Functional Neuromodulation CEO: Deep Brain Stimulation a Treatment for Alzheimer’s Disease

Functional Neuromodulation is conducting a phase two feasibility trial of Deep Brain Stimulation (DBS) therapy in mild Alzheimer’s Disease patients.

The Alzheimer’s market is a large one. Alzheimer’s Disease is the leading cause of dementia in the elderly. Today 5.9 million individuals are suffering from Alzheimer’s and that number is expected to jump to 9 million individuals by 2030 and 16 million by 2050.

Currently there are five existing, FDA approved, treatments for Alzheimer’s. However, these treatments only temporarily reduce symptoms, from six months up to a year, but do not change the underlying course of the disease. Functional Neuromodulation believes DBS may work as an add-on therapy to be combined with current and possibly future treatments.

Based on the success of a pilot study of six individuals conducted by researchers in Toronto, Functional Neuromodulation is advancing its concept through a phase two trial of 40 patients at seven sites in the United States and Canada.  On June 12, 2013 the company announced that it had implanted 20 DBS systems in mild Alzheimer’s patients, marking its halfway goal of 40 patients for its trial, which the company calls the ADvance Study. This trial is also being funded in part by a translational grant of up to $2.75 million from the National Institute on Aging, an office of the National Institute of Health.

In addition to the National Institute on Aging grant, Functional Neuromodulation has completed a round of funding totaling $13.4 million from Genesys Capital, Foundation Medical Partners, and Medtronic. Functional Neuromodulation has also entered into collaboration with Medtronic, the world’s largest medical technology company.

OneMedRadio’s Matt Margolis spoke with Dan O’Connell, co-founder and CEO of Functional Neuromodulation, about the science behind applying Deep Brain Stimulation to Alzheimer’s Disease, its current clinical trial, the lack of venture capital for Alzheimer’s research, and the regulatory obstacles that Functional Neuromodulation will face in the future.

Click below to listen to audio, scroll down to view transcript.

Part One: In part 1, CEO Dan O’Connell describes the science behind Functional Neuromodulation, applying Deep Brain Stimulation to Alzheimer’s Disease, and their current study.

Part Two: In part 2, Mr. O’Connell discusses the company’s partners, the market for Alzheimer’s treatments, and the regulatory obstacles that Functional Neuromodulation will face in the future.

Part Three: In part 3, Mr. O’Connell discusses lack of venture capital for Alzheimer’s research, the cost of Deep Brain Stimulation treatment, and the possible effect of ObamaCare on Functional Neuromodulation.

View the entire transcript belo

MM: OneMedRadio welcomes Dan O’Connell, co-founder and CEO of Functional Neuromodulation. The Charlottesville, VA-based company is advancing the application of deep brain stimulation therapies, to help improve the lives of people with Alzheimer’s and other memory cognitive disorders. Thank you for joining us, Dan.

DO’C: Thanks for having me, Matt.

MM: Let’s start with a snap shot of the company. Give me the elevator pitch.

DO’C: Sure. As you described it, the company is advancing deep brain  stimulation in the area of Alzheimer’s and memory and cognitive disorders. Specifically, we are using technology from Medtronic to stimulate the fornix, which is a critical structure in the memory circuit of the brain and enhance activity in that circuit to potentially relieve the symptoms of, in particular, Alzheimer’s disease.

The company has raised $13.4 million in commitments from two venture capital firms, Genesys Capital, out of Toronto, and Foundation of Medical Partners in Connecticut. As well, we’ve received funding and have entered into a collaboration with Medtronic, which is the leading provider of DBS systems in the world.

MM: Talk a little bit about the scientific rationale behind neuromodulation for Alzheimer’s disease and the pilot gain that led to the design of your studies.

DO’C: DBS has been an established therapy for key neurological conditions such as Essential Tremor and Parkinson’s Disease for over 10 years now. The technology has moved into new exploratory indications for things such as epilepsy and depression. We have taken a particular focus on Alzheimer’s Disease, which really goes back to some work that our scientific co founder. Dr. Andres Lozano in Toronto did, which involved stimulating the hypothalamic tract in an obese patient, who was shown to have considerable improvements in memory tests.

So this is a patient, his obesity was intended to be treated by modulating the hypothalamus and in this patient, essentially what they observed, was an off-target effect of activation of the memory circuit. From there, Dr. Lozano conducted a small pilot study, an open label study in six patients that each had Alzheimer’s Disease. We referred to this as a pilot study. In that study, the least impaired patients improved dramatically in cognitive and physiological measures or imaging bio markers.

That data became sort of the cornerstone of the scientific foundation for creating a company and garnering the resources from venture and corporate sources, to run what we’re doing now, which we refer to as the “ADvance Study”, which is a randomized control study in North America involving six centers and up to 40 patients.

With this particular study we will look at patients that are turned on two weeks after surgery versus patients that are delayed as much as 12 months from implantation. So, in drug development parlance, this is a proof of concept study whereby we expect to generate a treatment effect or a therapeutic effect which would inform the next stage of development, which could include a pivotal study in North America or potentially additional studies in Europe.

MM: Talk about some participating partners in the advanced study as well as the grand support.

DO’C: So, we have a collaboration with Medtronic which provides us very economical access to their DBS technology, which in terms of the capital efficiency of start-up company has [been incorporated and funded and managed]. This is a real advantage. I mean, within six months of closing our initial funding, we had an approved study to do a human trial in the US and in Canada. So that partnership has been a real jump start for us in many ways.

In the ADvanced Study we are working with some of the world’s leading centers both for Alzheimer’s therapeutic trials as well as for DBS and functional neurosurgery. So, in our current study we are using centers such as the Toronto Western Hospital in Toronto Canada, University of Pennsylvania, Johns Hopkins University, Brown University and related facilities, the Banner Alzheimer’s Institute out in Phoenix and the University of Florida Gainesville which has been a real center of innovation for DBS emerging it into new indications.

MM: Talk about the regulatory path. You said device in the traditional sense or will it be more complicated?

DO’C: Well it will clearly be a PMA device that will require a pivotal study in the US for FDA regulatory approval. As the DBS technology generally has advanced or migrated from initial movement disorders into other neurological and psychiatric conditions.

We have a pretty clear path as to what the safety and outcomes, expectations might be on the part of the FDA from a benefits and risk evaluation. We [bet] that with the expectations for an Alzheimer’s therapy and what will be clinically meaningful. So, I think we have very clear view on what we will need to do particularly in the US for regulatory approval and we kind of know where the watermark is, if you will, for an Alzheimer’s therapy to be approved and ultimately adopted in the market place.

In Europe there is a contrasting paradigm in which without a pivotal study but with a sufficient safety and enough patients’ outcomes data, one could just submit for a CE mark and potentially have at least authorization to sell the therapy in various European countries.

MM: So I want to talk market opportunity we know that Alzheimer’s is nearly significant on medical need. Why do firm ventures come up short, and then is your technology meant to be a complement or meant to be an alternative?

DO’C: Just the latter question first Matt, we view this as really add-on therapy and in fact the proof of concept study which we refer to as advance is including patients that are on standard care or best medical management which today includes four approved drugs in the cholinesterase and NMDA classes. In fact the patients effectively run the course of the benefit of those drugs and then they are implanted and received at the DBS therapy as an add-on paradigm.

So from a therapy standpoint, provided you know we have the right efficacy and safety profile, we view it as potential synergistic, quite frankly, with certainly the current generation of drugs and potentially other drugs that may come in the market in the future. Now with respect to the drug pipeline and why it’s been difficult, I think it’s established that Alzheimer’s is a very difficult disease to understand from a molecular biology standpoint and certainly even more challenging disease to confront from a therapeutic development standpoint.

So in fact, in many respects, the fact that many of the drugs in the late stage studies and in the pipeline have failed to deliver on their initial promise, presents a real market window for us to deliver a device-based intervention forwhat is a really debilitating disease which isn’t without either economic or societal consequences. So, we feel there’s a great urgency to bring innovative new approaches to this disease where other things have fallen short of the mark.

MM: Talk about the prime candidates and patients core for DBS therapy and how the cost of this may relate to the overall cost of Alzheimer’s care.

DO’C: We’re targeting the earlier, mild end of the spectrum of the disease and intending to give people benefit in their cognitive and memory capacities and potentially stave off the symptoms of disease over a period of time. The device itself typically costs about $25,000 and surgery can cost about $50,000 all in which on the face of it may sound like expensive, but I think that the health economics would show that the care of a dementia patient particularly in an institutional setting is 30-35% more than a standard senior patient.

So runs in the order of $150,000 a year in annual cost. So I think that as we learn, if this therapy is as efficacious as we hope and if it can keep patients from having to be institutionalized in a care setting, that the return on the therapy will be realized within the health system within a very short period of time.

MM: How does ObamaCare and increased excise taxes affect your company growth strategy?

DO’C: Indirectly for the time being, I think it more directly impacts our partners and potential future partners in that we’re a research based company doing exploratory clinical R&D. We have not yet had to contend directly with the impact of a sales based tax. I do think it’s generally having an impact on corporate partners’ risk appetite; it’s clearly impacting the P&Ls of those operating companies.

I think to a certain extent, it’s affecting the mindset of traditional venture investors in the space. I think we have come through or still are in the midst of the period of concern on the part of financial investors about the regulatory risks within this industry, whether they be approval risks or payment and other aspects of being part of this highly regulated industry.

MM: Do you see more or less venture capital falling towards your space?

DO’C: I think the most recent number showed that there’s clearly less, it tends to cycle in short spurts and I think those spurts are a function of large financings that take place in one quarter and not the next, but the general trend I think over the last several quarters has been generally down. I think this is a function of fewer active firms making fewer investments in this area.

The venture business, in general I think, is going through a bit of a transition, the regulatory environment both on approval and reimbursement and otherwise has really tempered the appetite of investors to continue to pursue this area which is unfortunate.

MM: That was a company snapshot with Dan O’Connell, co-founder and CEO of Functional Neuromodulation. For OneMedRadio, this is Matthew Margolis signing off.

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