Gene Therapy Investment At All Time High, Commercialization Challenges Noted
Executive Summary
Investor appetite for cell and gene therapy companies has skyrocketed during the past year. However, storm clouds may gather as manufacturing and reimbursement challenges remain.
2018 saw a huge uptick in investment in gene therapy companies, but the path to efficient manufacture and commercial success for these products is still far from clear, new research from the Alliance for Regenerative Medicine suggests.
2019 has so far continued the trend, kicking off with some big investments in gene therapy companies. Biogen Inc.’s $877m Nightstar Therapeutics PLC buy, which gives it access to the gene therapy developer’s expertise in retinal diseases, is the latest deal in big pharma’s quest to establish strongholds in this emerging area by investing heavily in companies and products that have disease-modifying potential. (Also see "Biogen By Buying Nightstar Targets Ophthalmology As Emerging Growth Area" - Scrip, 4 Mar, 2019.)
Just last week, on Feb 25. Roche marked its territory by agreeing to pay almost $5bn for Spark Therapeutics Inc. to get hold of inherited blindness drug Luxturna (marketed in Europe by Novartis AG and in the US by Spark), and a few hemophilia A candidates. (Also see "Roche $4.8bn Buy Sparks Hemophilia Gene Therapy Race " - Scrip, 25 Feb, 2019.)
This follows on from 2018’s stellar investment year in cell and gene therapy companies according to figures released by the Alliance for Regenerative Medicine (ARM) from its Annual Regenerative Medicine Data Report.
Globally, companies active in gene and cell therapies and other regenerative medicines raised more than $13.3bn in 2018, a 73% increase over 2017. This financing surpassed figures from 2015, which according to ARM’s CEO Janet Lambert, was a “watershed year” in terms of investment in the sector when it attracted over $10bn in financing.
By sector in 2018, gene and gene-modified cell therapy companies raised $9.7bn in 2018 financing, cell therapy companies raised $7.6bn, and tissue engineering companies raised $936.9m, a 258% year-on-year increase from 2017.
It was also a standout year for IPOs, to name a few: Allogene Therapeutics Inc. floated for $372.6m, Rubius Therapeutics Inc. for $277.3m and Orchard Therapeutics Ltd. for $225.5m. Secondary financing also found a responsive investment community ready and willing to invest with bluebird bio Inc., AveXis Inc., Iovance Biotherapeutics Inc. and Sangamo Therapeutics Inc. all raising hundreds of millions to develop their regenerative medicine pipelines.
“Several of these [cell and gene] therapies have made it to market in the US and Europe, and both public and private payers have shown at least some willingness to engage in innovative financing and reimbursement approaches,” Janet Lambert, CEO of ARM told Scrip in an interview. “These strides give investors the confidence that scientifically, these technologies are promising and in some cases, proven; clinically, these products have and will continue to provide significant improvement over current palliative approaches, and in some cases, provide a viable, durable treatment option where perhaps there was none.”
Investor Returns
While investor enthusiasm is evidently surging, the industry needs to now deliver on its promises and address some of the concerns investors have about return on investment. “We don’t have a lot of commercial success stories in this space yet,” Janet Lambert told Scrip. “There will be a time when investors will want to see that, to see that these products can come to market; that patients can access them and that all of that can create a good business opportunity for them as investors. I think right now there’s still confidence that all that will get worked out, but there’s still things that need to be worked out.”
Whether this level of investment will continue, Lambert said that ARM anticipated “sustained investor commitment to this space, especially as more product candidates enter the clinic, and those already there progress towards commercialization”.
There are now 906 regenerative medicines companies globally, with north America home to 484 of them.
Speaking specifically about Europe, which hosts 241 regenerative medicine companies, Lambert thinks the region’s companies have been at the forefront of addressing the main investor commercialization concern, manufacturing.
“We saw Novartis as one of the first movers in CAR-T therapy. Its tackling some of the manufacturing challenges in that space and part of its solution to that was to acquire its French CDMO partner, CellforCure,” she said, which is “evidence that some of the best thinking and most advanced work around manufacturing is going on in Europe”.
The Path Less Trodden
Three approved products have created a buzz over the last 18 months; Novartis’s Kymriah (tisagenlecleucel), Spark’s Luxturna (voretigene neparvovec) and Gilead’s Yescarta (axicabtagene ciloleucel). Products expected to come to the European market this year include bluebird bio’s LentiGlobin for beta thalassemia and Kiadis Pharma Netherlands BV’s leukemia drug ATIR101 which are both expected by the middle of 2019.
Expected by the end of 2019 is Novartis/AveXis’ therapy Zolgensma for spinal muscular atrophy type 1. It is anticipated that Orchard Therapeutics will file a marketing authorization application (MAA) in Europe for its gene therapies in ADA deficiency and metachromatic leukodystrophy in 2020.
There were 1,028 clinical trials underway in 2018 that utilized specific regenerative medicine or advanced therapy technology. Gene therapy trials numbered 362, while cell therapy came to 263, with tissue engineering clinical trials amounting to 41.
“We’ve had a period of incredible scientific innovation. Now we need commercial innovation for this sector,” Lambert told Scrip. “That is like figuring out how to scale up manufacturing; how to have a distribution network that’s both personalized but also efficient."
She added that from a reimbursement and market access standing, the industry needed to still figure out how it can work with public and private payers to “effectively integrate these kinds of products into the healthcare system as we know it, and to do so in a way that is financially sustainable and delivers real access to patients.”