Are we on the verge of a medical breakthrough?

X-linked myotubular myopathy (XLMTM) is a neuromuscular disorder with no curative options to date. Children with the condition have very little mobility and cannot breathe or swallow on their own, making them dependent on ventilator support, a stomach tube and a wheelchair. Half of those with the condition die before their second birthday and few survive until the age of 10. XLMTM is caused by a congenital defect in the MTM1 gene that encodes an enzyme called myotubularin. This enzyme needs muscle fibers to develop and be fully functional. XLTM affects one in 50 000 (in most cases) male newborns. 

A drug to treat this incurable disease is now poised to enter the market. Audentes Therapeutics, a US biotech company listed on the stock exchange since July 2016, is developing a method to introduce a healthy copy of the MTM1 gene into muscle cells. The vector is an intravenously administered harmless virus from the adeno-associated virus family. The gene reaches the nucleus of the target cells and triggers production of the myotubulin enzyme there. The first efficacy data presented in April 2019 showed that the muscle fibers resembled those of healthy children at 24 and 48 weeks, respectively. 

Audentes plans to file for approval in the United States in the third quarter of 2019. The legal basis for this fast-track procedure is RMAT designation, which AT132 received in August 2018. It is exclusively reserved for regenerative medicine advanced therapy products, that is, cell- and gene-based therapies to treat life-threatening conditions.

Audentes has three gene therapies in clinical studies. All three are from the company's proprietary technology platform for the development of adeno-associated virus (AAV) vectors. Before the end of the current quarter (Q3 2019), Audentes intends to request authorization to initiate the first clinical study to evaluate AT845 in Pompe disease, an inherited metabolic disorder. BB Biotech’s investment experts opened an initial position in Audentes during the final quarter of 2018 when the effectiveness of the therapeutic approach started to become apparent. This is a representative example of BB Biotech's increasing investments in companies active in the rapidly growing area of genetic medicine.

Gene therapy companies in BB Biotech's portfolio

4.2%

Agios Pharmaceuticals

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Agios Pharmaceuticals

4.2%

The two most advanced oncology programs of Agios Pharmaceuticals are targeting mutations in the isocitrate dehydrogenase 1 and 2 (IDH1 and IDH2) enzymes, which are implicated in hematologic malignancies and solid tumors. Data with IDH2 inhibitor Idhifa (AG-221) were compelling and due to the high response rate and well-defined group of patients who benefited, the drug was given an accelerated approval in August 2017. We estimate the worldwide market opportunity for Idhifa at USD  750  mn for acute myeloid leukemia (AML). Celgene has worldwide rights to Idhifa, and Agios will receive milestones and an estimated 15% royalty on sales. Data with IDH1 inhibitor AG-120 in AML were also promising and the product was approved in July 2018. Results with AG-120 in rare solid tumors were not as compelling as hoped, and we include little revenue potential from these indications despite continued development. Finally, the company is developing AG-348, a novel compound for the treatment of pyruvate kinase deficiency that reported compelling proof-of-concept data, and Phase III trials are now underway.

1.5%

Akcea Therapeutics

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Akcea Therapeutics

1.5%

Akcea was spun out of Ionis Pharmaceuticals and is developing antisense drugs to treat rare and severe diseases. Its lead product is Tegsedi which was launched in late 2018 for the treatment of hereditary transthyretin amyloidosis, a rare and severe disease. The company received a complete response letter for Waylivra for the treatment of familial chylomicronemia syndrome, a rare lipid disorder, and is pursuing a path forward with the FDA. Akcea also has a pipeline of next generation lipid products based on its LICA technology which allows for much lower dosing and higher potency. ANGPTL3-Lrx is in a Phase I/II study for rare hyperlipidemias and is also being evaluated in fatty liver diseases such as NAFLD and NASH. Akcea has two LICA programs partnered with Novartis for larger diseases, APO(a)-Lrx and APOCIII-Lrx for patients with elevated risk factors for cardiovascular disease. Ionis remains a majority shareholder.

3.3%

Alnylam Pharmaceuticals

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Alnylam Pharmaceuticals

3.3%

Alnylam Pharmaceuticals is the market leader in RNA interference (RNAi) therapeutics. This treatment approach selectively blocks the synthesis of specific disease-causing proteins. Their first marketed therapy, Onpattro (patisiran), received approval in 2018 for TTR amyloidosis, a rare and serious disorder in patients diagnosed with familial amyloidotic polyneuropathy (FAP). In addition to Onpattro, Alnylam has a broad pipeline of candidates, including four programs that have advanced to the clinical development stage. These include Fitusiran, which pursues a revolutionary approach in the treatment of hemophilia and rare bleeding disorders, Givosiran for the treatment of acute hepatic porphyrias, and Lumisiran, which received breakthrough status for primary hyperoxaluria. Alnylam continues to support its collaboration with The Medicines Company in their advancement of inclisiran into Phase III studies, which investigates RNAi disruption of PCSK9 for the treatment of hypercholesterolemia. Data thus far have been supportive of a once-quarterly and possibly biannual subcutaneous administration, which has obvious advantages over other PCSK9 antibody therapies.

1.4%

Audentes

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Audentes

1.4%

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.

4.6%

Celgene

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Celgene

4.6%

Celgene specializes in oncology and inflammatory diseases and has very strong fundamentals and positive long-term prospects based on products such as Revlimid, Pomalyst, Otezla and its robust pipeline of early-stage products. We expect Revlimid US revenue to continue to grow until loss of exclusivity in the 2024/25 timeframe, driven by the combined effects of increased prevalence, penetration and duration of treatment. The company’s acquisition of Receptos broadened their immunology and inflammation franchise beyond Otezla by gaining access to ozanimod, which we expect to be approved in multiple sclerosis late this year and continues to be developed for inflammatory bowel disease (IBD). Celgene’s acquisition of Juno in 2018 as well as their strategic collaboration with Bluebird has established the company as a leader in the CAR-T space. In January of 2019, Bristol-Myers Squibb entered into a definitive merger agreement to acquire Celgene in a cash and stock transaction with an equity value of approximately USD 74 bn. The deal is expected to close in the third quarter of 2019.

1.0%

Crispr Therapeutics

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Crispr Therapeutics

1.0%

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.

0.7%

Homology Medicines

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Homology Medicines

0.7%

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.

8.2%

Incyte

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Incyte

8.2%

Incyte is focused on hematologic disorders, inflammatory disorders, and cancer. Their marketed product is Jakafi, an oral JAK-2 inhibitor that received approval for myelofi-brosis (MF) and polycythemia vera (PV) in 2011 and 2014, respectively. We estimate that MF and PV represent a USD 3+ bn market opportunity in the US and Europe. Phase III trials in graft-versus-host-disease (GvHD) are also ongoing and could add another USD 500+ mn in sales if approved in 2019. In November 2009, Novartis licensed ex-US rights to Jakafi. A second-generation JAK-2 inhibitor, Baracitinib, posted positive data from several Phase III trials in rheumatoid arthritis and the product was launched as Olumiant in 2018. Incyte will receive royalties from partner Eli Lilly. Progress on other cancer compounds in its pipeline, including an FGFR inhibitor for cholangiocarcinoma and bladder cancer and a c-Met inhibitor for lung cancer, continues.

13.2%

Ionis Pharmaceuticals

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Ionis Pharmaceuticals

13.2%

Ionis Pharmaceuticals is the leader in the space of antisense, with over 40 compounds in development using this technology. Antisense allows for the control of protein production at the genetic level. Our focus and investment strategy revolve around the technology platform, which has demonstrated significant progress. Spinraza (partnered with Biogen) was approved in late 2016 following two positive Phase III studies in spinal muscular atrophy, and had a very strong launch throughout 2017 and 2018. Tegsedi, partnered with Akcea, for hereditary transthyretin amyloidosis polyneuropathy, was approved in the US and EU in 2018. Our focus going forward is on the company’s next-generation technologies such as 2.5 and LICA. Thus, Ionis remains an important and truly innovative investment in our portfolio.

1.9%

Moderna

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Moderna

1.9%

Moderna Therapeutics is pioneering a new class of medicine made of messenger RNA. Moderna recently gathered a lot of attention through the record-breaking IPO, which raised over USD 600 mn in December 2018. A substantial amount of the USD 3 bn of total capital raised since inception in 2011 has been invested in what is now the leading mRNA technology platform in order to be able to quickly drive development candidates into the clinic on a broad front of therapeutic and prophylactic applications. Their pipeline now includes 21 development candidates, with 10 of them in the clinic, for mRNA-based vaccines as well as treatments in diverse therapeutic areas. In our view, the key programs that will be reading out clinical data within the next few years include the rare liver disease MMA and PPA, the proprietary vaccines in congenital CMV and hMPV+PIV3, the intra-tumorally injected cytokine cocktail OX40L+IL23+IL36 gamma, the personalized cancer vaccine and early data on the VEGF Phase II during CABG-surgery.

1.7%

Myokardia

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Myokardia

1.7%

Myokardia is one of only a few small biotech companies in the cardiovascular disease area. The company’s initial focus is on the treatment of inheritable cardiomyopathies, a group of rare, genetically driven forms of heart failure that result from biomechanical defects in cardiac muscle contraction. The most advanced pipeline asset is MYK-461 (mavacamtem), an allosteric inhibitor of cardiac beta myosin function that is being investigated in obstructive hypertrophic cardiomyopathy (oHCM or HoCM). The company posted intriguing Phase II results not only showing direct improvement in biomarkers (up to 15% reduction in ejection fraction, up to 90% reduction in LVOT gradient) but also an increase of up to 17% in exercise capacity and an improvement in symptoms (1 Class NYHA improvement on average). A single Phase III trial aiming at exercise capacity and symptom improvement has been initiated with an expected readout in 2020. Further studies include a Phase II study in non-obstructive HCM as well as early dose escalation data in H2-18 for their second asset (MYK-491) that is being developed for DCM (dilated cardiomyopathy).

1.1%

Sangamo Therapeutics

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Sangamo Therapeutics

1.1%

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).

6.3%

Vertex Pharmaceuticals

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Vertex Pharmaceuticals

6.3%

Vertex’s core focus is cystic fibrosis. CFTR potentiator Kalydeco was launched in the US and Europe in 2012 for a subgroup of patients with cystic fibrosis. While the initial market opportunity is limited to around 5% of the patient population, we believe that sales could reach USD 1.0 bn with the inclusion of other small patient populations on the label. Positive Phase III results with the combination of Kalydeco and CFTR correc-tor VX-809, released in June 2014, enabled Vertex to begin to target the roughly 45% of patients who are homozygous for the most common mutation in the US and Europe in 2015. With this label inclusion, we expect sales of Kalydeco and the Kalydeco/VX-809 combination to reach approximately USD 4.0 bn. The company is also developing correctors that can be combined with Kalydeco and VX-661 to target the remaining patients who are heterozygous for the mutation. Data from Phase III trials announced in november were highly positive and we expect approval to follow in 2019.

2.0%

Voyager Therapeutics

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Voyager Therapeutics

2.0%

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.

1.1%

Wave Life Sciences

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Wave Life Sciences

1.1%

Wave is a leader in the space of stereochemistry, with an initial focus on antisense oligonucleotides (ASOs) and exon skipping. In simple terms, stereochemistry refers to the three-dimensional structure of a molecule and how this affects its chemical properties. Current ASOs can contain hundreds to hundreds of thousands of various enantiomers (stereomixture), many of which do not contribute to efficacy, but could be causing toxicity. Wave is able to specifically design their individual molecules (stereo-pure) to contain the desired properties, thus potentially enhancing potency and minimizing toxicity. The company’s lead product is in Phase I/II development for Huntington’s disease and targets very specific point mutations in order to knock down the mutant protein. We expect data in early 2019. Wave’s second program recently entered Phase I development for Duchenne muscular dystrophy (DMD) and acts by skipping exon 51.