2010 Scrip 100 - Argentina biotech: time to invest?

Argentinian firms have a surprising amount of expertise in the field of biosimilars, while a strong science base has fed healthy demand for locally manufactured products. Can the country elevate its early-stage research efforts to the next level without big pharma's dollars? Francesca Bruce investigates.

Argentina's biotech sector has a lot to offer companies looking to emerging markets for investment and expansion opportunities. Not only does it have a strong position in biomedicine, boasting three Nobel Prize winners, but it was also one of the first markets in Latin America to develop and use biotech products.

Moreover, there is new commitment from the government, underscored by the creation of a new ministry of science, to make science and technology a priority. The biomedical sector's credentials include home-grown biosimilars, a transgenic "pharmaceutical dairy" and many promising public and private sector researchers looking for investors. Nevertheless, there are hurdles, not least a poor financing system.

Argentina stands out in the area of biosimilars. While debate raged on in Europe about the safety of biosimilars, Argentina embraced the products as a means of providing affordable access to medicines. They have been available in Argentina since around 1990, but in 2002 (following the 2001 economic crisis) the government passed a substitution law obliging physicians to prescribe medicines by their generic name. This move helped to drive sales of both traditional generics and biosimilars. The latter have demonstrated a good safety profile and have been well received by patients and prescribers. Argentina therefore has much to contribute to the international safety debate, says Dr Alberto Díaz, biotechnology director of INTI, the National Institute for Industrial Technology.

Several local firms focus on biosimilars, but one in particular, Bio Sidus, has pioneered these drugs in Argentina. The firm began developing biosimilars in the early 1980s and, because Argentina's intellectual property (IP) laws did not incorporate pharmaceuticals until 2000, the firm was able to launch its first biosimilar, erythropoietin (EPO), in 1990. The launch of Bio Sidus's interferon alfa 2b followed in 1991 and today the firm has seven biosimilars in its portfolio, more than any other company in the world, says the firm's executive director Dr Marcelo Criscuolo. These are EPO, interferon alfa 2b, filgrastim, somatropin, interferon beta 1a, interferon alpha 2a and lenograstim. The firm has a biosimilars development pipeline including rituximab (Genentech/Roche's Rituxan) and etanercept (Amgen/Wyeth's Enbrel), among others.

Bio Sidus is also famed for its "pharmaceutical dairy" of 30 transgenic cows that produce somatotropin (human growth hormone) in their milk. The milk of one Bio Sidus cow would be enough for all the children in Latin America with pituitary dwarfism, while the milk of 20 animals would supply children all over the world, says Dr Criscuolo. The hormones are now in Phase III trials. The firm is now setting its sights on producing transgenic cows that can express monoclonal antibodies. "Monoclonal antibodies from cows are the future," he says.

Other ambitious projects are under way – for example Bio Sidus is working with the University of Colorado, with funds from the Bill & Melinda Gates Foundation, to produce a therapeutic human papilloma virus (HPV) vaccine.

Unlike other countries in the region, Argentina has a very strong local pharmaceutical industry, accounting for more than half the Argentinian pharmaceutical market. According to Foro Argentino de Biotecnologia (FAB), Argentina's biotech forum, there are several local companies working in human health biotechnology that are open to "business co-operation opportunities". Alongside Bio Sidus, these firms include Elea, Beta, Biocientifica, Gador, Weiner Laboratorios, UNC Hemoderivados and Purissimus.

public sector champions

Public sector researchers are also coming up with some interesting projects. For example, the Unidad Nacional de Quilmes' (UNQ) Molecular Oncology Lab is working to transform cancer into a chronic disease by developing new anti-tumour strategies. One approach is focused on modulating immune systems with therapeutic vaccines based on gangliosides (overexpressed molecules present in some tumour types).

This project has already shown results – one vaccine is entering Phase II trials, while a second is going into Phase III, says Dr Daniel G�mez, the UNQ's former vice-chancellor. The university is working alongside Cuba's Molecular Immunology Centre and the Spanish firm Recombio.

39 public universities and several public institutes linked to the national council of science and technology, CONICET (discussed below), are responsible for the bulk of Argentina's basic research, says Dr G�mez.

Despite the opportunities for investment in basic research, the larger foreign firms and multinationals still tend to focus their R&D efforts in Argentina on late-stage clinical trials; a bad policy because "firms could put in just a small amount and get very good returns," says Dr Díaz.

"There is a lot for foreign biotech firms to do in terms of making products suitable for the market," Dr Díaz says. For example, earlier in 2009, the new ministry of science put out a call for the development of a swine flu vaccine, making available up to $469,000 in funding. The ministry hopes that eventually enough swine flu vaccine will be produced to meet local demand. But this could be too ambitious, particularly as the only facilities in Latin America capable of producing a flu vaccine are in Brazil.

Nevertheless, the basic research could be done well at a local level, although developing and producing the vaccine would require collaboration with a big company, says Dr Díaz. This could prove interesting for big pharma firms involved in vaccine development, which according to a recent World Health Organization (WHO) report on vaccines, tend to outsource basic research functions, rather than invest in in-house research.

government a driving force

New commitment from the government is fuelling the biotech sector. In 2007, the government established the ministry of science and technology as part of a strategic plan to drive economic development through biotechnology, nanotechnology and IT. The plan aimed to increase national investment in science and technology to 1% of GDP by 2010, up from 0.5% in 2005. Lino Barañao, a distinguished scientist and former head of SECYT, the department of science, technology and innovation, became Argentina's first science and technology minister.

The ministry's efforts are yielding some results. Productivity, measured according to the science citation index, has grown from 5,646 contributions to 6,468 and the number of public sector staff working in the field has grown by 32% since the ministry became operational, says Dr G�mez. Moreover, scientists seem to be enjoying increasing respect. "During the swine flu pandemic, scientists were called on for their views. We are being listened to now, and this hasn't always been the case," says Dr Susana Levy, R&D biotechnology manager at Biogenesis Bago.

Public-private partnerships (PPPs) are gathering fresh momentum under the new ministry. Although Argentina has a tradition of such collaborations, they have proved procyclical, says Dr G�mez. Such relations are becoming increasingly recognised as key to driving innovation and making new science part of clinical practice (as highlighted by the EU's Innovative Medicines Initiative). Under the new ministry, more grants are available for technology transfers and for funding spin-off companies.

The UNQ has proven to be a model of success; it has a department specifically dedicated to overseeing industry partnerships. As proof of the importance of PPPs, Dr G�mez points to the launch in September 2009 of Desmopresina, a haemostatic injectable solution that cuts the risk of metastasis in female dogs by 70%. Trials in humans are set to follow, he says. The university teamed up with the local biotech firm Romikin in September to develop the technology, which was eventually licensed to Biogenesis Bago.

And thanks to the ministry, new lines of financing are available for equipment and for covering the cost of patenting new discoveries. Money is also available to train public sector workers, to fund technology transfer and to pay for modifications to public sector institutions and equipment. Nevertheless, there is still a lack of funding for later stage projects as much of the financing that is available tends to be for basic research, says Dr Criscuolo.

The government has also made efforts to strategically distribute biotech facilities and equipment throughout the country, ensuring that researchers across the territory have access, says Dr G�mez.

In September, INTI opened a new $2 million biotech R&D centre and bioprocessing plant. The services on offer include: cell cultivation; technical and management advice on technology transfer; purification and conservation of macromolecules; bioanalytics; enzymatic technologies; recombinant DNA technologies; training; and regular seminars on biotech-related topics. The centre should help bring new basic molecular technologies to the biotech sector, especially to small to medium-sized enterprises, which invest very little in R&D. INTI also hopes that it will help build a strong national network of research labs, something that Dr Díaz says has been slow to develop to date.

finance doesn't flow

For all the new ministry's successes, "research, development and innovation are still not at the core of the country's economic policy or its productive system," says Dr G�mez. Although the government should ideally be investing 1% of GDP in R&D, the figure still stands at 0.5%.

And more investment needs to come from industry. Estimates put private sector investment at around a quarter of that invested by the government, says Dr G�mez. "Private sector R&D is expensive everywhere in the world, but more so in parts of the world where the market is small," adds Dr Levy.

However, financing is hard to come by. Just 13% of the total invested in biotechnology comes from the banking system, says FAB. "Argentina's financial system does not work," adds Dr Criscuolo. Bio Sidus had to take out a loan from the Inter-American Development Bank to finance a new facility aimed at developing exports because financing was not available closer to home. The system is not open to the long-term high-risk investments characteristic of the biotech sector. More needs to be done to stimulate alternative financing systems, for example through the banking system, accessing risk capital and stimulating angel investors, says Dr María Paz Aduriz, FAB's director of international and institutional affairs.

The lack of financing is largely down to a wave of economic crises over the past 50 years. On the positive side, these crises have made Argentinian scientists more resilient: "If you don't have money, you need to appeal to your creativity ... Argentina can resist blows and come back more adaptable and with a new way of thinking," says Dr G�mez.

Regulatory issues are also cited as an industry concern, according to a FAB survey. The country's medicines regulator, ANMAT, is around 15 years old and has done much to stimulate local industry, especially after the 2001 economic crash when local medicine production soared, for example through introducing internationally recognised GMP standards. However, by ANMAT's own admission, it takes more time to deal with innovative products.

IP laws also prove challenging for biotech and there is a lively debate around the idea of "patenting life". Says Dr Díaz: "We need to create an IP system that allows innovation to thrive and get to the market, but which doesn't prevent access to knowledge." Meanwhile, Bio Sidus's human growth hormones derived from transgenic cows could bring valuable insights. While the processes and technology that were necessary for the development of the cow can be patented, it is unclear whether Bio Sidus can take out a patent on the cow itself. The IP institute's judgement on the matter could prove pivotal.

Most crucially, it is vital that the government continues its current level of support, especially given the country's turbulent economic history. Says Dr Levy: "Now we are blooming and have some support. But how long will it last?"

Francesca Bruce is a reporter for Scrip.