Risks abated, not gone as VCs dive back into cell, gene therapies

LONDON – It has taken many years of painstaking research, largely conducted in academic labs, but there is now a palpable sense that cell and gene therapies have reached a tipping point. A growing volume of early stage data indicates those products do – as promised – deliver unprecedented clinical benefit.

As a consequence, venture capital (VC) firms are discovering a new appetite for the field, as delegates heard at the Alliance for Regenerative Medicine Investor Day last week.

One significant attraction of advanced therapies is shorter clinical development timelines. "Some of the therapies are so spectacular you don't have to run megatrials," said biotech investor Gilbert Gerber, CEO of Belsize Asset Management. "Basically, you can tell after phase I whether [a product] is going to fly or not."

Chris Hollowood, partner at VC firm Syncona Partners, agreed. "The data are unlike anything that has gone before. People are alive who were expected to die; people can see who would have gone blind; these therapies are unlike any other modality."

Those strong clinical signals are attracting VCs to start up and invest in early stage cell and gene therapy companies.

In the heady days of the 1980s and 90s Abingworth invested in the pioneer of the field, Genetic Therapy Inc., which stood with peers such as Viagene Inc. and Somatic Therapy in the first – failed – wave of gene therapy companies.

"The field has advanced since then. I finally persuaded Abingworth's partners now is the right time to get back in," said John Shields, scientific and technical advisor to the VC firm.

But the ability to show significant clinical benefit in early trials does not mean an end to risk. Rather, the risks are transferred elsewhere in the system.

For a start, preclinical data have far less predictive power. "You can do as much work as you like in animals," Hollowood said, "To really understand performance you need clinical data."

And if the clinical hurdles are lower, the risks around manufacturing cell and gene therapies are higher. "Manufacturing is a nightmare and no one has a model," said Hollowood. "CMC (chemistry, manufacturing and controls) costs more than clinical development; there are huge challenges for manufacturing."

So much so, that Hollowood said he thinks there will be cases where manufacturing problems scupper effective therapies. "A lot of people don't realize this is the gate and some products will not get there because of CMC," he said.

The superior clinical profile of advanced therapies also will generate greater risks post-approval, Shields said. With the possibility that a single treatment can replace a lifetime of therapy, companies will need to secure large one-off payments. "Both commercialization and reimbursement cause more anxiety than in traditional companies," said Shields.

Gerber agreed that is a difficulty. "The problem is putting a value on something that delivers long term," he said.

For Hollowood, the solution to that problem lies in the superior clinical efficacy. "If we are a society that can pay for existing drugs but can't pay for the better clinical effects of advanced therapies, something has gone dramatically wrong," he said.

Keith Thompson, CEO of the UK Cell Therapy Catapult, a government-funded body involved in preparing the ground for the commercialization of advanced therapies, suggested the strong clinical signals pose further peril for VCs who are monitoring the field and waiting for the optimal moment to invest.

"The velocity with which some products are moving through the clinic [means] some VCs risk missing the boat because [the assets] will go straight to corporates," said Thompson.

Hollowood agreed the validation that is coming from the clinic should encourage VCs to make early stage bets. Syncona has formed start-ups, with expertise as much as products driving investment decisions. The key to success is "access to individuals who have been at it for 10 years, particularly academic clinicians," Hollowood said.

Risk is attenuated in some areas and intensified in others. Overall, said Hollowood, "the whole level of risk is warranted in the context of what the technology can do and the diseases it can get at that can't be addressed in any other way."

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