pharma and biotech m&a in gene & cell therapy: what s next ......nov 2015 undisclosed car-t...

Pharma and Biotech M&A in Gene & Cell Therapy: What’s Next in Deal Making in the EmergingAdvanced Therapeutics Space?

Ed Saltzman, Executive ChairmanDefined Health, a Cello Health business

New York Pharma Forum23 May, 2018New York City, NY

2New York Pharm Forum, May 2018© Defined Health, 2018

The information in this report has been obtained from what are believed to be reliable sources and has been verified whenever possible. Nevertheless, we cannot guarantee the information contained herein as to accuracy or completeness. All expressions of opinion are the responsibility of Defined Health, and though current as of the date of this report, are subject to change.

The opinions and information set forth herein are expressed solely for the benefit of the addressee and only for the purpose(s) for which the report was produced. Without the prior written consent of Defined Health, this report may not be relied on in whole or in part for any other purpose or by any other person or entity, provided that this report may be disclosed where disclosure is required by law.

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© Defined Health, 2018


Agenda

Are We On Verge of Next Phase of Therapeutics Platform Evolution?

Can Challenges to Business Model be Surmounted?

How Will Pharma Respond?

Key Takeaways

4

Are We On Verge of Next Phase of Therapeutics Platform Evolution?


Over Past 10 Years a Small Molecule Based Industry Became Biological

0 5,000 10,000 15,000

Seroquel (AstraZeneca)

Herceptin (Roche)

Singulair (Merck & Co)

Rituxan (Roche)

Plavix (Bristol-Myers Squibb)

Zyprexa (Eli Lilly)

Diovan (Novartis)

Nexium (AstraZeneca)

Advair (GlaxoSmithKline)

Lipitor (Pfizer)

EvaluatePharma

0 5,000 10,000 15,000

Lyrica (Pfizer)

Lantus (Sanofi)

Enbrel (Amgen)

Prevnar 13 (Pfizer)

Remicade (J&J)

Avastin (Roche)

Herceptin (Roche)

Rituxan (Roche)

Revlimid (Celgene)

Humira (AbbVie)

Top-Selling Products (WW Sales $M) 2007 vs. 2017(coded by conventional vs. biologics)

2007 2017

Biologic

Conventional


But Therapeutic Platforms Have Been Evolving for >30 Years

Small Molecule Modulators

Protein Augmentation

AntibodiesPeptides and Nucleic Acids

Gene Correction &Augmentation

Cell Therapy & Regenerative Med

• Immune Modulators

• SMIs

• Chaperones

• Substrate Reduction

• Transcription / Translation enhancers

• Epigenetics

• Plasma/tissue derived proteins

• Recombinant Proteins

– Clotting factors– Cytokines– Hormones– Growth factors

• EnzymeReplacement

• Plasma derivedPolyclonal Igs

• Monoclonal antibodies

• mAB fragments

• Scaffolds

• Intrabodies

• ImmuneModulator

• Exon skipping

• Antisense

• RNAi /miRN

• Aptamers/ Ribozyme

• Viral vectors‒ Retro/‒ Lentiviral‒ AdV, AAV

• Non-viral

‒ Plasmids/

‒ Fragments

• Gene editing with Meganucleases‒ Zinc Fingers‒ TALENS‒ CRISPR/Cas9

• Autologous/allo-geneic cell therapy

• Other cells:

‒ e.g. ES, iPS

• Mitochondrial transfer

• Devices‒ Encapsulation‒ Scaffolds‒ Implants‒ Micro-organs‒ Aphaeresis

Phenotypic Genotypic

Increasing Complexity of Therapeutic Interventions

1980s 1990s 2000s

Pla

tfo

rm E

volu

tio

n


Evolution Already in Progress: Over Just the Next Five Years Advanced Therapeutics Revenues Forecast to Grow to $7.7 Bln

0

1

2

3

4

5

6

7

8

9

2016 2017 2018e 2019e 2020e 2021e 2022e

US

Sale

s ($

B)

US Sales of Advanced Therapeutics 2016-2022e ($B)

Gene Therapy

Cell Therapy

EvaluatePharma; Leerink, NIGHTSTAR THERAPEUTICS PLC: Initiating at OP; A White Knight for Retinal Dystrophies, Oct 2017

⧫ Given the unique nature of advanced therapeutics, there is uncertainty as to how the market might grow and mature over the long-term


Novartis Just Cast A Huge Vote of Confidence in Future of Advanced Therapeutics

https://www.reuters.com/article/us-novartis-avexis/novartis-bets-big-on-gene-therapy-with-8-7-billion-avexis-deal-idUSKBN1HG0FT


Gilead and Celgene Also Just Recently Voted Yes With Their Checkbooks

https://www.bloomberg.com/news/articles/2017-08-28/gilead-to-buy-kite-for-11-9-billion-in-cancer-therapy-megadeal; https://www.geekwire.com/2018/juno-therapeutics-acquired-celgene-9b-dramatic-deal-rising-biotech-star/


Advanced Therapeutics M&A Began Only Two Years Ago but Has Just Become Super-Sized

BCIQ

Advanced Therapeutics M&A by Top 20 US Pharma

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

Aug 2016 Jun 2017 Oct 2017 Dec 2017 Jan 2018 Apr 2018

NovartisAveXis$8.7 B

CelgeneJuno$9 B

GileadKite

$11.9 BGilead

Cell Design Labs$467 M

PfizerBamboo$645 M

NovartisGamida$635 M

3 recent major M&A: $29.6 billion


Although A Slow Year for IPOs, 2017 Marked a Spike in Investment in Advanced Therapeutics

⧫ Total global investment in gene and cell therapies about $4.2B in 2017 – Up from $3.3B in 2017

⧫ Does not include $13.5B in acquisitions in 2017 vs. $1B in 2016 (Driven by $11.9B acquisition of Kite by Gilead)

BCIQ Financings Chart

41

9 95

129

14 13

25

18 18

31

24

38

2013 2014 2015 2016 2017

Nu

mb

er o

f Fi

nan

cin

gs

All IPO financings All follow-on financings

All venture financings

Annual Sum of Amount raised by Financing Type

12

How Will Pharma Respond?


Over The Last 30 Years, Gene Therapy Platforms Have Diversified But Big Pharma Remains for Most Part a Small Player With Main Interest Driver Being T-Cell Platforms

⧫ ARM tracks >850 Regenerative Medicines companies (460 US, 234 Europe and 122 Asia, 38 RoW)

Company Websites; Alliance for Regenerative Medicine State of the Industry report 2018; https://alliancerm.org/event/sotibriefing

Adoptive Cellular Immuno-Oncology (IO)

Gene EditingGene AugmentationAAV

AdV

Lenti-Retro

Plasmid

Other

Partners

https://alliancerm.org/event/sotibriefing

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://en.wikipedia.org/wiki/File:Sanofi.svg&ei=aDNKVfneOqPasASH9YCQBg&bvm=bv.92765956,d.cWc&psig=AFQjCNFMPXuD7ZKXF-T5RmOT5lwZWzbiHw&ust=1431012576738297

http://lentigen.com/

http://www.pfizer.com/

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi-oIij_6LLAhXJmR4KHccRCf4QjRwIBw&url=http://medcitynews.com/2015/09/baxalta-shire-google-in-healthcare/&bvm=bv.115339255,d.amc&psig=AFQjCNEOoGKWnDbWqQBulFjkC-xI_jWIHQ&ust=1457042183112868


Cell Therapy Deals and Value Dominated by Oncology, No Other Therapeutic Areas Have Seen “Mega-Deals”

Cell Therapy Deal Timeline 2015-2017

BCIQ, Company website; tpx = therapeutic; SC = stem cells

2015 2016 2017

May 2017Undisclosed

CAR-T

Jun 2017$33M

NK Cell Therapy

Dec 2017$350MCAR-T

Dec 2017$16MCAR-T

Jan 2015$3M

Respiratory distress syndrome SC tpx

Jan 2015Acquisition - $415M

Autologous DCs

Mar 2015$200M

Ischemic stroke SC tpx

Apr 2015$44M

Mesenchymal SCs

Jun 2015UndisclosedCAR-T/TCR

Aug 2015$332M

Diabetes SC tpx

Nov 2015Undisclosed

CAR-T

Jan 2016UndisclosedParkinson’s

disease cell tpx

Apr 2016UndisclosedPluripotent induced SCs

May 2016$40M

Mesenchymal SCs

Jul 2016$438M

Perianal fistula cell tpx

Oct 2016Undisclosed

T Cell Tpx

May 2017$96MCAR-T

May 2017Undisclosed

Immune disorder cell tpx

Aug 2017Acquisition -

$12BCAR-T

Oct 2017UndisclosedUndisclosed

2018

Jan 2018Acquisition -

$9BCAR-T/TCR

Dec 2017$497M

Immune Cell tpx


By Contrast Before Novartis/AveXis, Big Pharma Was an Infrequent and Risk-Adverse Player in Gene Therapy

Platform and Rare Disease Gene Therapy Deal Timeline 2015-2018

BCIQ, Company website

2015

Feb 2015$845M

Parkinson’s Disease

Jan 2015$6M

Hemophilia A&B

Jan 2015$11M

CRISPR platform

Apr 2015$64M

CRISPR platform

Apr 2015$1BCV

2016

Dec 2015$105MRare

diseases

Sep 2015Acquisition -

$845MCV

Aug 2015$53MCV

Aug 2015$124MRare

diseases

Oct 2015$337M

IBD

Oct 2015$105M

AAV tech

2017

Jan 2016UndisclosedRare disease

Jan 2016UndisclosedAAV tech

May 2016UndisclosedAAV tech

Aug 2016Undisclosed

Retinal disease

Apr 2017UndisclosedAAV tech

May 2017UndisclosedRare disease

May 2017$545M

Hemophilia A

Aug 2016$495MRare

diseases

Jan 2017Acquisition -Undisclosed

Gene delivery

Sep 2017Acquisition -

$151MRare disease

Jun 2017Undisclosed

DMD

Nov 2017UndisclosedPromoter

Dec 2017UndisclosedRare disease

2018

Jan 2018$170MRPE65 Retinal

dystrophy

Apr 2018Acquisition

$8.7B

http://www.hsr.it/

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://en.wikipedia.org/wiki/File:Sanofi.svg&ei=aDNKVfneOqPasASH9YCQBg&bvm=bv.92765956,d.cWc&psig=AFQjCNFMPXuD7ZKXF-T5RmOT5lwZWzbiHw&ust=1431012576738297

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjDmK6OiaXLAhWMMj4KHVEtD3UQjRwIBw&url=https://globenewswire.com/news-release/2016/01/08/800495/0/en/Bamboo-Therapeutics-Announces-the-Acquisition-of-the-Vector-Core-Manufacturing-Facility-From-UNC-Chapel-Hill.html&psig=AFQjCNGiMK42k4uKel98gW69EKUQNrgV6g&ust=1457113543298057


Who’s Next? Kite, Juno and AveXis are Far From Only Late Stage Opportunities in Advanced Therapeutics

EvaluatePharma

2016 / 2017 2018 2019 2020

Kymriah (Novartis): ALLYescarta (Gilead): DLBCLStrimvelis (GSK): ADA-SCIDLuxturna (Spark): LCA/RP

Cx601 (TiGenix/Takeda): CrohnsATA129 (Atara): EBV cancersPLX-PAD (Pluristem): PADHabeo (Cytori): SclerodermaECCI-50 (Cytori): UIAVXS-101 (AveXis): SMALenti-D (bluebird): ALD

NeoCart (Histogenics): CartilageJCAR014 (Juno): CLLCMV-CTL (Atara): CMV InfectionsDCCI-10 (Cytori): BurnsMAGE-A10 (Adaptimmune): NSCLCJCAR015 (Juno): ALLJCAR017 (Juno): NHLBPX-501 (Bellicum): GvHDLentiGlobin (bluebird): β-ThalassemiaSPK-7001 (Spark): CHMDTX301 (Dimension): Urea CycleABO-102 (Abeona): MPS IIIAMT-060 (uniQure): Hemophilia BEB-101 (Abeona): EB

LN-144 (Iovance): MelanomaNurOwn (BrainStorm): ALSNK-92 (NantKwest): NE TumorECCO-50 (Cytori): OsteoarthritisMultiStem (Pfizer): StrokeStrataGraft (Mallinckrodt): BurnsAnti-CD19 CAR-T (ZIOPHARM): NHLUCARTCS1 (Cellectis): ALLSPK-8011 (Spark): Hemophilia ABMN-270 (BioMarin): Hemophilia ADTX401 (Dimension): Glycogen StorageVY-AADC01 (Voyager): Parkinson's Ad-RTS-hIL-12 (Ziopharm): Breast CancerAT132 (Audentes): Myotubular MyopathyAT342 (Audentes): Crigler-Najjar AAV-CNGB3 (AGTC): ACHMSAR422459 (Sanofi): StargardtPexa-Vec (Transgene): HepatomaSPK-TPP1 (Spark): Batten

Recent And Expected Upcoming US/EU Approvals


Strategic Fork in Road

Presentermedia.com

⧫ Pharma’s Strategic Interest/Approach to Date in Advanced Therapeutics Differs:

• As Part of Therapeutic Strategy in Broader Oncology

• As Platform Strategy for Expansion in Monogenic/Rare Diseases

• Only Novartis pursuing both

• Pfizer now more committed to gene therapeutics for rare diseases than T-Cell platforms (e.g. Allogenedeal as “exit” for Pfizer)

⧫ Majority of companies still watching from sidelines

• Less or no interest in Rare Diseases

• Unwilling to take on business model challenges especially in autologous T-cell therapies


First Gen CAR-T Programs Have Significant Safety, Manufacturing and Commercialization Challenges: But Valuations Suggest At Least Some Pharmas Are Undeterred

Novartis


Limited Access to Patients (both Reimbursement and Treatment Center Throughput) Creating a Long Waiting List Warrants Development of Broadly Accessible “Off-the-Shelf” Solutions

⧫ Individualized treatments have significant challenges to overcome if they are to ever become broadly available:

• Manufacturing is laborious and takes several weeks until it is ready for patient dosing.

• COGS are exorbitant (raw materials including lentiviral vectors, cell processing and skilled labor)

• High cost (Kymriah is $475,000 and Yescarta is $373,000 for a one-time treatment)

• Need for skilled hem/oncs physicians to collect cells and treat patients

• Only tertiary care centers equipped to deal with potential AEs such as CRS

• Reimbursement and risk sharing strategies still work in progress. Limited number of eligible patients have been treated with approved CARTs, since launch.

https://www.technologyreview.com/s/609890/gene-therapy-could-make-cancer-care-more-unequal-and-this-map-shows-why/

(Current Kymriah sites are red; current Yescarta sites are blue; sites where both therapies are available are green; and planned Kymriah sites are orange.)

Although allogeneic and universally available ACT products are as yet moving slowly in very early stages, the market expects that such late entrants will provide competitive advancements in COGs, availability and convenience.


Validation/Enthusiasm of IO Cell Therapy in Heme Malignancies, but Massive Valuation Hinges on Ability to Demonstrate Efficacy Against Solid Tumors

⧫ Whereas there are an equivalent number of IO cell therapy programs in Phase 2 clinical development for both solid and hememalignancies, there are a much higher proportion of early-stage clinical trials and preclinical programs in the solid tumor space

⧫ This likely reflects the fact that, while striking initial PoC has been demonstrated for anti-CD19 CARTs in ALL, especially now with approval of Novartis’ Kymriah, and Kite’s Yescarta in DLBCL, the massive valuations for IO cell therapy companies largely hinges on the ability of these technologies to address broader solid tumor markets

Clinicaltrials.gov, Adis R&D, Clarivate Analytics Cortellis, FiercePharma, Gilead press release


While CARTs Enter or Approach Market, Majority of Gene Therapy Programs Remain In Early Clinical Phases

http://www.abedia.com/wiley - Gene Therapy Clinical Trials Worldwide, Provided by the Journal of Gene Medicine

Phases of Gene Therapy Clinical Trials


But Path to Approval May be Rapid

http://investors.avexis.com/phoenix.zhtml?c=254285&p=irol-newsArticle&ID=2254564


As Many Therapies Carry RMAT Designation

https://smanewstoday.com/2018/01/08/fda-gives-avexis-the-lowdown-on-approving-its-therapy-for-sma-type-1

January 8, 2018


Creation Of FDA Office Of Tissues And Advanced Therapies (OTAT) And RMAT Designation Expediting Review Of Advanced Therapeutics

⧫ Created in 2016, the Regenerative Medicine Advanced Therapy (RMAT) designation was established under the 21st Century Cures Act to help reduce development times in the field of regenerative medicine

FDA, Federal Register, BCIQ

⧫ Regenerative medicine therapies are defined as:

• Cell therapy

• Tissue engineering product

• Human cell/tissue product

• Any combination product using the above

⧫ RMAT designation given to drugs intended to cure serious/life-threatening conditions where preliminary clinical data suggests the potential to address an unmet need

• Requested with new IND or as an amendment to an existing IND

• The agency has 60 days to review the request for RMAT designation

⧫ Analogous to breakthrough therapy designation

• More frequent FDA interactions

• Include fast track features

⧫ Must apply separately for accelerated approval or priority review

⧫ The RMAT designation gives the sponsor of a new drug access to:

• Increased meeting opportunities with FDA, in a manner comparable to those offered to sponsors of breakthrough-designated therapies

• Type B development meetings are normally restricted to one each at pre-IND, end of Phase II/pre-Phase III and pre-BLA submission

• Priority review reduces the BLA assessment from 10 months to 6 months

• Accelerated approval, which bases approval on an effect on a predictive surrogate endpoint or an intermediate clinical endpoint. May require post-approval clinical studies as well as real-world data such as patient registries and health record analysis

• Option to qualify for fast-track approval allows for “rolling review” of the BLA, which can be submitted for assessment following agreement of a review timetable with CBER

RMAT designation given to drugs intended to cure serious/life-threatening conditions where preliminary clinical data suggests the potential to address an unmet need


Gene Tx Field Crosses All Therapeutic Areas But Two-Thirds of Programs are In Oncology

http://www.abedia.com/wiley - Gene Therapy Clinical Trials Worldwide, Provided by the Journal of Gene Medicine

Indications Addressed by Gene Therapy Clinical Trials


But Majority of Pharmas Not Yet Bought Into Gene Therapy Approaches to Cancer, Even for P3 Programs

⧫ Does obsession with T-cell directed therapies lead to less or no interest in gene based approaches to Immuno-Oncology?

https://tocagen.com/wp-content/uploads/pipeline-10-25-17.pdf; Yahoo Finance (stock chart), Market Cap as of 20-May-2018

Market Cap: $187.97M

Readout expected end of 2019


Though Much Smaller Percentage of Inventory, Gene Therapies for Rare Monogenic Disorders Have Garnered the Most Attention From Both Pharma and Investors

Yahoo Finance; Market Cap as of 20-May-2018

Market Cap: $2.86 MBMarket Cap: $9.21 B


While Oncology Players Can Probably Safely Sit on Sidelines and Wait for Data, Inactivity in Gene Therapy By Ophthalmology, Hemophilia and IEM Companies May Carry Threat of Therapeutic Franchise Obsolescence

Ophthalmology Hemophilia Inborn Errors of Mechanism (IEM)


Approximately 75 Products Are In Development For One Or More Inherited Retinal Dystrophies, With Gene Therapies the Leading Approach

Adis R&D Insight; Clarivate Analytics Cortellis; DH Analysis; *products may be in development for more than one indication

⧫ Retinitis Pigmentosa (RP) and Leber’s Congenital Amaurosis (LCA) Gene/cell therapy pipeline is competitive; but market is fragmented with numerous patient segments

⧫ The eye is an ideal organ for gene-replacement therapy given its accessibility, immune privilege, small size and compartmentalization

⧫ Clinical studies have already shown that in vivo gene addition approaches can benefit specific groups of RP patients (e.g., RPE65 for patients with LCA Gene editing approaches are also being developed with PoC studies focused on LCA patients with mutations in CEP290, a gene too large to address with AAV vectors)

Gene therapy, 38

Small molecule, 17

Other biologic, 12

Cell therapy,

9

# Products by Type

58

10 83

0

10

20

30

40

50

60

70

RP LCA Usher Syndrome Other IRD

# Products by Indication*


Spark Therapeutics' Luxturna, Indicated For Biallelic RPE65-mediated IRDs, First FDA Approved In-vivo Gene Addition Therapy Approved by the FDA

⧫ In the pivotal trial, Luxturna showed statistically significant and clinically meaningful improvement following:

• Primary endpoint of mean bilateral MLMT change score (patients’ ability to navigate a mobility course under a variety of specified light levels)

• Gain in functional vision based on MLMT in 93% (27/29) with 72% achieving maximum improvement (to 1 lux) – no product‐related SAEs observed

• 3‐year data (n=20) and 4‐year data (n=4) from Phase 3 add evidence to durability of effect; no statistically significant signs of a waning of therapeutic effect

• Met two of three secondary endpoints

• There were no drug-related serious adverse events observed and no deleterious immune responses

http://ir.sparktx.com/static-files/eb8d4229-6ab2-48b9-9d0e-c1b1d604caf7; https://www.genengnews.com/gen-news-highlights/fda-advisory-panel-unanimously-recommends-approval-of-spark-therapeutics-gene-therapy-luxturna/81255043

⧫ The FDA’s Advisory Committee voted 16 to 0 to recommend approval of Luxturna (Priority Review PDUFA date of Jan 12, 2018)

⧫ Luxturna is indicated as a one-time gene therapy for the treatment of patients with vision loss due to confirmed biallelic RPE65-mediated inherited retinal dystrophies.

http://ir.sparktx.com/static-files/eb8d4229-6ab2-48b9-9d0e-c1b1d604caf7

https://www.genengnews.com/gen-news-highlights/fda-advisory-panel-unanimously-recommends-approval-of-spark-therapeutics-gene-therapy-luxturna/81255043


Substantial Competition Between Advanced Therapeutics Platforms for Both Hemophilia A & B

autologous stem cell therapy(University of California Davis)

enzyme/protein replacement therapy

(Immusoft)

Factor VIII gene restoration therapy

(ToolGen/Seoul National Univ/K-STEMCELL)

genetically engineered cell strains

(Sernova Corp)

hematopoietic Factor VIII gene therapy

(Discovery Genomics/Univ. of Minnesota)

LG 889(Opus Bio/Expression/

Emory)BAX 888(Shire/Baxalta)

BMN 270(BioMarin/UCL/

St Jude)

DTX 201(Dimension/Bayer)

Factor VIII gene therapy(Sangamo BioSciences)

GREF8(Greffex)

hemophilia A gene therapy(uniQure)

SPK8011(Spark Therapeutics)

SB-FVIII(Sangamo BioSciences)

2bFVIII gene therapy(Medical College of Wisconsin)

hemophilia A/B gene therapy(Biogen/TIGET)

Retroductal gene delivery systems

(Genteric Inc,)

Cell therapy, ex vivo, autologous

Gene therapy, in vivo, AAV

Gene therapy, in vivo,

gene editing

Gene therapy, in vivo, lentiviral

Gene therapy, other

Adis Insight; Thomson Reuters Cortellis

Preclinical

Phase 1

Phase 2

Phase 3

Marketed


Hemophilia A, In Particular, May be Battleground for Multiple Competing Therapeutic Platforms: Factor VIII Case

⧫ Bispecific Antibodies: Although questions remain about the long-term safety and durability of Roche/Chugai’s bispecific FIXa/X antibody, ACE910 has the potential to change the management of inhibitors in the near term and could disrupt the broader hemophilia A landscape in the long term if proven to be as effective as Factor VIII replacement in the on-demand and prophylaxis treatment settings

⧫ RNAi Agents: Alnylam’s ALN-AT3 (fitusiran), an RNAi agent designed to knock down antithrombin showed promising efficacy, safety and tolerability Phase 1b data at WFH 2016

⧫ Gene Therapy: Several gene therapies for Hemophilia A are in development (Spark/Pfizer, UniQure, Dimension/Bayer, BioMarin, and Shire). BioMarin reported encouraging data from a cohort of eight hemophilia A patients dosed with AAV5-based gene therapy BMN 270 in April 2016

Evaluate Pharma (Obizur and Nuwiq sales are captured in the “Other” category)

♦ Global sales of FVIII drugs are projected to grow from ~$8.7B to $11B over the next 5 years

♦ Long-acting products are expected to drive growth but disruptive innovation could change the future landscape


• Sangamo’s IND application for ZFP Therapeutic (SB FIX) for hemophilia B and (SB-525) for hemophilia A was approved by the FDA

• The two hemophilia programs are the first in a platform of IVPRP assets that use intravenous AAV-delivered ZFP/ZFNs to target the albumin locus and drive permanent expression of therapeutic proteins for a wide range of deficiency diseases, including the hemophilias, LSDs and other metabolic diseases

Further Disruption Potential in Hemophilia: In-vivo Gene Editing Already In The Clinic

http://investor.sangamo.com/releases.cfm


Disruption in Commercial Markets for Enzyme Replacements: Gene Therapy Approaches Also Advancing in Clinic

http://www.avrobio.com/pipeline/


A Big Pharma’s Commitment to Rare Disease May be a “Marker” for Next Up Gene Therapy Acquirers

EvaluatePharma; includes preclinical-marketed assets full portfolio for percent rare disease calculation

Rare Disease Portfolio (excl. oncology) of the Top 10 Pharma Companiesby Source of Program & % of Portfolio

Top 10 Pharma Companies External Source(M&A, Licensing, Product Acq.)

Internal Source(Organic)

% of Overall Portfolio

Pfizer 33 11 7.6%

Novartis 22 24 9.9%

Roche 18 7 8.3%

Merck & Co 14 3 4.7%

Johnson & Johnson 15 5 5.1%

Sanofi 37 5 9.3%

GlaxoSmithKline 25 5 7.3%

AbbVie 7 4.5%

Gilead Sciences 6 1 7.1%

Amgen 8 2 8.1%


EvaluatePharma; includes preclinical-marketed assets full portfolio for percent rare disease calculation

Rare Disease Portfolio (excl. oncology) of the Top 10 Japanese Pharma Companiesby Source of Program & % of Portfolio

Top 10 Japanese Pharma Companies

External Source(M&A, Licensing, Product Acq.)

Internal Source(Organic)

% of Overall Portfolio

Takeda 13 4 5.4%

Astellas Pharma 9 3 5.4%

Daiichi Sankyo 4 2 2.8%

Otsuka Holdings 2 1.3%

Eisai 10 5.4%

Chugai Pharmaceutical 2 5 8.4%

Sumitomo Dainippon Pharma 8 1 6.8%

Mitsubishi Tanabe Pharma 4 2 4.4%

Kyowa Hakko Kirin 6 2 7.9%

Ono Pharmaceutical 1 1 2.8%

Japanese Pharmas Show Clear Differences in Commitment to Rare Disease


Allogene Deal Sees Pfizer Exit From CART and Become Passive Investor Instead

https://www.pfizer.com/news/press-release/press-release-detail/pfizer_and_allogene_therapeutics_enter_into_asset_contribution_agreement_for_pfizer_s_allogeneic_car_t_immuno_oncology_portfolio


But With Rare Disease Set Forth as Clear Priority, Pfizer Will Very Likely be Shopping for Gene Therapies

https://www.pfizer.com/health-wellness/disease-conditions/rare-disease

39

Can Challenges to Business Model be Surmounted?


While All Therapeutic Platforms Face Increasing Pressure on TPPs; Advanced Therapeutics Programs Encounter Unique Challenges, Especially to Business Model

⧫ Biology more tractable but risk still associated with clinical translation

• Scale-up, delivery, stability, immunogenicity

• Safety – e.g. anaphylaxis, insertional mutagenesis, cytokine storm

⧫ More favorable regulatory environment

• However, innovative clinical endpoints necessary

⧫ Does not fit nicely into pharma scalability model

• Complicated IP and stacking royalties

• Individualized vs. one-size fits all

• Involves devices and process

⧫ Manufacturing: Reproducibility, scalability, high cost of goods

⧫ Market access: Value-based pricing in different payer systems

• Degree of improvement – restore to normal or somewhere in between?

• Durability – short effect of long term cure?

⧫ Bioethics: Boundaries of use, testing in vulnerable populations

AdvancedTherapeutics

Dis

rup

tive

Tech

no

logi

es

Biological / PathophysiologyUnderstanding

UNMETNEEDS

Defined ClinicalEndpoints

Commercial MarketBuilding

Reimbursement

Market AccessRegulatory

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Medicine


Pricing And Market Access For Gene & Cell Therapies

Brand Company Indication Price Comments

GlyberaUniQure/

Chiesi

Lipoprotein lipase deficiency patients who have acute and chronic pancreatitis attacks

$1M+

• First gene therapy approved in Europe; however, none of the price setting markets provided access. HTA groups in Germany and France concluded that the benefit is insufficient to justify reimbursement.

• UniQure decided not to renew marketing authorization in Europe and abandoned plans for commercialization in the US

Strimvelis GSKADA-SCID or “bubble boy syndrome”

$714,000(£594,000)

• Extremely rare condition affecting ~15 patients per year in Europe• Faced reimbursement and payment hurdles - despite the money back

guarantee and pay-for-performance pricing model, GSK struggled to make Strimvelis a commercial success

Kymriah NovartisB-cell precursor ALL for patients <25 years $475,000

• First CAR-T therapy approved in the US• Outcomes-based reimbursement model - full payment only if the patients

respond to therapy 30 days after initiating treatment

YescartaGilead/

Kite PharmaRelapsed/refractory large B-cell lymphoma, including DLBCL $373,000

• 2nd CAR-T therapy approved in the US for a much larger patient population• Has a boxed warning for cytokine release syndrome (CRS) and neurologic

toxicities, thus part of a REMS program• CMS & some private insurers lack billing codes for CAR-T treatments; Yescarta

reimbursement situation still being worked out with CMS and private insurers

Luxturna csConfirmed biallelic RPE65 mutation-associated retinal dystrophy

$850,000 or $425,000/eye

• Three innovative programs to improve access:1) Outcomes-based rebate linked to short- and long-term efficacy; 2)

Installment payment option negotiated with CMS with greater rebates tied to clinical outcomes; 3) Agreement with commercial payers for alternative contracting to “buy and bill”

• Favorable for US launch anticipated based on these programs


Usually “One- Off” treatments

Limited follow up duration at time of reimbursement dossier submission

Gene and Cell Therapies

Promising long-term benefits

Strong uncertainty on sustainability of effects

Pharma and biotech companies communicating to financial investors prices based on multiples of expensive drugs for chronic therapies – unlikely to be accepted by payers

Pharma and biotech companies suggesting annuity programs – may be impossible currently from a practical point of view in most health systems

Emerging Advanced Therapeutics are Likely to be Associated with Significant Payer Value Uncertainty

© Therapeutic Challenges Analysis, 2016 , Compass Strategic Consultants


Luxturna Launched At $850K With Payment Linked To Both Short-term Efficacy (30-90 Days) And Longer-Term Durability (30 Months) Measures

“We believe that access to therapy is a shared responsibility among Spark Therapeutics, payers, health benefit providers, physicians and treatment centers. We have been working with stakeholders across the health care sector to help ensure that appropriate patients have access to a product that challenges all of the current conventions of how patients are treated, how products are delivered and how payments are handled.”

Jeffrey D. Marrazzo, CEO of Spark Therapeutics

http://sparktx.com/investors-media/media/; https://www.fiercepharma.com/pharma/spark-prices-gene-therapy-luxturna-at-850k-grabbing-top-spot-pharma-s-costliest-drugs

Spark sets off gene therapy debate with $850K sticker on Luxturna There's a new medicine atop of pharma's global pricing charts, and it's Spark Therapeutics' Luxturna. After winning FDA approval in December, the company said Wednesday its gene therapy will cost $850,000, or $425,000 per eye before discounts.

To soften the blow, Spark is introducing outcomes-based deals with Harvard Pilgrim and Express Scripts affiliates—and it's in talks for more. Under those arrangements, the company won't collect full payment if its superpricey drug doesn't work. The company is alsoworking on a proposal with the CMS that would allow payments over multiple years.

Luxturna treats a rare inherited disease that can lead to blindness and works by delivering a gene called RPE65 into a patient's retinal cells, which then produce a protein to restore vision loss. While $850,000 is a staggering figure on its face, the price actually came in lower than a $1 million estimate by Wall Street analysts. Before the launch, Spark CEO Jeffrey D. Marrazzo said the one-time treatment offers "a value in excess" of $1 million. In a statement Wednesday, Marrazzo said his company believes "access to therapy is a shared responsibility among Spark Therapeutics, payers, health benefit providers, physicians and treatment centers.“ To that end, the company has "been working with stakeholders across the health care sector to help ensure that appropriate patients have access to a product that challenges all of the current conventions of how patients are treated, how products are delivered and how payments are handled," the helmsman said. But even though Evercore ISI analyst Steve Breazzano said the price came in "generally within expectations," the company quickly ran into criticism from patient advocates. "Spark Therapeutics is charging as much for Luxturna as they think they can get away with," Patients for Affordable Drugs president David Mitchell said in a statement shortly after theannouncement. "Our system cannot handle unjustified prices like this, and the new payment models announced today are merely away to disguise a price that is simply too high."

Breazzano said Spark is "clearly focused on moving away from this one-time upfront payment to an annuity-like model with payments over multiple years." But for now, those efforts are in early stages, according to the analyst.

How does Luxturna's price compare to some of pharma's other superpricey drugs? The first year of Biogen's Spinraza costs $750,000—the med is $375,000 for subsequent years—while BioMarin's Brineura, approved last year, costs $702,000 before discounts. Both are recurring treatments versus the one-time nature of Luxturna. UniQure's Glybera, now discontinued, cost $1.2 million in Europe, but its commercial use was limited and the drugmaker opted to stop pouring resources into marketing the drug. Spark's gene therapy approval followed FDA clearance of CAR-T cell therapies from Novartis in August and Gilead in October. Novartis also has an outcomes-based contract on its Kymriah, which costs $475,000 to treat a rare form of acute lymphoblastic leukemia. Both drugmakers plan to expand the technology into other uses.

To soften the blow, Spark is introducing outcomes-based deals with Harvard Pilgrim and Express Scripts affiliates—and it's in talks for more. Under those arrangements, the company won't collect full payment if its super-pricey drug doesn't work. The company is also working on a proposal with the CMS that would allow payments over multiple years.

Breazzano said Spark is "clearly focused on moving away from this one-time upfront payment to an annuity-like model with payments over multiple years." But for now, those efforts are in early stages, according to the analyst.

http://sparktx.com/investors-media/media/

https://www.fiercepharma.com/pharma/spark-prices-gene-therapy-luxturna-at-850k-grabbing-top-spot-pharma-s-costliest-drugs


ICER Releases Its Evidence Report On Luxturna For Public Comment

https://www.statnews.com/2018/01/12/price-gene-therapy-childhood-blindess/?utm_source=STAT+Newsletters&utm_campaign=3098c86d3c-Daily_Recap&utm_medium=email&utm_term=0_8cab1d7961-3098c86d3c-149648341

At $850,000, price for new childhood blindness gene therapy four times too high, analysis saysThe $850,000 list price for a new medicine that treats a genetic form of childhood blindness is about four times too high for the value the drug provides, a nonprofit that studies the cost-effectiveness of new drugs said Friday, though it added that the price of the drug is cost-effective for select patients and with certain assumptions. The report from the Institute for Clinical and Economic Review focused on the medicine Luxturna, the first-of-its-kind gene therapy approved for the U.S. market and the most expensive medicine by list price. It is the latest flashpoint in the debate over how to afford an innovative medicine — in this case, a therapy that corrects a genetic mutation in people’s cells — that carries, and in some views, deserves, a pricey list cost.

In its report, ICER said a cost-effective price for Luxturna would be $153,000 to $217,000 — a discount of 75 percent or more. ICER cited a lack of data that Luxturna causes permanent improvements in vision as a key reason that its developer, Spark Therapeutics, should not be charging so much. ICER reached its suggested list price for Luxturna by assuming that a 15-year-old person (the average age of the patients enrolled in the clinical trials) would experience improvements for a decade or two and taking into account the benefits to the health care system. It added that when it also took into account the benefits related to education, caregiver burdens, and productivity, the drug’s list price should still be cut in half. ICER, however, did say that the drug’s list price met its standards for “cost-effectiveness thresholds” when it analyzed treating 3-year-old patients. In that case, it took into account both medical and societal benefits, and assumed the vision improvements would last for the patients’ whole lives.

Ahead of Spark’s pricing announcement earlier this month, some analysts forecasted the price could reach $1 million. Between the list price coming in under those expectations and the reimbursement arrangements the company struck, some experts credited Spark withcrafting a thoughtful payment plan and picking a price that was in the range of other medicines that pushed the boundaries of what past therapies could do. The Food and Drug Administration approved Luxturna in December to treat people with a rare and progressive retinal disease caused by a mutation in the RPE65 gene. People with the mutation can eventually go completely blind. The pricing of gene therapies like Luxturna has been closely watched, and raised a fascinating question: How much are we willing to pay for a cure?

While Luxturna is a one-time therapy, it does not “cure” people born with mutated RPE65 genes; instead, it is meant to stop disease progression and restore some visual strength. But other gene therapies in pipelines could, by replacing faulty genes with functional ones, actually amount to cures. If they are able to reverse or prevent disease — and avoid all the future medical costs that accompany long-lasting conditions — how much is fair for the drug makers to recoup? Spark has said it is negotiating deals with health plans to repay them should patients not be successfully treated. It is also discussing allowing insurers to pay for the therapy over several years instead of all at once.

“While the evidence is clear the therapy improves vision for patients over several years, the long-term duration of this benefit remains unknown,” Dr. David Rind, ICER’s chief medical officer, said in a statement. “Assuming a 10- to 20-year period of benefit, at list price the treatment does not meet standard cost-effectiveness thresholds, even after accounting for the broader societal benefits improved vision has on productivity and education costs.”

https://www.statnews.com/2018/01/12/price-gene-therapy-childhood-blindess/?utm_source=STAT+Newsletters&utm_campaign=3098c86d3c-Daily_Recap&utm_medium=email&utm_term=0_8cab1d7961-3098c86d3c-149648341


ICER Final Report: Broader Benefits of Voretigene Neparvovec to Affected Individuals and Society Provide Reasonable Long-Term Value Despite High Price

BOSTON, February 14, 2018-The Institute for Clinical and Economic Review (ICER) today released a Final Evidence Report and Report-at-a-Glance on voretigene neparvovec (VN; Luxturna™, Spark Therapeutics) for treatment of vision loss associated with RPE65-mediated retinal disease. Approved in 2017, VN is the first treatment for this condition.

ICER's report was reviewed at a public meeting of the Midwest Comparative Effectiveness Public Advisory Council (Midwest CEPAC), where the Council unanimously voted that the therapy provides a net health benefit to those affected by RPE65-mediated retinal disease. Results of votes on value were mixed, with the majority of the members voting that VN provided intermediate long-term value for money. Uncertainty remains around the long-term effectiveness of the therapy, and ICER's analyses found cost-effectiveness to far exceed commonly accepted thresholds; however, the therapy's role as the only treatment option available for an ultra-rare condition, and as the first therapy approved in the US targeting a disease caused by mutations in a specific gene, created special considerations that weighed heavily in many Council members' votes.

"Voretigene neparvovec has a very high cost, and the long-term durability of its effect is uncertain. However, this is an effective treatment that gives people with a serious, ultra-rare condition a treatment option where they previously had none," noted David Rind, MD, MSc. "Payers and other policymakers must strike a difficult balance in judging the value of this therapy, recognizing the treatment's broader benefits to affected individuals and society while simultaneously working to maintain health insurance affordability. As an increasing number of therapies for ultra-rare conditions enter the market, stakeholders must collaborate to develop new approaches to pricing and payment that can reward innovation while preserving access to high-value care for all patients."

Policy Recommendations

Following the voting session during the Midwest CEPAC meeting, a policy roundtable of experts, including a physician, an individual who had received treatment with voretigene, a former commissioner of rehabilitative services who also has retinal disease, and pharmacy benefit manager representatives convened to discuss the implications of the evidence for policy and practice.

https://icer-review.org/material/voretigene-final-report/?utm_source=VN+final+report&utm_campaign=TD+Evidence+Report&utm_medium=email

Key recommendations from the roundtable discussion include:• Manufacturers should reach out to public and private payers ahead of FDA approval to negotiate

innovative pricing and reimbursement strategies for high-cost therapies like VN that are delivered once but offer potentially long-term benefits. Spark Therapeutics' development of reimbursement strategies for VN should be considered as potential best practice by other manufacturers of high cost therapies for ultra-rare conditions.

• The CMS should take steps to permit private payers to use innovative payment mechanisms without triggering Medicaid Best Price constraints.

• Clinical societies, patient groups, and the manufacturer of VN should work to educate all optometrists and ophthalmologists about RPE65-mediated retinal diseases and develop referral networks to facilitate rapid diagnosis.

• Payers and the manufacturer should collaborate with retinal specialists to develop policies that promote appropriate access to genetic testing for individuals at high-risk of treatable genetic retinal diseases.

https://icer-review.org/material/voretigene-final-report/?utm_source=VN+final+report&utm_campaign=TD+Evidence+Report&utm_medium=email


Proving Durable Benefit May Be Relatively More Critical in Ophthalmology Than in Rapidly Fatal Diseases (Such as SMA): Nightstar Example

Nightstar Therapeutics, Corporate Overview May 2018


Unlike Luxturna, AveXis 101 Has a Drug Pricing “Precedent” in Spinraza

CureSMA; UpToDate.com; https://www.spinraza-hcp.com/en_us/home/about/mechanism-of-action.html

⧫ Spinraza (nusinersen) is an antisense oligonucleotide that is designed to increase expression of the SMN protein, which is deficient in SMA

⧫ Spinraza is administered by intrathecal injection; each dose is 12 mg per 5 mL supplied in a single vial

• Initiated with four loading doses; the first three loading doses are given at 14 day intervals, while the fourth loading dose is given 30 days after the third; Thereafter, a maintenance dose is given once every 4 months

⧫ The cost of each dose is listed as $125,000

⧫ FDA approval was based mainly upon an interim analysis of the multicenter, double-blind, unpublished ENDEAR trial

• Enrolled infants with SMA who were <7 months of age were randomly assigned to intrathecal nusinersen or sham treatment

• In an interim analysis of 82 eligible patients, improvement in motor milestones (eg, head control, sitting, kicking in supine position, rolling, crawling, standing, and walking) as measured by the Hammersmith Infant Neurological Examination (HINE) was observed in 40 percent of patients treated with nusinersen, versus none for those who received the sham procedure

• In addition, the FDA noted that data from uncontrolled, open label studies evaluating nusinersen for symptomatic patients (ages 30 days to 15 years) and presymptomatic patients (ages 8 to 42 days) were supportive of the clinical benefit as was seen in the ENDEAR trial


Spinraza Discussion Quickly Turned From Breakthrough Therapy To Value And Access Debate


Although Spinraza Has The Potential To Change The Course Of SMA, A Number Of Ethical Challenges Revolve Around Its Use

Spinal Muscular Atrophy Researchers Identify Spinraza Ethical ChallengesIn an article in the journal JAMA Pediatrics, they maintained that the healthcare system needs to address six issues to ensure that SMA patients “benefit from treatment, are protected from harm, and are treated fairly.” The title of the piece is “Ethical Challenges Confronted When Providing Nusinersen Treatment for Spinal Muscular Atrophy,” The group, led by Dr. Alyssa M. Burgart of Stanford University, said the biggest challenge is cost.

Spinraza’s pricetag is $750,000 the first year, and $375,000 each year thereafter. A cost that hefty can make insurers reluctant to cover the treatment, the group said. It also creates the possibility of hospitals bearing partial or full costs if an insurer refuses to reimburse them. In fact, this is a major reason why some hospitals are not offering Spinraza (nusinersen) treatments, the team wrote.

A second ethical challenge is the possibility that people with similar levels of disease severity will receive different treatments because of cost. This generates “concerns for the just distribution of healthcare,” the scientists wrote. While unequal health insurance coverage is an inherent flaw of the U.S. healthcare system, Spinraza’s enormous cost makes the problem particularly daunting. Healthcare insurers and hospitals are not the only ones bearing the cost burden, the team wrote. The lifelong cost of the therapy may force families to opt out of treatment or become impoverished.

The third ethical challenge is dealing with limited information on Spinraza’s long-term effectiveness. Since Spinraza trials involved small patient samples and were relatively short term, the verdict is out on whether most patients will benefit long term. It is also not clear if the improvements seen in the trials will translate into improvements in muscle strength and function when doctors treat patients. While patients and their families may be prepared to accept these uncertainties, health insurers may not be. This may lead to situations in which insurers approve a treatment only if patients can prove with arbitrarily determined measurements that it is effective. Limited access to such testing may further disadvantage a patient, the team argued. In addition, there is no agreement on what a treatment benefit is. This has a bearing on a third ethical issue — informed consent. If a treatment is failing to provide benefits, a doctor may decide that it should be dropped. Since there is no consensus on what a treatment benefit is, patients, families and physicians may find themselves holding differing views on the issue. The best way to deal with this is to discuss it before a patient starts treatment, the team contended. “Although these complex discussions occur at the bedside, institutions should ensure that clinicians [doctors] and patients have the support they need while facing prognostic uncertainty,” they wrote.

The fourth ethical challenge is how to allocate treatment. Granting access to everyone who is eligible will likely lead to treatment delays. The question is: Who gets treatment first. As an example, doctors may need to use special procedures to administer a spinal tap drug, including sedating a patient and having them hospitalized afterward. Researchers agree that Spinraza should be started as soon as possible. Logistical obstacles could cause delays that make it less effective. Since drug administration resources are limited, hospitals may need to come up with ways to decide who gets priority access to treatment. These could include allocation criteria, case by case circumstances, or even lotteries. Each method has pros and cons in terms of fairness and other considerations.

Availability of treatment centers, which also affects therapy allocation, is the fifth ethical challenge revolving around Spinraza. While it is possible to open more centers with the expertise to administer Spinraza, this solution is also linked to cost. Some centers may choose not to offer Spinraza or to develop the expertise needed to administer it, leaving just a few centers to tackle patients’ needs. “Such a system may increase overall wait times and strain the participating centers in an unsustainable and unfair fashion,” the team argued. “Patients who live far from a participating center may not have the resources or clinical stability to travel, creating further disequilibrium of justice.”

The sixth ethical challenge is ensuring transparent communication between patients, families, doctors and others in the SMA community about these issues. On the one hand, patients and families need reliable information about a medical center’s care processes to make treatment decisions. This means the centers need to be up-front about how they allocate resources. The transparency will help patients obtain Spinraza at a center that offers the most advantages for their situation. “As we pass through the initiation phase of nusinersen treatment among prevalent and newly diagnosed patients, pressure must be applied to reduce the cost and its effect on access, learn more details of medication benefit and safety, and examine different ways to initiate treatment and manage clinical workflows for this therapy,” the researchers concluded.

https://smanewstoday.com/2017/12/20/spinal-muscular-atrophy-researchers-shine-spotlight-on-spinraza-ethical-challenges/

Availability of treatment centers, which also affects therapy allocation, is the fifth ethical challenge revolving around Spinraza. While it is possible to open more centers with the expertise to administer Spinraza, this solution is also linked to cost. Some centers may choose not to offer Spinraza or to develop the expertise needed to administer it, leaving just a few centers to tackle patients’ needs. “Such a system may increase overall wait times and strain the participating centers in an unsustainable and unfair fashion,” the team argued. “Patients who live far from a participating center may not have the resources or clinical stability to travel, creating further disequilibrium

https://smanewstoday.com/2017/12/20/spinal-muscular-atrophy-researchers-shine-spotlight-on-spinraza-ethical-challenges/


Recent Published Results On AVXS-101, An AAV9-Based Gene Therapy, Signify Potential To Offer Patients A One-Time Durable Treatment For SMA Type 1 And Possibly Broader Subtypes

⧫ AveXis presented a positive interim analysis of data from 15 SMA Type 1 patients in its ongoing Phase 1 safety trial of AVXS-101, a one-time, intravenous AAV9 based gene therapy carrying SMN complementary DNA encoding the missing SMN protein

⧫ AVXS-101 was safe and tolerable. Elevated serum aminotransferase levels occurred in 4 patients and were attenuated by prednisolone

⧫ Efficacy endpoints:

• time until death or need for permanent ventilatory assistance

• Comparison of CHOP INTEND scale of motor function (0 to 64)

• Motor milestones in the high-dose cohort with scores in studies of the natural history of the disease (historical cohorts)

ASGCT; AveXis website; J. Mendell http://www.nejm.org/doi/full/10.1056/NEJMoa1706198

⧫ As of data cutoff, all 15 patients were alive and event-free at 20 months, compared with survival rate of 8% in a historical cohort

⧫ Of the 12 patients who had received the high dose:

• a rapid increase from baseline in CHOP INTEND score followed gene delivery, with an increase of 9.8 points at 1 month and 15.4 points at 3 months, as compared with a decline in a historical cohort

• 11 sat unassisted, 9 rolled over, 11 fed orally and could speak, and 2 walked independently


The Ultimate Business Model Puzzle: Given The Unique Nature Of Advanced Therapeutics, There Is Uncertainty As To How New Revenue Stage Companies Can Succeed Over the Long Term

⧫ For any particular advanced therapeutics player, especially those with potentially curative therapies, unique challenges exist to sustain growth beyond lifecycle of initial products.

⧫ For example, assume a successful launch of “one-and-done” curative treatment for a rare inherited monogenetic disease. Initial uptake into prevalent pool is soon tempered once “warehoused” patients are cured. Future sales come only from few very small number of newly diagnosed patients entering treatment eligibility.

EvaluatePharma; Leerink, NIGHTSTAR THERAPEUTICS PLC: Initiating at OP; A White Knight for Retinal Dystrophies, Oct 2017

▪ High unmet need, severe conditions

▪ 6K prevalence, 30% eligible

▪ 300 new annual births

▪ $1M One-time treatments

⧫ Ideal scenario: Stage-gapped development pipeline for ultra-rare monogenetic disease (new product launched every 3 years)

▪ Equates durable cure

▪ Rapid uptake, 4 years to peak

▪ No direct competition

NIGHTSTAR THERAPEUTICS

Depictive Revenue Model for a Portfolio of One-Time Treatments and Implications for Pipeline Portfolio Strategy

• R&D and aggressive BD/M&A needed to support pipeline that delivers new products to new rare disease populations every 4-5 years or less.


Advanced Therapeutics Companies, Even if Initially Successful, Face Unique Risks to Sustainability

⧫ What if next up “curative” product:

• Does not support the clinical value and payers constrain access or demand high rebates?

• “Proof” of durable benefit not accepted by payers?

• Does not avoid all clinical complications, needs other support?

• New product launches are delayed or pipeline projects fail?

• Companies without balanced and full “stage gapped” pipelines are vulnerable!

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GENE THERAPY MONOGENE PORTFOLIO($US MILLIONS)

MonoGene 1 MonoGene 2 MonoGene 3 MonoGene 4

MonoGene 5 MonoGene 6 MonoGene 7 MonoGene 8

$0$500

$1,000$1,500$2,000$2,500$3,000$3,500

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GENE THERAPY MIXED PORTFOLIO($US MILLIONS)

MonoGene 1 MonoGene 2 Broad Indication 1


Key Takeaways (1)

⧫ Advanced Therapeutics very clearly represent the next step in evolution of therapeutics platforms and will, in less than a decade, be as important as today’s “conventional” small molecule and biological approaches currently are to treating disease, especially rare disease.

⧫ Few, if any Pharmas will play (at least over the short-term) across all advanced therapeutics platforms (Novartis so far appears to be the notable exception). Many will move to gene therapy/editing platforms for rare and monogenic diseases as part of their larger focus on rare diseases.

⧫ Celgene and Gilead have jumped into CAR-T, presumably for different reasons (the former to expand a core business and protect against downstream disruption and the latter to improve on a fledgling start in hematological cancers). Expect interest from other companies to be limited unless more progress is made against solid tumors. If not, the “next generation“ of CAR-T players promising less cumbersome approaches may see comparatively less interest from strategics. Indeed, Pfizer’s recent “exit” from active development of Cellectis programs is a sign of evolving views of this space by large pharma.

• In any case, the market will be intensely competitive among numerous developers of more convenient and effective CAR-Ts; the only question is how large the overall opportunity will be.

⧫ Meanwhile, the Novartis acquisition of AveXis is a potential game changer and a signal to all companies serious about rare disease that a gene therapy platform is a must have. Given the number of attractive late stage gene therapy programs aimed at rare disease, Novartis/AveXis will almost certainly not be a one-off. Curative therapies fit more comfortably into the more diversified revenue mix of a large pharma portfolio than as stand alone companies.


Key Takeaways (2)

⧫ It will be almost impossible to be serious player in rare/monogenic disease lacking a strong platform and presence in gene therapy/editing. More M&A activity by Novartis, Pfizer, and Sanofi is a near certainty as these are most committed rare diseaseplayers and will be a valuation driver.

⧫ However, valuations may be tempered by a number of factors including:

• Intensity of competition with other therapeutic platform approaches in more advanced diseases such as hemophilia

• Continued uncertainty around commercial models, pricing/market access issues (especially around uncertain “permanence” of the effect)

⧫ BD&L will be the single most important critical competency for achieving sustainability and long term value for stand-alone “oneand done” gene therapy rare disease companies as both a serially full pipeline and staged new product launches will be critical to growth.

• These smaller specialist companies can and should consider portfolio diversification with the addition of “conventional” pharmaceutical products within selected therapeutic areas

Pharma and Biotech M&A in Gene & Cell Therapy: What’s Next in Deal Making in the EmergingAdvanced Therapeutics Space?

Ed Saltzman, Executive ChairmanDefined Health, a Cello Health business

New York Pharma Forum23 May, 2018New York City, NY

pharma and biotech m&a in gene & cell therapy: what s next ......nov 2015 undisclosed car-t...

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