2 Aug, 2019 image
search_img

Giving viruses a taste of their own medicine

New technology is exploiting a virus’s capability to enter the human body and deliver therapy, rather than disease.  It’s called a viral vector, and it’s one of the fastest growing themes in precision medicine due to its increasing accuracy in treating rare diseases. Here is a brief look at this innovative technology, and the genomics and precision medicine companies within the ROBO Global Healthcare Technology and Innovation Index (HTEC) that provide investors with exposure to this theme.

Viral vectors 101

Gene therapy is a technique that uses genes to treat or prevent disease. In many cases, the therapy is loaded into a gene, as if it was cargo being loaded onto a ship.  The gene is then inserted into a human, and travels to the organ or location that needs treatment. Once it arrives at its destination, it drops off the “cargo”, which then treats the illness.  This delivery method is known as a viral vector. The two most common vector applications are Lipid Nanoparticle (LNP) and adeno-associated viral (AAV) vectors. Scientists had been experimenting with these applications for two decades to little or no avail, until recently, when the FDA approved its first ever AAV treatment.

 

AAV is unique in its ability to deliver treatment directly to the organ that needs it, with near 100% certainty. In December 2017, the FDA approved the first ever AAV treatment, Luxturna, created by Spark Pharmaceutical, to treat a rare genetic retinal disease that causes blindness. Although the addressable population for this treatment is very small (1,000-2,000 people in the U.S.), the drug itself comes at a hefty list price of $425,000 per eye, making it a $1.7B revenue opportunity. That’s just for one drug.  One can imagine that further development by other biotech companies for other diseases could drive a sizeable total addressable market over time.  The strong economic potential combined with AAV’s accuracy, and the breakthrough of the first FDA approval, is attracting more research and investment into the gene therapy space.

Companies in the HTEC Index that are developing viral vectors

Precision medicine companies in the HTEC Index that are currently involved in LNP and AAV-related clinical trials include Biomarin, Intellia, Regeneron, Vertex, and Editas. Intellia and Regeneron are in a collaboration to develop a treatment for hemophilia B patients using a combination LNP/AAV delivery approach. The companies recognize the strengths and risks in both LNP and AAV viral vectors. By combining the two technologies, the companies seek to leverage the benefits, while also mitigating the shortcomings, of each approach. Vertex expanded its focus on gene editing products, including AAV, through a collaboration with CRISPR Therapeutic in June. Editas, in partnership with Allergan, is also using AAV for its EDIT-101 trial to treat a rare and genetic ophthalmic disease.

It’s a seller’s market for manufacturing services  

Another critical component to drug development is manufacturing, and every company needs to determine how they will manufacture their drug while designing their clinical trials. In fact, before the final phase of the trial can start, the company must provide the FDA with complete plans for a commercially viable product. Failure to do so results in trial delays. Some opt to manufacture in-house, but most don’t have the scale or capital to both manufacture their own therapies and run the clinical trial. Because manufacturing is such a critical component to the overall trial timeline, many investors will ask companies to confirm that there is an outsourcing contract in place even before investing any capital. This is in turn driving demand for contract development and manufacturing organizations’ services (CDMOs). At this time, demand is outpacing capacity so much that manufacturers can choose who to partner with, and many clients actually have to wait in line.

There are a few companies that are well positioned for this growing demand.  Lonza has been involved with gene therapy since the mid-‘90s, and can support large-scale production of all viral vector technologies. Thermo Fisher Scientific entered the space through its acquisition of Brammer Bio in March.  Catalent, which seeks to service the smaller batch needs, recently acquired Paragon, an industry-known leader in LNP and AAV manufacturing. Paragon Gene Therapy has completed over 100 clinical AAV batches across 40 different programs. To meet further anticipated demand for gene therapy manufacturing, Catalent also acquired Novavax’s manufacturing and development assets. That Novavax elected to pivot its operating expenditure away from manufacturing to increase focus on its clinical trials is testament to the growing need for capacity in this space, and the stability of this trend. Thermo Fisher Scientific, Lonza, and Catalent are all members of the HTEC Index.

Putting the precision in precision medicine

Another critical component in the development and commercialization of gene therapy is testing.  There’s no precision in precision medicine without a diagnostic companion. Qiagen, another member of our HTEC Index, is the global market leader for sample testing used in both life sciences and clinical diagnostics. Qiagen offers test prep kits needed to identify whether the patient has a gene that would be suitable for the associated therapy.

Gene therapy is only a part of a broader investment strategy

Most of the drugs currently on the market are designed to treat every patient who has a specified illness. The problem with this approach is that the prescribed treatment may only help some patients, while the remaining recipients wonder why they’re not getting better. Rapid advancements in genomic innovation have enabled therapies to reach beyond one-size-fits-all methods toward a new medical approach known as precision medicine. In other words, scientists are starting to identify the exact gene that is causing a specific disease and develop a therapy that is tailor-made for that gene. The outcome is a much more precise treatment regimen, better patient outcomes, and reduction of costs associated with ineffective treatment. Success with precision medicine has also created strong investment opportunities. According to the Personalized Medicine Coalition, in 2018, 25 of these precision therapies were approved, and comprised 48% of all drugs approved by the FDA that year.[1] The number of genomic clinical trials for cancer treatments has more than doubled in the past two years. Overall, genomics and precision medicine are in their earliest stages, with a long runway for growth, making these sub-sectors a strong fit for the ROBO Global Healthcare Technology and Innovation Index.

By Nina Deka, Senior Research Analyst, ROBO Global


[1] Personalized Medicine at FDA: A Progress & Outlook Report, December 2018

  • 769 Followers
  • Subscribeto RSS Feed

Popular & Recent News

Recent White Papers

Categories

You are now leaving the ROBO Global website

You are now leaving the ROBO Global website. The following landing page may contain information concerning investments, products or other information. Exchange Traded Concepts LLC, the Fund Advisor are not responsible for the accuracy or completeness of information on non-affiliated websites. The material available on non-affiliated websites has been produced by the entities that are not affiliated with Exchange Traded Concepts LLC. Descriptions of, references to, or links to products or publications within any non-affiliated linked website does not imply endorsement of that product or publication by Exchange Traded Concepts LLC. Any opinions or recommendations from non-affiliated websites are solely those of the independent providers and are not the opinions or recommendations of Exchange Traded Concepts LLC, which is not responsible for any inaccuracies or errors.

Proceed

Dismiss

You are now leaving the ROBO Global website

You are now leaving the ROBO Global, LLC website and being directed to ETF Securities (UK) Limited which is authorized and regulated by the United Kingdom Financial Conduct Authority (the “FCA”). By clicking “OK”, you acknowledge that you are someone authorized to undertake investment activities relating to the Exchange Traded Funds (ETFs). IN addition, you understand that ROBO Global, LLC is not making any financial promotion or carrying out any regulated activity of said products. The following landing page may contain information concerning investments, products or other information. ETF Securities (UK) Limited is not responsible for the accuracy or completeness of information on non-affiliated websites. The material available on non-affiliated websites has been produced by entities that are not affiliated with ETF Securities (UK) Limited. Descriptions of references to, or links to products or publications within any non-affiliated linked websites does not imply endorsement of that product or publication by ETF Securities (UK) Limited. Any opinions or recommendations from non-affiliated websites are solely those of the independent providers and are not the opinions or recommendations of ETF Securities (UK) Limited, which is not responsible for any inaccuracies or errors.

Proceed

Dismiss

You are now leaving the ROBO Global website

You are now leaving the ROBO Global, LLC website and being directed to ETFS Management (AUS) Limited which is authorized and regulated by the Australian Securities and Investments Commission (“ASIC“). By clicking “OK”, you acknowledge that you are someone authorized to undertake investment activities relating to the Exchange Traded Funds (ETFs). In addition, you understand that ROBO Global, LLC is not making any financial promotion or carrying out any regulated activity of said products. The following landing page may contain information concerning investments, products or other information. ETFS Management (AUS) Limited is not responsible for the accuracy or completeness of information on non-affiliated websites. The material available on non-affiliated websites has been produced by entities that are not affiliated with ETFS Management (AUS) Limited. Descriptions of references to, or links to products or publications within any non-affiliated linked websites does not imply endorsement of that product or publication by ETFS Management (AUS) Limited. Any opinions or recommendations from non-affiliated websites are solely those of the independent providers and are not the opinions or recommendations of ETFS Management (AUS) Limited, which is not responsible for any inaccuracies or errors.

Proceed

Dismiss