Novartis move signals further gene therapy resurgence

Less than two years ago Novartis’s decision to disband its cell and gene therapy division caused a crisis among investors. Events since then have shown how misplaced the fears were: Novartis and other large groups have continued showing an interest in gene therapies, likely driven by an increasingly positive regulatory stance.

Yesterday the Swiss giant, the first to launch a CAR-T therapy, doubled down on emerging technologies when it paid Spark Therapeutics $105m for Europe rights to Luxturna, the first bona fide gene therapy approved in the US. The deal might disappoint Spark bulls, but it does feature as one of the largest up-front fees for a gene therapy in recent years (see table below).

As far as big pharma buy-in is concerned, however, Novartis is up against Pfizer, which has probably committed more than any other large group to gene therapy. Novartis’s Spark deal came a few months after Pfizer licensed Sangamo’s haemophilia A gene therapy, and is outstripped by Pfizer’s $193m takeout of Bamboo Therapeutics last year.

Indeed, Spark itself already counts Pfizer as a partner, having licensed its haemophilia B gene therapy to the big pharma group back in 2014. It was at roughly that time that Uniqure launched Glybera, the west’s first ever approved gene therapy, in the EU, though the product was a commercial flop and ended up being withdrawn.

Despite that failure gene therapies have continued to impress clinically – witness Biomarin’s spectacular results for valoctocogene roxaparvovec in haemophilia A, presented at Ash last year – and have won further regulatory backing: Spark’s Luxturna bagged US approval for vision loss caused by biallelic RPE65 mutation-associated retinal dystrophy last month.

As such, Spark could probably not have hoped for a better Luxturna partner than Novartis. The Swiss group boasts the muscle of its Alcon eyecare division, as well as having ex-US rights to Lucentis, one of the bigger eyecare drugs. And it already has a gene therapy deal under its belt – a 2010 hearing loss tie-up with Genvec.

Selected recent gene therapy deals
Company Partner Project Focus Up front ($m) Deal value ($m)
2018
Novartis Spark Therapeutics Luxturna (RPE65) Retinal dystrophy 105 170
Pfizer Sangamo C9ORF72 gene therapy ALS 12 162
2017
CSL Calimmune* CAL-H Sickle cell disease and β-thal 91 416
Allergan Editas Medicine EDIT-101 (CEP290) Leber congenital amaurosis type 10 90 90
Pfizer Sangamo SB-525 (factor VIII) Haemophilia A 70 370
2016
Regeneron Intellia Therapeutics Crispr gene therapy Transthyretin amyloidosis 75 3,325
Pfizer Bamboo Therapeutics* BMB 001 DMD and others 193 688
Allergan Retrosense Therapeutics* RST-001 (channelrhodopsin-2) Retinitis pigmentosa 60 555
Takeda Engene Two undisclosed Gastrointestinal diseases - -
Astellas Pharma Clino AAV-mVChR Retinitis pigmentosa - -
Pfizer 4D Molecular Therapeutics - AAV vector discovery - -
2015
Bayer Crispr** Crispr gene therapy Various 35# -
Bristol-Myers Squibb Uniqure S100A1 Cardiovascular 100## 603
Johnson & Johnson Engene EG-12 (IL-10, non-viral admin) Inflammatory bowel disease - 337
Vertex Crispr Therapeutics CTX001 Sickle cell disease and β-thal 75 2,625
Bioverativ (Biogen) San Raffaele Telethon Two projects Haemophilia A & B 5 5
Biogen Applied Genetic Technologies BIIB087 Retinitis pigmentosa 124^ 473
Sanofi Voyager Therapeutics^^ VY-AADC01 Parkinson's disease 70 845
2014
Bayer Dimension Therapeutics DTX201 (factor VIII) Haemophilia A 20 252
Bioverativ (Biogen) Sangamo ST-400 β-thalassaemia 20 320
Pfizer Spark Therapeutics SPK-9001 (factor IX) Haemophilia B 20 280
2012
Shire Sangamo  SB-FIX (factor IX) Haemophilia B 13 13
2010
Novartis Genvec CGF166 (Atoh1) Hearing loss 5 214
Glaxosmithkline San Raffaele Telethon Strimvelis (adenosine deaminase) ADA-SCID 13 13
Note: *acquisition; **formed Casebia Therapeutics joint venture; #equity investment, plus $300m R&D funding over 5 yrs; ##includes $35m in equity; ^includes $30m in equity; ^^deal scrapped in 2017.

All the signs point to growing confidence in gene therapy as a viable technology. However the $105m that Novartis has paid Spark is still a significant bet to make on a product that could have difficulties gaining reimbursement among austere European payers. Regulatory successes notwithstanding, whether gene therapies are economically viable is a major missing piece of the puzzle.

That said, Spark’s bullish investors have assigned a market cap to the group of over $2bn, and the Novartis deal could disappoint those who had banked on a takeout. Stifel analysis today wrote that Spark trading ex-US sales “for what essentially amounts to $3/share and a mid-20% royalty rate” would raise valuation concerns.

Exuberance

It could be that big pharma has not bought into this area as much as exuberant investors have.

Sanofi, for one, seems to have significant doubts, last year canning a 2015 deal with Voyager despite what looked like promising data in Parkinson’s disease, and this week buying Bioverativ in a clear snub to haemophilia gene therapies (Sanofi bets against haemophilia gene therapy, January 22, 2018).

The markets do not look like being put off just yet, but today’s planned float of Solid Biosicences will provide a major test. The group upsized the IPO to $130m yesterday, but only this morning revealed that its lead asset, the Duchenne muscular disease project SGT-001, had been placed on partial US clinical hold in November – before it first filed to float.

With some venture capitalists hailing 2018 as the year in which gene therapy finally comes of age this advanced therapy niche still has it all to do.

To contact the writers of this story email Jacob Plieth or Jon Gardner in London at news@epvantage.com or follow @JacobPlieth or @ByJonGardner on Twitter

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