These 3 Gene Therapy Biotechs Could Make Investors Rich
Published: Oct 23, 2017 By Mark Terry
Immuno-oncology and gene therapy has been a hot field for the last few years, and the approval of the first CAR-T therapies has only set the kindling ablaze. Cory Renauer, writing for The Motley Fool, takes a look at three immuno-oncology companies that are likely to soar in value.
The U.S. Food and Drug Administration (FDA) approved Gilead’s Yescarta (axicatagene ciloleucel, or axi-cel) on Oct. 19. Yescarta was developed by Kite Pharma, which Gilead acquired on Aug. 28 for $11.9 billion.
It’s not completely clear if Yescarta will be able to earn back the $11.9 billion investment. Renauer writes, “New cancer therapies often cost more than $100,000 for a year of treatment, and once you factor in hospitalization expenses for patients who don’t respond, Gilead’s $373,000 list price for a single Yescarta infusion could save end payers a bundle in the long run. Enough patients are eligible for Yescarta that peak annual sales of the therapy could top out around $2 billion if private insurers and other end payers agree with Gilead’s value proposition.”
Even so, the company’s in a good position, with the stock value likely to increase, even if CAR-T becomes mundane. The company’s market cap is 8.1 times the $13.4 billion in free cash flow it’s already generated this last year.
Bluebird is still a clinical-development company with no approved products yet. However, what it has going on in development is exciting. It’s lead candidate is Lenti-D, a gene therapy to treat cerebral adrenoleukodystrophy (CALD). In trials, 15 of 17 CALD patients receiving the treatment had no major disabilities.
The company also has CAR-T compounds in partnership with Celgene.Trials have shown a stunning 100 percent response rate in 15 advanced-stage multiple myeloma patients treated with bb2121. Celgene has licensed bb21217 from Bluebird, which is likely to be even more effective than bb2121. Celgene will pay for mid- to late-stage clinical development, and Bluebird will receive significant milestones and royalty payments if any of them make it to market.
Renauer writes, “Although Lenti-D might not become a blockbuster drug on its own, it could go a long way toward funding development of a similar gene therapy candidate with far more potential. LentiGlobin could be a huge improvement that allows huge swaths of people with sickle-cell disease and beta-thalassemia. Peak sales estimates for the therapy, which allows patients to produce functional hemoglobin, run as high as $4 billion annually, and there’s still more.”
AveXis is a gene-therapy company. On Oct. 3, it indicated it planned to present top-line data as of Aug. 7 from its Phase I trial of AVXS-101 in spinal muscular atrophy (SMA) Type 1 at the 22nd International Annual Congress of the World Muscle Society (WMS) in Saint Malo, France. An overview of the data indicated that all patients were alive and event-free at 20 months of age. Nine of the 12 patients could sit unassisted for 30 seconds or more, and 92 percent had sustained CHOP-INTEND score more than 40 for a mean of 18.8 months.
SMA patients are rarely able to swallow, and most lose the ability to breathe unassisted before they turn one-year-old. Renauer writes, “With results this impressive, Biogen has plenty to worry about. The big biotech launched the first ever SMA treatment at the beginning of the year, and sales of the drug are already on pace to reach $1 billion in its first year. AveXis intends to begin a trial designed to support an application before the end of 2017, which means Spinraza [Biogen’s drug for SMA] sales should be safe for a few more years.”
Renauer notes that if AVXS-101 continues demonstrating positive data, Biogen or some other company might buy AveXis. One drawback for AveXis is that AVXS-101 is pretty much its sole candidate in clinical trials. It has a greater upside potential than Gilead, but if AVXS-101 fails—and it could happen, even though so far results are dazzling—then the company won’t be worth much.