LONDON – After a long haul to market, recent approvals and initial commercial successes of advanced cell and gene therapies are shifting the balance of power between biotech and pharma in dealmaking.

Previously biotech relied on big pharma for money, clinical development expertise and sales and marketing heft.

Now companies developing advanced therapies have access to patient capital, clinical trials are smaller and development timelines are shorter. Companies bringing products to market know all the key clinical opinion leaders, leaving sales reps redundant.

The recent commercial validation of advanced therapies means pharma’s advantage in having “a standing army of sales reps” evaporates, said Dimitry Kuzmin, managing partner of 4BIO Capital, a London-based fund investing exclusively in cell and gene therapies and RNA drugs.

“We are super-specialists in this segment, so we can commercialize better than [pharma] can,” Kuzmin told attendees of the Consilium Healthcare conference in London.

Jan Thirkettle, previously in charge of developing cell and gene therapy manufacturing platforms at Glaxosmithkline plc and now chief development officer of gene therapy specialist Freeline Therapeutics Ltd., agreed. “If you are talking small molecules, big pharma has the advantage. When talking about cell and gene therapies, there is disruptive change.”

Thirkettle chose an analogy from the automobile industry. “It’s no surprise Tesla is making the best electric cars, not GM,” he said.

Similarly, the model in advanced therapies is different. “Trying to make changes in big pharma to adapt to this is not easy. You need to break things and rebuild – it is difficult to do incrementally,” Thirkettle said.

Sven Kili, an independent consultant who was head of GSK’s gene therapy unit when Strimvelis, a one-off treatment for the rare inherited immune disorder adenosine deaminase severe combined immunodeficiency, became the first ex vivo gene therapy to be approved by the EMA in 2016, said more biotechs will be able to get to market under their own steam.

Delivery of autologous products, requiring eight hours to extract cells from a patient, followed by engineering the cells with all the related logistics, readministering to the patient, following up for 15 years and finessing the issue of how to get paid, may be complex, but the need for a salesperson is not that strong. “You don’t have to go around persuading clinicians to use it; you need to be having a scientific discussion. It’s all very different from what a salesperson in big pharma does,” Kili said.

As evidence of how biotech is increasingly independent of pharma, Kate Bingham, managing partner of the venture capital firm SV Investors, noted that 65% of current phase III trials in the U.S. are being sponsored by biotech companies. “It’s interesting how biotechs are starting to really fill out their pipelines and portfolios,” Bingham said. “It’s always going to be big pharma guys doing the large-scale international trials. But we do see biotechs starting to bite into it.”

Kili said more small companies are going further, but while there are cases of biotechs “doing it well” by themselves, “small European companies can’t market in the U.S. and China; they need a partner.”  

‘Threshold has been crossed’

The ability to take products further rests on the availability of capital, and here, too, attitudes to advanced therapies have changed.

If you went to raise money for cell and gene therapies in 2012, people “thought you were mad,” said Thirkettle. “Now the commercial model is here; the threshold has been crossed.” That shift meant that by 2018, Freeline was able to raise $116.5 million in a series B round to fund clinical development of treatments for hemophilia B and Fabry disease and to bring forward other programs based on its adeno-associated viral vector.

Kuzmin said he also was told he was mad, when in 2014, he tried to raise a specialist cell and gene therapy fund. Since then other thresholds have been crossed, with products getting reimbursement and changes in how health care systems in Europe assess products that often are one-off cures.

From $100 million per annum 10 years ago, advanced therapies are attracting funding of $12.5 billion per annum now, Kuzmin said.

And from the underwhelming reception received five years ago, in September this year, 4BIO announced the first close of its second fund at $50 million and is targeting a final close of $150 million by the second half of 2020. Investors have given 4BIO a mandate to invest 30% of the money in academic startups.

As Bingham noted, regulators “have been very helpful” in shifting attitudes to advanced therapies.

Thirkettle said typical advanced therapy companies have a firm grounding in the science, enabling them to make arguments in front of regulators based on that knowledge. “Regulators are prepared to reinterpret the rules for cell and gene therapies versus small molecules,” he said.

Kili agreed, saying pharma’s small-molecule model cannot be plugged into clinical development of advanced therapies. “That’s where biotech has the advantage, because it has got the scientific knowledge,” Kili said.

However, the situation should not be portrayed as biotech vs. pharma. “There has got to be a happy medium. [Biotech] companies getting more money can go on very nicely alone, but they know they have weaknesses, so need to partner. But they are on a more even footing,” Kili said.

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