Sometime before the end of March, a person with the inherited blood disease beta thalassemia will receive an infusion containing hundreds of millions of their own stem cells. These cells will have just completed a round-trip journey to a drug manufacturing facility, where they'll be equipped with a modified gene capable of fixing the patient's condition.

The expected infusion will be the first commercial use of a gene therapy approved by the Food and Drug Administration in August. Called Zynteglo, the treatment is the result of more than a decade of research by biotechnology company Bluebird bio. Its approval offered validation to Bluebird and to the broader gene therapy field, which over the past two years has struggled through safety concerns as well as clinical and regulatory setbacks.

Zynteglo's approval, as well as two other FDA OKs in September and November, has gene therapy developers looking ahead. "If you take a step back, I think that what we've gone through in the last couple years is just part of a maturation process," said Faraz Ali, the CEO of Tenaya Therapeutics and an executive at Bluebird from 2011 to 2016.

That process is still playing out, though, and this year companies in the space face a number of important questions. Here are five:

Will approvals lead to commercial successes?

The trio of recent gene therapy approvals — for Zynteglo, Bluebird’s Skysona and CSL’s Hemgenix — is one more than the FDA granted in the five years previous.

More could soon follow. The industry group Alliance for Regenerative Medicine, or ARM, predicts 2023 could bring at least five more gene therapies for rare diseases to the U.S. market, including potential new treatments for sickle cell disease, Duchenne muscular dystrophy and hemophilia A.

But regulatory clearances lead to the even harder test of marketing complex, expensive and unfamiliar treatments. While Novartis’ relative success with Zolgensma — the second gene therapy OK’d in the U.S. — shows what’s possible, the industry has had a poorer commercial track record in Europe, with several companies later withdrawing approved medicines. Bluebird, for instance, pulled from European markets both of the treatments that it is now trying to sell in the U.S.

Geoff MacKay, CEO of the gene therapy developer Avrobio, described 2023’s key theme as “commercial viability.”

“We are at a tipping point in gene therapy supported by real data, real milestones and real patients’ lives changed,” he added in an email.

Accomplishing that will be the challenge faced by Bluebird and CSL as well as any other biotech companies that secure an FDA approval this year.

They’ll face scrutiny over pricing. Both Bluebird and CSL set list prices of several million dollars for their therapies, citing the years of benefit they’re expected to deliver for patients. So far, insurers don’t appear to be pushing back strongly, but that might change when the gene therapies in question affect larger numbers of people.

They’ll also need to prove that they can reliably produce at larger scale treatments that in clinical testing were used only in scores of patients.

“Like all areas of medicine, there will be both winners and losers, but progress through 2023 will provide more clarity on the recipe for success,” MacKay said.

Can the FDA hire fast enough to stay ahead of the growing field?

Behind the gene therapies on the cusp of U.S. approval is a pipeline of experimental therapies swelled by the dozens of biotech companies that jumped into the field over the past decade.

It makes for a lot of work for the FDA, which must weigh in on clinical trial starts and provide regular counsel to companies throughout the development process. At the same time, the FDA center that oversees gene therapies has had difficulties keeping staff, stretched thin by the pandemic and its related vaccine review workload.

“They’ve clearly had some turnover,” said Timothy Hunt, head of ARM. “That has led to some challenges.”

The agency will be getting reinforcements, however, with a planned uptick in hiring following new user fee agreements with drugmakers. The Center for Biologics Evaluation and Research, or CBER, stands to gain nearly 200 new staff over the next two fiscal years.

“This is going to be a big area of emphasis at the FDA,” Commissioner Robert Califf told investors and industry professionals attending the J.P. Morgan Healthcare Conference in San Francisco in January. “There’s a very nice increase in budget for CBER to hire a bunch of people.”

“So we do have jobs, those of you who are tired of investing or whatever,” he quipped.

Additionally, the FDA elevated the division in charge of gene therapies specifically — the Office of Therapeutic Products — to “super office” status, giving it more autonomy and authority.

Drugmakers are watching closely. “The expansion of [OTP] paired with increased regulatory maturity and a promising stream of regulatory activity ... is a signal to the industry that the door is open for innovation,” wrote Avrobio’s MacKay.

How will gene therapy startups fare in a prolonged downturn?

Genetic medicine companies weren’t spared from last year’s biotech market reversal, with more than a dozen cell and gene therapy specialists forced to cut jobs over the course of 2022. That count included relatively large and mature companies like BioMarin Pharmaceutical and Bluebird, as well as high-profile startups like Passage Bio and Tasyha Gene Therapies.

With this year’s financial outlook uncertain, the sector may see more consolidation, particularly given the often expansive pipelines that many gene therapy biotechs touted when markets were more favorable. Taysha, for instance, once listed 18 programs in its pipeline and boasted of plans to launch a product every two to three years.

Gene therapy development is also expensive, requiring biotechs to make costly choices around manufacturing.

Already, Editas Medicine, a leading biotech in CRISPR gene editing, in January announced plans to cut back investment in several clinical-stage therapies and lay off 20% of its staff.

“Oftentimes you see that the corners of the sector that are the most cutting-edge ... get it a little bit more disproportionately than others,” said Hunt, of ARM. “But I think it’s balanced out by the realization that the FDA and the [European Medicines Agency] are rewarding innovation.”

MacKay also noted the field’s recent regulatory and clinical progress, but added that he expects investors to remain wary.

“The data will eventually pull the public markets along, but it may take a long time,” he wrote. “Until then, this tough financing environment will spur more restructuring, consolidation, pipeline reprioritization, M&A, market de-listings and, unfortunately, bankruptcies.”

What do recent clinical holds say about the FDA’s views on gene editing?

If all goes to plan, 2023 could see the first FDA approval of a CRISPR gene editing medicine. CRISPR Therapeutics and Vertex Pharmaceuticals currently expect to finish submitting an application to the agency by the end of March, potentially setting up a consequential decision from the regulator later this year.

Developed for sickle cell and beta thalassemia, CRISPR and Vertex’s medicine builds on the long history of stem cell transplantation, using the gene editing technique to modify a patient’s own stem cells in a laboratory, or ex vivo.

An approval would represent a remarkable achievement for a field catalyzed by scientific breakthroughs made just a decade ago. Already, developers have moved quickly to explore gene editing directly inside the body, or in vivo. Intellia Therapeutics, for one, has reported clinical trial results for CRISPR medicines used in vivo to treat two rare genetic diseases.

But in the U.S., there are some signs of caution from the FDA when it comes to in vivo gene editing. The agency has put on hold a study by Verve Therapeutics that uses a newer iteration of CRISPR-based gene editing inside the body, for example.

Safety is of paramount concern when editing genes, both because of the theoretical potential for off-target changes to DNA and the permanence of such modifications.

“Regulatory agencies quite rightly should be cautious,” said Editas CEO Gilmore O’Neill. “That is their job. I think it is our job to make sure that, as we advance our new technologies — and advancing in vivo is an example — we need to be very rigorous about our approach to managing risk.” (Editas is now prioritizing in vivo gene editing.)

Still, the go-slow approach contrasts somewhat with outside the U.S., where Intellia is conducting its studies and Verve has begun human testing of its medicine.

“We're the first in front of the agency with this kind of product,” said Verve CEO Sek Kathiresan, referring to a base editing medicine in a January interview. “So we're really working it out in real time with them in terms of regulatory expectations for this product."

Kathiresan noted Verve is working through the FDA’s questions following the study hold and said “it’s a matter of when, not if” it can address the agency’s questions.

Can the business model work for ultra-rare conditions?

Many genetic disorders being targeted by gene therapy developers are uncommon, affecting several thousand or a few hundreds of people in a given country. Others are rarer still, found in only a few dozen individuals or even just one or two people — conditions sometimes referred to as “n of one” diseases.

For many of these conditions, the promise of genetic medicines can be great. Treatments for several types of severe combined immunodeficiency, for instance, could be curative. But, despite developing powerfully effective treatments, drugmakers have backed off, deprioritizing SCID gene therapies.

Even the prospect of being able to price treatments in the millions of dollars might not be enough, if companies need to spend much more to collect the needed evidence and can only treat a few patients.

“When you’re talking about dozens of patients, it is tricky to think through how you can capture the appropriate value to the patient,” said ARM’s Hunt. “That has been hard and will be tricky in the future.”

A down market in biotech makes the financial calculus even harder, potentially forcing companies to prioritize projects with greater chances of earning a return on investment.

It’s a problem that regulators are watching, too.

“We’re not going to find enough philanthropic groups to foot the bill for gene therapies for the hundreds upon hundreds of different diseases that need to be addressed,” said Peter Marks, head of the FDA’s CBER, at a conference in October.

“We’re gonna have to find a way to make this commercially viable so that industry can find a way forward towards this.”

He put forward a few proposals for how his agency could lower hurdles for developing therapies for ultra-rare diseases, such as using data from one application to speed review of others using the same technology.

Meanwhile, in the U.S., Bluebird will put the model to the test. It expects to treat only 10 patients a year with its newly approved gene therapy Skysona, for a rare childhood brain disease.

Jacob Bell and Ben Fidler contributed reporting

The Food and Drug Administration in November approved the first gene therapy for a type of hemophilia, giving people with the inherited disorder a treatment option that could potentially keep their bleeding in check for years while also allowing them to skip the infusions that have been the standard of care.

The therapy, called Hemgenix and developed by the Dutch biotechnology company UniQure, is for the less common “B” form of hemophilia, which is estimated to represent about 15% of all patients with the disease.

“Gene therapy for hemophilia has been on the horizon for more than two decades,” said Peter Marks, head of the FDA’s Center for Biologics Evaluation and Research, in a statement. “[The] approval provides a new treatment option for patients with hemophilia B and represents important progress in the development of innovative therapies for those experiencing a high burden of disease associated with this form of hemophilia.” 

Australian drugmaker CSL, which licensed Hemgenix from UniQure and will market the drug, set the treatment’s list price at $3.5 million, making it the most expensive medicine in the U.S. on a single-use basis. 

In a statement, the company said it is confident that the price “will generate significant cost savings for the overall healthcare system and significantly lower the economic burden of hemophilia B.” 

The Institute for Clinical and Economic Review, an influential nonprofit that assesses drug costs, previously estimated Hemgenix could be cost effective at a price of $2.9 million. The group cited the therapy’s benefit in clinical testing, as well as the high cost of current treatment.

Hemophilia B is caused by missing or low levels of a critically important protein called Factor IX that the body needs to effectively clot blood. Depending on the amount of Factor IX present, people with the condition experience spontaneous or excessive bleeding that can cause serious health complications.

To prevent this, treatments consisting of replacement Factor IX are taken routinely — a regimen that many patients consider burdensome to daily living. (While women can have hemophilia B, most individuals who experience symptoms are men.)

“Anecdotally, what we hear from the gentlemen who have gone through this treatment is they’re really enjoying not having to think about their hemophilia anymore,” said Steven Pipe, a professor of pediatrics and pathology at the University of Medicine who led the main trial testing Hemgenix. “You’re not doing infusions anymore. You’re not scheduling your life around your prophylactic therapy.” 

In that study Pipe helped run, 54 adult men with severe or moderately severe hemophilia B were given Hemgenix and tracked for changes in their Factor IX levels, as well as bleeding rates and use of standard replacement therapies. 

After 18 months, treatment raised Factor IX levels to amounts that were, on average, typically considered equivalent to “mild” hemophilia. The annualized bleeding rate was sharply reduced and participants were largely able to stop taking replacement Factor IX. 

Meant to be a one-time treatment, Hemgenix is designed to replace the gene that encodes for Factor IX and is defective in people with hemophilia B. A specially engineered virus, known as AAV5, is used to shuttle a functioning version of the gene into the liver, where it’s taken up by cells and spurs production of Factor IX. 

Its development has been years in the making. Hemophilia was one of the first diseases identified as a good candidate for gene therapy. A landmark 2014 study of a treatment similar to Hemgenix showed the potential for long-term bleeding control. 

UniQure, which was originally known as Amsterdam Molecular Therapeutics, extended that research, first developing and testing a prototype gene therapy using the AAV5 virus. It then tweaked that version further to make what’s now approved as Hemgenix. (In testing, Hemgenix was known as AMT-061, or etranacogene dezaparvovec.) 

In 2020, UniQure sold rights to Hemgenix to CSL for $450 million upfront, with additional payments promised depending on the achievement of regulatory and commercial milestones.

Development was stalled, however, by a case of liver cancer in one study participant, which prompted the FDA to temporarily suspend testing. UniQure later determined the cancer was unrelated to treatment, but the delays pushed back when it and CSL applied for regulatory approval. 

Michigan’s Pipe noted that many people with hemophilia have hepatitis C or other liver problems that raise their risk of cancer. He pointed to the longer follow-up for participants in the 2014 study and the earlier work UniQure did with Hemgenix’s predecessor as further evidence of the low cancer risk. 

“We still need to do epidemiological follow-up on a global scale for patients who undergo gene therapy to make sure that we don't see some accumulating safety signal in malignancy or any other adverse event risk,” he said. 

CSL’s therapy is also under review in Europe. There, European regulators have approved a gene therapy from BioMarin Pharmaceutical for the more common hemophilia A.

The FDA is set to make a decision on BioMarin’s treatment, called Roctavian, next year. The agency originally planned to consult an advisory committee, but in November the company disclosed the FDA is no longer planning to do so.

Sponsored content

By Eversana

The cell and gene therapy (CGT) sector is creating ‘next generation’ drugs that deliver transformative and curative potential to some of society’s greatest health challenges. 

Scientific brilliance and technological advances have turned on the taps of these advanced therapies with the FDA and the EMA forecast to be approving and licensing around 30 new products a year by 2025. 

Potential vs. Reality

The potential is enormous, and CGT clinical trials are stacking up yet, worryingly, only a few are getting to market successfully because of the complex nature of commercialization and the multi-faceted, multi-stakeholder influences across this emerging sector. 

The mechanisms, structures, logistics and ‘nitty gritty’ processes to smooth the gene therapy commercial journey have not been established and experts predict that up to 40% of CGT products on the verge of approval could be unviable because of lack of commercialization expertise.

Re-evaluate, recalibrate, reorganize – Reap the rewards

It is clear that a fresh set of strategies are needed to improve CGT commercialization success.

It is also important to acknowledge that a substantial number of companies pursuing novel CGTs are start-ups or medium size enterprises that do not have the resources available to larger scale organizations. 
 
Smaller companies can collaborate with outsourcing specialists to get economies of scale, sector expertise, planning and logistics capabilities and relationships with KOLs across every facet of commercialization. 
 
The need to strengthen the chances of these pioneering companies and their breakthrough products is pressing so we canvassed opinions across the industry to discover where companies can improve their chances of taking their hard-won discoveries to the next level. 

Attention must be paid to the following areas to improve the chance of successful commercial launch:

Patients

• Identify patients early in their journey. Have a mission to ‘not miss one’
• Work with treatment centers to help their accreditation and to understand logistical issues
• Connect with and support patient groups early to understand how the condition affects their lives and demonstrate how the therapy can improve them
• Use patients’ real-world and socio-economic evidence to demonstrate a broader and enduring benefit

Planning

• Invest time and effort in planning the details
• Partner with outsourcing specialists to upscale potential
• Do not rely on templates or practices from mainstream drug launches

Advocacy

• Source and develop KOLs to underpin the case for the therapy
• Make them part of the journey to improve high level advocacy
• Engage in media analysis to understand resistance to cost and to articulate the benefit in different geographies

Medical affairs

• Focus on MSLs to make the case and liaise with HCPs before turning up the sales effort
• Weave the economic and scientific case together to demonstrate long-term efficacy for the patient and the health system
• Make a clear case of differences between existing therapies and the improvements on infrastructure, outcomes and economics switching to CGT will bring

Data

• Invest in evidence generation before taking therapies to patients
• Commit to continuing to collect data and real-world evidence after approval
• Understand what performance detail matters to stakeholders
• Have robust collections systems that eliminate duplications
• Build capabilities to track patients who move or change circumstances over time
• Make that data available as part of running dialogue with healthcare systems to demonstrate long-term benefits and support innovative payment strategies

Manufacture

• Start early with supply and capacity analysis
• Invest in understanding the differences in Chemistry Manufacturing and Controls (CMC) in different countries
• Consider partnering with established contract manufacturing organizations with specialized experience to offset high resource costs

Moving towards a successful future

The flood of CGT is backing up against logistical barriers that can be lowered with strategic planning and by investing the same levels of energy into commercialization logistics as scientific discovery. 

A therapy is little more than a scientific paper if it is priced out of the market, does not have enough evidence and cannot gain the support of KOLs or the passion of patients. Not every company has the capacity to resource these major requirements with permanent staffing but ignoring them could doom a product. Analysis shows that the success of a therapy is not down solely to its ‘shop window’ mode of action but a spectrum of factors from improving patients’ lives to maintaining temperature controls at a distribution facility.

Single-partner outsourced models that can address all of the key areas of focused under one holistic strategy is the way forward for the commercialization of Cell & Gene Therapies.

Until this August, just two gene therapies for inherited diseases were available in the U.S. Now, in the span of one month, that count has doubled, with the Food and Drug Administration approving new treatments for a rare blood condition and a childhood brain disorder.

The agency’s decisions, delivered Aug. 17 and on Sept. 16, represent a turnaround for the gene therapy field after a series of setbacks had slowed progress. They also offer a lifeline to the treatments’ developer, the Massachusetts-based biotechnology company Bluebird bio, which is running out of money and earlier this year warned investors it may not be able to stay afloat.

Selling the two gene therapies could help Bluebird survive. More broadly, the company’s success or failure launching the treatments will be a signal to other gene therapy developers nearing the FDA, among them CSL, BioMarin Pharmaceutical and PTC Therapeutics.

“We've had to cross this desert for years and, all of a sudden, we have the two-fer from Bluebird,” said Geoff MacKay, CEO of a gene therapy biotech called Avrobio. “For those of us who have been in the field for a decade plus, this is an incredible period of time.”

Bluebird’s development of its newly approved treatments dates back just as long, to when the company, then named Genetix Pharmaceuticals, was an early explorer of gene therapy. Renamed in 2010, the company came to be seen as a leader in the field, which after many lean years was benefiting from improved scientific tools and renewed investor interest.

FDA approvals of the first two gene therapies, a blindness treatment called Luxturna and the neuromuscular disease therapy Zolgensma, in 2017 and 2019 were a further proof point, spurring predictions of a coming wave of gene-based medicines.

More recently, though, gene therapy development has been marked by renewed questions around safety, manufacturing missteps and more conservative regulatory decision making. Bluebird hasn’t been immune. It has run into repeated delays due to disagreements with the FDA over gene therapy production, while cases of cancer in its clinical trials slowed testing further.

That Bluebird was still able to persevere and win back-to-back approvals is an encouraging sign for other companies in the field, according to MacKay. The FDA and its advisers were also willing to balance the cancer risk associated with Bluebird’s treatments against their benefits, suggesting a degree of comfort with gene therapy technology more broadly.

“The more clarity, the more this is a well-traveled path, the more it facilitates drug development [and] changes investor confidence,” MacKay said in an interview ahead of the Sept. 16 FDA clearance.

But as a result of its setbacks, Bluebird is arriving on the market in a precarious position. Its stock price has tumbled precipitously over the past five years and its funds have dwindled to such a low level that the company was forced to acknowledge the risk of insolvency. To save money, Bluebird laid off 30% of its staff and moved its headquarters. In March, it lost its chief financial officer and her replacement will depart this fall.

Neither of its new gene therapies, called Zynteglo and Skysona, are expected to become big sellers, despite prices that rank as among the most expensive for any drug. Bluebird will charge $2.8 million for Zynteglo and $3 million for Skysona, although it has offered to reimburse part of Zynteglo’s cost if patients don’t benefit.

The company expects to treat about 50 patients initially with Zynteglo, and eventually many more of the estimated 850 or so who are healthy enough to receive the treatment. The market for Skysona, which treats a brain disorder called cerebral adrenoleukodystrophy, is smaller still, with Bluebird anticipating it will treat about 10 patients each year.

The next step for Bluebird will be convincing insurers to cover its therapies, which would likely otherwise be out of reach for patients and their families. While it’s confident it can do so, the company ran into significant difficulties in Europe, where Zynteglo and Skysona were approved previously, and later withdrew both products from the market.

“With Zynteglo, we are several weeks into our launch now and we are getting a lot of positive feedback from payers,” said Tom Klima, Bluebird’s chief commercial and operating officer, on a call with analysts Sept. 19. The company has signed multiple contracts so far.

“We feel confident that payers will support Skysona,” he added.

Crucially for Bluebird, the approvals of Zynteglo and Skysona both came with so-called priority review vouchers granted by the FDA. These vouchers can be used to shorten regulatory reviews for new drug applications and may be sold to other companies. Recently, they’ve commanded prices between $100 million and $110 million, giving Bluebird an opportunity to secure significant funding that’s not dilutive to its existing shareholders.

“We do not need them because the therapies we develop have priority review in general,” said Bluebird CEO Andrew Obenshain in an interview. “So we will sell both — sequentially, though, not all at once.”

Bluebird held $218 million in the bank as of June 30, and expects its restructuring efforts will bring its cash burn down to about $60 million per quarter by the end of this year. That level of spending will be sufficient to launch Zynteglo and Skysona, as well as prepare to file for approval of a third gene therapy for sickle cell disease next year, the company’s outgoing CFO Jason Cole said on the Sept. 19 call.

People with the blood disorder sickle cell are anticipating the arrival of two gene therapies that could dramatically reshape their disease, potentially offering something approaching a cure.

Insurers, too, are preparing for the treatments, which are expected to carry price tags in the seven figures. While five other expensive gene therapies are already available in the U.S., sickle cell is far more prevalent than the inherited diseases they treat, affecting an estimated 100,000 people in the country. Many are covered through Medicaid, the federal insurance plan for people with limited income.

An experimental model proposed by the Centers for Medicare and Medicaid Services last week could help state agencies better afford those medicines, as well as offer a testing ground for payment schemes that could apply to other pricey gene therapies. Yet the timeline for its implementation might mean it comes after the first sickle cell gene therapies reach market.

“Sickle cell is a call to action,” said Michael Sherman, chief medical officer of Point32 Health, the parent company of Harvard Pilgrim Health Care and Tufts Health Plan.

“Without these kinds of models, we’re going to see access issues,” he added. “The Medicaid state agencies, like other parts of the financing system, were never designed with this sort of upfront shock.”

The gene therapy model is one of three pilot programs CMS will test in the coming years in response to an executive order from President Joe Biden directing the agency to find further ways to lower prescription drug costs. Administration officials described these programs as building on last year’s Inflation Reduction Act, which gave Medicare the authority to negotiate prices for a limited number of drugs.

Under the gene therapy model, state Medicaid agencies could delegate authority to CMS to coordinate multistate frameworks to pay for gene therapies based on how much patients benefit from treatment. In sickle cell, for example, payment could be contingent on whether patients remain free of the pain crises they regularly experience.

These types of payment schemes, typically known as outcomes-based arrangements, are already used in some cases for the currently available gene therapies. But budget limitations and federal price reporting requirements have limited their use within Medicaid, indirectly shaping how they’re designed for private insurers, too.

“There’s a lot of benefit, I think, to having both more of a centralized purchaser or negotiator across Medicaid programs … and having more centralized data collection,” said Stacie Dusetzina, a professor of health policy at Vanderbilt University Medical Center. “I think it also gives CMS a little bit of an upper hand at the negotiating table.”

Jeff Marrazzo, the former CEO of gene therapy developer Spark Therapeutics, agrees that a centralized approach in Medicaid could help.

“What I’ve observed is that state Medicaid agencies … generally have experienced more challenges with providing access to cell and gene therapies,” he wrote in an email. “This is due in part to the cost density of cell and gene therapies, but also because these organizations lack the infrastructure required to implement alternative pricing, reimbursement, and access models.”

Marrazzo cited data collection as one example, noting that some state agencies might lack the ability to appropriately track clinical outcomes for patients treated with a gene therapy.

CMS envisions testing several different types of outcomes-based arrangements, including an annuity model where continued payment is based on continued benefit. (To date, gene therapy developers have favored a rebate-based approach, where a certain percentage of their treatment’s cost is returned to the insurer if a specific outcome is not achieved.)

Five years ago, Spark proposed a similar annuity-based idea to help insurers pay for its then newly approved gene therapy Luxturna, for a type of childhood blindness. Spark priced the treatment at $425,000 per eye and sought to offer an installment payment plan, proposing the CMS run a demonstration project around Luxturna.

Its ability to do so was limited by Medicaid rules requiring drugmakers give the program the “best price” they offer on their products. In the event a patient didn’t benefit from treatment, and an insurer therefore didn’t owe the remaining installment payments, Spark would have had to report that fractional cost as its best price.

CMS recently tweaked its policy, allowing drugmakers to report multiple “best prices” in the context of outcomes-based arrangements. “This was an important first step,” Marrazzo wrote. “Along with the [recent] policy change, I do believe CMS providing a more centralized approach could lead to more annuity models being taken up, particularly by Medicaid plans.”

The agency plans to focus the model on a specific disease, and indicated sickle cell as a likely candidate. Behind the advancing sickle cell treatments is a growing pipeline of other gene therapies in development.

“Our concern has been that, for some of these more rare diseases, we haven't seen the access that we would like to see. Sickle cell is one of them,” said CMS Administrator Chiquita Brooks-LaSure on a call with reporters last week. “One of the reasons we're so excited about this model is because we think states need some assistance from us to really be effective in the space.”

But CMS doesn’t envision launching the gene therapy model until 2026 at the earliest, years after the two gene therapies now nearing market are expected to be approved. Their developers — Bluebird bio and partners Vertex Pharmaceuticals and CRISPR Therapeutics — are currently preparing approval applications that they expect to finish filing with the FDA this quarter.

Under current timelines, CMS would begin developing the model this year and announce model specifications in 2024 and 2025, with implementation following the year after. The agency would then track metrics like gene therapy spending, use and change in access over time to evaluate its success.

To some, earlier would be better. “Being in a business, I don’t understand why it takes two years to announce model specifications,” Sherman said.

The planned model is also voluntary, so CMS would need to rely on participation from both state Medicaid agencies and from drugmakers. The latter group, CMS argued in its report, would be enticed by the prospect of simpler market access.

That access could come with some tradeoffs, however. “It may be a little bit less attractive because of the inability to command the highest possible price, especially if there is a large population that's going to be treated and many Medicaid programs are interested in joining together into this kind of one model,” Dusetzina said.

As a top regulator at the Food and Drug Administration, Peter Marks isn’t responsible for weighing the cost of the treatments his teams review. But he is worried that some of the drug industry’s most promising medicines may not reach patients with uncommon diseases if companies can’t figure out how to sell them.

There are an estimated 7,000 rare diseases, many of which affect only small groups of people. Genetic medicines, including RNA-based drugs and gene replacement therapies, could offer a powerful way to treat, and potentially even cure, some of them. But for would-be developers, diseases affecting only a few dozen people might not represent a large enough market to justify the cost of developing and selling a new treatment.

“We're not going to find enough philanthropic groups to foot the bill for gene therapies for the hundreds upon hundreds of different diseases that need to be addressed,” said Marks, head of the FDA’s Center for Biologics Evaluation and Research, at a conference hosted by the Alliance for Regenerative Medicine on Oct. 12.

“We're gonna have to find a way to make this commercially viable so that industry can find a way forward towards this."

According to Marks, commercial viability for a gene therapy means administering roughly 100 to 200 treatments a year, a threshold that could be difficult to clear in a single country for rare conditions like severe combined immunodeficiences or adrenoleukodystrophies.

“It has not escaped our attention at FDA that there have been some clouds on the horizon in gene therapy,” said Marks, noting instances when gene therapies were taken off the market or returned by their developers to the original academic researchers.

In Europe, for example, first GSK and then Orchard Therapeutics abandoned one of the first gene therapies approved there, a treatment called Strimvelis for a condition known as ADA-SCID. Only a few dozen patients were ever treated, and Orchard has also handed back rights to a successor treatment. More recently, Bluebird bio withdrew two gene therapies from the EU market after running into difficulties securing reimbursement in several European countries.

Bluebird recently won FDA approval for both of those therapies in the U.S. One, to be sold as Skysona at a cost of $3 million, is for an inherited condition known as CALD that affects about 50 boys each year. Bluebird has said it expects to treat around 10 each year.

In his remarks to the conference, known as the Meeting on the Mesa and attended by many in the cell and gene therapy field, Marks highlighted a few areas where the FDA could help ease hurdles for ultra-rare disease treatments.

The agency is currently putting together a “cookbook” for developing and manufacturing of bespoke gene therapies, which could help academic groups more easily transfer treatments they’re working on to industry. It’s also looking into how to use non-clinical and manufacturing data from one application to speed the review of others that share similar technology.

“There are certain pieces of gene therapies that are not like your typical small molecule drug, because they're reused repeatedly,” Marks said.

Automated manufacturing could be another solution to help lower the costs of production, which are significantly higher for cell and gene therapies than for other more established drug types.

The FDA is also hoping to get on the same page with other regulators so that developers could be more confident a product they gain approval for in one country would have a good chance of success in others.

“Some of [these problems] may relate to how we can make gene therapies for small populations more widely available,” Marks said. “What may be a tiny population in the U.S. becomes a reasonable sized population when you go globally.”

Gene editing startup Prime Medicine raised $175 million in a mid-October initial public offering that was a rare market debut for a genetic medicine company amid an IPO slowdown. 

The Cambridge, Mass.-based startup on Oct. 20 sold about 10.3 million shares at $17 apiece. Its IPO was the sector’s sixth-largest by proceeds in 2022, and the biggest for a company not yet in human trials, according to BioPharma Dive data.

Though the number of biotechnology companies hitting Wall Street slowed to a trickle in 2022, gene editing companies like Prime may have better luck due to the past successes of Beam Therapeutics and Verve Therapeutics, said Kevin Eisele, a managing director at investment firm William Blair.

Plunging stock prices shook the biotech sector this year. Young companies attempting to go public found little appetite for the sky-high valuations that were common in 2020 and 2021’s bull run of IPOs. Some investors described that period as resulting from "a lack of discipline.”

Recently, companies have been more likely to try and prolong the cash raised in Series B rounds or raise additional private funding before making a debut on the Nasdaq. A few have opted for alternatives such as reverse mergers.

Though the rate of biotechs going public remains slow, the market hasn’t scared off all companies.

According to Eisele, the appetite for gene editing IPOs is “immense.”

“It's a technology that has the ability to really serve patients who have debilitating genetic diseases that don't necessarily have a lot of alternatives, and so the market opportunity here is really exciting,” Eisele said.

Though a company like Prime is still early in its drug discovery, it is partnered with Beam and could attract larger drugmakers as well, he said.

The ability of companies like Beam — which was co-founded by Prime co-founder David Liu — and Verve to hold their values despite the downturn could help whet investor appetite. Both are among the few companies that went public in 2020 and 2021 and are still trading above their initial stock price.

Prime's IPO was one of 23 in the biotech industry last year, compared to 104 in 2021, according to data from BioPharma Dive. Prime’s IPO followed on the heels of Third Harmonic Bio’s successful public offering in September. 

Prime is a “platform” biotech, built around a gene editing technology it will use to develop several medicines, rather than a “product” biotech concentrated more closely on a single drug. 

Prime initially aimed for a roughly $160 million IPO after raising more than $315 million in private financing, regulatory filings show. The company priced within its projected $16 to $18 per share range, but raised its IPO total by selling about 1.6 million more shares than intended, a sign of investor interest in the offering. That figure could climb higher if underwriters exercise their right to buy another 1.5 million shares at the IPO price.

Prime claims its “prime editing” is more precise than other CRISPR-based gene editing techniques. Though it shares some similarities with CRISPR, it can swap out specific DNA letters as well as edit out or add sequences of nucleotides.

The company has 18 research programs across diseases of the blood, liver, ear, eye and lung. None are in human trials. Its IPO filing did not reveal when it expects to begin its first Phase 1 trial.

CRISPR pioneer Feng Zhang is again making a mark in biotechnology, this time with a new startup focused on expanding the kinds of diseases genetic medicines can treat.

Aera Therapeutics officially debuted Feb. 16, announcing a combined Series A and B funding of $193 million. The company, which is headquartered in Boston, is formed around technology that’s meant to help solve one of genetic medicine’s most vexing challenges.

Gene therapy, which encompasses RNA-based medicines as well as gene replacement and gene editing applications, has been a hot area of research for biotech startups and pharmaceutical giants alike over the past decade, spurred by its potential to create powerful, long-lasting treatments for many diseases.

However, delivering gene therapies to the right area of the body for them to work remains a major obstacle. Infused genetic medicines are often limited to diseases of the liver, where they will usually end up, or to “ex vivo” applications, involving the modification of cells outside of the body.

Genetic medicines are also expensive to develop and manufacture, due in part to the high costs of the components that make them work, such as engineered viruses.

In 2021, Zhang's lab at the Broad Institute of MIT and Harvard identified a collection of proteins in the human genome that could form “capsid-like” structures capable of transporting genetic cargo within the body. One of the proteins, known as PEG10, could be engineered to "package, secrete and deliver specific RNAs," according to a Science journal article published that year.

He took that research to Bob Nelsen of Arch Venture Partners and Issi Rozen of GV, two investors with experience building gene editing companies. In September 2022, Zhang tapped former Alnylam Pharmaceuticals executive Akin Akinc to become Aera’s CEO and, more recently, longtime Alnylam leader John Maraganore to be its chairman.

The company isn’t yet working on building a pipeline of medicines, Akinc said. Instead, it’s first spending time developing its technology and identifying potential applications.

“The greatest unmet need today in terms of the genetic medicine space is delivery,” Akinc said in an interview with BioPharma Dive. “Ultimately, what we're after is a genetic medicine, and that means combining those two.”

Akinc claims Aera can address the safety and immunogenicity issues sometimes seen with current gene-based treatments. Aera is starting with human proteins, which its researchers hypothesize could lower the risk of provoking unwanted immune responses.

Cracking the code for delivery may also lead to new targets, perhaps in the central nervous system, heart or lungs, Akinc said. And it could also help with some of the problems associated with manufacturing the complex medicines.

“We’re less interested in trying to do a different way of solving a problem that's already been solved with lipid nanoparticles or viral vectors,” Akinc said, referring to the two most common ways to deliver genetic medicines.

Aera’s platform is built on work done in Zhang’s lab, where he also developed the research that led to the formation of Editas Medicine and Beam Therapeutics. Some of that technology also comes from a biotech it acquired called VNV, which Akinc described as doing “similar work” to Aera.

Arch and GV, which both bet big on gene editing company Prime Medicine, are joined by Lux Capital in leading Aera’s private financing rounds. The cash raised so far will be put to building out its team, currently numbering roughly 50 employees, Akinc said.

The company’s board of directors also includes Maraganore, former Vertex Pharmaceuticals president Vicki Sato and ex-Agios Pharmaceuticals CEO David Schenkein.

Maraganore, who advises several other biotechs, among them Beam and Orbital Therapeutics, said Aera’s technology could be “disruptive for the future of genetic medicine.”

“I'm trying to make new Alnylams, and companies like Orbital, Beam and Aera are great examples of companies I think have the potential to be the Alnylam of the future," Maraganore said.

When Misty Lovelace was a baby, her eyes were drawn to the light.

She could not focus on faces, only sources of light. Her grandmother Cynthia Lovelace, who would become her main caretaker, suspected vision problems.

By age three, Misty was diagnosed as legally blind. School systems struggled with how to handle her. She was intelligent and intuitive, but people would treat her as if she had a learning disability.

As she got older, Misty started carrying a lamp with her at school. She would put her lunch under it to see what she was about to eat. She learned Braille and used a cane to navigate. When she visited the doctor for checkups, her prognosis seemed to get worse.

"[The doctor] would take her little face and he'd put his hands on her face and say, 'Misty, I'm so sorry, there's nothing more we can do for you, honey. You're going to wake up in the dark one day,'" Lovelace recalled.

"It'd be like looking through a tunnel. And all of a sudden that tunnel goes out."

Misty has Leber congenital amaurosis, or LCA, a genetic disorder that often manifests at a young age, causing vision loss. In Misty's case, and for approximately 1,000 to 2,000 other people in the U.S., the disease is caused by mutations in a gene called RPE65.

What Misty didn't know as her vision got darker was that a scientist and doctor duo at the Children's Hospital of Philadelphia had already spent years working on a gene therapy for her disease.

The gene therapy, which would eventually become known as Luxturna, was not an overnight success. Decades of research and setbacks preceded the landmark U.S. approval of Luxturna four years ago, the first the Food and Drug Administration had ever granted to a gene therapy for an inherited disease. While Luxturna is not a cure for blindness, treatment has brought sustained improvements in sight, particularly in lower light, for several patients who spoke with BioPharma Dive. As a result, they've needed less help in educational and social environments, and have more independence.

Their experience with Luxturna is proof of gene therapy's potential as well as its limitations. As the first gene therapy of its kind, Luxturna also holds lessons for a field that's grown dramatically since its December 2017 approval.

A gene therapy first

Lovelace said she never stopped trying to find a way for Misty to regain her sight. The possibility gave her hope as she watched her granddaughter adjust to a life that, for her, was almost in total darkness.

A call from Jean Bennett was a lifeline.

Bennett and her husband, Albert Maguire, met at Harvard Medical School in the early 1980s. The two began researching gene therapy together, attempting to treat blindness in mice. Soon they were testing their approach on Briard dogs with the same defective RPE65 gene that causes LCA in humans.

By 2007, their gene therapy was ready to be tested in people — a high-stakes proposition for a field that had largely been shut down nearly a decade before. After 18-year-old Jesse Gelsinger died during a 1999 gene therapy study, many questioned whether such research was safe. The success Bennett and Maguire had with Luxturna was a large part of gene therapy's journey back to the forefront of biomedical research, aided by improvements in how such treatments are designed and delivered.

Testing began at the Children's Hospital of Philadelphia, where Misty was recruited as a study participant. At age 12, she took her first flight out of Kentucky and received the gene therapy in both eyes, starting with the one with worse vision.

"We didn't know if I was going to get worse, stay the same or get better," she said. "But in my mind, I was going to be completely blind by 18, so what's knocking a couple years off?"

The improvements were almost immediate, however. Lovelace recalls her granddaughter commenting on her wrinkles as soon as the eye patches from the procedure were removed. Misty could make out the fine hairs on the manes of horses, her favorite animal and hobby. Rainbows and stars, though, she found underwhelming.

More than eight years later, Misty says she's grateful she "took the leap," attributing to Luxturna her independence and ability to pursue a career as a horse trainer.

Results from early participants like Misty led to the formation of Spark Therapeutics and a larger clinical trial in Pennsylvania and at the University of Iowa that gave the biotech company the evidence needed to approach the FDA.

On Oct. 12, 2017, a panel of scientists and FDA advisers unanimously endorsed the gene therapy, with Misty one of several individuals who shared their stories. The FDA followed with an approval on Dec. 18, a gene therapy milestone.

"For many of us, this is exactly the type of disease that we hoped that gene therapy would someday treat," Wilson Bryan, director of an FDA office tasked with reviewing Luxturna, said at the time. The next year, Luxturna was also approved in Europe.

It's unclear how many people have received Luxturna since. A Spark spokesperson told BioPharma Dive the company does not disclose that information. In 2019, the company told the Philadelphia Business Journal it had shipped 75 vials of the gene therapy in its first year post-approval. (One vial is used per eye.)

Spark is now owned by the Swiss pharmaceutical company Roche, which does not disclose sales of Luxturna. In February, however, Roche reduced the accounting value of Luxturna, citing "reduced sales expectations."

'This is not a cure'

Luxturna consists of one hundred and fifty billion copies of the corrected RPE65 gene encoded into modified viruses, which are delivered into the eye via about 0.3 milliliters of liquid. Those few drops are injected underneath the retina and, over the course of a week, the viral particles shuttle the functional gene into the patient's eye cells. Once inside, the gene instructs the cells to produce a protein that's otherwise missing, helping restore visual function.

"This is not a cure," said Jason Comander, a physician at Massachusetts Eye and Ear in Boston who has administered Luxturna. "It will not make your vision normal," he added, "and there's a small chance that it could hurt your vision." Comander consults with other drugmakers and in 2019 received a nominal amount from Spark.

Luxturna also benefits each patient differently. Comander said the vast majority gain some night vision, while others report improvements in central or side vision. Some see more substantial improvements — one of his patients was able to see in up to one thousand times dimmer light than in pre-surgery exams. Many have been able to walk without canes and read without using Braille after surgery.

Their vision isn't perfect, however. Some recipients, Misty included, are still considered legally blind and unable to drive. How long the benefit of gene therapy treatment will last is still unclear, though a recent study co-authored by Maguire and Bennett indicated "improvements were maintained up to 3 to 4 years" after Luxturna.

Comander, who was in his residency while Luxturna was tested, said seeing Maguire administer the therapy affirmed his decision to go into the practice. Now, Comander has done close to a dozen surgeries; his youngest patient was 4 years old at the time of treatment and his oldest was in their 30s. While younger patients saw greater improvements, each patient's eyes functioned better in lower light following treatment.

For Comander, Luxturna was an inspiration, one that he said has helped fuel greater interest in gene therapy. "Many careers have been dedicated to expanding on the success of Luxturna, and it's made a huge difference in the field," he said.

Since Luxturna's clearance, Novartis won FDA approval in May 2019 for a spinal muscular atrophy treatment known as Zolgensma, making it the second gene therapy for an inherited disease available in the U.S. A handful of other gene therapies are in late-stage testing and, behind them, are an expanding pipeline of experimental medicines for a constellation of genetic conditions. In 2020 alone, the FDA received more than 230 applications from cell and gene therapy developers to begin clinical trials, the head of the agency's biologic drugs division said in 2021.

"It's like he's a new kid every day"

Gordon "Creed" Pettit was one of the kids who couldn't get into clinical trials for Luxturna. His mother, Sarah St. Pierre-Pettit, brought him from Florida to the University of Iowa a number of times. But he couldn't get through the tests needed to qualify him for treatment.

From there, it was a waiting game until Luxturna's approval. Soon after the FDA's decision, Pierre-Pettit brought Creed to Audina Berrocal at the Bascom Palmer Eye Institute in Miami.

Creed was Berrocal's first Luxturna patient. As a pediatric retina specialist, Berrocal said Spark sought her out in the fall of 2017. To date, she's performed a dozen surgeries, all of which have yielded positive results.

"Of all the things I've done in my career, this has been the most amazing and the most rewarding in the sense that we are changing the genetics, the DNA of a person, and we're allowing them to do things that before they couldn't do," Berrocal said. Berrocal consults with other drugmakers and has contributed to published research on Luxturna. In 2018 and 2019, she received nominal payments from Spark.

But treatment, even when positive, can come with adjustments, too. In Creed's case, he was overwhelmed by the sudden change, at first telling his mother he wished he had his old eyes back.

With time, however, Creed has started challenging himself more. "I think most of the gains were at the beginning," Pierre-Pettit said. "Whatever Luxturna did is done. But now that he finally feels confident with himself, he's putting Luxturna to the test now."

For Creed, that means being more social and inquisitive about the world around him. Now 12 years old, he hasn't mentioned wanting his old eyes back for years.

"It's still almost like a new kid every day, like a new baby that sees something new," his mother said.

A sky-high price tag

From a young age, Luke Ward told his mother, Stephanie Joachim, about his dream of playing soccer. But the sport — as well as many other daily tasks — seemed out of reach.

His vision problems were apparent from birth. While his twin sister could track people with her eyes, Luke stared only at sources of light. When he started walking, he needed to put his hands out to stop himself from running into walls.

Genetic testing revealed Luke had LCA. His doctor said he'd be legally blind by kindergarten. Around the same time, Joachim read an article about Luxturna, but was too late to get Luke enrolled in clinical testing. By the time the FDA approved the therapy, the family had already decided that Luke was getting Luxturna.

But Joachim was anxious after learning Luxturna's price tag of $425,000 per eye. "I was just flabbergasted and I was like, 'You know what, it's fine. We have the best health insurance,'" she said.

To the family's disappointment, and as other Luxturna patients have experienced, insurance denied the request and cited the therapy's then "newness" as a reason.

At some point in the process, however, Luke's file crossed the desk of an anonymous person who was "so moved from Luke's story and from Luke's pictures, he volunteered to pay for Luke's surgery," Joachim said.

Luxturna's cost was criticized when the therapy was approved and has remained an issue within the patient community since. Shortly after the FDA gave its OK, Spark announced a program with health insurer Harvard Pilgrim and affiliates of Express Scripts, through which the company agreed to pay rebates if the drug doesn't help patients meet certain thresholds.

In a statement to BioPharma Dive, Spark said it offers a "range of patient services and payment models to help navigate and support access" to Luxturna, but did not respond to questions on the number of times rebates have been paid.

"Parents shouldn't be paying for this out of pocket," Berrocal, who was also Luke's surgeon, said.

Berrocal told Luke he's the "poster child for Luxturna," Joachim said. He can play sports with his twin sister, including soccer and tee-ball. He started kindergarten this year and has no issues seeing the whiteboard. He still has visual impairments, though, including his peripheral vision. His mother says they keep their shoes tucked out of the way in the house to prevent Luke from tripping.

"This is what we have, and it's working"

Four years after its approval, Luxturna continues to be sought out by patients. Joachim says she's received messages from people in Spain, South Africa and the U.K. inquiring about Luke and his progress.

And as Luxturna keeps working, other drugmakers hope to replicate its success. The eye, in particular, is the focus of many gene therapy developers, as it's easy to access and targeting it doesn't carry as many safety risks as other organs. Novartis, which sells Luxturna in Europe, AbbVie, Biogen and Johnson & Johnson are all exploring gene therapies for the eye.

Research into gene editing is advancing as well. In September, Editas Medicine shared preliminary results from the first trial testing a CRISPR gene editing treatment that does its work inside the body. Treatment appeared safe, although the efficacy results were mixed, with several patients experiencing little improvement in vision. The treatment uses CRISPR editing to restore the function of eye cells in people with another form of LCA known as type 10.

Berrocal believes Luxturna represents the beginning of what genetic medicine can offer to patients with many inherited diseases, not only those of the eye.

"20 years from now, we could look back and say, 'Oh my god, that was so rudimentary. Look how much you have advanced,'" she said. "But we have to start somewhere, right? And in 2021, this is what we have, and it's working."

Gene therapy could dramatically alter how dozens of inherited diseases are treated. It's also transforming how the academic institutions working in this growing field move research from the laboratory to the clinic.

Private sector skepticism a decade or more ago spurred institutions like the University of Pennsylvania and Nationwide Children's Hospital to advance experimental projects much further before selling their ideas to biopharma companies — a departure from the previous model of identifying a molecular target and letting industry do the heavy lifting.

As a result, university technology transfer officers are much more involved in the technical and commercial details of preclinical drug development, from assembling financing and creating private companies to building manufacturing capacity. The product is a host of new startups, such as AveXis, Spark Therapeutics and Bamboo Therapeutics, that in recent years have been swallowed up by large pharmaceutical companies.

"The old way is, 'I have a patent, I'm going to throw it over the fence to you and you throw me a sack of money,'" said John Swartley, managing director of the University of Pennsylvania's Penn Center for Innovation, in an interview. "This is completely different. This is co-development."

"We're directly involved over multiple years in helping to move the technology forward. And our commercialization partner is going to take it hopefully all the way to the market."

A paper published in JAMA in March 2020 quantifies the shift. Together, hospitals, universities and the National Institutes of Health sponsored 206 of the 341 identified gene therapy trials that were active in 2019. Biotech and pharma companies led the remaining 135.

Measured by funding, hospitals, universities and the NIH had a hand in more than 280 of those studies, as some trials had multiple funders. Fourteen trials were funded by other federal sources or non-profit charities.

Hospitals and universities were most active in early-stage studies, with industry sponsoring only 22% of Phase 1 trials. But, in gene therapy, those initial human tests can hold more weight, as the benefits of a genetic fix can be quickly apparent.

"This is a sign that the model of drug development that was prominent in the past — academia does basic science and finds some targets and then pharma develops the actual drug product — is pretty different with gene therapy," one of the paper's authors, Walid Gellad, director of the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh, wrote to BioPharma Dive.

The changing academic model also raises questions about the rich price tags being sought by drugmakers for gene therapies, given the greater role played by universities and other non-profit entities.

"The paper, I think, informs discussions about how high prices really need to be in order to encourage private risk taking for gene therapies — it may be a different number than for other drugs that have less late stage involvement by academia and NIH," wrote Gellad.

University involvement in gene therapy development was driven in part by the private sector's reluctance to get involved in a therapeutic approach perceived, until several years ago, as risky. The death of Jesse Gelsinger in a Penn gene therapy trial in 1999 inflicted severe reputational damage on the field, driving away drugmaker interest.

Scientists kept the faith, and their institutions carried the field forward for years afterward. When Swartley began working at Penn in 2007, one of his first meetings was with the university's gene therapy director James Wilson, who was in charge of the tragic trial that led to Gelsinger's death.

"From an external perspective, from an industrial perspective, there was almost nothing happening," he said. "But it was evident from the kind of research that Dr. Wilson and his colleagues were sharing with us, they made a very convincing case that this was going to rapidly shift into a more of a developmental paradigm."

"They were anticipating a tremendous amount of industry interest when that shift occurred," Swartley added. "It turned out to be very prophetic."

At the University of North Carolina, the situation was similar in the early part of the 2000s. The institution reached a slightly different solution, however, spinning out companies like Asklepios BioPharmaceutical to advance gene therapy beyond the walls of the university laboratories.

"We had a lot of vector technology, but the market was not receptive to gene therapy at the time," said Kelly Parsons, associate technology commercialization director at UNC, in an interview. "We had a startup company that had to work very diligently to try to establish the merits of gene therapy."

Asklepios is now owned by Bayer, and some of its gene therapy work was earlier folded into a Pfizer-owned Duchenne muscular dystrophy project that was previously developed by Bamboo Therapeutics.

But the time spent building the knowledge and expertise at universities or closely affiliated startups has been one of the reasons why big pharmas have rushed into the space. By advancing the technology, the universities reduced the risk of failure, making pharmas more willing to buy in.

"We had a recognition that if we wanted the for-profit sector and the investment sector and the [venture capital] world to give gene therapy a chance, it was important as an institution we were able to start that process of de-risking the asset," said Matthew McFarland, vice president of commercialization and industry relations at Nationwide, in an interview.

Doing so was a greater commitment than they expected. "What we did is say: 'What stage would these assets need to get to before external dollars would be interested in investing?'" he said. "And the reality is, oh my gosh, you have to de-risk it all the way to the point it's ready to go into the patients."

That included the initial Phase 1 study of the spinal muscular atrophy gene therapy now known as Zolgensma, which was licensed to AveXis and later acquired by Novartis.

More broadly, development included building production capabilities compliant with Good Manufacturing Practices, which govern quality and consistency standards for finished drug products, and a regulatory team that was able to prepare Investigational New Drug applications within the hospital's technology transfer office.

Building up manufacturing expertise has resulted in a new business for Nationwide: the for-profit Andelyn Biosciences, which will run a commercial scale gene therapy production facility.

Solving the manufacturing question is something many academic gene therapy centers are still grappling with as they near the point of handing off to private-sector partners. Biopharma companies want to have confidence that the therapies manufactured by university scientists will work as well in clinical trials and in wider use as they did in earlier study.

"There's no university that has the ability to ramp their early production manufacturing production to a level to get enough doses … that industry doesn't have to recapitulate it," said Jim O'Connell, director of technology transfer at the University of Florida's UF Innovate, in an interview. "It's notorious for university labs, small molecules and others, to not be able to have their work reproduced out in the real world."

This very question may have been behind data quality issues for Zolgensma. In 2019, Novartis was chastised by the Food and Drug Administration for having submitted manipulated preclinical data, a scandal that the Swiss pharma tied to AveXis co-founder and former Nationwide trial investigator Brian Kaspar. Through his lawyer, Kaspar has denied all wrongdoing.

"Academic institutions have got to ask themselves: How far into this do we want to go?," said O'Connell. "It's going to have a whole bunch of costs that universities aren't used to taking on. How do we share the expense? How do we share the risk appropriately?"

Thorny questions notwithstanding, the increased investment has led to better returns for universities. Technology transfer offices interviewed by BioPharma Dive report the licensing deals are much richer for gene therapies that have advanced to human testing or near it — money which gets returned to scientists and their departments to fund new research.

Returns aren't equally shared, however. Schools blessed with research that is sought-after by private industry flourish, while others struggle, said Lee Vinsel, a Virginia Tech assistant professor who is writing a book called "The Innovator's Delusion."

Indeed, broadly speaking, universities reported a little more than $3 billion in licensing revenue in 2017, but spent $68 billion, according to the Association of University Technology Managers. Less than 1% of licenses yielded more than $1 million in revenue.

Moreover, Vinsel argues the potential for licensing revenue incentivizes universities to only conduct research the private sector wants to license.

"One reason why we need federal funding and university research is to do basic science that corporations aren't going to pay for and do," Vinsel said. "If we tack more university research towards the profitable, who is going to do this basic work, including research that could really help society but will enrich no one?"

McFarland of Nationwide, however, points to less lucrative licenses it has signed, such as a device to prevent pressure ulcers in patients with tracheostomies, along with a mental health research and treatment facility the institution has launched, as ventures that were enabled by bigger deals like in gene therapy.

"If we can take that return and continue to foster research not only in [gene therapy] but even further spread that out and have an impact across all of research," he said.

"There are a lot of times when we're not the office of tech commercialization, but instead we're the office of tech realization, because what we go into is just about getting it out there to the public, and we're not going to get a return on it."