This week, German big pharma Bayer announced a €3.5B takeover of Asklepios BioPharmaceutical, a well known US gene therapy specialist. This is only one of many examples of the funding windfall experienced by the gene therapy field in 2020.
Despite the difficulties posed by the Covid-19 pandemic, 2020 has been a good year for gene therapy. In the first half of the year, funding of gene and cell therapy companies was up 103% compared to the same period in 2019 according to a report from the Alliance for Regenerative Medicine.
This year, there have been some notable European successes on the fundraising front in gene therapy such as the €106M Series C and €134M Nasdaq IPO of UK-based biotech Freeline Therapeutics.
CRISPR Therapeutics, co-founded by recent Nobel prize winner and CRISPR technology pioneer Emmanuelle Charpentier, also launched on the Nasdaq in July, raising €400M. Similarly, earlier this month, French ophthalmic biotech SparingVision raised €44.5M in financing.
“I think there are various aspects leading to this increase in investments,” says Peter Nell, CBO and Head of Therapeutics at CRISPR-focused biotech Mammoth Biosciences — which was co-founded by Jennifer Doudna who shared this year’s Nobel prize for Chemistry with Charpentier.
“While the initial attention to gene therapy in the 1990s was shut off by several scientific drawbacks, a lot of progress has been made and the field is much better set up for success,” Nell continued. “Open questions such as durability and pre-existing immunity remain, however, companies are addressing these in next-generation approaches. The first successful regulatory approvals and success stories have also contributed to more confidence in the field.”
AskBio was founded in 2001 and is a solid bet for Bayer, as its scientific founder Jude Samulski was one of the first to engineer adeno-associated viruses as a method of delivering gene therapies in the 1980s. These vectors are now powering many therapies being developed in this space today.
“This is a significant deal for Bayer and building on the BlueRock acquisition is a strong statement of its intent in the cell and gene therapy space,” commented Alan O’Connell, a partner at Seroba Life Sciences, an Irish VC investment firm with a focus on advanced therapies.
“Bayer wants to be at the forefront of cell and gene therapy, an area that represents the next wave of innovation in the sector and an attractive growth opportunity,” said Marianne De Backer, Head of Global Business Development & Licensing, and a member of the Executive Committee of the Pharmaceuticals Division of Bayer. “To achieve this, we are strengthening our internal capabilities while pursuing external strategic collaborations and technology acquisitions and licensing.”
AskBio has a platform that can explore the development of gene therapies that go beyond targeting rare, single-gene disorders, which is something Bayer is keen to explore.
“AskBio has a broad technology platform focused on expanding the therapeutic potential of gene therapies to multi-factor, or pathway, disorders. These types of diseases, which include heart disease, cancer, and type 2 diabetes, are caused by mutations in several genes and can be compounded by environmental factors such as smoking or diet,” explained Sheila Mikhail, co-founder and CEO of AskBio.
“The strategic value of AskBio for Bayer, providing multiple disease treatment options and partnership potential around the adeno-associated viruses platform is reflected in the price paid,” said O’Connell.
It seems that big pharma has decided that now is the time to invest in gene therapy in a big way. Bayer is actually a bit late to the party, as Novartis acquired AveXis — the makers of spinal muscular atrophy gene therapy Zolgensma in 2018, with Roche acquiring Spark Therapeutics — the company behind ophthalmic gene therapy Luxturna — last year. Similarly, in January this year, Japanese big pharma Astellas acquired US gene therapy biotech Audentes Therapeutics.
So what does this new interest from big investors mean for gene therapy biotechs in Europe? Nell thinks it is likely to have a positive impact, as it increases the chances of smaller biotechs attracting funding or merger or acquisition offers.
“I would assume that companies that have invested in in-house manufacturing and have not partnered all of their programs might have the best chances for future acquisitions,” he said. “In addition, having assets already in clinical development will de-risk the investment for large companies, even if the price to pay will be higher.”
Despite this increase in investment, it has not been plain sailing for companies developing gene therapies this year, particularly those running clinical trials.
“Across the biopharmaceutical industry, Covid-19 has slowed clinical trials. This is no different for gene therapy developers like AskBio,” says Mikhail.
“We are using this time while research sites are seeing fewer patients to accelerate the administrative work that will allow us to quickly initiate new studies as operations ramp up again. We are also amending protocols for planned and ongoing studies, in collaboration with patient advocates, to allow patients to complete as many visits at home as possible by taking advantage of local resources and technology to limit travel.”
Orchard Therapeutics, a UK-based gene therapy unicorn has attracted a lot of attention and funding over the last few years, cut 25% of jobs at the company in May and announced it was stopping construction of a US-based manufacturing facility, citing a need to “focus on higher yield opportunities and conserve cash.”
Despite these setbacks, Orchard could be expecting an approval of its treatment for the rare childhood neurological disorder metachromatic leukodystrophy in Europe very soon.
Nell thinks that the pandemic has actually encouraged big pharma companies to explore more innovative approaches and areas such as gene therapy, gene editing, and artificial intelligence to improve their future flexibility.
“It seems that more pharma companies are exploring innovative technologies… as traditional business might have seen an impact due to the pandemic and how the world is changing,” noted Nell.
It certainly seems as though interest in gene therapy is not going to disappear any time soon and indeed, in combination with other advanced therapeutics such as cell therapy, seems only set to continue.
“Investor interest in gene therapy is high, driven by its huge potential across single-gene disorders and also in larger more complex diseases, like cancer, central nervous system conditions, and cardiovascular disease,” says O’Connell.
“Clinical success, maturing pipelines, and the evolving and more favorable regulatory climate, particularly in the US, are all key factors driving activity. As more products come to the market, it’s vital that the challenges in manufacturing capacity, logistics, and payer models evolve if we are to realize the true potential here.”
Images from Elena Resko and Shutterstock