Introduction

About Aura Biosciences

Aura Biosciences is developing a new class of therapies to selectively target and destroy cancer cells. Its lead
program, AU-011 for the treatment of primary choroidal melanoma, is being developed under a CRADA with the
National Cancer Institute (NCI), part of the National Institutes of Health.

AU-011 is a first-in-class targeted therapy in development for the treatment of primary choroidal melanoma. The
therapy consists of proprietary viral-like particle bioconjugates (VPB) that are activated with an ophthalmic laser.
The VPBs bind selectively to unique receptors on cancer cells in the eye and are derived from technology
originally pioneered by Dr. John Schiller of the Center for Cancer Research at the National Cancer Institute (NCI),
recipient of the 2017 Lasker-DeBakey Award. Upon activation with an ophthalmic laser, the drug rapidly and
specifically disrupts the cell membrane of tumor cells while sparing key eye structures, which may allow for the
potential of preserving patients’ vision and reducing other long-term complications of radiation treatment. AU-011
can be delivered using equipment commonly found in an ophthalmologist’s office and does not require a surgical
procedure, pointing to a potentially less invasive, more convenient therapy for patients and physicians. AU-011 for
the treatment of choroidal melanoma has been granted orphan drug and fast track designations by the U.S. Food
and Drug Administration and is currently in clinical development.
 Problems
 Declaration of Orphan drug
Orphan drugs" are medicinal products intended for diagnosis, prevention or treatment of life-threatening or very
serious diseases or disorders that are rare.

These drugs are called “orphan” because under normal market conditions the pharmaceutical industry has little
interest in developing and marketing products intended for only a small number of patients.

As a result the potential market for new drug treatment is also small and the drug companies industry would
actually incur a financial loss.

(In the case study )

AU-011 had been granted “Orphan Drug” status by the FDA. An "orphan drug" was one treating a disease so rare
that standard rules of FDA drug approval would likely render research and development on the drug economically
infeasible. Orphan drug status provided: (i) some tax benefits on research and development costs, (ii) typically
smaller sample size requirements in human testing for FDA approval and (iii) a period of "market exclusivity"
beyond any provided by relevant patents. The FDA would not approve another drug targeted to the same rare
disease for a period of at least seven years after commercialization of the orphan drug. (jan,2019)

 Market potential
(Market Research) Aura had a commissioned market research focused on the U.S. and the five largest EU markets
(France, Germany, Italy, Spain and UK). ClearView Healthcare Partners interviewed about 50 respondents
including retina specialists, ocular oncologists, key opinion leaders (KOLs), and payers. In the interviews

The key findings were

Overall: physicians viewed the targeted nature of AU-011 as compelling relative to brachytherapy.

Concerns/Tumor Size: Physicians’ main concern regarding the mechanism of action of AU-011 was the ability of viral-like
particles and the laser to sufficiently penetrate the tumors. They considered the tumor thickness to be the likely limiting
factor in using AU-011, with AU-011 being appropriate only for “small” tumors and high-risk indeterminate lesions. This
was compatible with Aura’s own perception of the situations when AU-011 could be the preferred treatment.

Difference between U.S. and EU: U.S. physicians were highly enthusiastic about AU-011’s reduced visual impairment
impact. EU physicians, on the other hand, placed on higher value on AU-011 being a less invasive treatment, i.e. no surgery
or hospitalization for 3–5 days.

Safety Perception: Physicians in both the U.S. and EU considered AU-011 to be safer than the current standard of care with
an easily manageable side effect profile.

Ease of Treatment: In terms of method of administration, AU-011 being a simple, non-surgical, in-office procedure, was
viewed as a significant improvement over the current standard of care, considering both quality of life and convenience.
Physicians suggested that the ease of administration might result in some patients wanting to use it earlier instead of waiting
perhaps to get radiation later.
  Ocular Melanoma: Current Treatment options
Ocular Melanoma is treated with highly invasive radioactive therapies that required multiple surgeries and cause
blindness without prevention of metastases.

 Problem in pricing
There were a number of details of the AU—011 market introduction plan still to be decided. For example, on
pricing, should Aura price on a “per injection” basis or “per regimen” of three recommended injections for
maximum tumor arrest impact? Based on market research and other
knowledge of the market, Aura was assessing its go to market options under the following
planning parameters. (N.B. some data here are disguised for company confidentiality and others
are simplified for case discussion purposes.)

 Size of Potential Market – United States

Each year, 600 “small melanomas” of a size suitable for AU-011 use, would be diagnosed.

Each year, 3,900 “indeterminate lesions” of size suitable for AU-011 use, would be seen.

Aura recognized that, in the longer run, the availability of AU-011 may impact the entire
potential patient flow. For example, with a non-surgical option such as AU-011 available,
perhaps more people would present themselves for annual eye screening increasing
"indeterminate lesion" identification. Treating IL's could lead to fewer small melanomas
presenting each year. However, for initial planning purposes, it was assumed that 600 cases of
small melanomas and 3,900 cases of “Indeterminate lesions” would present each year.

Size of Potential Market – “EU5” Countries

o 500 "small melanomas” and 3,600 IL’s present annually

Size of Potential Market – Rest of EU Countries Beyond EU5 plus Norway, Switzerland and
Canada

o 75% of EU5 Market

Cost of Goods:

o Assume initially that AU-011 would be sold in “regimen” pack of three doses. Cost to make
and distribute a regimen pack of three doses (in temperature controlled system) was $25,000 plus
8% of sales royalty paid to various patent holders on intellectual property used by Aura.

Based on market research, the “preference share” for a physician fully informed about AU-011
was estimated to be:

United States Europe

Use on Small CM 80% 70%

Use on IL 60% 50%

 Solutions
 Targeting eyes cancer with unique machines of action
 Management team with expertise in orphan drug development and market launch
 AU-011 will potentially be the first approved FDA treatment for first line therapy of
ocular Melanoma (treatment of the primary tumor in the eye)
 Raid clinical proof of concept: safety and efficacy in Q1-2/16
 Its National Institute for Health and Care Excellence (NICE) assessed the cost
effectiveness of each new drug given intended pricing. If NICE judged that a drug and its
pricing did not meet a “cost effective” standard, it was not eligible for coverage through
the National Health System. The strong role of a centralized body was often cited as the
reason for lower drug prices in Europe than the United States. Due to which it was
difficult to do pricing of the drug.
 There were findings that physicians with the potential use are
categorized into three categories
1. Aggressive Treaters: were confident that AU-011 use on “indeterminate lesion” (IL’s)
would significantly reduce metastatic rates and thus would use AU-011 broadly for IL
cases. Indicative quote: “We remove suspicious looking skin moles so why not do that in
the eye? As long as this is safe, I think people will want the peace of mind.”

2. Balanced Treaters: would use on ILs with clear risk factors presenting. Indicative quote:
“Some patients I’m watching are riskier—they might just be on the edge of 2 mm and
have fluid. So, I’d want this product in those patients.”

3. Hesitant Treaters: felt the cost-benefit did not justify using AU-011 in ILs, seeing AU-011
largely as a substitute for radiation. Indicative quote: “There is no data proving we can
prevent metastasis, so I do not think we can really justify spending money to treat these
patients.”

The “Balanced Treaters” group was the majority of physicians.

 Solution of pricing was got after the research done by the company as stated above
The “preference share” was the percentage of tumors of each type for which a doctor would
employ AU-011, if insurance coverage was provided.

Based on market research, the “insurance coverage/access" percentages were a

function of price. In the United States, three price levels were under
consideration: $100,000, $200,00, and
$250,000 for a “regimen” of three doses.

Coverage percentages were estimated to be:

United States Insurance Coverage

Price Type of Tumor

CM IL
$100K 95% 90%
$200K 95% 80%
$250K 95% 50%

In Europe, based on market research, an average price of $70,000 was assumed as being
negotiated.
This price level would yield 100% coverage for CM’s and 50% coverage for IL’s.

Market Opportunity:

• >$750M worldwide

• No FDA approved therapy • Focused call point

Clinical Trial Objectives:

• Local tumor control

• Maintenance of visual acuity

Value Proposition:

Early treatment of tumors without the vision loss associated with current radioactive-based
methods

Reference
 https://www.eurordis.org/content/what-orphan-drug
http://www.aurabiosciences.com

https://www.bloomberg.com/profile/company/0091588Z:US