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A thesis on new horizons within advance therapies and why the timing is just right.

May 1, 2020

BREAKING NEW GROUNDS

Not too long ago, the idea of treating or even curing a disease by altering the genome of the cell was just a theoretical discussion, but today it is a reality that holds the promise of bringing significant clinical benefits to patients by directly targeting the underlying cause of the disease.

Advanced therapy medicinal products (ATMPs) is an umbrella term for cell therapy (CT), gene therapy (GT), and tissue engineered (TE) products, which offer groundbreaking new opportunities for the treatment of diseases that conventionally were considered incurable.

Cell & Gene Therapy: Cell and gene therapy are both aimed at addressing pathologies by introducing new genetic code as a replacement for broken code. Although overlapping, they are distinguished by their delivery methods that enable the gene to reach its target cells. While gene therapy is an in vivo approach, cell therapy is ex vivo; i.e., gene therapy involves administering the gene of interest directly into the cells inside the patient’s body while cell therapy involves physical extraction and isolation of cells and their subsequent modification in the lab followed by cell expansion and reintroduction into the patient’s body.

Tissue engineered products: Tissue engineering, also called regenerative medicine, refers to creation of functional human tissue in the laboratory. Tissue engineering has four important pillars; the right cells to start the process, the right support for the cells (scaffold), the right growth factors and the right physical and mechanical forces to influence the development of the cells. Currently TE plays a relatively small role in patient treatment. Supplemental bladders, small arteries, skin grafts, cartilage, and even a full trachea have been implanted in patients, but the procedures are still experimental and very costly.

THE MARKET IS GEARING UP

Research: The first paper on the potential use of gene therapy in humans was published in the 1970s. For a few decades, the advancement in the field was halted by negative safety data. However, the field has experienced a tremendous increase in momentum over the past few years, and today 14 ATMPs are approved for use in Europe and US (fig. 1). Recently, the number of clinical trials involving ATMPs has more than doubled from 486 in 2015 to 1,052 at the end of Q3 2019 (fig 2.). In fact, the FDA is anticipating more than 200 Investigational New Drug applications in this field per year by 2020, with 10-20 new approvals per year by 2025. In our view, these early successes are a clear signal of the promise that the future holds.

Market Trend and Dynamic: The ATMP market has been valued at $6 billion in 2017 and is projected to exhibit a CAGR of 22% over the forecast period (2018 – 2026), exceeding $35 billion by 2026. Since 2015, there has been an influx of over $36 billion in the ATMP space with many companies initiating an IPO and successfully raising significant sums in follow-on funding. In 2018, seven ATMP companies raised an average of $200 million each – Autolus Therapeutics, AVROBIO, Magenta Therapeutics, Homology Medicines, Rubius Therapeutics, Allogene Therapeutics and Orchard Therapeutics. It is also worth noting how young some of these companies are; e.g. Allogene was created by a $300 million Series A in April 2018 and just 6 months later, at the time of its IPO in October 2018, raised $324 million pegging the company’s market value at an eye-popping $2 billion-plus.

Active M&A Landscape: Over the past couple of years, several larger companies have dived into ATMP via acquisitions. These include Gilead’s acquisition of another CAR-T developer, Kite pharmaceuticals, for $12 billion; Celgene’s acquisition of Juno Therapeutics for $9 billion; and Novartis’s acquisition of AveXis for $8.7 billion. Celgene has since been acquired by Bristol-Myers Squibb for a massive $74 billion, and the proposed takeovers of Spark Therapeutics, by Roche for a reported $4.3 billion and Nightstar by Biogen for $800 million indicate the desire of large players to have a presence in the ATMP market. Notably, at the time of acquisition, all of the candidates had the initial proof-of-concept clinical data and manufacturing investments already in place speaking to the fact that big pharma not only pays significant sums for therapeutics but also for manufacturing capabilities. Going forward, we believe M&A will be the hottest exit route.

OUR DO’S AND DON’TS

Considering the strong scientific base and market activity within ATMP, we believe that the timing of VC-investments in this space is right. Thus, we actively look for such opportunities. And due to the early stage of the market, we scout with an interest agnostic to the therapeutic area.

However, we do think that the ATMP sector faces a diverse set of challenges. The first concerns the uncertainty surrounding reimbursement. The advances in cutting edge science are currently outpacing the traditional pricing and reimbursement systems that the industry has been built on. This disconnect is leaving both patients and payers wondering how accessible these life-altering products will be. Other challenges include complex manufacturing processes, implementation of Good Manufacturing Practices (GMP) especially for cell therapy, complex trial designs, heterogeneous regulatory procedures, and use of hospital exemption (HE),

As always, our initial investment interest will be motivated by the science, the experience of the management team and the scalability of the project. Our fund’s evergreen structure allows flexibility in the investment approach and the possibility, when appropriate, to take a long-term perspective in the investments.

/by Bita Sehat

1) Severe immune response leading to the death of a teenager undergoing gene therapy in 1999 at the University of Pennsylvania and development of leukemia in 4 out of 9 infants that were treated in Paris in 2008.
2) https://www.fda.gov/news-events/press-announcements/statement-fda-commissioner-scott-gottlieb-md-and-peter-marks-md-phd-director-center-biologics
3) https://www.coherentmarketinsights.com/market-insight/cell-and-gene-therapy-market-2475

4) https://fortune.com/2018/10/11/biotech-allogene-ipo/
5) https://doi.org/10.1016/j.omtm.2018.10.003
6) https://alliancerm.org/sites/default/files/ARM_position_on_HE_final.pdf

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