April 1, 2013 (Vol. 33, No. 7)
James M. Wilson, M.D., Ph.D.
Flurry of Activity in Sector Driven by Investment from Venture Capital Community
Venture capital interest in funding gene therapies, and the companies that develop them, has dramatically increased, judging by a recent spurt of activity, a lot of due diligence, a few deals announced, and a few more in the works and expected to be announced soon.
Most of the new money in the field has come through VC investment. AGCT on November 19, 2012, announced it secured $37.5 million in a series B round allowing the company to continue its Phase II program in Alpha-1 Antitrypsin Deficiency (Alpha-1) and initiate full development of potential treatments for two orphan ophthalmology indications, Achromatopsia (ACHM) and X-Linked Rentinoschisis (XLRS).
Earlier that month, uniQure won the Western world’s first regulatory approval for a gene therapy when the European Commission signed off on Glybera® (alipogene tiparvovec) for patients with lipoprotein lipase deficiency (LPLD or familial hyperchylomicronemia) suffering from recurring acute pancreatitis.
In July, bluebird bio secured a $60 million Series D financing round to advance clinical programs in childhood cerebral adrenoleukodystrophy (CCALD), beta-thalassemia and sickle cell disease. This year, bluebird bio plans to initiate a Phase II/III clinical study in CCALD in both the U.S. and Europe, as well as a second U.S.-based Phase I/II study in betathalassemia. And in February 2012, Celladon completed a $43 million equity financing to advance clinical development of its lead drug candidate MYDICAR for heart failure.
What does all that activity mean? First, there’s enough clinical data out there to validate the concept of gene therapy. The more speculative venture capital investors, rather than the pharmaceutical industry, are realizing the potential of this, and are getting into the game.
Indeed there are very few, if any, gene-therapy programs being developed by the pharma industry’s biggest players. The most advanced such programs have been overseen by Sanofi’s Genzyme subsidiary. Its pipeline as of June included the Parkinson’s disease application AAV-hAADC in Phase II, the age-related macular degeneration application AAV-sFLT in Phase I, and other preclinical products. More than a year after Genzyme’s acquisition, the future of the gene therapy programs remain unclear, though Sanofi has insisted otherwise.
Also last June, Baxter International agreed to develop and commercialize potential hemophilia B treatments using gene therapy technology that I developed, and licensed to Chatham Therapeutics, an affiliate of Asklepios BioPharmaceutical (AskBio). Baxter agreed to pay $25 million up front, and additional payments tied to development and commercial milestones, in return for investigating Chatham Biological Nano Particles™, an advanced rAAV-based gene therapy technology that showed potential therapeutic benefit in a Phase I/II study sponsored by St. Jude Children’s Research Hospital, conducted by UCL, and involving six patients using Chatham technology.
In that study, published December 22, 2011, in The New England Journal of Medicine, the six were treated (via peripheral-vein infusion) with an AAV vector carrying a proprietary (codon-optimized) human factor IX (FIX) transgene. The treatment resulted in FIX transgene expression at levels sufficient to improve the bleeding phenotype, with few side effects, all easily treatable.
Some of the patients were able to discontinue prophylactic treatment with FIX. AskBio] is now recruiting patients for a follow-up Phase I/Phase II trial designed to evaluate the safety of single ascending IV doses of FIX genes delivered by an AAV8 vector in up to 16 adults with Hemophilia B.
Pharma is attracted to low-lying fruit such as the orphan diseases accounting for most early indications in gene therapy, and will step up to the plate when there’s compelling clinical data relevant to a product. But pharma is much more market sensitive than biotech or VC, which is willing to invest based more on the broader implications of that positive clinical data, the concept of platform validation.
Unlike in pharma, VC and biotech investors are much more driven by unmet need. An unmet need translates to them in terms of an easier regulatory approval process, and even more flexibility in pricing. It’s an easier to develop a drug under those circumstances.
While the criteria pharma uses for selecting a disease indication are much more formulaic than VC and biotech, once you start applying very rigorous, thorough, standard criteria for investment in disease indications, gene therapy has some question marks—primarily, its business model and lingering concerns about technical risk.
We have developed a very structured way in which we think about whether to invest in a gene therapy product:
- Technical risk: Has there been enough preclinical and clinical data with a platform to suggest it’s going to work? That has to do with delivery—do we know what the gene should be? For a recessive genetic disease, that’s clear. If it’s an acquired disease, where you’re going to remodel a tissue, you may not know.
- Unmet need: For gene therapy, since it’s still largely untested, the unmet need has to be quite high from the risk-benefit standpoint.
- Market size: The third criterion is market size.
- Clinical evaluation: The fourth and most important criterion with respect to making decisions about investment.
Clinical evaluation should be further broken down into two areas. First, are there biomarkers or other indicators that you can evaluate in a Phase I or Phase I/II study to answer the questions: Did the vector get in? Did it deliver the gene? Is the gene being expressed? And is it functional? When you put a gene into the liver in a hemophiliac, you know the gene is expressing because you can assay for the protein in the blood. That’s exactly the kind of program you want.
Second, what would the clinical trial look like? What would be the endpoints for registration? In gene therapy, it’s hard to do placebo-controlled double-blinded studies, because you have to inject vector into the heart or into the brain. You’re not going to do that with just saline. Or if you do a bone marrow transplant, you’re not going to do that without the gene.
You also have to think about what are going to be the endpoints. And this isn’t specific for gene therapy. But it is important, because of the constraints on the clinical trials, and the fact that we are dealing with orphan diseases in smaller patient populations.
James M. Wilson, M.D., Ph.D., is professor and director of the gene therapy program in the department of pathology and laboratory medicine, and professor in the department of internal medicine at the University of Pennsylvania.