Live money
New frontiers of medicine have been taken in the USA
Anton Gopka, Forbes, 12.10.2017
This year, record volumes of investments in the field of Life Sciences and Digital Health in the United States are expected. Recent weeks have become the culmination of many previous decades of research: the first gene therapy that cures hopeless cases of cancer has been approved, exceptional results of a revolutionary class of drugs have been shown, a new era of "digital medicine" is opening.
In 2010, five-year-old Emily Whitehead was diagnosed with acute lymphoblastic leukemia, the most common blood cancer in children. Parents were encouraged by the fact that this disease is better than others curable with classical chemotherapy, but everything went wrong for Emily. After two courses of chemotherapy, her legs began to fail, and she miraculously avoided amputation. 16 months later, a relapse occurred. Then the parents learned about the recruitment of patients in the first study of a new experimental therapy that had just received permission to launch in the clinical program. Unfortunately, in Emily's situation, the doctors considered hospice, with its supportive therapy inevitably leading to death, the preferred alternative. Participation in a clinical trial of a new gene therapy, which gives hope for the salvation of the child, was not considered. But the parents did not accept the inevitability, and Emily became the first child to receive therapy with a new method – transplantation of genetically modified immune system T-cells (CAR-T). As a result, she has not only recovered and feels great now at the age of 12 – her healing has allowed her to once again draw attention to the possibilities of gene therapy, which has been on the periphery of research for many years.
At the end of August this year, the FDA approved the first gene therapy in the United States developed by Novartis – the Kymriah product. So far, the indications for use are very limited, but the results are impressive: 52 out of 63 children who received therapy in the second phase of clinical trials showed complete disappearance of malignant lymphoma cells three months after the procedure. At the same time, all the patients who participated in the study have already exhausted traditional methods of treatment. We talked about this procedure and its risks in more detail in Forbes a year ago, when the fate of this new method of therapy has not yet been determined.
The history of the appearance of CAR-T clearly illustrates how scientific progress takes place and what personal factors drive it. CAR-T therapy owes its appearance to many hundreds of scientists who have worked for many decades.
The idea of using the immune system in the fight against cancer appeared in the XIX century, when in 1891 the American surgeon William Kohli injected several patients with inoperable tumors with specially derived bacterial cultures, which led to an immune response and a decrease in the size of tumors. Kohli's works were ignored, and he himself was proclaimed a charlatan. It took 102 years for the first line of genetically modified T cells to be created in Israel in 1993. In the USA, the possibilities of T-cell modification were dealt with by scientist Carl Jun exclusively within the framework of fundamental research. But in 1996, his 41-year-old wife was diagnosed with ovarian cancer. Karl tried to develop a medicine for his wife, but did not have time. Carl Jun's wife died in 2001. In those years it was extremely difficult to attract funding for such projects – in 1999 there was a notorious case of death of a relatively healthy 18-year-old volunteer patient as a result of the gene therapy received. After the procedure, his kidneys, lungs and brain simultaneously failed.
For a decade, Carl Jun has been developing inside the research institute and, according to him, was ready to give up more than once. The culmination was the rescue of the first patient Emily Whitehead in 2011. According to June, if Emily had died, the entire CAR-T direction would have gone into oblivion with her. Emily Whitehead also experienced severe side effects – a multi-day fever, the so-called "cytokine storm". For about a week, patients may be on the verge of life and death, but already now there is an understanding of how this condition can be controlled. In a clinical study conducted by Novartis using Carl June technology, about 78% of patients experienced this typical reaction to the introduction of CAR-T cells, but thanks to the developed complex of therapeutic methods of counteraction, the drug Kymriah received unanimous approval from FDA experts and was admitted into clinical practice.
It becomes obvious that the direction will take its rightful place in the line of existing methods of influencing cancer processes: hormone therapy, targeted chemotherapy and immunotherapy.
CAR-T Therapy: the price of healing
After the approval of the first gene therapy based on CAR-T technology, the main topic of discussion was the price. The old model of the pharmaceutical business in the field of oncology assumed long courses of drugs for a wide range of patients for many years or for life. Gene therapy methods, as a rule, are aimed at very narrow groups of patients and are used once. Therefore, it becomes difficult for pharmaceutical companies to return their investments. Obviously, due to the change in the treatment paradigm, a new pricing model and optimization of production and logistics technologies are required.
Novartis recently announced a price of $475,000 for one procedure. The price turned out to be significantly lower than expected (in Europe, the first approved gene therapy costs over $ 1 million per patient), but, of course, could not avoid criticism. According to the representative of Novartis, approaches to pricing based on clinical value confirm that the price of $600,000–750,000 is cost–effective for the state, since alternative therapies in children - bone marrow transplantation or blood stem cells - collectively leads to costs reaching $800,000 in the first year of treatment.
As a result, Novartis offered a simple solution: for all patients who are covered by state insurance, the company will receive full payment for the procedure only if successful. In addition, representatives of the company assure that they are working on special programs of access to treatment for patients without state insurance. It is not yet clear how much the market is ready to implement the new procedure, the industry is waiting for sales figures in the first quarters. Analysts estimate that sales could peak at up to $2 billion in the U.S. market, or about 4,000 patients per year.
How much did CAR-T technology investors earn?
Simultaneously with the approval of the first gene therapy in the United States, one of the largest pharmaceutical companies Gilead with a market capitalization of more than $ 100 billion announced the acquisition of KITE Pharma with CAR-T technology for $11.9 billion. Approval of the drug by KITE Pharma is expected within the next few months. Gilead agreed to buy the company at a price of $180 per share with a relatively modest premium to the market of 29%, but it is worth noting that just 3 years ago the IPO of the company in the amount of $128 million was considered exceptionally successful at a share price 10 times lower – $17. Accordingly, for the IPO participants who waited for a successful exit, the return on investment was more than 100% per annum.
But the biggest single beneficiary was CEO Ari Belldegran. He currently works as a professor at the University of California and, according to The Hollywood Reporter, is one of the best urologists in Hollywood. In parallel with clinical practice, he founded a number of companies, including those with successful exits.
The sale of KITE Pharma brought Professor Belldegran about $700 million as the largest shareholder and head of the company. According to the latest estimates by Forbes Israel (even before the deal), his fortune was already estimated at $1 billion. Belldegran will share the success with his colleagues, for example, the chief operating officer of the company, Cynthia Buttita, will receive $120 million, and the head of R&D of the company, David Chang, will receive about $100 million as a result of the transaction.
In total, about 40 biotech companies are currently engaged in developments in the field of CAR-T. Three leading companies: KITE, Juno and Novartis, and new players add heat to the competition.
RNA interference: "managing" the genome instead of editing
While gene therapy is loudly entering the market, a fundamentally new therapeutic modality has come close to approval, which does not require modification of genes in a living organism – RNA interference (RNA interference, RNAi). RNAi technology consists in controlled suppression of the activity of the selected gene without the need for its modification and with the possibility of its re-"inclusion", by interfering at the stage of RNA reading for the release of proteins.
It is interesting to look in retrospect at the ups and downs of interest in this technology over the past 20 years, this story is quite typical of breakthrough technologies. In 2006, American scientists were awarded the Nobel Prize for their work on the study of RNAi in roundworms, published back in 1998 – that is, in a "short" 8 years after the discovery. Then it caused a wave of interest in RNA interference. The pharmaceutical company Roche has invested about $ 500 million in an internal program for the development of drugs based on this technology. Merck acquired the development of a small company Sirna Therapeutics for $ 1.1 billion. Other major players have joined in.
Within a few years, it became clear that the technology does not give quick results and there was a long disappointment. Experimental RNAi-based therapy demonstrated dangerous side effects that proved impossible to predict based on animal studies. By 2010, the industry's interest in this technology had disappeared. Roche wrote off its investments and disbanded the RNAi division. Pfizer and Abbott have left this area of research. And Merck sold Sirna Therapeutics at a loss for $175 million in 2014. The buyer was a small company Alnylam Pharmaceuticals, which was founded in 2002 and purposefully engaged exclusively in RNAi technologies.
On September 20 of this year, the market capitalization of Alnylam Pharmaceuticals increased by 50% and added more than $3 billion (since the beginning of the year, the company's capitalization has grown by more than 200%). The final clinical trials for one of the programs were crowned with unprecedented success. Presumably, the first RNAi-based drug may be approved within the next few months. The company's portfolio of developments includes many candidates for genetically determined diseases and hepatitis B, which is practically incurable at the moment. 20 years after the discovery and 10 years after the noise caused by the Nobel Prize, RNA interference technology can finally become a drug.
Experts on the prospects of RNA interference
The main reason for the failures of RNAi technology is the difficulties with delivering the drug directly to those cells in which it is necessary to stop the pathogenic process. It took significant progress in drug delivery nanotechnology to make RNA interference a reality.
On the issues of nanoplatform delivery, we cooperate with scientist Robert Langer, a global leader in nanotechnology from the Massachusetts Institute of Technology (MIT). In 2010, he joined the Scientific Council of Alnylam and brought his expertise. Langer is called the "Edison of Medicine", he is the most cited engineer in history, has about 1300 patents. On September 27 of this year, he received the highest award in the field of nanotechnology – The Kabiller Prize in the amount of $250,000. In 2015, he was awarded the Queen Elizabeth Prize in engineering sciences in the amount of 1 million pounds. And in 2014, he received a $3 million prize for breakthrough developments in the field of Life Sciences, established by the founders of Facebook, Google, 23andMe and Yuri Milner.
Since 2014, Langer has been on the advisory board of our ATEM Capital fund, and we discussed with him the future of RNA interference technology. In his opinion, the problem of drug delivery is still not solved. Despite recent successes, all existing nanoplatforms deliver the active substance mainly to the liver. The search for a type of "transport" that could overcome the protection of the immune system and reach the cells of the target organ is an extremely difficult technological task. The mechanism of action of RNAi can work perfectly in a Petri dish, but not in living organisms. When the delivery problems are solved, RNA interference can be widely used. The use of this technology in the field of oncology is especially promising, where it will be possible to arbitrarily control the activity of a number of genes that are not susceptible to traditional drugs.
We also discussed the prospects of the technology with Viktor Kotelyansky, former Senior Vice President of Alnylam for Science (2003-2012) and professor at Skoltech. In his opinion, the main advantage of RNA interference technology is the possibility of effective development of new drugs. When the problems with delivery are finally solved, the question of the genetic basis of diseases will arise. As soon as the "genetic profile" of the disease is understood, it will be possible to develop drugs aimed at a specific gene or group of genes quite quickly. A new paradigm of drug development will begin – those studies that now take more than ten years and cost billions of dollars can be carried out within a few years with significantly lower costs. Such a future of medicine will lead to a radical transformation of the market and new opportunities for humanity.
The beginning of the Digital medicine era
Genetic engineering and genome "management" are gradually becoming the mainstream of high-tech medicine. It is curious, however, to note that the Nobel Committee, contrary to expectations, this year did not award prizes to scientists for the sensational Crispr genome editing technology, but noted their colleagues who studied the molecular mechanisms of biological rhythms. Indeed, after many years of research, scientists are increasingly inclined to believe that the most common ailments can be corrected by a healthy lifestyle.
So earlier this year, a book co-authored with Elizabeth Blackburn, the 2009 Nobel laureate, was published, which discovered telomerase and the role of telomeres as the "biological clock of aging." The book is called "The Telomere Effect: A Revolutionary Approach to Prolonging Youth, Health and Life" (The Telomere Effect: A Revolutionary Approach to Living Younger, Healthier, Longer). Many readers expected new discoveries in the field of molecular biology and stories about rejuvenating "genetic" injections. In the book, the scientist quickly moves from discussing telomerase to practical recommendations for prolonging life: quality sleep, physical activity and a healthy diet. She also recommends driving away negative emotions and unpleasant neighborhood. It is difficult not to agree with these tips of the Nobel laureate.
In connection with these "discoveries", thousands of convenient applications for tracking the state of the body began to be developed in the world. But all of them were held in the category of "improving general well-being" ("wellness"), the prices were minimal and typical for mobile applications. In this form, this sector was not of interest to the pharmaceutical market. In 2015, the development of digital medicine was supported by the US Government's Food and Drug Administration (FDA). The regulator has issued a new instruction on medical mobile applications, which allowed startups to enter multibillion-dollar markets, including public and private insurance. Since then, it has become possible to prove the clinical value of mobile applications and receive compensation for them from insurance companies. Thanks to this support, the market volume has grown significantly. This year, a record will be set for the volume of venture investments in Digital Health – according to the estimates of the management company Rock Health, the volume of investments in the first three quarters has already exceeded $ 4.7 billion.
On September 14 of this year, the first mobile Reset application for clinical indications was approved in the USA. The application is aimed at combating the disorder caused by the use of psychoactive substances: alcohol, cocaine, marijuana and others. As part of a clinical study, it was reliably shown that the use of the application increased the ability of patients to abstain from using substances in 40.3% of cases against 17.6% with current treatment standards. This application will be "downloaded" exclusively by a doctor's prescription.
We discussed the prospects of this direction with Ed Godber, a member of our advisory board, a former top manager of GlaxoSmithKline and PatientsLikeMe, one of the most successful projects in the field of Digital Health. In his opinion, the approval of Reset opens a new page in the field of medicine. Digital medicine can potentially be applied to the largest therapeutic areas: type II diabetes, obesity, hypertension, attention deficit hyperactivity disorder, depression and even Alzheimer's disease. All these diseases are associated with our behavior and lifestyle and form multibillion-dollar markets where ineffective drugs are often present today.
Thus, this year, new records are expected to be set for the volume of investments in the spheres of Life Sciences and Digital Health in the USA. This is due to the fact that gene therapy, RNA interference, digital medicine and many other technologies are reaching the stage of maturity and opening up new horizons for the cure of previously hopeless cases of cancer and genetically determined diseases, as well as for the prevention and control of chronic ailments.
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