By Michael Quigley, VP of Investor Research, LSN

Earlier this year the FDA announced its plans to develop a Digital Health unit comprised of 13 engineers and experts in the digital health world, with the goal of restructuring the FDA’s assessment of digital health completely, making the process for approval more streamlined for new technologies. This announcement follows a trend of easing on regulations for medical software, as last summer the FDA announced that it would not be regulating fitness trackers and mobile apps.

Fitness apps are really just the tip of the iceberg. Things get much more difficult when you begin to evaluate the clinical validity of a constantly changing algorithm that sorts through streams of medical data to diagnose or recommend treatment options. Currently the FDA’s regulatory process is centered around consistency and reproducibility of results.  In order to accommodate these new technologies, the FDA too must adapt.

Bakul Patel, the associate center director for digital health at the FDA, will be building and heading the new unit. He envisions a new model for approvals similar to the TSA security line at the airport, where established veterans in the space can quickly pass through, while newer developers or those with less than stellar histories would still have to take off their shoes and get a full body scan ⁽¹⁾.

It would appear as though that model is taking shape as just last month the FDA Commissioner Scott Gottlieb announced that the FDA would be launching a pilot program under which lower-risk digital health products could be marketed without FDA premarket review, and higher risk products could receive a streamlined review. According to Gottlieb, the pilot would help to certify whether a company “consistently and reliably engages in high quality software design and testing (validation) and ongoing maintenance of its software products. Employing a unique pre-certification program for software as a medical device (SaMD) could reduce the time and cost of market entry for digital health technologies.”⁽²⁾.

This all is welcome news for innovators, investors, providers, payers, and patients who all stand to gain from the adoption of novel digital health technologies. It would also appear that investors have caught wind early of the FDA’s easing as funding for digital health companies was at an all-time high during the 1st half of 2017 with various research groups citing total numbers between $3.5-$6.5 billion⁽³⁾. As the FDA solidifies its plans and programs for the review of medical software I would anticipate investment in the sector to remain strong. If the pilot streamlining process proposed by Gottlieb takes hold I could also see more and more large tech firms following in the footsteps of Google and IBM and getting into healthcare, as they have the resources available to qualify for streamlined review.

(1). MEDICINE IS GOING DIGITAL. THE FDA IS RACING TO CATCH UP

(2). FDA Pilot to Sign Off on Low-Risk Digital Health Products Without Premarket Review

(3). Rock Health: digital health funding hits $3.5B in first half of 2017

By Michael Quigley, VP of Investor Research, LSN

Due to a recent FDA decision, immuno-oncology has proven to be a key area for personalized medicine approaches.  In this article, Next Phase will explore what this could mean for new technology development.

Many currently marketed cancer immunotherapies struggle due to high toxicity and response patterns that differ when compared to traditional therapies (1). Both in a research and clinical setting, identifying those patients most likely to respond to these and other new therapeutic approaches represents a massive opportunity for pharma companies.  This has given rise to increasing interest and investment in the field of companion diagnostics.

In May, the FDA approved Keytruda as the first immunotherapy cancer drug based on tumor specific molecular characteristics. While there have already been such approvals for genetic based markers, the FDA’s approval of Keytruda based on tumor specific characteristics offers shows the regulatory environment’s positive sentiment on other personalized approaches as well.  This is the first of such successes of a long developed shift away from the more traditional organ based approvals/research for cancer therapeutics.

While this shows obvious promise for large pharma companies developing these types of therapeutics it also shines a very positive light on companies looking at innovative ways of profiling tumor and patient subtypes.  These include including sequence-based diagnostics, multiple gene and protein signatures, multiplexed and digital PCR, microfluidic systems and novel signal detection approaches among others. These methods for identifying predictive biomarkers and patient stratification stand to move the field of immunotherapy forward, away from its current toxicity and efficacy issues and into an era of more personalized medicine.

Looking farther into the future implications of this approval is another positive sign into the early research current being done into what is known as “theranostics”. Where companion diagnostics are generally developed for an existing therapeutic agent the development of theranostics is a process involving the co-creation of therapeutics and a diagnostic to identify which patients will respond most positively. This is the next frontier for personalized medicine, where therapeutics are designed inherently to be effective in sub-populations of a disease or condition. Though this approach would potentially shrink the potential market for a new drug rather than aiming for “blockbuster” status, it also presents the opportunity to dramatically improve research and clinical trial efficiency for these compounds.

Overall this latest Keytruda approval provides a signal that the FDA is on board with this trend towards personalized medicine that researchers and drug developers have been moving towards for years.  In an industry that is so filled with risk and uncertainty, any form of reassurance from the regulatory environment is always welcome, and investors may see this as a positive signal for the sector.

1. http://www.ascopost.com/issues/april-25-2016/immunotherapy-could-be-the-wave-of-the-future-but-problems-and-challenges-cannot-be-ignored/