We are investing more in gene therapies

Getting in early when an investment opportunity starts taking off with massive upside potential is every investor‘s dream, but often that also exposes investors to unexpectedly high risk. In the health industry, gene therapies seem to be up and coming, but many of these approaches are in early clinical development and will take years to reach the market, if they even get that far. The big blockbuster drugs dominating the pharmaceutical market for much of its history have clearly been based on chemical substances. In the last two decades, these agents have increasingly been displaced by biologics (therapeutic agents manufactured in a living system such as microorganisms, plants, or animal cells) – evident from the fact that eight of the current top ten best-selling drugs were developed on the basis of antibodies and therapeutic proteins.

Last year there were a record 59 new drug approvals in the US but only a few of them were gene therapies. What factors make this field so attractive?

These new therapeutic approaches still account for a low share of total drug approvals because drug development timelines are generally long. Increasing investment in gene therapy candidates is reflected both in the large number of clinical studies currently underway and in statements by former FDA Commissioner Scott Gottlieb, who said he expects the number of gene therapy approvals to increase in the coming years. Besides the promising potential and incentives to provide tangible, long-lasting benefits to patients with serious diseases after just one treatment, high-priced takeovers of gene therapy specialists by pharmaceutical companies have drawn additional interest to this new field. In 2018 Novartis acquired AveXis, a gene therapy company, for USD 8.7 bn and Roche recently offered USD 4.3 bn to buy Spark Therapeutics.

What exactly is gene therapy?

Put simply, gene therapies are designed to permanently replace a missing or faulty function of disease-causing proteins with a single dose of treatment. Most of the drugs we've seen so far attempt to block the mechanisms of certain disease-causing proteins temporarily whereas gene therapy has achieved a stable effect lasting over several years in some cases, but without integration into the human genome. The more complex technology of gene editing aims to permanently change the human genome in cells and organs and thus correct existing errors or replace missing information.

That sounds promising. But what about the risks?

Besides the potential, yes, there are risks and challenges, with issues ranging from long-term safety, the dosage of the single treatment and efficiency in reaching target organs and cells to unintended negative consequences of gene-editing resulting from integration into the human genome, not to mention the high initial cost of gene-editing techniques.

BB Biotech has been invested in various companies focused on gene therapies for quite a while..

We began with a highly successful investment in Avexis, which was acquired by Novartis in 2018. That made Voyager Therapeutics the only other gene therapy company in the portfolio until the final quarter of 2018, when new positions were opened in Audentes, Sangamo and other companies. We bought more shares of these positions during the first quarter of 2019 and added two more gene therapy companies to the portfolio. One was Crispr Therapeutics, a pioneer in Cas9 genome editing that is working with Vertex on a study of CTX001 in patients suffering from hemoglobinopathies such as beta thalassemia and sickle cell disease. Crispr is also pursuing early clinical studies of its next-generation allogeneic cell therapies, most of which are for treating cancers.

The second new investment is Homology Medicines, which is building a pipeline of gene therapy and gene editing candidates. In the field of gene therapy, HMI-102 is the company's lead compound, under clinical investigation as a treatment for adults with classic phenylketonuria (PKU). In gene editing, Homology Medicines is investigating HMI-103 as a treatment for children with PKU.

What is the current portfolio weight of these investments?

At the end of March 2019, we had invested approximately 4% of the portfolio in this important new field of technology. We are convinced that gene therapy offers patients and the healthcare system plenty of potential and we are investing in this budding market with firmness and determination, but also with prudence. Although gene therapy and gene editing specialists are making steady progress, one must bear in mind that their drug candidates are still in an early stage of clinical development.

You have invested around 25% of total portfolio assets in companies that are active in the field of RNA therapies. What’s so convincing about this technology?

It seems that RNA-based therapies have received less attention lately due to the hype surrounding recent gene therapy acquisitions. RNA therapy uses various genetic building blocks to increase or decrease the production of specific proteins without affecting the human genome. RNA-based therapeutic agents can be tailored for use in many indications, ranging from metabolic disorders and rare genetic diseases to cancer, infectious diseases and neurological disorders.

What RNA therapy companies are you invested in?

Ionis Pharmaceuticals, the largest holding in our portfolio, is the global leader in antisense technology with more than 30 candidates in its R&D pipeline. Its partner Biogen achieved one of the most successful post-launch sales curves of any orphan drug with Spinraza, Ionis’ product for treating spinal muscular atrophy, a rare muscular disorder. Alnylam, another portfolio holding, received regulatory approval for Onpattro, the first drug to be developed using siRNA technology. Alnylam has a number of candidates in late-stage clinical trials; Fitusiran, for example, with which it is taking a completely new approach in the treatment of rare bleeding disorders. In addition, Alnylam is collaborating with The Medicines Company to develop a cholesterol-lowering drug.

 

Gene therapy companies in BB Biotech's portfolio

1.3%

Audentes

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Audentes

1.3%

Audentes is a clinical stage gene therapy company focused on rare diseases. The company has two clinical stage programs and importantly, commercial scale, in-house manufacturing capability that is GMP-approved. AT132 is the lead product in Phase I/II for the treatment of X-linked myotubular myopathy (XLMTM). The second clinical compound is AT342 in Phase I/II for the treatment of Crigler-Najjar syndrome (CN), but the drug needs to be dosed higher as the first patient data at the lowest dose saw a return to baseline following a reduction in the target. Beyond the two lead assets, there are two preclinical compounds and a yet to be named compound. Given the data seen so far with the lead asset, the company will discuss the regulatory path with the FDA and present the data, which we believe have established proof of concept thus far, with durability being the main question. The manufacturing facility has 2 500 liters bioreactors with additional capacity of up to 5 000 liters. The same process, facility, and scale have been used from the beginning which is a very important factor in the regulatory process. The manufacturing process uses a mammalian, serum-free suspension culture which allows for increased scalability versus adherent cultures.

0.7%

Crispr Therapeutics

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Crispr Therapeutics

0.7%

Crispr Therapeutics AG is a company with the main part of its operations in Boston, MA. The Company focuses on the development of transformative gene-based medicines for serious diseases using its Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR)/Cas9 gene-editing platform. CRISPR/Cas9 can be programmed to cut, edit and correct disease-associated deoxyribonucleic acid (DNA) in a patient’s cell. The location at which the Cas9 molecular scissors cut the DNA to be edited is specified by guide ribonucleic acid (RNA), which is comprised of a crRNA component and a tracrRNA component, either individually or combined together as a single guide RNA. The Company has business operations in London, the United Kingdom, as well as research and development operations in Cambridge, the United States. Among the CRISPR companies, CRISPR Therapeutics is unique in being the first having entered the clinic (in late 2018) and specifically focussing on ex vivo applications. CTX-001 is in the clinic in Europe for Transfusion-dependent Beta-thalassemia and in the US for Sickle Cell Disease (profit sharing for both programs with VRTX). CRISPR Therapeutics is the only gene editing company having retained full rights for its allogenic CAR-T programs, they are specifically pursuing CD19, BCMA and CD70 as initial targets and entering the clinic in early 2019. Further it has structure a JV with Bayer named Casebia that concentrates on in vivo applications ($300mn deployed by Bayer) as well as a regenerative medicines pact with Viacyte to de-immunize its synthetic pancreas device with gene editing technology.

0.1%

Homology Medicines

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Homology Medicines

0.1%

Homology Medicine is a genetic medicines company with a proprietary platform based on AAV vectors derived from human CD34+ cells, known as AAVHSCs (FIXX has 15 different capsids). Sequence analysis has mapped AAVHSCs to Clade F, which also has AAV9 as one of its members. The company is building both a gene therapy and gene editing pipeline based on this technology which they licensed from City of Hope. It is believed that the vectors will be less immunogenic, have natural tropism for desired human tissues, and increased efficiency for homologous recombination. Its lead program is HMI-102 which is an AAVHSC8 vector containing the human phenylalanine hydroxylase (PAH) gene and a liver specific promoter being developed for classic Phenylketonuria (PKU) patients (Phe > 1,200 µmol/L). PKU is an inborn error of metabolism where there are mutations in the PAH gene resulting in the inability to metabolize Phe, which can result in severe neurological impairment. Preclinical models in the established and commercially validated ENU2 mouse model have generated encouraging data leading the company to start a Ph I/II proof-of-concept study in 2019 with inital proof of concept data by year-end 2019. The first gene editing program HMI-103 leverages the same delivery vehicle (AAVHSC) as its gene therapy relative HMI-102, but excludes a promotor and flanks the transgene with two homology arms to drive integration of the transgene into a specified region by homologous recombination. This poses an inherent safety advantage in comparison to other gene editing technology that have to create single- or doubles strand-breaks in the patient DNA by cutting with an endonuclease (Cas9 or Fok-I), which mainly trigger error-prone no-homologues end joining (NHEJ) for repair as well as have higher associated risks of off-target cutting and on-target effects (large genomic rearrangements or deletions). The drawback is lower editing efficiency due to lack of endonuclease cutting.

0.6%

Sangamo Therapeutics

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Sangamo Therapeutics

0.6%

Sangamo Therapeutics is uniquely positioned as the dominant and almost exclusive holder and developer of Zinc-finger-based genomic editing (ZFN) IP. One of the key achievements of the new CEO on the pharmacological side was the manifold improvement in selectivity of the ZFN platform (100x), thereby pushing off-target cutting below the limit of detectability, which enables the company to conduct the first in vivo gene-editing clinical trial (MPS II). Further the company now also pursues classic gene therapy approaches through the formulation expertise (that they gained while delivering ZFN) and IP around AAV2/6 (AAV6 capsid with AAV2 promotor/genome), e.g. in haemophilia A (Phase I/II running) as well as Fabry’s disease (IND). It will be key for Sangamo to successfully develop their ZFN platform for their first proprietary projects (MPS I, MPS II, hemophilia B) and based thereon deploy that or newer generations of ZFN into further liver albumin locus targeting applications, while reaping the optionality from partnered projects (hemophilia A with Pfizer, ex vivo collaborations with Bioverativ and Kite, gene regulation ZFP without nucleases with Shire and Pfizer).

1.4%

Voyager Therapeutics

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Voyager Therapeutics

1.4%

Voyager is a clinical-stage biotech company focused on developing novel genetically targeted therapies to treat CNS diseases. The company’s lead asset, VY-AADC, is an AAV-based gene therapy with the objective of increasing the expression of the enzyme responsible for converting levodopa to dopamine (AADC, L-amino acid decarboxylase) in the brains of Parkinson’s disease patients. VY-AADC is currently enrolling patients in a Phase II trial, which will serve as the first of two sham-controlled studies for registration. A Phase III study to begin in 2020 will serve as the second pivotal trial. The company is also developing other AAV vectors targeted at increasing expression of a key gene in Friedreich’s ataxia, delivering monoclonal antibodies, or silencing/knocking down genes using microRNA delivery in diseases like monogenic SOD1 familial ALS and Huntington’s disease. Voyager’s discovery engine has generated programs in five CNS indications, and in the next 18 to 24 months, they plan to initiate at least three other clinical programs.