The era of gene therapy is accelerating! KPMG has issued a report saying that large biopharmaceutical companies are pouring everything into this

Cell and gene therapy is now one of the most eye-catching emerging areas of biotechnology worldwide.

Recently, KPMG released the "one-time cure" gene therapy report, pointing out that in the treatment of cancer, genetic diseases and infectious diseases, cell and gene therapy show great potential, in the field of curing rare and extremely rare single gene genetic diseases are most likely to achieve breakthroughs, and the report also covers the technical problems of gene therapy, the market challenges faced by biopharmaceutical companies, investment models and other issues.

Despite uncertainties and challenges in development, manufacturing and commercialization, the gene therapy sector continues to receive significant investment from investors and biopharmaceutical companies. For example, in February of this year, Takeda Pharmaceutical and biotech company Code Bio reached a collaboration and selection agreement to use Code Bio's proprietary targeted 3DNA non-viral gene drug delivery platform to design and develop gene therapies for rare disease indications. If the milestones of all 4 projects are achieved, the total value of potential transactions during the partnership will be as high as $2 billion.

The KPMG report shows that some large biopharmaceutical companies are pouring billions of dollars into M&A targets in the global gene therapy space, and smaller companies with less money are constantly entering the field.

Single-gene diseases are most likely to be a breakthrough

In the early 21st century, sequencing the human genome gave scientists an unprecedented understanding of the genetic factors of disease, and the field of gene therapy has seen a renaissance in the past two decades. However, at present, the research and development and production technology is still immature, gene therapy faces three major problems, drug transmission is the main technical obstacle, under the premise of minimizing toxicity and immunogenicity problems, it is still difficult for manufacturers to determine the optimal dose to deliver the efficacy to the target tissue.

Dr Alasdair Milton, General Manager, Strategic Life Sciences, KPMG, said that although scientists have developed a range of delivery techniques over the years, viral delivery is still the most common way, with recombinant adeno-associated virus (rAAV) being the "preferred" vector, at least for in vivo administration.

The report's analysis shows that about 70% of current clinical trials of "one-step cure" gene therapy use rAAV for transmission. With slow start-up and limited vector capacity (currently around 5 kb), scientists have been working to improve the rAAV genome. To optimize rAAV vectors, enterprises are turning to new approaches such as artificial intelligence, hoping to improve payload capabilities, targeting, and immune escape capabilities.

Gene therapy also faces resistance from production and supply chains. Gene therapy is very expensive to produce, especially in vitro therapy. Expanding from a small clinical trial with only a few patients to a larger commercial group is also a very difficult task. Strong demand leads to shortages of raw materials, which affects the stability of supply chains.

Yu Zilong, head of life sciences at KPMG China, told China Times that some companies are strengthening their control over their supply chains by investing in their own production facilities and independent production capacity. But this strategy only works for large, deep-pocketed biopharma companies, while smaller biotech companies that dominate cell and gene therapies remain heavily dependent on external vendors.

The appeal of gene therapy is that it can be cured with a single dose or a single treatment, but the effectiveness of gene therapy is still full of uncertainty. Dr. Alasdair Milton said the reality is that scientists are still grappling with the challenges associated with the persistence of gene therapies, which raises questions about whether gene therapies can actually "cure" diseases.

For example, in childhood diseases such as Duchenneut's dystrophy, as children age, cell metabolism, gene therapy may lose its effectiveness in certain tissues such as muscle. In addition, in many cases the immune response may lead to vector clearance and transfer to deletion of gene expression. Neutralizing antibody levels are low in children and increase with age. Interventions in young children are most effective because the risk of complications from neutralizing antibodies is lowest. Whether receiving gene therapy or other therapies, the diagnosis and treatment of genetic diseases is always as early as possible.

The report points out that for single-gene genetic diseases, pharmaceutical companies have a clear understanding of the pathogenic factors of the disease, can develop the best methods for the relevant genes (such as knockout, replacement, editing), and are very likely to work on the disease, and even completely cure it. At the same time, there are currently 5,000 to 8,000 single-gene diseases, most of which do not have any treatment options, and gene therapy is the most likely breakthrough.

Dr. Alasdair Milton said that in contrast, polygenic genetic diseases often have multiple genetic factors as well as environmental factors, lifestyle factors and other complex factors, and it is difficult to use gene therapy. At the same time, polygenic genetic diseases often have mature diagnostic and therapeutic standards, and some of these treatment options are less expensive, which has become a commercial resistance to gene therapy. Therefore, gene therapy needs to make significant advances in technology and production before it can be applied to a large number of polygenic genetic diseases, and its potential depends on whether it can actually "cure" the disease. Because of this, for the foreseeable future, "one-step cure" gene therapy will remain largely limited to a smaller number of single-gene genetic diseases.

Industry development requires long-termism

With the outbreak of the new crown epidemic around the world, mRNA vaccines have gradually entered the public's field of vision, and academics, industry and capital have shown great interest and enthusiasm in the field of RNA treatment. According to public information, at present, the three giants of mRNA vaccines in the world are BioNTech, Moderna and CureVac. The main domestic layout in this field are Aibo Biology, Si Microorganism, Zhuhai Lifanda, Xinxin Biology, Blue Magpie Biology, St. Regis Biology, Houcun Nano, Minor Hengkang, Jiachen Xihai, Haichang Biology, Tianjing Biology and other enterprises.

Although the development of single-gene genetic disease therapies is very scientifically attractive, these diseases are often rare and have narrow patient populations. In order to be commercially successful in this area and bring possible revolutionary therapies to patients, bio-companies need to deal with key questions such as "where to start" and "first-mover advantage".

The report points out that the "first-mover advantage" is particularly prominent in the gene therapy industry, and whether it can enter the market first will initially determine the success or failure of the business. When patients are cured through "one-step cure" gene therapy, the market shrinks and the efforts of latecomers are in vain. Therefore, once a competitor has taken a step ahead, the relevant company should assess whether the stop loss should be stopped in time.

Another key question is whether companies can strengthen their R&D and management capabilities to address future risks in order to make their revenues sustainable over the long term. "Cure" the disease could mean inverted V-shaped revenue lines, which affect a company's ability to forecast future profits and cash flows. This is particularly detrimental for small biotech companies. In addition to rolling out follow-up therapies for patients, companies can track and focus on pathologically similar diseases, like two genetic disorders caused by a genetic defect. This will help companies open up new users and markets based on existing "one-step curative" gene therapies.

Given the complexity and technical barriers in the field, early access and maintaining close contact and communication with key stakeholders such as patients, healthcare providers and payers is an important issue, the report notes. Because this will affect the regulatory approval, promotion, payment and other aspects of gene therapy.

Despite uncertainties and challenges, the gene therapy sector continues to receive significant investment from investors and biopharmaceutical companies, but with different investment strategies. The report shows that some large biopharma companies are pouring billions of dollars into merger targets.

Yu Zilong said that this strategy is based on the estimated value of the platform and its benefits in long-term research and development of technology, rather than any short-term revenue opportunities. However, after acquisitions, large biopharma companies have not always been able to achieve good execution in integrating innovation goals. Companies must strike a good balance between managing and controlling the risks associated with acquisitions and not suppressing innovation.

An interesting trend has emerged, with large biopharmaceutical companies that have made large acquisitions in the gene therapy space in the past recently striking deals with a number of smaller biotech companies. In addition to making smaller acquisitions, large biopharma companies are also forging multiple partnerships or developing acquisition options to enhance their technological prowess and competitiveness.

Smaller companies with less money are also constantly entering the space. These companies are aware that in the face of competitive threats posed by gene therapies to their product portfolios, and given their limited financial capacity compared to large pharmaceutical companies, a partnership approach may make more sense than a full merger.

In view of the challenges of gene therapy in the development, manufacturing and commercialization, Yu Zilong said that "active and prudent, diversified investment, perseverance, and long-term success" may be more in line with the actual investment and business strategy of the current industry.

Editor: Yu Na Editor-in-chief: Chen Yanpeng