Cell and gene therapy companies are quickly emerging as favorites of venture capital firms, investors and members of Big Pharma, according to a report from the Alliance for Regenerative Medicine.
The numbers are eye-catching. In 2020, biotechs working in this space garnered nearly $20 billion in funding. That's 50% higher than the previous record of $13.5 billion in 2018 and a remarkable achievement coming in the face of Covid-19.
More than $5.5 billion of last year's investments flowed from venture capital financing for startups, the biggest being the $700 million raised by cell therapy developer Sana Biotechnology Inc.(SANA, Financial). That was before its initial public offering during the first week in February. Since going public, the company's stock is up more than 30% from its offering price of $25 a share.
Sana's performance is indicative of what happened throughout the industry last year. Regenerative medicine companies outpaced the overall Nasdaq Biotech Index, according to ARM. Publicly traded regenerative companies recorded a 44% increase in share price in 2020, nearly doubling the overall biotech industry.
Large drugmakers are getting in on the action too. Recognizing the potential of cell and gene therapy, they're partnering with regenerative medicine biotechs. For example, Sangamo Therapeutics Inc. (SGMO, Financial) got $350 million upfront from Biogen Inc. (BIIB, Financial) to develop proteins for neurodegenerative disorders. Johnson & Johnson (JNJ, Financial) wrote a $100 million check to Fate Therapeutics Inc. (FATE, Financial) to develop cell-based therapies for two types of tumors. These deals contributed to the $3 billion raised in upfront payments from corporate partnerships, not counting the clinical and regulatory milestones that could be worth billions more.
Two new therapies were approved last year. Orchard Therapeutics (ORTX, Financial) got the go-ahead from the European Medicines Agency to market its gene therapy to treat a rare hereditary disease. Meanwhile, Gilead Sciences Inc.'s (GILD, Financial) Kite unit received Food and Drug Administration approval for its CAR-T treatment for a type of lymphoma. Last month, the FDA greenlighted Bristol-Myers Squibb Co's. (BMY, Financial) CAR-T therapy Breyanzi to treat diffuse large B-cell lymphoma.
But the party is just getting started. In fact, there over 1,200 ongoing clinical trials in regenerative medicine trying to enroll 90,000 patients worldwide. Between the U.S. and Europe, regulators will decide the fate of at least eight therapies this year. And the FDA and EMA think they will approve 10 to 20 cell and gene therapies each year by 2025.
As expected, there have been some blips. Some companies have reported disappointing study results, according to a Biopharma Dive article. Cancer cases occurring in trials of two closely watched gene therapies have raised safety concerns, though it seems the treatments weren't the cause.
These setbacks haven't dulled enthusiasm for the potential of these technologies. Failures are a fact of life in drug trials. In fact, many of the ongoing tests are unlikely to succeed, but those that do are likely to have a huge impact on the performance and share price of the developer.
Disclosure: The author has positions in Gilead Sciences, Johnson & Johnson and Bristol-Myers.
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