The ability of cell and gene therapy companies to raise capital this year will hinge on their ability to address the manufacturing of their products as well as address medical needs beyond cancer, a panel of three investors and an industry executive agreed yesterday.
Speaking at the Alliance for Regenerative Medicine (ARM)’s Cell & Gene Therapy Investor Day, held in New York at the Metropolitan Club, the panelists agreed that the sector is heading for a strong year based on 2018 activity.
That activity, according to ARM, included more than $13 billion in global financings and a record-high number of clinical trials (1,028) with a target enrollment of more than 59,000 patients. ARM counts 906 cell and gene therapy and other “regenerative medicine” companies worldwide, more than half of which (484) are based in North America.
Patrick Rivers, principal, Aquilo Capital Management, said the most important concern in evaluating companies seeking investment is their manufacturing processes—a longstanding challenge, especially for gene therapy developers dependent on supply of virus.
That challenge has led companies to pursue a combination of in-house and outsourced approaches. In the most recent example, bluebird bio today is officially opening its first wholly owned manufacturing facility in Durham, NC. The 125,000-square-foot facility is designed to produce lentiviral vector for the company’s investigational gene and cell therapies.
“Manufacturing becomes question numbers one, two, and three when we’re beginning to know a gene therapy company for the first time,” Rivers said. “To a much bigger extent than with generally any other type of company, the first thing that we’re going to interrogate is, what is your manufacturing setup? How scalable is it? What can you do yourself? What do you have to have a source do? What are you doing in process development today vs. what you plan to accomplish tomorrow?”
Founded in 2010, Aquilo is a San Francisco firm that invests in drug developers focused on new treatments for urgent medical needs.
Companies are less than forthcoming when it comes to their manufacturing, Rivers added.
Pretty opaque area
“It’s a pretty opaque area. Very few companies are really willing to talk about manufacturing at a granular level, because there’s a lot of secret sauce that’s attached to it,” as in proprietary processes. “They don’t really want to talk about it. I find myself asking the same question over and over and over again, to try and glean a small amount of information.”
Dennis Purcell, founder and senior advisor of Aisling Capital, agreed with Rivers: “Clinical trials are pretty transparent: ‘We dosed these 20 patients, and these are the results.’ When we get into doing that due diligence in manufacturing, it’s kind of below the surface a little bit.”
Aisling Capital is a New York life sciences investment firm investing in companies that develop pharmaceutical, biotechnology, and medical products, as well as providers of drug development, manufacturing, and other important services.
The need to address manufacturing has created an opportunity for startups focused less on developing cell and gene therapies than on the processes to produce them at scale in the quantities needed by companies, added Matthew Gline, CFO of Roivant Sciences and the panel’s only industry executive.
Roivant has raised more than $3 billion toward building its family of 15 companies or “vants” focused on developing therapies for diseases that include uterine fibroids, endometriosis, prostate cancer, Parkinson’s disease, diabetes, sickle cell disease, and multiple rare and fatal pediatric conditions—as well as technologies designed to improve the process of developing and commercializing new treatments.
“I think if you want to start a gene therapy company, I think there’s a huge opportunity for like the Illumina of gene therapy, a services company where we (gene therapy developers) don’t have to worry about the manufacturing,” Gline said.
Gline cited the example of TriLink BioTechnologies, which serves mRNA therapy developers as a third-party provider specializing in the synthesis of highly modified nucleic acid constructs for research, diagnostic, and therapeutic applications. According to its website, TriLink develops and manufactures oligonucleotides, mRNA transcripts, nucleotides, bioconjugation, custom chemistry, solutions for PCR & RT-PCR, and NGS library preparation kits. Privately-held TriLink was acquired in 2017 by Maravai LifeSciences.
“I think about what that’s going to look like in gene therapy once many people can start gene therapy companies, because the tools are there, and you can do it in a garage laboratory. Then you’ll start to see people going after more indications.”
However, panel moderator Reni Benjamin, PhD, managing director and senior biotechnology analyst at Raymond James, said many investors he speaks with prefer cell and gene therapy startups to develop their own manufacturing solutions rather than rely on contract manufacturers.
“We actually talk to a lot of investors who say, ‘I want them to be doing it themselves,’ Benjamin said. “Companies are focused on their own manufacturing because they’ve tried going to a contract manufacturer, and they don’t seem to get it exactly right, and they don’t care. So they [companies] say, it’s got to come back in house.”
More than half of the clinical trials (598 or 58%) recorded by ARM were in oncology.
“I’m very bullish on the sector as a whole. That said, there’s no way we’ll do another cancer deal,” said Elona Baum, managing director, DEFTA Partners, a venture capital firm that invests in companies with innovative technologies in IT and healthcare. “We’re looking at neuro, which is in the early stage. I try to go where everybody else isn’t going.”
One such example Baum cited was a company DEFTA has invested in, Endogena Therapeutics. Endogena seeks to develop first-in-class endogenous regenerative medicines to repair and regenerate tissues and organs, with the aim of addressing unmet medical needs associated with aging and genetic diseases.
Rivers agreed that cell and gene therapy developers need to look beyond cancer. In gene therapy, he said, he is excited about the potential for intravitreal delivery of viral vectors that can get into the back of the eye.
“I think subretinal delivery is fraught with a number of challenges, technically or commercially. I would love somebody to crack that problem with being able to delivery AAV [adeno-associated viral vectors] to the back of the eye with intravitreal. That’s a technology I’m excited about.”
As for cell therapy startups, Rivers added, “I really like to get more involved in cell therapy in autoimmune disease.
“I think we’ve seen a lot in oncology, and there’s a lot to be excited about there, and we have data on a lot of liquid tumors that looks fantastic. Not so much in solid tumors,” Rivers acknowledged. “But I think that there’s just a ton of open landscape for developing cell therapy in autoimmune disease.”