M&A Push to Secure a Slice of the Gene Therapy Opportunity

Justin Wilson is a partner and life sciences specialist at European intellectual property firm, Withers & Rogers.

Pharma companies are actively on the look-out for opportunities to secure a stake in emerging gene therapies due to their promise as a source of new treatments for a wide range of inherited diseases, as well as cancer. Biotech businesses with a well-managed portfolio of intellectual property rights are attracting significant interest from corporate investors who are keen to develop their presence in this fast-growing market.

Despite gene therapy R&D being around for almost 30 years, big pharma companies have been somewhat slow to grasp the commercial opportunity. There are many reasons for this, not least some early setbacks, including an incident in October 1999 where clinical trials resulted in the death of an 18-year-old man with a genetic liver disorder, who suffered a severe immune reaction after being given a gene therapy treatment. A further life-threatening complication occurred in 2003, when a patient acquired a leukaemia-like disease as a result of an unexpected genetic mutation triggered by a gene therapy treatment.

There have been other problems along the way, which may have made some big pharma companies think twice about jumping on the gene therapy bandwagon. In particular, as gene therapies are intended to provide one-off treatments for life-long genetic disorders, some pharma companies have preferred to take a ‘wait and see’ approach, to find out if new treatments are as effective as they claim over the long term. In other cases, it has proven difficult to ensure that some gene therapies have sufficient therapeutic effect, so additional R&D activity and/or clinical trials have been required to address these issues.

Nevertheless, the gene therapy opportunity has ultimately proved irresistible to big pharma companies, largely due to the potential to find a single-dose treatment for some debilitating life-long congenital conditions. This technology generally involves the use of a viral vector, carrying a replacement gene which, once administered, forms part of the patient’s own DNA, potentially curing them from their genetic disorder. Similarly, this approach can also be used to provide targeted cell therapies, for example, CAR T-cell therapy to treat certain cancers by engineering a patient’s T-cells to better recognise cancer cells. Once the reprogrammed T-cells are returned to the patient’s body, they are better able to fight the disease.

By the 2010s, research science in all areas of gene and cell therapy was flourishing. Patent filing activity for technologies in these areas was gaining momentum, as biotech companies spinning out of universities were able to make progress in completing clinical trials and securing the necessary regulatory approvals on route to market. This demonstrated to big pharma companies that such treatments were fulfilling their early therapeutic promise. Some big pharma companies sought to licence the emerging technologies or else acquire the business responsible for their development, in order to secure a stake in a fast-developing space.

The wave of M&A activity that ensued has continued through to current times. Recently in May 2023, US pharma giant, Novartis, paid gene therapy developer, Avrobio, $87.5m for a treatment for cystinosis, an uncommon genetic condition caused by the toxic build-up of the amino acid, cystine. Novartis also acquired an exclusive licence to other assets owned by Avrobio and IP rights related to their proprietary experimental drugs.

At the end of 2022, Eli Lilly and Company completed its acquisition of Akouos Inc, a developer of gene therapies for use in the treatment of various ear disorders, for a sum of $487 million. The pharma company has been on the look-out for opportunities to bolster its pipeline of gene therapies, after acquiring Prevail Therapeutics Inc for $1 billion in 2021. 

The values paid for biotech businesses with gene therapies on their books have soared in recent years, especially as treatments for more common conditions have been developed. For example, the US biotech company, BioMarin, has recently been granted regulatory approval in both European and American markets for their Haemophilia A gene therapy treatment known as Roctavian. This has further boosted investor interest in this productive area of research science. With more M&A activity likely in the year ahead, and investors willing to pay a higher price for therapies that can treat diseases affecting larger patient groups, early-stage biotech companies need to plan ahead.

Developing a novel gene therapy is challenging enough, but attracting the right investor attention is a different proposition altogether. In a sector where an increasing number of opportunities are emerging from many different academic institutions and their spin-outs, a compelling case must be presented to capture the attention of potential suitors. To help with this, innovative companies should ensure they protect all their intellectual property from the outset as broadly as possible to maximise its value, as this is often a key consideration in whether a company is considered to be a good investment option.