Lev Gerlovin, vice president in the Life Sciences Practice at Charles River Associates (CRA), and Pascale Diesel former vice president in the Life Sciences Practice at CRA, discuss how pharma companies are changing their strategies when it comes to cell and gene therapies.
Abstract
In recent years, drug development has been transitioning from a “one pill fits all” approach to a focus on more targeted and personalised therapies, including many cell and gene therapies. These innovative treatments often bring the promise of high efficacy and even curative benefit and, in many cases, are options for patients with diseases that previously had limited or no treatments available. With several cell and gene therapies now approved and many more advancing toward late-stage clinical development, patient communities and healthcare systems are rapidly recognising their potential benefits, whilst pharmaceutical companies are considering opportunities including mergers, acquisitions, licensing agreements, and partnerships. The deal-making landscape for cell and gene therapies is already very active and positioned to grow exponentially in the years ahead.
While the pace of deal-making is accelerating, the unique qualities of cell and gene therapies are also requiring dealmakers on both sides to consider some innovative and previously untried strategies designed to optimise returns and reduce risk. They are structuring deals to address many factors, including the lack of commercial benchmarks for these products and limited long-term safety and efficacy data often associated with cell and gene therapies. We conducted an analysis of more than 30 deals executed in the cell and gene therapy sector recently and compared them to deals executed for monoclonal antibodies (mAbs) between 1999-2013. Emerging cell and gene therapies are often considered “magic bullets” in the treatment of many serious diseases – a claim that was applied to many mAbs when they were first introduced to the market about 20 to 25 years ago – and the level of interest in deal-making for these therapies is a reflection of the level of optimism companies have regarding their clinical and commercial potential. Findings from our analysis show that the pace of deal-making in cell and gene therapy is faster and occurring much earlier in the drug development process compared to deals seen in the past for breakthrough therapies including mAbs.
Role of Big Pharma
When the first mAb was approved in the mid-1980s, deal-making interactions were mostly limited to collaborations and licensing agreements between smaller biotechnology firms. It took more than 20 years for big pharma to become significantly interested in mAbs and start proactively pursuing deals for these drugs. Conversely, deals within the cell and gene therapy sector have shown a much faster uptake, quickly growing in momentum since approval of the first cell and gene therapies in the early 2010s. More than 50 cell and gene therapy-related partnerships and investments were established between 2010-2016, with big pharma involved in many deals from the beginning. In one example, Novartis initiated a collaboration with GenVec in 2010 for clinical development of adeno-based gene therapies – a deal worth potentially $213 million (excluding royalties). That same year Novartis also formed a strategic alliance with GlaxoSmithKline and the Telethon Institute of Gene Therapy to pursue additional gene therapy research and development.
Establishing an Early Presence
Larger pharmaceutical companies such as Novartis seem more eager to embrace cell and gene therapies compared to prior innovative therapies including mAbs, but the types and values of related deals are evolving compared to what has historically been seen. While the largest mAb deals were often characterised by the acquisitions of late-stage and marketed products, which present more robust data and potentially lower risk to acquisition or licensing partners, most major cell and gene therapy acquisitions involve product pipelines, platform technologies, and manufacturing capabilities rather than one single product. Larger pharmaceutical companies are also targeting earlier stage opportunities, with a higher proportion of partnerships involving Phase 1 or even preclinical stage assets. For example, Pfizer established a collaboration deal with Spark Therapeutics for the development and potential commercialisation of a Phase 1/2 gene therapy for the treatment of haemophilia B and also acquired Bamboo Therapeutics based on a promising gene therapy portfolio including one Phase 1 and several preclinical assets for the treatment of rare diseases impacting the nervous system.
Taking Steps to Mitigate Risk
As more companies work to establish a presence in this sector, both larger and smaller companies now often prefer innovative licensing and collaborative agreements, whereas the majority of deals executed for mAbs were straightforward mergers or acquisitions. Given that cell and gene therapy development is still in its nascent stages and many stakeholders, including payers, have questions related to their long-term clinical benefit and budget impact, the fact that mergers or acquisitions are deemed less attractive is unsurprising. Innovative partnerships can be a lower risk option for licensors or investors who want to expand their cell and gene therapy portfolios without assuming full financial responsibility. Partnership and licensing deals can also help reduce the risk of possible disruptions in business operations and productivity, which often occur following M&A deals and the subsequent restructuring of company resources and teams.
The opportunity to access complementary business capabilities is another factor that is driving interest in innovative licensing and collaborative agreements. With licensing arrangements, a licensor might be seeking a partner who can offer specialised expertise in a specific indication whereas a licensee might see the benefit of collaborating with a company with technical abilities or assets that align with their own product pipeline. The partnership between Neurocrine Bioscience and Voyager Therapeutics reflects this type of synergistic collaboration, where Neurocrine provides expertise in central nervous system (CNS) drug development as well as financial support for the clinical development of gene therapies for Parkinson's disease and Friedreich’s ataxia. In return, Neurocrine gains the opportunity to co-commercialise and potentially obtain global rights to portfolio-compatible therapies.
Strategies Moving Forward
As new cell and gene therapies emerge and others progress to late-stage clinical development and regulatory approval, most industry stakeholders anticipate that both the structure and value of deals in the sector will mature. Companies will exercise the option to follow up on previous collaborative deals, punctuating the space with potentially massive exclusive licensing agreements and acquisitions.
*The views expressed herein are the authors’ and not those of Charles River Associates (CRA) or any of the organisations with which the authors are affiliated. The authors wish to acknowledge the contributions of Súil Collins and Alex David to this article.