2023 has begun at full throttle. We have collected seven major biotech trends that industry experts are keeping an eye on over the next 12 months.
Just like that, another year has begun. 2023 has already launched with announcements of big pharma acquisitions and the approval of Eisai and Biogen’s Alzheimer’s drug lecanemab by the U.S. Food and Drug Administration (FDA).
We already collected a bunch of biotech companies that may be of interest this year. Now it’s time to reflect on some of the biggest biotech trends that analysts and investors see developing over 2023.
Rollout and readout of Alzheimer’s drugs
The accelerated approval of lecanemab, branded as Leqembi, heralded a promising development for the treatment of Alzheimer’s disease.
Lecanemab slowed the progress of Alzheimer’s disease in early-stage patients by 27% over 18 months in a phase 3 trial last year; a rare positive result in a sea of failed clinical trials in Alzheimer’s disease. However, the drug, designed to clear harmful accumulations of amyloid protein, is priced at a considerable $26,500 per year in the U.S., and can cause serious side effects including swelling and bleeding in the brain.
“Beta amyloid directed antibodies have become one of the most controversial drug classes in recent history,” said Fady Riad, CEO of the consulting firm Centurion Life Sciences. “The approval of Aduhelm in 2021 led to significant scrutiny with regards to the efficacy and safety profiles of this drug and its entire class.”
“The fact that Roche’s own beta amyloid-directed antibody gantenerumab failed phase 3 trials adds more confusion and raises more questions than answers about the viability of this drug class.”
For now, the U.S. Centers for Medicare & Medicaid Services (CMS) has declined to cover the costs of Leqembi unless the patient is enrolled in a clinical trial of the treatment, similar to its response to Aduhelm’s accelerated approval last year. This will likely restrict Eisai’s revenue from the drug.
Meanwhile, another amyloid-targeting drug, Eli Lilly’s donanemab, is expected to read out phase 3 results in late 2023, solidifying this biotech trend.
Obesity comes into focus
When the U.S. FDA approved Novo Nordisk’s diabetes drug semaglutide for increasing weight loss in obesity in 2021, this electrified the biotech industry. Drugs were arriving that could treat obesity with better safety profiles than earlier weight loss pills. This could help society to tackle growing obesity rates, which are causing more than 4 million deaths worldwide.
In 2022, Lilly’s drug tirzepatide (Mounjaro) was approved for the treatment of type 2 diabetes. The drug also shows big potential in boosting weight loss in overweight patients, with a phase 3 trial readout due later in 2023. If the results bear out, Mounjaro could be approved quickly as the U.S. FDA has granted a Fast Track Designation to Lilly to expedite the regulatory clearance process of the drug.
Adding to this biotech trend in 2023, Amgen is planning to launch a mid-stage clinical trial of a competing weight loss drug this year, with a phase 3 trial expected in 2024.
“Obesity has been gaining more prominence as a disease area for big pharma more broadly; I expect more news and discussions,” said Alex Cogut, Head of Healthcare Equity Research at Bryan, Garnier & Co. “In Europe, Zealand Pharma has a few early-stage assets that could be interesting.”
Inflation regulations bite
In August 2022, the U.S. passed sweeping new legislation dubbed the Inflation Reduction Act (IRA). The act aims to cut inflation rates in the nation by reducing the federal deficit, investing in domestic energy production and enabling green energy sources. The IRA also is set on lowering the prices of prescription drugs.
Lowered prescription drug prices may cause some drugmakers in the U.S. to lose revenue, and the industry is bracing itself. Some of the biopharma firms most affected by the changes are likely to be those developing small molecules and treatments for diseases that mostly affect the elderly population.
“We’ve been seeing consequences from the U.S. IRA healthcare legislation play out with some companies deprioritizing small molecules or small lead indications,” noted Cogut.
The coming year will reveal how the industry can adapt to the IRA, and what decisions are taken by big and small drugmakers alike.
Oncology ups and downs
Interest in oncology has always been a bustling biotech trend, and 2023 will be no different.
In 2022, there were regulatory approvals for the antibody-drug conjugate Enhertu, which is developed and commercialized by AstraZeneca and Daiichi Sankyo. Enhertu was first greenlit by the U.S. FDA in 2019 for the treatment of late-stage breast cancer that has an abundance of proteins called HER2, known as HER2-positive breast cancer.
Over the years, Enhertu collected more approvals in other cancer indications, including in non-small cell lung cancer in August 2022. Enhertu is in now development with other indications on the way, and in combination with other anticancer treatments, such as immunotherapies.
Another active arena for oncology is immune checkpoint inhibitor drugs. The field had a stir in March 2022 when the first checkpoint blocker targeting the protein LAG-3 — relatlimab — was greenlit by the U.S. FDA as part of a combination treatment for advanced melanoma.
One emerging immune checkpoint target in this space is TIGIT. In May 2022, an anti-TIGIT drug developed by Roche, tiragolumab, failed an interim analysis in a phase 3 trial, serving to reset high expectations surrounding the new target.
However, Roche’s phase 3 trial is ongoing, with more data expected this year. And Gilead alongside its partner Arcus Biosciences aim to test their own anti-TIGIT drug, domvanalimab, in phase 3 trials.
Finally, CAR-T cell therapies continue to stake out new territory in rare forms of blood cancer. Carvykti got its first FDA approval in late-stage blood cancer in late 2022. Meanwhile, two approved CAR-T therapies that were already approved for late-stage cancer, Breyanzi and Yescarta, were greenlit by the U.S. FDA for earlier-stage cancers, making them available for more patients. The continuing progress of CAR-T therapies is leading to massive growth in investments in startups in the field.
Big pharma jumps on an anemic biotech market
Biotech stock markets have remained in a lackluster state in 2022. For example, the S&P Biotech index (XBI), a measure of small-to-mid-cap biotech companies, is sitting at 50% lower than its last peak in early 2021.
During poor market conditions like the current bull run, big pharma companies often snap up cheap M&A deals while market caps are suppressed. However, this didn’t materialize in 2022.
In 2023, the biotech trend may go in the direction of M&A deals. In January, the JP Morgan conference kicked off with several announcements of M&A deals, including AstraZeneca buying out CinCor Pharma and Ipsen taking over Albireo.
In addition to acquisitions of biotechs with marketed drugs, Cogut expects “more M&A in early stage private biotech, as VCs will have to make some choices of what to keep funding into proof of concept data.”
On the other hand, M&As could remain scarce if big pharma prefers to partner with biotech companies than to acquire them.
Marketing of gene therapies
Players developing advanced therapies such as cell and gene therapies have a lot to look forward to in 2023.
In 2022, some key ‘firsts’ passed the final regulatory hurdle in Europe, including the hemophilia B gene therapy Hemgenix, the hemophilia A gene therapy Roctavian, and Ebvallo, the first approved off-the-shelf T-cell therapy. In the U.S., bluebird bio also gained approvals of its own gene therapies. As these products typically have a very high price tag, Cogut is curious to find out how the commercial launches progress.
Some of the candidates that Riad sees getting U.S. FDA approval in 2023 include Roctavian, the enhanced bone marrow transplant omidubicel and SRP-9001, which could become the first gene therapy for the rare condition Duchenne’s muscular dystrophy (DMD).
“There is a lot of pressure on the FDA from patient advocacy groups to approve the therapy as soon as possible since DMD is not reversible and SRP-9001 can only prevent further deterioration,” explained Riad. He added that the gene therapy developer, Sarepta Therapeutics, has applied for accelerated approval of the gene therapy, with a decision expected by May 29th, 2023.
“This will be a very closely watched regulatory decision, especially given that results from the phase 3 confirmatory trial are due to drop only a few months after,” said Riad.
Also of interest will be a gene-edited cell therapy for sickle cell disease and beta thalassemia, called exa-cel. The developers Vertex and CRISPR Therapeutics aim to complete the approval application for this therapy in early 2023.
One notable biotech trend in 2023 will likely also be the progress of meat alternatives into the market.
Companies developing fermentation-based food production methods promise big strides in the quest for sustainability. In 2022, one company developing a protein-rich ingredient from microbes and renewable energy, Solar Foods, received approval to market its product in Singapore.
In late 2022, Eat Just got the go-ahead from the U.S. FDA, classifying its chicken meat product as safe to eat. However, Eat Just needs more nods from other U.S. agencies including the Department of Agriculture Food Safety and Inspection Service for full clearance. This could arrive in the coming months.
Biotech trends that make 2023
Whether it’s artificial intelligence, automation, digitization, or changes in regulatory policy, small biotech trends could build up into big waves over the years. At the same time, other negative developments could arise, such as the growing danger of cyberattacks for biotech startups.
The biotech industry continues to fluctuate; and players must be able to adapt to the big changes coming.
Thanks for tips from Sofinnova Partners; Rafaèle Tordjman, founder of Jeito Capital; Dylan van Haaften, managing director, healthcare equity research at Bryan Garnier & Co; Alex Cogut, head of healthcare equity research at Bryan Garnier & Co; Bertrand Delsuc, founder of Biotech Radar; and Fady Riad, CEO of Centurion Life Sciences.