the therapeutic effects and long-term clinical benefits. To date, proof of long-term therapeutic benefits from single administration has not been determined in current clinical trials. Current gene therapy clinical trials can only provide patients and payers with relevant scientific background and nonclinical information but details on the durability of the of the gene therapy is limited or proprietary. (Kent, D et al., 2015) This creates a complex

44 situation for the drug makers and payers trying to estimate the approximate cost of gene therapy based on the long term benefits.

Data availability/Disease-free period - There is no certainty that the gene therapy administered once, will have a long-term effect on the individual as the disease-free period is not defined. Gene therapy developers and payers can only speculate that this principle will apply, but there is always some level of associated uncertainty. This is in part related to the delivery vehicle and route of administration. For example, blind subjects enrolled in clinical trials at the University of

Pennsylvania following a single administration of a recombinant AAV vector have improved visual acuity for up to 3 years, however improvements in vision began to fade again beyond this time point (Kent, D et al., 2015). Thus, illustrating the need for clinical trial results and long term follow of enrolled subject that price will generate efficacy data to provide a cost basis and rationale for gene therapy and justify prices set by the manufacturers.

Cost savings from therapy - The cost savings and potential improvements on quality of life following gene therapy will be difficult to gauge from the clinical trial results which are only conducted for a few years. Since, the effects of gene therapy will not be short term (6-12 months), but are expected to last for a prolonged period of time. (Kent, D et al., 2015). Thus, comparing the cost of gene therapy to the standard and average duration of the current standard of care might also be necessary

Lower patient number - Gene therapy is currently being developed for monogenetic disorders that often rare disease resulting in a limited number of patients and thus clinical data collection would be restricted to these fewer patient numbers. These factors will play important roles in

45 costing of treatment as the disease burden increases. (Brennan, T.A., and Wilson, James M.,

2014)

Societal benefits- It is really hard to assign a numerical value to the broader impact that gene therapy has on the day to day activities of the patient. The potential impact on the quality of life

(interactions, meaningful participation in family activities, confidence and self-reliance, self- esteem, ability to earn an income) make assigning a price difficult when clinically meaningful outcomes can only be provided by the patients.

Existence of alternative treatments- In the rare disease space, the standard of care is supportive and palliative and not a cure. Especially in case of rare orphan disorders where the number of affected patients are really small. (Aronson, J.K. 2014)

Switching of health insurance plans- In general, individuals/families frequently switch health insurance plans during their lifetime due to a number of reasons (ICER., 2017) As a result of this, a one-time payment for gene therapy, may raise concerns with payers, who ultimately carry the financial burden of the therapy. (Touchot, N and Flume, M., 2015) Therefore, the economics of a single upfront payment by a third party payer can prove too burdensome for payers.

Multiple year pricing structure compared to other treatment modalities - Protein replacement therapies and monoclonal antibody therapies are administered multiple times a year (weekly, biweekly or monthly) when compared to the current proposed treatment regimens for gene therapy. Hence theoretically, a model for gene therapy gene therapy could be priced as a multiple of the yearly cost of protein replacement or monoclonal antibody therapies. However, most people consider pricing gene therapy as a multiple of the yearly cost of such therapies as

46 unjustified as there would be no rationale for justifying this higher price. Pricing them based on clinical outcomes is considered a better alternative for pricing (Touchot, N., and Flume, M., 2015)

Patient centered medical home- Patients have to travel to centers of gene therapy administration in order to receive treatments, while the follow up visits and checkup can be carried out at their local physician centers. Thus, there should me a mechanism for smooth transition and flow of this information from one center to the other. This can be done through the development of a patient centered medical home which involves construction of a network of people including doctors, nurses, pharmacists, manufacturers and others to help coordinate the care of patients in order to provide higher and better quality service. This is however difficult as it requires more coordination between all these groups people which would mean improvements in the existing equipment and changes to the administration process. Although, this would be ideal, it would require a lot of effort, time and money. (Valence health, 2013).

Shift from fee-for-service to value based reimbursement- A shift from the traditional fee-for- service (pay per visit) to value-based reimbursement (payment based on the value or quality of care derived from the treatment) is an attractive option for pricing of gene therapies. This is however hard to achieve overnight and may require a lot of changes to the health care system policies. (Brown, B., and Crapo, J., 2016)

Example- Strimvellis, a drug priced at approximately $665,000 was launched by GSK, with a money back guarantee if it did not work towards its intended purpose of treating the adenosine deaminase disease. The company said that they would refund some of the costs if the patient did not derive any benefit from the therapy or if the health of the patient declined. (Staton, T., 2016)

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Patient transportation and monitoring- In some instances, gene therapy can be classified as personalized medicine based on the disease genotype and phenotype. In some instances, ex- vivo genetic modification of autologous cells are required. While in other cases a more generic approach can be applied where an engineered recombinant viral vector or non-viral delivery approach can mitigate disease burden. In some instances, patients may be required to travel pre and post gene therapy for product development, routine patient monitoring following test article administration at regional facilities where therapies are developed. This additional cost consideration must also be factored in the pricing of gene therapy.

Table 5: Price Setting Factors for Gene Therapy

The table below contains the factors that companies can consider while setting the price for their gene therapy products.

Factor Rationale Benchmarking The price is set after thorough market research to assess the price set by comparators in the market. If no direct comparators are available, which is very likely the scenario for most of the orphan drugs, then pricing can be done based on similar products/alternative treatments available in the market. (Carr, D.R, Bradshaw, S. E., 2016)

Financial and Financial and economic assessments like cost-effectiveness and budget economic analyses impact studies are carried out which helps in understanding the financial consequences of administering the gene therapy. (Carr, D.R, Bradshaw, S. E., 2016)

Assessing the Conducting extensive research with payers, doctors’ clinicians, patients willingness to pay to understand the general reimbursement trends in the industry. (Carr, D.R, Bradshaw, S. E., 2016) We need to get involved the families of the patients to see how much of an impact gene therapy would have on the patient’s life.

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Drug development An important factor to be considered while setting the price for any cost drug or curative therapy. This takes into consideration the research and development costs, manufacturing costs and also price and sales forecast. This is the minimum cost that would be quoted in order to recover the investment that was put inti drug development.

Disease burden and According to the WHO, “disease burden is a measure of the burden of unmet need disease using the disability-adjusted-life-year (DALY). This time-based measure combines years of life lost due to premature mortality and years of life lost due to time lived in states of less than full health.” (World Health Organization, 2017) Unmet need on the other hand can be because there are no existing therapies or the ones that are available are not effective enough. If the disease burden is higher, a higher price can be quoted for the therapy. (Brennan, T.A., and Wilson, J. M., 2014)

Size of the target If the population is small, like in the case of rare diseases, a higher price population/Unmet is quoted for the therapy. (Brennan, T.A., and Wilson, J. M., 2014) This need is done in order to recoup the Research and Development costs, when compared to diseases like diabetes that are wide spread and affect a significantly large portion of the population.

Savings as a result The cost of therapy can be evaluated using the yearly treatment costs of the treatment for the patient suffering from a particular disease. (Kent, Denis et al., 2015) These may include hospitalization costs, treatment and medication costs and any other costs associated with the treatment of the disease. The savings that would result from administering this treatment to the patient can be used to also help arrive at the cost for the therapy. (Ricthie, A, et al., 2014) Especially in the case of gene therapy, if successful, this one-time treatment could potentially cure the patient and help eradicate the need for any of the life support systems or drugs that were previously being taken.

Quality of drug Based on clinical trial data, we can assess the likely quality of the drug outcome outcome. If the drug/therapy has a potential to subside the effects or likely cure a life threatening illness, then it is said to have a higher quality of outcome than one that can only mildly suppress the disease symptoms. Risk taken by the This is another factor that is difficult to assign a numerical value to. It manufacturer involves assessing the risks and uncertainty burden that is associated with the development of a drug/disease which invariably falls on the manufacturer who develops the therapy.

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Economical/Social Takes into consideration the social improvement brought about by the impact drug in the life of a patient in terms of his/her confidence and also ability to carry out day-to-day chores. Organ transplant has been suggested as benchmark/price reference to help effectively evaluate the price of gene therapy. This is slightly different from generally suggested reference, notably enzyme replacement therapy.

About 29 payers were contacted in the US and Western Europe, in order to evaluate their top two preferences of factors that would serve as a reference for gene therapy pricing. Their responses are displayed in the diagram below. (Touchot, N., and Flume, M., 2015)

Figure 21: Responses to the potential price reference in gene therapy (Touchot, N., and Flume, M., 2015)

Out of the three main choices, i.e. multiple years of chronic replacement, organ transplant and medical devices, organ transplants seemed to have a slightly higher acceptance rate (77%) over medical devices (64%) and a much higher acceptance rate than protein replacement therapies (12%). Prior to this many analysts assumed that enzyme replacement therapies would

50 be a better price comparator. There are several concerns that the payers have with enzyme replacement therapies as a result of which organ transplant seems to be a better price reference.

Table 6: Difference between Protein replacement therapies and Organ Transplant as a price reference for gene therapy

Protein Replacement therapies (PRT) Organ Transplant

 Gene therapy is done once as opposed  More frequently accepted by payers to Protein Replacement therapies  Comparable patient value  Price of PRT is very high without a clear  More or less a one-time treatment rationale justifying this  Organ transplants replace a non-  PRT can be stopped/ switched if functional/ diseased organ while gene patient doesn’t respond therapy restores function to a  Yearly treatment costs will reduce diseased organ with novel and cheaper PRT  Cost is extremely high (e.g heart introductions transplant is $1.2 million), similar to cost of Glybera (gene therapy) which is $ 1.2-1.4 million

Thus as observed, organ transplant seems to be a better price comparator and has a better acceptance rate than chronic enzyme replacement therapies administered yearly.

(Touchot, N., and Flume, M., 2015)

Reimbursement models suggested for gene therapy

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Generally, when a patient goes to a hospital for certain services, they only pay a portion of the cost of the treatment to the hospital, often called a co-payment. The rest of the money is paid by their insurance provider. Gene therapy on the other hand is a one-time treatment that could be curative and cost about a million dollars or more. Presently there is a debate as to whether paying a lump-sum amount would be the best way to finance the cost of this therapy.

(Touchot, N., and Flume, M., 2015) Also with switching insurance providers post gene therapy, it might be risky for providers to finance the cost of the entire therapy. (ICER, 2017) Thus, there has been a lot of speculation and discussion to suggest the best way to finance the huge cost of gene therapy. There are several payment models that are suggested by various stakeholders in order to help fund this cost of gene therapy, some of which are described below.

Consumer loans/Health Consumer loans

Features:

 Setting up of a special purpose entity (SPE) that would help in funding very expensive

drugs.

 These special purpose entities (SPE’s) will be in turn financed by a group of investors

 The consumers borrow from these entities, just like they borrow from banks or other

funding agencies while buying a car or a house.

 This loan amount is paid by the consumer along with interest just like it is applicable in

the case of a car or house loan described above. (Montazerhodjat, V., 2016)

Concerns:

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 The consumer will have to worry about paying the loan and also the healthcare premium

every year. It adds additional burden on the consumer/patient.

 The have to pay interest rates which could be presumably higher depending on the type

of therapy/drug being financed.

Figure 22: Cash flow diagram for funding of a Consumer/Health Consumer Loan

(Montazerhodjat, V., 2016)

A) As depicted in the above figure, the investors buy notes issued by the SPE during the investment period. The sale of the notes generates cash flow, which the SPE uses to pay a portion if the drug’s price.

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B) The patient makes their annual payment during the loan repayment period, which is distributed to the investors based on the note seniority. The losses (if any) as depicted in the diagram propagate from the bottom to the top. (Montazerhodjat, V., 2016)

Pay for performance:

Features:

 Manufacturers are reimbursed for the drug/therapy based on the certain clinical

outcomes

 Standards or clinical milestones that have been agreed upon by the manufacturers and

the payers are paid for only if these clinical milestones are achieved.

 These can also be combined with risk sharing agreements like the ones that are currently

existent in Spain and France for their Hepatitis C Virus drugs.

 The payment is made for only those drugs that would cure patients of Hepatitis C.

 Other approaches include payment per unit of health, i.e., paying only for the years that

a patient is free of the disease. (ICER.,2017)

 An example of this kind of drug is Entresto by Novartis.

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Quantitative outcome- cuts cardiovascular disease risk/heart failure hospitalizations by 20%

Outcome has a direct Replication of clinical economic impact- results in real-life Reduction in proportions patients of patients hospitalized

Figure 23: Example of pay-for performance drug- Entresto by Novartis

(Malik, N. N.,2016)

Entresto is a drug developed by Novartis. Novartis entered into a deal with Cigna and

Aetna, both health insurance providers as a pay for performance deal. It was priced at $4500 per patient per year. The drug supposedly cut the risk of cardiovascular death or hospitalizations due to heart failure by 20% versus the other generic and brand name drugs available in the market

(Malik, N. N., 2016). This could bring about change in the pharma industry from a fee for service

55 based models to pay for performance. This would definitely revolutionize the way things work here.

Table 7: Examples of pay for performance drugs

Repatha Olysio

 Is a drug that helps lower the LDL  It is a drug to cure Hepatitis C cholesterol levels  Partners were Jannsen, NIH and NIHCE  Partners were Amgen and Harvard  Payment was made by the patients only Pilgrim if the drug cured the patients of Hepatitis  Amgen sold the drug at a discounted C within the first 12 weeks of treatment price to Harvard Pilgrim  The drug costs were refunded if the  Rebates were given if drug fails to lower treatments failed cholesterol with the same degree as  In order to screen out potential patients clinical trials that would not respond to therapy,  Additional discounts if the patient pretreatment blood tests were carried utilization exceeds predefined levels out  It was done so that the drug could  This was done in order to maximize the specifically be given to patients who success rate and to administer the drug required it and on whom it had a better to the right patients chance of showing results. (Szabo, L., 2017)

(FDA, 2015) (FDA, 2013)

Concerns:

 Patient population affected might be too small to adapt this kind of change. (Valence

health, 2013)

 May require a lot of changes to be made to the current healthcare system, which may

cost a lot and might not be feasible.

 It requires regularly monitoring patients and collecting and analyzing the patient data, to

ensure that the drug milestones are achieved. (Carr, D.R, Bradshaw, S. E., 2016)

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Up front/One-time payment

Features:

 It is a situation in which the entire cost of the therapy is paid by the consumer/patient

and the insurance provider at the time of treatment.

Concerns:

 Might not be affordable especially in the case of gene therapy where costs greater than

$1 million are expected. (Brennan, T. A., and Wilson, J. M., 2014)

Annuity model

Features:

 It involves a yearly payment instead of a one-time treatment cost.

 This is similar to a car/house loan repayment or EMI where a fixed amount of money is

paid each month. In the case of gene therapy however, the payment would be yearly.

 The annuity model can also be combined with the ‘pay-for-performance’ model, so that

the consumer and insurance provider reimburse the treatment only if the therapy

continues to work or show desired results. (Brennan, T. A., & Wilson, J. M., 2014).

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Concerns:

 The frequent switching of health insurance providers in the US would make this model

less appealing, since if one insurance provider paid the initial treatment cost at the time

of therapy administration and for a few years after that, the second insurance provider

would have much lesser of a payment to make. (ICER., 2017)

 Insurance providers might not agree to bearing the initial high treatment cost.

 This would also require significant changes to be made to the way the healthcare system

functions to accommodate the annuity model.

 There would be a longer return on investment period for the manufacturer.

Hybrid Model

Features:

 Involves a mixture of financing partly by the consumer and the rest by the insurance plan.

 This would involve the end user paying large sums of money as co-pay. (Tapestry

networks, 2016)

 This can also be combined with a ‘pay-for-performance’ model that lets users pay only if

the derive certain benefits from the therapy during a certain time period.

Concerns:

 Patient would end up paying twice (loan and healthcare premium), just like in the case of

a Health Consumer loan.

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 It would be difficult to apply these models to gene therapy owing to its large cost of

treatment.

 Supporting a pay-for-performance type of model, within the current healthcare system

would not be a viable option. (Tapestry Networks, 2016)

In addition to these, there are many other models that are discussed for gene therapy.

Government loans are another suggested alternative. These are loans that are given out to payers by the government in the form of bonds, to fund the high costs of therapies. The advantage in this case is that the patients being covered by Medicare/Medicaid are already being paid for by the government. Another alternative is reinsurance, where a health care insurers seek insurance from other parties to cover the financial cost and spread the financial risk of paying for the cost of therapy. (Tapestry Networks., 2016) (ICER.,2017)

The gene therapy models in Europe work differently from those in the Unites States. For e.g., in the United Kingdom, the National Institute of Health and Care Excellence uses technology appraisals to judge the cost effectiveness of various treatments. (Jorgensen, J et al., 2015) This cost effectiveness is measured in terms of QALYs or Quality-adjusted life years. It is calculated by accounting for the benefits of a treatment in terms of the length of the life and the quality of the life of a patient following a particular treatment. QALY measurements generally considers the ability of a person to carry out daily chores and activities and also their physical and mental health and freedom from pain. (NICE., 2017)

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The incremental treatment costs are then compared to the incremental QALYs to calculate at the incremental cost effectiveness ratio (ICER). A cost of £30,000 is considered cost effective but upper limits of £50,000 are accepted for end-of-life treatments with small patient populations.

(Jorgensen, J et al., 2015) There have been constant debates whether assigning such values and upper limits is feasible for potential cures like gene therapy.

Strategy for Pricing and Reimbursement for the gene therapy developed for

Sanfilippo syndrome by Abeona

Based on the information presented above, there is no single model to explain parameters for pricing and reimbursement for gene therapy. This is due to the personalized nature of these therapies, along with the uncertainty and complexity that is attached to developing them.

Thus, after reviewing several published gene therapy articles, pricing and discussions with patient families (via Patient Advocacy at Abeona Therapeutics), a list of contributing factors for developing a cost basis for MPS III A and B gene therapy is proposed. This analysis is similar to two studies that have been carried out to understand and evaluate the costs incurred by patients suffering from MPS. One study focuses on the costs of Enzyme replacement therapy in patients with Hunter’s Syndrome (MPS II) in France and the other study focuses on the medical costs related to Enzyme replacement therapy for Mucopolysaccharidosis type I, II and VI in Brazil.

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These two studies took included considerations including hospital and medical treatments, surgical procedures, medical devices use and number of enzyme replacement treatments.

The MPS Society was contacted to get a cost estimate incurred by patients suffering from

MPS III A and B, but data from existing studies on the average incurred costs were not available and are generally considered proprietary. For the purpose of this thesis, input from two patient families was collected to compile a list of factors that contribute to the yearly costs associated with MPS III A and B, and serves as a starting point to establish the base cost of the gene therapy after marketing approval by the FDA.

Table 8: Factors driving yearly costs associated with MPS III A and B

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Factors Effect on the various stages in the life of an MPS III A/B patient Medications- Drugs/supplements Nutritional supplements are needed at all stages along etc taken for MPS with medications for diarrhea, ADHD, and sleep (since many children have disturbed sleep cycles).

The middle stages of the disease use all the above along with seizure medications, pseudobulbar medications, weight gain supplements, formula for tube fed children, reflux medications, pain management medications. Diamox is taken for suspected ICP/NPH type symptoms. Respiratory supports, Inhalers, nebulizers, etc. are also required.

The third stage of the disease needs all of the above along with dystonia medications, some Alzheimer's medications, medications for excessive drooling, pain management medications and botox injections for joints.

Many parents prefer to use nutritional supplements/vitamins over some drugs. The costs of these are not covered by their insurance. As the child ages and regresses, the out of pocket costs for vitamins and supplements can run as high as $400- $500 monthly.

Doctor visit costs and the reasons The early stages of the disease require frequent doctor associated with these visits visits for ear and throat infections, asthma, sleep and hearing issues.

The middle stages of the disease have doctor visits for examining the heart, neurology and inspecting the genetics. These require consulting general care and pulmonary doctors. The checkups include swallow studies, sleep studies, EEG, blood testing, orthopedics, vision checkups and general pain management. The later stages of the disease have frequent doctor visits for all of the above but with much more frequent checkups included.

In many cases, there are miscellaneous reasons for hospital visits like the occurrence of unusual symptoms that can only be diagnosed in a hospital setting.

Travelling associated with the Many families use doctors specializing Sanfilippo or those visits to the doctor have experience in dealing with patients with Sanfilippo.

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These doctors are generally located very far off and it is not unusual for parents to drive up to 2 hours to and fro for these visits.

There are various costs involved with these that include cost of toll, parking and sometimes overnight accommodations, meals and other incidentals.

Lab or other assessments All stages of the disease require urine GAG and enzyme level tests regularly and sometimes every 3 to 6 months. Comprehensive panels and complete blood count tests (CBC) are done every 6 months in young children and every 3 -6 months in older children. Hearing assessments and vision tests are also conducted.

Older children require sleep assessments, swallowing assessments, echocardiograms, EKG’s. MRI scans are conducted at least yearly. Auditory Brainstem Response (ABR) is done yearly. Orthopedic X-ray, CAT scans and brain imagining are also conducted. Eye exams are conducted annually. Ultra Sounds are conducted for organs that start malfunctioning.

Surgeries In the early stages of the disease ear tubes are required. Surgeries are conducted for removing tonsils and adenoids (sometimes more than once as they can grow back).

Feeding tubes happening are required at all stages. A handful of them have eye surgeries and shunts for Intracranial Pressure (ICP). Some of them have joint surgeries conducted.

Alternative therapies, and Acupuncture, massage and craniosacral therapy, equipment required hydrotherapy and hippo therapy are required.

Gait trainers, special chairs for seating, specialized car seats are some of the additional equipment that is required by the patients.

Home modifications/ vehicle In the younger years, safe rooms are for hyperactivity and modifications these have to often times be padded.

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As children age they must have sleep safe beds, handicap accessible bathrooms with roll-in showers and accessories, such as bath chairs, and hand held shower heads.

Handicap accessible homes are required for the patients and they must be modified. Hoya systems are used and there has to be wheel chair accessibility throughout the house. Hospital type beds with head and foot rising are required along with bed rails for some.

Vehicles must be fitted with wheelchair accessible or lift seating.

Hospitalization- number of times Later stages of the disease have a few hospitalizations per this occurs and also duration of year requiring 3 weeks to month long stays for flu, this stay pneumonia, RSV virus, uncontrolled pain, dystonia, pulmonary, wounds infected with MRSA (Methicillin- resistant staphylococcus aureus).

Any specialized dietary needs and Later stages of the disease require the purchase of special costs for purchase of this thickened liquids and also equipment that helps to purée food/equipment food. There is also a need for general equipment that can help with mobility, safety, etc.

The patients require all safety gadgets for their house similar to the requirement for a toddler. Special chairs, strollers, feeding chairs, special beds much be purchased and the rooms should be made safe for them to move around with ease.

Any speech/language or general Young children have many speech therapy, Occupational therapist visits Therapy (OT) and Physical Therapy (PT) classes along with special tutors for Applied behavioral analysis (ABA) therapy. Older children also do require the above therapies and have other aquatic, horse, sensory classes that they need to attend.

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Educational assistance not covered As these children age, the school does not cover speech, by public/private school OT and PT and it all become a part of the out of pocket expenses for a child with MPS.

As seen in the above analysis, the costs incurred by a patient with Sanfilippo syndrome only tends to increase with disease progresses. The only existing alternative that might prove beneficial is the enzyme replacement therapy that has not been proven effective in crossing the blood brain barrier unlike gene therapy that is being developed and tested by Abeona.

Many gene therapies being developed target rare diseases or diseases with relatively lower patient populations. Thus, the high costs quoted for these therapies is justified because of the high research and development costs that have to be recouped by the manufacturers from these smaller patient numbers. The costs of enzyme replacement therapies are also soaring, with many of them costing more than $100,000/year, some of which were discussed earlier.

Manufacturers of these ground-breaking or curative therapies, that do not have existing alternatives can justify the higher costs set by them.

The above table helps evaluate the factors that can be considered while making pricing decisions for ABO-101 and ABO-102, which are still yet to receive regulatory approval for commercial production by the FDA. These factors will act as a starting point/serve as a backbone for making complex decisions about the pricing of gene therapy products. The factors listed in the above table, along with other factors like the manufacturing, research and development costs, alternative solutions, method of delivery and administration, presence of competitors at the time of approval, disease burden etc., will contribute to making effective decisions about the final price set for the commercial product.

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Since gene therapy is more of a personalized method of treatment, compared to other drugs, no single pricing and reimbursement model can be applied. The annuity model combined with the pay for performance, seems like the most ideal option, not considering the constraints of the current healthcare system. However, in order to adapt this model, drastic change would current healthcare system are necessary. A recent report by ICER established that the first gene therapy to be approved in the US is likely to be within the next 1-2 years. Spark therapeutics has begun the process of submitting its Biological Licensing Application (BLA) to the FDA for its gene therapy (vortigene neparvovec) to treat patients with rare inherited retinal dystrophy, which is a genetic disorder due to which patients can go blind. (ICER., 2017) With gene therapy being so close to approval, making changes to the existing healthcare system to accommodate the cost for potential curative treatments like gene therapy is going to be challenging. Also, with the recent government debates regarding repeal and replacement of Affordable Care Act, only adds to the complexity of pricing and reimbursement in gene therapy. The non-partisan Congressional

Budget Office stated that 14 million fewer Americans would be uninsured by 2018, and another

24 million by 2026 if the Affordable Care Act (ACA) is repealed under President Trump’s rule.

(Kelly, E., 2017).

With the potential for political and health care reform, a shift to value-based pricing would most likely occur in the near future. Many countries like Spain and Italy have already adapted to this model for drugs with a high price tag that have the potential to cure life- threatening illness. For example, Italy has received about $250 million in refunds, from drugs or treatments that failed to offer the clinical test results/benefits that they were expected/claimed to be delivered. These payments might not seem a big deal to big pharma companies that deal

66 with billions of dollars, but letting smaller/start-up companies like Abeona Therapeutics, Inc,

Spark Therapeutics, UniQure, etc., take the hit for these therapies failing is questionable. (Boggs,

J., 2017)

Abeona Therapeutics, Inc. is still at least 12-24 months away from receiving FDA approval for commercial production of AB0-101 and ABO-102, conclusive and well informed decisions can only be made further along the line of regulatory approval and informed discussion with payers.

Market and Competitor Analysis

The orphan drug market is projected to grow to a revenue of $178 billion by 2020. Out of this, the Orphan drug therapeutics market is projected to grow to a total of $6 billion by the year

2018. (Miller, T and Berg, M., 2015) The gene therapy for the Sanfilippo syndrome being developed by Abeona just forms a small fraction of this $6 billion industry. The incidence of MPS

III (A, B, C and D) as discussed earlier is 1 in 70,000 births. (MPS Society., 2011)

Orphan Disease Therapeutics Global Market ($ Billion) 7 6 5 4 CAGR( 2010- 2018)13.1 % 3 CAGR(2004- 2 2010): 13.8%

Revenue ($ Billion) ($ Revenue 1 0 2004 2010 2018 Year

Figure 24: Orphan disease Therapeutics Global Market (Miller, T., and Berg, M., 2015)

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Thus, the market for ABO-101 and ABO-102 will primarily pertain to those children affected with the Sanfilippo syndrome in the USA. However, with the help of adequate resources available in the future, the company also plans on delivering this therapy outside the United

States to other countries such as Spain, Australia etc.

There are no direct competitors for Abeona who are currently developing gene therapy for MPS III A and B. However, Shire Human Genetics Therapeutics is developing enzyme replacement therapy for MPS III A. However, clinical trials have shown that this enzyme replacement therapy has not been effective in crossing the blood brain barrier, unlike Abeona’s gene therapy product which has shown to be successful. (Clinical Trials., 2016)

Other gene therapy companies that exist include Bluebird, UniQure, AveXis, Spark

Therapeutics and Avalance Biotech. AveXis uses the same AAV9 serotype vector as Abeona, for its gene therapy targeting a genetic disorder spinal muscular atrophy.

Intellectual Property

The technology (gene therapy) for Sanfilippo syndrome is based out of the research conducted at Nationwide Children’s hospital in Columbus, Ohio and Abeona has licensed this technology from them. However, the clinical trials for the gene therapy for Sanfilippo syndrome are being conducted by Abeona and the IND will be transferred to Abeona. Abeona will be the owner of the gene therapy product for Sanfilippo syndrome, once it has been approved by the

FDA.

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Go-to Market Strategy

Start-up and smaller companies generally have limited production capacity. Therefore, there are two possible strategies for the commercial production of Abeona’s gene therapy products ABO-101 and ABO-102 being developed for the Sanfilippo syndrome. Either, Abeona will produce the products in-house or they would collaborate with Contract Management

Organizations to carry out this mass production. Currently, they do not have the capacity to commercially produce these products in-house but if they do have the resources to carry out this commercial production in the future, they would do so. They intend to make a decision regarding this once they are closer to regulatory approval for commercial production.

Collaborators

Abeona is being supported by various organizations for developing a cure for Sanfilippo syndrome, namely Sanfilippo foundation in USA, National MPS Society of USA, Sanfilippo

Research Foundation of USA, Abby Grace foundation for Sanfilippo in USA and also Sanfilippo foundations in countries like Spain, Mexico, Australia, Switzerland and Canada.

Potential Exit Strategy

Depending upon the commercial production need at the given point of time, the potential exit strategies would be for Abeona Therapeutics to be acquired by a bigger bio-pharmaceutical company like Amgen, Genentech, Biogen etc. or to merge with them.

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