Cell and gene therapies - licensing considerations

Last month, Atara Biotherapeutics’ Ebvallo was granted marketing authorisation in the EU - the first off-the-shelf T-cell immunotherapy in the world to receive marketing approval. Ebvallo is a therapy for people who have received an organ or bone marrow transplantation and then go on to develop a blood cancer called Epstein-Barr virus positive post-transplant lymphoproliferative disease (EBV+ PTLD).

The therapy works by taking T cells from a healthy donor, and mixing them with B cells from the same donor which have been infected with the Epstein-Barr virus (EBV). This ‘trains’ the T cells to recognise B cells infected with EBV. The trained T cells are then expanded in the lab and given to patients where they attack the patient’s infected B cells.

There are huge efforts currently underway to develop allogeneic, ‘off the shelf’ immunotherapies to try to overcome some of the challenges seen with the autologous CAR-T cell therapies currently on the market (where a patient's own T cells are harvested, genetically modified and grown, and then infused back into the patient). Many pre-clinical and clinical studies are underway using a number of different immune cells, including T cells and NK cells, with the aim of producing therapies that are easier and less time consuming to manufacture, ultimately less costly, and have fewer and less severe side effects.

There are an increasing number of licensing deals being done in this area and, while licence agreements do not differ hugely from licences of more traditional pharmaceutical products, there are some important things to look out for:

• Definition of Licensed Product: The term "Licensed Product" usually defines the products that the licensee is licensed to develop, as well as the products on which royalties are payable. It is therefore crucial to ensure that this definition encompasses the likely products that will be developed, and this depends on the technology being licensed. For example, the parties need to consider whether the therapy could be marketed as a service instead of a traditional product. It is also important to think, for example, about products developed or manufactured using a licensed cell line, but that might not be covered by a licensed patent.
  
   
• Pricing issues: Cell and gene therapies are the most expensive medicines in the world. Hemgenix, a gene therapy for Haemophilia B, currently holds the record for being the most costly at $3.5m per dose. It can be difficult for healthcare providers and insurers to budget for these large amounts, and innovative pricing models, including ‘payment-by-results’, have been developed to deal with this. My colleagues have previously written here and here about some of the challenges these payment models pose for licensing agreements. Does the licence agreement deal with the case where a licensee sells a cell therapy, but then many months down the line, has to pay rebates to the healthcare provider if the therapy doesn’t work as expected? What if royalties have already been paid to the licensor on the initial sale? Does the agreement allow for these to be clawed back or offset from future royalty payments?
  
   
• Milestones: Milestone events in the development and commercialisation of a product commonly attract very large payments in licence agreements, so it goes without saying that it is critical to define the milestone events accurately. Where regulatory milestones are included, such as milestones based on clinical trials or product approval, it is important to make sure the appropriate regulatory procedures are referred to, and to tailor defined terms accordingly, to avoid disagreements in the future about whether or not a milestone payment is due. For example, the first clinical trial for a cell or gene therapy is often structured as a phase I / IIa study, enrolling critically ill patients, rather than a classic phase I study in healthy volunteers.
  
   
• Royalty stacking. Royalty stacking clauses have been in use in licence agreements for many years and are used to protect a licensee from being over-burdened by royalties payable to different third parties on the same product. Under such a clause in a licence agreement, if the licensee has to pay royalties to a third party in relation to the licensed products, then the licensee can deduct all (or some) of such royalties from the royalties payable to the licensor. Cell and gene therapies, compared to a traditional small molecule drug, have a lot of constituent parts, such as cell lines, vectors and promotors, some or all of which may be licensed-in from third parties. The parties to a licence agreement for a cell or gene therapy will have to think carefully about this issue when negotiating the breadth of the royalty stack.

As more cell and gene therapies come to market, and parties start to look back at their licence agreements for guidance on milestones and royalties (and potentially have disagreements over large payments), we will no doubt see more changes to how certain clauses and definitions are typically drafted.