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Biotech investors zero in on gene therapy as next big frontier

Fund managers have bullish outlook for gene-editing technology in long run.

Biotech investors are bullish on the market for gene therapies, even though actual sales of a few existing drugs have so far failed to impress some Wall Street analysts.

Fund managers and venture capitalists discussed their outlook for the technology in interviews in Boston, where investors gathered for the Cowen health-care conference. Investor interest in gene-therapy stocks is high, as investing has paid off this year. Roche Holding AG and Biogen Inc. recently snapped up a pair of drug developers, boosting speculation of more deals.

Also, US regulators say they expect to approve 10 to 20 new medicines by 2025, while insurers grapple with treatment costs that can run into the hundreds of thousands of dollars.

Here’s what investors had to say about the space:

Ben Auspitz, partner at F Prime
Auspitz doesn’t view initial sales of available gene therapies “particularly negatively,” and he feels good about the ability of these medicines to get adopted.

Even though there’s “sticker shock” with gene therapies, the prospects for value-based pricing for them is better than most areas in pharma. “There is, for sure, going to be reimbursement pressure and value-based pricing pressure on the industry, I think we have to expect that to happen,” he said. “But the solution is to deliver medicines that really work and are worth it. The problems can be sorted out.”

Another key question with gene therapies is how quickly they can be broadened out to more common diseases that are typically caused by multiple problematic genes, he said.

Chris Bardon, MPM Capital Oncology Impact Fund
Slow early sales of so-called CAR-T infusions approved to treat cancer “are growing pains for the industry as we build the infrastructure for that supply chain and for the hospital services to support the patients,” she said. “But at the end of the day, what really drives penetration in my mind is always clinical efficacy.” And the results seen in patients with blood cancers who have been treated with CAR-Ts are “unparalleled.”

The “holy grail” would be off-the-shelf CAR-T treatments made using cells from healthy people. Innovation will continue in the space because “there’s a world of targets out there.”

Geoffrey Hsu, partner at OrbiMed Advisors
Hsu said he believes that reimbursement logistics with CAR-Ts will eventually be resolved. The data for these therapies are still impressive, given that they’re being administered to some of the sickest patients, he said.

Regarding the competitive dynamics, Hsu said CAR-Ts have an advantage over other emerging therapies like bispecifics because they’re one-time treatments that should theoretically deliver a durable response. While bispecifics may be easier to administer, it’s “too early to say that CAR-Ts are obsolete.”

OrbiMed is also bullish on gene-editing technology in the long run but Hsu says the concept needs to be validated with clinical data.

© 2019 Bloomberg L.P

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