Gene Therapy

A landmark regulatory approval has vaulted the cell and gene therapy space to the front of the drug industry's mind. But speedy progress has also brought forward significant challenges.

Approved for infants with spinal muscular atrophy, Novartis' Zolgensma is a stunning advancement for a disease that in its most severe form is fatal before age two. In clinical tests, almost all babies given the therapy remained alive and off permanent breathing support.

"The issue is really how do you cover Zolgensma, not how you say no to it," said Michael Sherman, the chief medical officer for Harvard Pilgrim Health Care, in an interview with BioPharma Dive on the sidelines of the 2019 BIO conference in Philadelphia. A similar logic applies to Spark Therapeutics' Luxturna, a gene therapy approved in the U.S. in December 2017 to treat a rare form of blindness.

Novartis' Zolgensma and Spark's Luxturna are just the first in what's expected to be a wave of experimental gene therapies to make it to market. The Food and Drug Administration foresees approving 10 to 20 cell and gene therapy products each year by 2025.

Not all of those products, though, are guaranteed to have the compelling efficacy that make Luxturna and Zolgensma relatively easy choices for insurers to cover. (Zolgensma's approval was subsequently put under the microscope after revelations Novartis submitted manipulated testing data from mice to the FDA, an issue that will be explored later in this Trendline.)

The next critical test of the gene therapy era will likely come in hemophilia. Multiple companies are racing to market with candidates for hemophilia A, with BioMarin Pharmaceutical the furthest along.

"Hemophilia A is going to force the problem [with payers] to be solved," said Sandy Macrae, CEO of Sangamo Therapeutics, which is developing a rival gene therapy to BioMarin's.

"If it's SMA, it's a few dreadfully impacted children," he said. "No one's going to stand in the way of that, and they're just going to make it available. If it's hemophilia A, there are alternatives."

Payer pains in adapting to the new era

Novartis priced Zolgensma at $2.1 million, making it the most expensive drug ever brought to market.

The Swiss pharma intends for that cost to be spread over multi-year payment plans, the result of lengthy discussions with payers.

New England-based Harvard Pilgrim Health Care, for instance, began talks on Zolgensma more than a year ago, before Novartis bought the therapy's original developer, AveXis.

Still, the payment plan is less substantive than both sides had hoped for, Sherman said, reflecting limits within the U.S. healthcare system in paying for these one-time treatments.

Medicaid "best price" regulations enacted over 25 years ago require that state Medicaid agencies receive statutory discounts, either at a fixed rate or, if greater, matching what drugmakers provide elsewhere. That's proved a roadblock in constructing outcomes-based or annuity-based agreements with payers.

"I want to stress that the issue wasn't Novartis' lack of willingness to participate," Sherman said. "It was the best pricing regulations that have been the largest challenge."

"As someone who is trying to operationalize this on the front lines," he added, "the Medicaid best price restriction is the largest barrier to some of the innovative kind of agreements that both the pharma companies and myself would like to engage in."

Sherman said he's had similar talks with other gene therapy developers, including BioMarin, Spark, Sarepta Therapeutics and Bluebird bio that have all been predicated on that barrier being removed.

In hemophilia, Sherman noted that having existing treatments gives insurers the ability to say no, and uncertainty over the durability of gene therapy's benefits makes outcomes-based agreements even more critical.

Recent three-year data from BioMarin, for example, appeared to show a continued drop in clotting factor expression, albeit to levels considered "mild" hemophilia.

Gene therapy's rapid emergence may bump up against other limits, too.

Most treatments now being developed use inactivated viral vectors, such as adeno-associated viruses or lentiviruses, to deliver corrected genes. Those vectors can concentrate in the liver, potentially narrowing the universe of readily targetable diseases that also carry commercial appeal, Sangamo's CEO predicted.

"I think in the next three to five years, gene therapy will have mined all of the liver diseases that are liver-centric and really saturate that space," Macrae said.

Peter Marks, the director of the FDA's Center for Biologics Evaluation and Research, noted gene therapy will face additional challenges in addressing diseases spurred by multiple genes rather than the single gene defects that treatments like Luxturna and Zolgensma target.

"The challenge for gene therapies in areas where we don't understand the pathophysiology is that becomes a much larger development program, much more expensive," Marks said in an interview at BIO. "You lose the benefit you normally get with gene therapy, which is that you have a high probability of success if you're dealing with a single-gene disorder."

Regulatory review for the cell and gene therapies brought forward has so far heavily focused on what's known as chemistry, manufacturing, and controls — the details of how a therapy is made. Less focus has been on the clinical questions of how the treatment works, since single gene defects cause clearly identifiable deficiencies.

That's made interpreting clinical results from these first gene therapies like Zolgensma pretty simple.

"How many kids do you need to see that would be floppy babies on ventilators that instead are walking around at age three?" Marks said. "You don't need tons of those, and you don't need sophisticated statistics, patient-focused outcomes, because they're normal. You go from very abnormal to normal."

More uncertain mechanisms of action would add back in the "biological" risk of many current experimental drugs, which are often supported by hazy notions of how they work.

"The worry is that you're going to devolve back to conventional drug development, where clinical data will actually be important, because you'll have to figure out 'Is that actually really working' and 'Is it working over the long term?'" Marks said.

Some biotechs are already going after those tougher, multigenic targets. Marks highlighted Parkinson's disease as one such example. Axovant and Voyager Therapeutics are both developing gene therapies for that neurodegenerative disorder.

In 10 or 15 years, the CBER head suspects the gene therapy space may end up looking quite like the small molecule industry of today.

FDA keeping pace, with caution

Even as gene therapy companies bolt ahead, the head of CBER remains cautious of leading the agency too far forward in "leaps of faith with using preclinical data."

While recent years have been marked with success, gene therapy's history has its share of setbacks.

"We don't want to have another Jesse Gelsinger," Marks said, referring to the U.S. teenager who died in 1999 after being treated with an experimental gene therapy. "We don't want to go backwards."

"The good news is people have more understanding now for this, but if you look at what happened with some of the Phase 1 trials that went bad in Europe, it doesn't take much to get people to really pull back," he added.

Caution, though, is balanced against the FDA's interest in promoting gene therapy development, even when it's for just a few patients.

The regulator is considering new ideas for regulatory review of so-called bespoke, or extremely personalized therapies, Marks said. If there's a level of similarity, the FDA is looking for ways to streamline oversight so each tiny tweak won't require a different drug application.

"If you treated those each as individual drugs, people are never going to get the therapies because you can't expect anyone to put in the effort," he said. "And so you'll never have any business venture going after making these."

"We want to be forward-leaning," Marks added, but "we don't want to be cavalier and create problems."

Article top image credit: Getty / Edited by BioPharma Dive

Babies born with a severe form of a rare genetic condition known as spinal muscular atrophy almost always die before their second birthday.

Novartis Zolgensma, approved in May by the Food and Drug Administration, promises to change that by offering a potential one-time fix for the genetic deficiency behind the neuromuscular disease. 

Zolgensma was only the second gene therapy for an inherited disorder to be cleared for commercial use in the U.S. Its keenly awaited approval marked another milestone for a fast-moving field, and validated the decision by Novartis last year to acquire its developer, the biotech company AveXis, for $8.7 billion. (A scandal over manipulated data, addressed in an article to follow in this trendline, has clouded Zolgensma's arrival, however.) 

The therapy is also notable for its price. At $2.125 million per dose, Zolgensma is the most expensive treatment ever brought to market. Novartis intends for that price to be paid in installments of $425,000 a year for five years.

Novartis justifies that unprecedented cost with Zolgensma's life-saving benefit. In the clinical trial used by the FDA to make its decision, all 15 infants treated with Zolgensma were alive and off permanent breathing assistance at two years. 

Follow-up results presented by Novartis in May showed the 10 who continued with follow-up study maintained all motor function gains from treatment, such as sitting without support, and were alive at three to five years of age. 

"It has the potential to be a cure if patients are treated early before they have manifestations of the disease," said Jerry Mendell, a physician at Nationwide Children's Hospital in Ohio and a lead investigator for the initial study of Zolgensma, in an interview. 

Each year in the U.S., roughly 450 to 500 people are born with SMA, about 60% of whom are diagnosed with a severe form of the condition known as Type 1. In affected babies, a gene called survival motor neuron 1 is defective, hindering or preventing production of a crucial protein responsible for motor neuron development. 

For those with Type 1, typical motor milestones are never attained and affected infants quickly develop problems breathing and swallowing. Natural history data cited by Novartis suggests less than 10% are alive and off ventilation support at two years. 

The FDA approved Zolgensma for pediatric patients under the age of two with bi-allelic mutations in the SMN1 gene. This label includes both babies newly incident with the condition, as well as those previously diagnosed who are still younger than two. Notably, that also would include patients with the less severe SMA Types 2 and 3. 

Novartis estimates the current treatable patient population to be roughly 1,100 in the U.S. 

Until recently, no approved treatments were available for SMA. That changed in December 2016, when Biogen won an OK from the FDA for Spinraza, which works by altering gene expression to help create a back-up version of the needed protein. It's approved to treat SMA Type 1, as well as later-onset forms.

Spinraza can help babies survive and improve motor function, but is not a cure. After an initial 4 injections, doses are taken chronically every four months. Each vial costs $125,000 at list price, a figure that the Institute for Clinical and Economic Review determined "far exceeds commonly accepted thresholds" for cost effectiveness. 

Zolgensma presented patients, prescribers and payers with even greater sticker shock, but is intended as a one-time, curative therapy. While unprecedented, Novartis' price does come close to what ICER deems to be cost-effective, according to a newly released estimate.

By a measure of cost per life-years gained, ICER judges an appropriate value-based price for Zolgensma to be between $1.2 million and $2.1 million. 

Due to their high costs, gene therapies like Zolgensma and Spark Therapeutics' blindness treatment Luxturna before it could force changes in how drugs are paid for and reimbursed. 

"Our insurance system is not designed for one-time, very large payments," Michael Sherman, chief medical officer for the New England-based insurer Harvard Pilgrim Health Care, told attendees at a gene therapy conference in Washington, D.C. this past spring. 

A key question in valuing Zolgensma is whether benefits shown to date will endure. In principle, addressing the genetic cause of the disease should reverse the progressive muscle weakening seen with SMA.

"This is one of the longest clinical trials where we have evidence of sustained gene expression," said Mendell. "I think it's very encouraging and we have every reason to believe it will be sustained." 

Beyond the longer-term data Novartis has from the first small study of Zolgensma, though, there's limited clinical proof of how long a one-time dose of Zolgensma could be effective. 

Three patients in the extension arm of that initial trial did go on to receive combination therapy, but that decision was made by either physicians or parents rather than due to loss of motor function, Novartis said at the time of Zolgensma's approval. 

For the SMA patients for whom Zolgensma is approved, Novartis believes Zolgensma should be the preferred treatment option over Spinraza. 

"We believe Zolgensma will be a very strong option for patients who are already being treated by the currently approved therapy," said Novartis CEO Vas Narasimahn on a May conference call with reporters. 

With Zolgensma's approval, families of infants born with SMA now have two disease-modifying treatment options when less than three years ago there were none. 

Recent research presented by Roche suggest the Swiss pharma could have a third in the experimental oral drug risdiplam, which analysts view as competitive to both Zolgensma and Spinraza. Roche plans to file the drug for approval this year. 

The accelerating research in SMA is reflective of an industry-wide turn toward rare disease and the RNA- or DNA-targeting medicines that hold hope for improved treatment. 

Gene therapies for hemophilia, muscular dystrophies, sickle cell disease and retinal disorders are advancing rapidly through drugmaker pipelines and could reach patients over the next several years. 

Their eventual success or failure will depend on clinical results foremost, but whether drugmakers and insurers solve payment and reimbursement will matter nearly as much. 

"A therapy that can cure disease in a single treatment isn't a unit of drug," wrote former FDA Commissioner Scott Gottlieb in a May op-ed. "It's a public health solution."

Article top image credit: Novartis

Introduction

Logistics is a key part of any advanced therapies supply chain. Failure within it may prevent therapies reaching patients. Therefore, logistics platforms need to be created early and built alongside the therapies clinical and process development programs.

Logistics by Design (LbD) is a framework for logistics decision making. Using a risk based analysis it identifies the areas within the supply chain that need to be addressed to create a logistics platform that can meet the needs of patients at clinical and commercial scale.

The Logistics by Design Framework

Logistics by Design (LbD) seeks to provide structure to, and de-risk, logistics planning and implementation activities and help align it with the development plans of clinical process development teams.

Underpinning LbD is a well-established process development framework. This framework known as Quality by Design focuses on risk mitigation, as opposed to cost reduction. It uses a systematic approach that begins with predefined objectives, emphasizes product and process understanding and process control, and is based on sound science and quality risk management (for further information, download the white paper by completing the form below).

As with clinical and manufacturing development pathways, the key to logistics success is designing in "quality" from the outset. By doing this, challenges in creating a logistics platform can be identified early and allows sufficient time to consult with key stakeholders (e.g. manufacturing, clinical teams and providers). This will help align the various development programs and address any high risk or cost drivers.

To achieve this LbD creates a 6 stage tool kit that aligns with clinical and manufacturing development: 

1. Mapping of and risk identification for the commercial logistics vision - Application of LbD principles
2. Building Collaborations (Technology Selection and Testing)
3. Infrastructure Planning
4. Field Validation
5. Scaling for Commercial Operations
6. Commercial Deployment

Stage 1: Logistics mapping and risk identification for the commercial logistics vision - Application of LbD principles

The key is to set pre-defined objectives that capture the commercial vision of the therapy developer. This a Target Logistics Profile (TLP) and defines the overarching objectives of the logistics platform with respect to supporting business goals, supplying market needs, maintaining regulatory compliance and facilitating clinical adoption.

From this a Focused Target Logistics Profile (FTLP) can be established to provide a prospective summary of the logistics platforms traits. Including all components of the value chain, to ensure successful delivery of the therapy to the patient whilst maintaining chain of custody and identity. Thus, the FTLP describes the design criteria for the logistics strategy.

The Critical Logistics Attributes (CLAs) and resulting Critical Logistics Parameters (CLPs) can then be generated.  From this analysis, a developer will then have a clear understanding of the risk points within their supply chain, and start to identify mitigation or removal actions.

Stage 2: Building Collaborations (Technology Selection and Testing)

Having defined and identified all the logistic activities required to execute the complete value chain, this stage of the framework builds, and manages, collaborations essential to creating a viable logistics platform.

Logistic providers should be viewed as technical experts, with "joint planning" and "collaborative" relationship levels sought for complex and high-risk elements of the logistics chain. Their expertise and experience can then be harnessed to add maximum value. Furthermore, by having this level of co-engagement and investment in the therapy, providers can appreciate the landscape ahead and "co-evolution" of companies can occur, amplifying the probability of success.

Part of these collaborative working relationships will include the selection and testing of specific technologies, whether it be the physical product shippers or complex integrated data management systems. If selected early in the development lifecycle, they can be assessed within early stage clinical trials and a logistics platform built, tested and optimised alongside the clinical and manufacturing teams.

Stage 3: Infrastructure Planning

Early insight into the challenges and technological feasibility of the proposed commercial logistics platform, as provided in stages 1 and 2 of the framework above, will provide developers with an opportunity to revisit any of the original decisions based on data driven assessments of performance.

Once the agreed pathway is defined, then planning can commence for establishing the required infrastructure to support field validation (stage 4) as part of pivotal clinical studies and ultimately full-scale commercial deployment (stage 6).

Activities included at this stage of development may include for example the identification and sourcing of appropriately located warehousing capability within a specific geographic footprint. 

For example, having an allogeneic off-the-shelf cryopreserved product for an acute clinical condition such as stroke, where it may be important to administer the therapy within a small timeframe window (<12h), means it may be more desirable to have several smaller cryo-storage hubs, appropriately distributed globally, than one big master centre.

Stage 4: Field Validation

This stage of the framework is focused on large-scale validation of the logistics platform with a view to gathering "in-the-field" data.  

Stage 5: Scaling for commercial operations

This stage of the framework focuses on the scale-out of the logistics platform to cover the full commercial footprint. Exemplars of activities that may be actioned at this point in the development plan include:

• Bringing on board additional warehousing
• Lane mapping to ensure delivery windows are achievable based on clinical availability, manufacturing schedules, etc.
• Implementation of training in key procedures and processes to new market sectors
• Translation of documents into languages for new market sectors not covered in the pivotal clinical trials
• Embedding novel technologies (e.g. controlled thawing devices) at new clinical sites
• Bringing on-line additional manufacturing facilities to meet expected market demand

Stage 6: Commercial Deployment

This stage of the process involves executing the developed commercial logistics platform, undertaking continual performance monitoring with a view to identifying points of failure (where and why) and where appropriate, implementing further mitigation strategies to correct these in real time. Additionally, once substantial volumes of data are generated, iterative review procedures can be started to identify opportunities to further streamline the logistics platform.

References

Full white paper reference: Ellison*, McCoy*, Bell, Frend, Ward (*Joint 1st Author), Logistics by Design – A framework for advanced therapy developers to create optimal Logistics Platforms, Cell and Gene Therapy Insights, Dec 2018, 1019 - 103

Bluebird bio's newly approved gene therapy Zynteglo will come at a steep cost, with the company setting the treatment's price at 1.6 million euros, or $1.8 million.

The Cambridge, Mass.-based biotech intends for that cost, which puts Zynteglo among the most expensive drugs ever, to be spread over five years based on its continued effectiveness. 

Announcing the price in June, Bluebird said its calculations considered only patient benefits and did not include healthcare cost offsets, which it said could have pushed Zynteglo's cost as high as $4 million. Actual reimbursement is still under negotiation with health authorities in European countries, and the treatment's launch has been pushed back to early 2020 due to manufacturing issues. 

Payers around the world are grappling with the launch of gene therapies, many of which promise one-time treatments that can avert long-term health care costs, but carry huge upfront prices now settling at around $2 million. Novartis set a price of $2.1 million for its gene therapy Zolgensma.

Bluebird declined to release Zynteglo's price when the drug received European Commission conditional approval in early June. The price announcement two weeks later coincided with a data presentation at the European Hematology Association in both transfusion-dependent beta-thalassemia, the therapy's approved European indication, and sickle-cell disease, in which it is still under development.

Zynteglo has yet to be approved in the U.S., where Bluebird hopes to begin submission of an application to the Food and Drug Administration by the end of 2019. 

Under Bluebird's pricing approach, full payment is contingent on the effectiveness of the drug, with installment payments reduced or ceased for patients who must undergo post-Zynteglo transfusions.

The company argues that Zynteglo delivers $2.1 million worth of patient benefit through improvements in quality of life and extended life span. By reducing the need for frequent blood infusions and other medical interventions to treat the disease, which causes life-threatening anemia, Zynteglo can avert other healthcare costs, too, amounting to an additional $2 million, the company says.

Bluebird CEO Nick Leschly said the company's approach represents a "significant departure" from typical rare disease drug pricing in that it does not attempt to include those cost offsets in its price.

From a health system perspective, Zynteglo is more burdensome than Novartis' recently approved gene therapy Zolgensma, which is delivered via a single infusion of a virus carrying a corrective gene. Bluebird's requires patients to have stem cells pulled from their body through a process called apheresis.

The stem cells are altered in a laboratory to encode the βA-T87Q-globin gene, which stimulates production of healthy red blood cells, and then re-infused into patients. Patients must also receive chemotherapy to prepare their bone marrow for the reintroduction of the stem cells.

While Bluebird has set a price, the actual details of reimbursement haven't been worked out. Influential cost-effectiveness agencies like the U.K.'s National Institute for Health and Care Excellence and Germany's Institute for Quality and Efficiency in Health Care have yet to weigh in, which could result in payments lower than Bluebird's asking price.

Article top image credit: NPR

The Food and Drug Administration sent Novartis an unambiguous signal in August, indicating the drugmaker could face civil or criminal penalties for manipulating data used to support approval of its gene therapy Zolgensma. 

That warning was also directed at other pharmaceutical companies, former agency officials say, a reminder that's particularly relevant for those working on gene therapies and other cutting-edge treatments. 

"This is a rapidly evolving field where there are going to be accelerated approvals. The quality of the data is critical," said former FDA chief Robert Califf in an interview with BioPharma Dive. 

"People who are working in a lab on a cure for a disease in children should be aware that falsifying data is a crime and it's huge betrayal of public trust." 

The FDA's May 26 decision to clear Zolgensma was a landmark moment for Novartis, which invested $8.7 billion in buying the treatment's biotech developer, AveXis. 

The Swiss pharma company needed data from only three dozen infants to convince the regulator of Zolgensma, which treats a rare neurodegenerative disease called spinal muscular atrophy. Results were dramatic, showing the treatment helped keep alive infants who would otherwise have almost certainly died or seen their disease progress. 

Yet that approval is now under the microscope, after revelations Novartis knew of problems with some of the preclinical data in its application but didn't tell regulators until after Zolgensma's approval. 

The faulty data, according to the FDA, was confined to results from an assay used to test in mice two different versions of Zolgensma. Clinical data was not manipulated, and the agency affirms Zolgensma should remain on the market. 

Even preclinical data can be important, though, and more so for drugs with limited data from human testing.

"Ensuring truthful, complete and accurate data in product applications, regardless of priority review status, is a critical component of industry's responsibility as they work to demonstrate the safety, purity, and potency of biological products," the FDA wrote in an emailed statement, referring to the accelerated evaluation granted Zolgensma. 

"The submission of such truthful, complete and accurate data is also critical for the FDA to be able to protect the public health, and the law requires it." 

Zolgensma is only the second gene therapy for an inherited disease cleared for market in the U.S., but others — with varying sizes of clinical evidence — are nearing regulators' desks.

As Novartis tells it, the company acted quickly to substantiate and fully investigate the allegations of data manipulation. At no point did the company believe the inaccurate data risked patient harm, informing its decision to wait until it had findings in hand before informing the FDA. 

"I would say it was normal course of business and pretty typical for how we handle these items," said Novartis' head of regulatory affairs, Rob Kowalski, on a call with investors and Wall Street analysts Wednesday. It's worth noting that Novartis has also informed health agencies in the European Union and Japan, where Zolgensma is not approved, of the data issues. 

Normal course of business or not, the FDA's response has been anything but. In an agency memo, an FDA official indicated that, had the regulator known of the data issues beforehand, it would have delayed its decision to approve Zolgensma. 

"I suspect there will be wrongdoers here. And consequences," tweeted former FDA Commissioner Scott Gottlieb in the wake of the revelations. 

Novartis has blamed a "few individuals" for the manipulated data — which involve discrepancies in time stamps and the recorded number of survival days for treated mice — and is in the process of "exiting" those employees.

In early May, the company placed AveXis' chief scientist and head of R&D, two brothers, on administrative leave and both have since left the company. Novartis did not announce their departure until mid-August. 

It's not clear how the FDA would determine whether to pursue civil or criminal sanctions against AveXis or Novartis. The agency plans to continue its assessment and could require supplemental applications for Zolgensma, a process that might take some months. 

Historically, settled violations between drugmakers and the government most often involve the overcharging of health programs or unlawful promotion.

A few in recent decades, however, have involved concealed data or poor manufacturing practices, according to data compiled by Public Citizen. Those centered on marketed or generic products, however, rather than manipulated data in a drug approval application. 

The FDA declined to respond to BioPharma Dive's questions on historical precedents for Novartis' situation. 

"The FDA frequently finds problems with manufacturing when scale up [from clinical testing] happens," said Califf, adding "there's always a judgment about whether you require that everything be fixed." 

"I think it's good for the FDA to make a statement for the world to say you'd better button down the quality of your information," he added. 

Patti Zettler, an assistant professor of law at The Ohio State University and a former associate chief counsel at the FDA, echoed Califf's comments. 

"There's benefit to the agency publicly expressing how serious its concerns are, using its enforcement authorities when it discovers violations to send that signal," Zettler said.

At least one gene therapy biotech, Sarepta Therapeutics, has already fielded questions from investors on whether they should be concerned about similar occurrences. Sarepta is developing a gene therapy for Duchenne muscular dystrophy that emerged from the same lab which developed Zolgensma.

Article top image credit: Getty Images

The honeymoon period for gene therapy developers was short-lived. Shares of at least 26 are trading lower now than they were a year ago, amounting to roughly $18 billion in lost market value.

Relief may not come soon, either. Analysts suspect investors aren't just looking for promising safety and efficacy data anymore; they want to know how companies intend to make money off these treatments. Most don't have answers to that question yet.

"There's this phase, not just in gene therapy, but in most companies or technologies, where it's all exuberance and development," said Tyler Van Buren, an analyst at Piper Jaffray. "A lot of that can end once rubber hits the road and you have to launch a product."

Bluebird bio is having this problem. The Boston biotech's share price to start October is down 41% from a year ago and 26% since mid-June, when executives said the European launch of its Zynteglo gene therapy would be pushed back from 2019 to 2020.

Mani Faroohar of investment bank SVB Leerink argues the delay has dimmed investor confidence in smaller biotechs working on "transplant" gene therapies like Zynteglo, which treats a blood disorder known as beta-thalassemia by harvesting a patient's stem cells, engineering them to produce a form of hemoglobin, and infusing them back into patients.

"If the bellwether can't launch a product that they've been spending billions of dollars on over the course of 10 years, how is a $400 million company somewhere going to do it?" Faroohar told BioPharma Dive.

Bluebird isn't the only gene therapy leader to get knocked recently.

Swiss pharma giant Novartis remains on damage control following a data scandal that, to some extent, tarnished the approval of its Zolgensma gene therapy. Roche's acquisition of Spark Therapeutics, meanwhile, is taking longer than expected because of antitrust concerns.

Delays to the Spark deal may be having a particularly outsized effect on gene therapy stocks. Signs that the Federal Trade Commission took issue with the pairing, which many analysts assumed would be a sort of "check-the-boxes" acquisition, started to show up in early April.

No gene therapy acquisitions have been announced since, and Faroohar doesn't expect that to change until buyers have more clarity on what's holding up Roche. With the deal's timeline already extended by months, shareholders of other companies might not be willing to wait around for a resolution.

"If you paralyze the acquirers, that makes it very difficult to make a compelling case for a lot of these companies that certainly wouldn't be able to commercialize their own products without raising a lot of diluted capital," Faroohar said.

Van Buren sees the Spark deal as a more minor issue, given that gene therapy continues to be one of the hottest areas in drug development. Even so, he acknowledged that it could discourage "natural bidders" from coming to the table, which lowers the probability of certain acquisitions.

A strategy beyond positive readouts

The gene therapy field evolved rapidly over the last decade and, by 2025, the Food and Drug Administration expects to clear for market 10 to 20 cell or gene therapy products annually.

Investor sentiment is shifting with the times. As Bluebird, Novartis and Spark Therapeutics proved these treatments can move through the clinic and gain regulatory approval, investors became increasingly interested in marketing and manufacturing strategies — even for drugs in early development.

"For so long, [gene therapy companies] didn't really trade on, 'What's my margin structure going to be? What's my distribution method? How do I realize attractive pricing in Europe versus Japan versus the U.S.?'" Faroohar said.

Now, investor awareness "about some of these very nuanced commercial questions is catching up."

One of their biggest commercial concerns revolves around insurance coverage, since the U.S. insurance system wasn't designed to handle incredibly expensive, potentially one-time treatments like Zolgensma, which Novartis offers at $2.1 million through a five-year installment plan.

Another commercial sticking point has been manufacturing. Bluebird, for example, pinned Zynteglo's slower launch on tweaks the company was making to the therapy's production process.

Ensuring consistent and quality manufacturing will likely be a challenge for others too. PwC proposes in a new report that the growing interest in gene therapy will lead to greater competition for the time and resources of contract manufacturers working in the space. The competition could, in turn, result in higher costs or supply constraints, and may force companies to invest more in their own manufacturing — a development seen with projects begun by Novartis, Pfizer, Sarepta and Bluebird.

"The days of 100% outsourcing and letting somebody else deal with it — I don't see that being the standard model," said Karen Young, U.S. Pharmaceutical and Life Sciences Leader at PwC.

The industry, however, is still getting acclimated to the small-scale, highly personalized, logistically daunting processes required for cell and gene therapy production. Building in-house capabilities and a team with the technical know-how to run them would likely be an expensive, time-consuming endeavor.

These challenges are, of course, predicated on a gene therapy having positive clinical data. On that measure, analysts have observed investors becoming harder to impress.

Van Buren noted to BioPharma Dive how shares of Adverum Technologies, which is working on gene therapies for eye and rare diseases, plummeted in mid-September because investor expectations about one of the company's trial readouts were "almost impossibly high."

"It got crushed as if a trial failed, when it was actually an objectively positive outcome," he said.

Adverum's therapy targets an eye disease known as wet AMD, which already has treatment options in Regeneron's Eylea and Roche's Lucentis. Both Van Buren and Faroohar expect that in markets where patients respond well to the standards of care, such as wet AMD and hemophilia, there will be even more pressure for gene therapy developers to show their treatments are safe and long-lasting.

Data and post-approval obstacles, combined with potentially diminished M&A prospects, set the stage for a tough road ahead for gene therapy stocks.

"It becomes harder to put together a compelling long-case for a lot of gene therapy stocks, even if they continue to produce a very attractive set of data and potentially transformative clinical products," Faroohar said.

Editor's Note: Paper losses for the group of gene therapy companies included in BioPharma Dive's analysis were calculated by using historical valuations compiled by Koyfin, measured against current market capitalizations. Stock change over 52 weeks was measured from Oct. 1, 2018 to Oct. 1, 2019.

Publicly traded biotechs were included based on whether gene therapy, or gene editing, made up the bulk of their pipeline, yielding a list that's representative of the field but not exhaustive. Large pharmas involved in gene therapy were not included, nor were companies dedicated to autologous or allogeneic cancer cell therapies.

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Peter Marks, head of the Food and Drug Administration's Center for Biologics Evaluation and Research, said his top concern for gene therapy's future is manufacturing, and how companies will scale up production to match scientific advances.

"When the cost of goods are very high, they help justify when people charge astronomical prices," Marks said in a June interview with BioPharma Dive. "If we can help see cost of goods and ability to manufacture reproducibly improve, I think that'll be a big thing. That's something we're working on but something that keeps me up at night."

The FDA has taken steps to keep pace with the field's rapid expansion. The agency aims to finalize six draft guidance documents by the end of 2019 related to gene therapy, including some that will address specific manufacturing issues, Marks said.

While it's far from the only challenge facing gene therapy, manufacturing is particularly critical for drugmakers developing the potentially one-time treatments.

Packing functional genes into inactivated viruses to deliver to humans has brought new production problems to solve. Manufacturers used to small molecule drugs and biologics, meanwhile, have had to retool.

In response, contract development and manufacturing organizations have stepped up their dealmaking. In March, Thermo Fisher Scientific bought Brammer Bio for $1.7 billion, and Catalent purchased Paragon Bioservices the following month for $1.2 billion.

In explaining the decision to buy Brammer, Thermo Fisher's pharma services head said about 65% of total spending on gene therapy manufacturing is outsourced, as few companies have built their in-house capabilities yet.

Acquiring manufacturing capabilities and know-how has also factored into decisions by big pharma to enter the space, such as in Roche's $4.8 billion deal for Spark Therapeutics and Novartis' $8.7 billion buy of AveXis.

Sandy Macrae, CEO of Sangamo Therapeutics, another biotech working on experimental gene therapies, called manufacturing "a limited resource that everyone's competing over" in an interview last week with BioPharma Dive.

That scarcity and value led the biotech to build its own manufacturing facilities in addition to previous deals with CDMOs. Macrae said the site will allow Sangamo to produce therapies for commercialization on a smaller scale.

More involved manufacturing means gene therapy costs more to produce than the technologies before it. While Marks and others express concern such expenses will keep prices sky-high, it's not clear how much cost of goods dictates what drugmakers will charge.

"Cost of goods does not drive our thinking around pricing," said Dave Lennon, head of AveXis, in a May interview. "We believe in a value-based approach to pricing that is based on the condition we are treating and the value that the product brings to that condition."

Sangamo's Macrae, meanwhile, called the current level of costs for gene therapy products "manageable," noting the biotech took such costs into account when choosing which doses to focus on in testing.

"Sangamo is not just a science company, it's a company that is going to make products, and therefore we think about that and only go into things where the cost of goods is sensible," he said. "I think some of the other people are more enthusiastic and are not always factoring that in."

Which diseases drugmakers target matters, too. For conditions like the inherited form of blindness that Spark Therapeutics' Luxturna treats, less viral vector is needed to deliver the therapy —​ meaning lower production costs.

Diseases like spinal muscular atrophy, Duchenne muscular dystrophy or hemophilia, though, require much more virus. Zolgensma, for example, uses a dose many hundred times that of Luxturna.

As gene therapy makers become more ambitious, that could raise the manufacturing bar even more.

"I wouldn't call it unreasonable. I would call it unsustainable," Macrae added, on the high-dose vectors.

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Pfizer plans to spend $500 million expanding its gene therapy operations in North Carolina, the latest big pharma investment in the burgeoning technology and a sign of manufacturing's importance to the field. 

The money will go toward building a new production facility in Sanford, a small city about 50 miles outside of Raleigh, North Carolina. The facility will create about 300 jobs, according to Pfizer, and be responsible for making the recombinant adeno-associated viral vectors needed to supply clinical- and commercial-stage gene therapies.

Pfizer has three gene therapies in clinical testing. One, which it got through the $150 million acquisition of Bamboo Therapeutics, targets a rare muscular disorder. The other two are partnered programs going after hemophilia.

Gene therapy's advances are increasingly catching the attention and investment of large pharmaceutical companies. Novartis shelled out nearly $9 billion last year to acquire AveXis, a biotech focused on gene therapies for neurological disorders. Another Swiss pharma giant, Roche, is trying to lock down a $4.8 billion bid for Spark Therapeutics, which received the first ever U.S. approval for a gene therapy targeting an inherited disease.

Pfizer has made a few investments too. The Bamboo deal, for instance, gave it not only a pipeline of gene therapies for neuromuscular and central nervous system diseases, but also a fully staffed, 11,000-square foot manufacturing facility in Chapel Hill, North Carolina.

Executives noted during the 2016 acquisition how they wanted Pfizer to become a leader in the gene therapy field. Since then, the company devoted $100 million to grow the Bamboo manufacturing facility and secured an exclusive option to acquire Vivet Therapeutics, a privately held biotech based in France.

Pfizer's ambitions are now leading to another manufacturing expansion. According to an Aug. 21 statement, the Sanford site already has 650 Pfizer employees and produces both gene therapies as well as vaccines, including the blockbuster pneumococcal vaccine Prevnar 13.

The additional investments should expand end-to-end production capabilities, Pfizer said. Another of the company's sites is located in Kit Creek, North Carolina, where scientists test various manufacturing processes at smaller scales to see what might work best on a broader basis.

The selected processes, according to Pfizer, are then honed further at its Chapel Hill site through build-out of quality control measures. 

Ensuring adequate supply and quality control are essential tasks in drugmaking, and especially so with gene therapies.

Already, there have been challenges. Bluebird Bio offers one example, as the biotech had to push back the European launch of its gene therapy Zynteglo because it was still finalizing the commercial manufacturing process. And more notably, the pioneering approval Novartis won for Zolgensma is now under scrutiny after revelations company employees manipulated preclinical testing data.

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A treatment for hemophilia A could be the next gene therapy to win approval, with BioMarin Pharmaceutical planning to submit its drug to regulators this year, which could mean arrival on U.S. and European markets as early as mid-2020.

Supporting the submissions for valrox, as the therapy's known, are an ongoing Phase 1/2 study as well as an interim analysis of a Phase 3 trial. In a July presentation, three-year data from the earlier trial showed almost all patients who got a one-time dose of valrox continue did not need infusions of blood clotting protein. BioMarin said the results represent a 96% reduction in patients' mean annualized bleed rates.

Fourth-quarter filings would affirm BioMarin's leading position over rival companies developing hemophilia A gene therapies. The next closest is Spark Therapeutics, which has also advanced its SPK-8011 into late-stage testing. Sangamo and Pfizer are further behind, but in July announced positive data for the high dose of their treatment, SB-525.

Hemophilia has become one of the most competitive battlegrounds in the emerging field of gene therapy. While BioMarin remains the frontrunner to market, a key question moving forward is whether valrox, or valoctocogene roxaparvovec, primes the well for additional therapies — or dries it up.

BioMarin intends to first get an accelerated approval of valrox, and then later secure a full approval based on results from the ongoing Phase 3 study. Henry Fuchs, head of the company's R&D, said in June he hoped the full approval would "become a barrier to entry" for others trying to go down the accelerated path, as it could require them "to do a larger and longer study to get on the market."

Yet an approval of any sort may create competitive challenges.

SVB Leerink analyst Mani Foroohar argued in an interview with BioPharma Dive this year that enrolling clinical trials for rare disease gene therapies will become more difficult once patients have an approved option.

That doesn't seem to be deterring companies like Pfizer and Sangamo — which, while behind, have signaled they intend to also pursue accelerated approval for their candidate.

Paul Matteis at Stifel wrote in a July 7 investor note about how such a move "appears firmly within the cards following the well-lit path blazed by BioMarin."

Boosting Pfizer and Sangamo further are interim Phase 1/2 data that showed patients who received the highest dose of SB-525 were sustaining normal levels of Factor VIII clotting protein. While more data are needed to confirm these responses, Matteis argued that SB-525 appears to be an "authentic competitor" to valrox, particularly in light of the latter therapy's "so-so" interim Phase 3 data presented thus far.

Valrox's lead, however, does carry clear advantages.

Cantor Fitzgerald recently surveyed 25 doctors who treated about 3,000 hemophilia A patients in the U.S. and Europe. Results found that, on average, 28% intend to prescribe valrox to eligible patients within two years of its launch, and 39% said they would within five years.

And BioMarin has since offered more detailed expanations of why treatment durability appeared lesser in interim Phase 3 results than in earlier Phase 2 data. Namely, the company pointed to the timing of steroid administration, which it believes influenced the late-stage findings presented to date. 

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Vertex will spend as much as $2 billion to join a growing list of biotech companies seeking to develop gene therapy for muscular dystrophies, announcing in June it will expand a partnership with CRISPR Therapeutics and buy privately held Exonics.

It's a particularly sizable investment, as research at both CRISPR and Exonics into muscular dystrophy treatment remains preclinical. Unlike others currently in the space, though, Vertex's focus is on gene editing via CRISPR rather than the gene transfer strategies now favored by Sarepta Therapeutics, Pfizer and Solid Biosciences.

In addition to the two deals, Vertex also announced former Audentes executive John Gray as its head of genetic therapies, and said it will establish a new site in the Boston area to house its gene therapy research.

Alongside sickle cell disease and beta-thalassemia, muscular dystrophies have become an attractive target for companies working in gene therapy.

Duchenne muscular dystrophy, in particular, is the focus of a half dozen companies' research, with Sarepta, Pfizer and Solid considered the most advanced. Vertex's entry, by way of CRISPR and Exonics, adds another well-respected biotech to the mix.

Duchenne, or DMD, is one of the more common and severe forms of muscular dystrophy, and almost exclusively affects boys. Most of those affected don't live past their mid-twenties, and progressive muscle weakness means many require a wheelchair as the disease advances.

Treatment options remain limited, with Sarepta holding the most recent DMD approval for its controversial drug Exondys 51.

Experimental drugs from Sarepta, Pfizer and Solid propose a genetic fix for the mutated dystrophin gene behind the disease. By delivering a functional copy of gene to muscle tissue — an approach known as gene transfer — the companies aim to spur production of the needed dystrophin protein that’s missing in DMD patients.

Vertex's approach with CRISPR and Exonics will be different, relying on CRISPR gene editing to repair DMD-related mutations in the body and thereby restore dystrophin production.

The biotech, which is best known for its trio of cystic fibrosis treatments, will pay a substantial sum to enter the space, however.

Under deal terms with Exonics, Vertex will acquire all shares of the private company for $245 million upfront, and as much as $755 million in milestone payments.

CRISPR and Vertex are already working together, having partnered in 2015 in sickle cell and beta-thalassemia. The first patient in a Phase 1 study of the CRISPR-based gene editing therapy covered by that deal was treated in February.

Expanding the CRISPR partnership into DMD and myotonic dystrophy Type 1 (DM1), another research focus, will cost Vertex $175 million upfront and potentially up to $825 million more.

Such financial commitment shows "a real appetite to pursue non-small molecule R&D," wrote Stifel analyst Paul Matteis in a note to clients. Small molecules like Vertex’s cystic fibrosis drugs have to date been the company’s strength.

Vertex CEO Jeffrey Leiden, however, sees opportunity in gene therapy, telling BioPharma Dive in a September interview that "it wouldn't be unreasonable to expect us to do one or more gene therapy deals."

Per the agreement with CRISPR, Vertex will hold exclusive rights to both the smaller biotech’s existing and future intellectual property concerning the use of CRISPR and related delivery platforms for DMD and DM1 gene editing candidates.

Exonics is centered on the research of Eric Olson, a professor at the University of Texas Southwestern Medical Center.

The company raised $40 million in Series A funding in late 2017 and has attracted the likes of Merck & Co.'s Roger Perlmutter and the noted gene therapy researcher Jerry Mendell to its corporate and scientific advisory boards.

CureDuchenne Ventures, the investment arm of the similarly named patient group, helped found Exonics in 2017.

So far, Exonics has only researched its approach in mice and dogs. Results from the latter group of animals showed Exonics' gene editing therapeutic restored dystrophin expression in skeletal muscle tissue of up to 90% of normal.

DMD gene therapies with clinical data, meanwhile, have had mixed results.

Sarepta widely impressed in 2018, showing that four boys treated with its microdystrophin gene therapy could stand up, walk and climb stairs more quickly than normally would be expected.

Readouts from Solid, though, were less encouraging and Phase 1 data from Pfizer spurred safety concerns. 

Article top image credit: Ryan McKnight, Vertex Pharmaceuticals Inc.

Biopharma companies wanting to treat rare diseases are increasingly pressed to be invested in gene therapy. 

Novartis and Roche have recognized this with their multi-billion-dollar acquisitions of AveXis and Spark Therapeutics for marketed or nearly-marketed products. Down the food chain of the biopharma ecosystem, rare disease specialists have been scouring university laboratories for pre-clinical assets.

A recent example is Amicus Therapeutics, which in May expanded a gene therapy collaboration with the University of Pennsylvania, a hotspot for research in the field.

Amicus has targeted rare diseases called lysosomal storage disorders, in which genetically driven enzyme deficiencies lead to a buildup of toxic materials in tissues.

This led to approval of Galafold, which treats some patients with Fabry disease by stabilizing the protein alpha-galactosidase A, thereby allowing it to be removed from cells. Amicus is working on a similar project in Pompe disease. These are advances on older approaches to treatment, which relied on merely replacing enzymes.

But Amicus sees the future as gene therapies.

Last year it struck two deals securing assets from the most prominent laboratories in the space, Nationwide Children's Hospital and University of Pennsylvania. The company bought Nationwide spinout Celenex for $100 million to secure a portfolio of Batten disease projects, and signed a collaboration deal with UPenn for access to gene therapy technologies to treat Fabry and Pompe disease, along with another condition called CDKL5 deficiency.

The expanded deal with UPenn adds access to specific treatments for two types of mucopolysaccharidosis (MPS) and Niemann-Pick type C, along with a majority of UPenn's lysosomal storage disorder treatments. Twelve other types of rare non-lysosomal diseases are also subject to the deal, including treatments for Rett syndrome, Angelman syndrome, and myotonic dystrophy.

Amicus will pay UPenn's gene therapy laboratories $10 million a year for five years, a term that can be extended.

The New Jersey-based biotech may have seen the emergence of competition from the likes of Sangamo, which has a pre-clinical Fabry disease candidate, and Avrobio, which has a Fabry gene therapy in Phase 2 study. Sangamo and Regenxbio also have candidates in MPS types, but would not compete directly with those emerging so far from the UPenn-Amicus collaboration.

In an interview with BioPharma Dive, Amicus CEO John Crowley said the company has been encouraged to invest in gene therapy because of Food and Drug Administration approvals, including that of Novartis' Zolgensma, as well as the progress made by Bluebird Bio, Biomarin and others.

"We really are coming into this golden age of research and development, and approved therapies, and really on the cusp of providing cures," he said.

Article top image credit: Bryan Y.W. Shin [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0/)], from Wikimedia Commons

Unlike most pharmacological interventions, gene therapy raises numerous ethical issues. In most cases, the technology has involved attempts to alter genetic expression in patients to correct for faulty proteins behind disease, research that has resulted in the marketed drugs sold by Spark Therapeutics, Novartis and Bluebird bio. 

These use viral vectors or engineered autologous cells to deliver corrected genes into affected tissue, with little risk that the alterations could be passed to subsequent generations because the therapies do not affect "germline cells," or sperm, eggs or embryos.

Genetic editing of germline cells is newly in focus, though, following research by Chinese scientist He Jiankui, who edited the genomes of at least three embryos that were implanted for birth. 

In late 2018, He, a researcher at the Southern University of Science and Technology, announced to the scientific community's shock the birth of twin girls whose genomes had been edited as embryos using CRISPR-based techniques. He said he sought to make the girls resistant to HIV.

As the backlash grew, He was fired from his job and put under house arrest by Chinese authorities.

In August, 13 biopharma companies, including Sangamo Therapeutics and Bluebird bio, signed a statement of principles opposing gene editing of human sperm, eggs or embryos because of the risks of passing on modifications to subsequent generations.

The statement of principles, released by the Alliance for Regenerative Medicine, supports gene editing of "somatic" cells, which cover most tissues, because most genetically driven diseases can be treated in those cells.

The 13 gene therapy companies said they are only focusing on somatic tissues and are opposed to germline gene editing.

"Unless and until ethical and potential safety questions with respect to germline gene editing are adequately addressed, we do not support or condone germline gene editing in human clinical trials or for human implantation," they wrote.

The companies said the Food and Drug Administration, European Medicines Agency and other national agencies provide the best framework for regulating the development of gene therapies, and warned against adding additional levels of oversight.

"It is our belief that arbitrary and ancillary oversight bodies or processes may carry the risk of delaying research and development efforts, which in turn would adversely impact afflicted patient populations," the statement of principles reads.

They added they support the work of standards settings bodies, such as the U.S. National Institute of Standards and Technology and International Organization for Standardization, to develop guidelines for identifying off-target effects on tumor suppressors and oncogenes. 

James Burns, CEO of Casebia Therapeutics, one of the co-signers, said the call for a moratorium on gene editing of germline cells could be reversed as researchers gain more experience with the technology.

"I think that's one of the things that we still have to talk about: What is that standard that we have to have on the ethical as well as scientific and safety questions?" Burns said in an interview with BioPharma Dive. "I think we'll know when we get there, but it's hard to actually prospectively define it."

Companies signing the statement were Audentes Therapeutics, Bluebird Bio, BlueRock Therapeutics, Caribou Biosciences, Casebia Therapeutics, CRISPR Therapeutics, Editas Medicine, Homology Medicines, Intellia Therapeutics, LogicBio Therapeutics, Precision Biosciences, Sangamo Therapeutics and Tmunity Therapeutics.

Article top image credit: Getty / Edited by BioPharma Dive