It has been a productive year for cell and gene therapy companies, and every week the sector never fails to generate exciting news flow to keep investors engaged. Given these ongoing developments, it is not surprising that companies involved in the area continue to attract financing and strategic partners. In addition, several biopharma companies have made strategic investments, placing major bets to ensure a stake in the burgeoning field through acquisitions, including Vertex Pharmaceuticals Inc., which paid $950 million to snap up Semma Therapeutics Inc. and bring on board a stem cell-based approach for generating insulin-producing pancreatic beta cells.
Semma’s technology has demonstrated in animal models the ability to produce large quantities of functional human pancreatic beta cells encapsulated in a device that protects those cells from the immune system, restoring insulin secretion and ameliorating hypoglycemia.
Commenting on the deal, Ravi Mehrotra, Evercore ISI analyst, said, "We find the space very interesting and the deal fits well within Vertex's tool box partnering/acquisition strategy."
Vertex also brought on board Exonics Therapeutics Inc., which is using CRISPR/Cas9 gene editing technology to correct the mutations that cause Duchenne muscular dystrophy (DMD) and other neuromuscular diseases. Under the terms of the acquisition, Exonics will become a separate wholly owned subsidiary of Vertex. In proof-of-concept mouse models of DMD, Exonics’ lab demonstrated the ability to use adeno-associated virus to deliver a payload based on CRISPR/Cas9 technology that can identify and correct exon mutations and prevent the production of dystrophin. The company received an initial $245 million up front, and it will be eligible to receive payments of approximately $1 billion in potential future payments based primarily upon the successful achievement of specified development and regulatory milestones.
Also, in the third quarter, Bayer AG paid $240 million in cash and earmarked up to $360 million for future milestone payments for total ownership of Bluerock Therapeutics, a cell therapy company it launched and funded with Versant Ventures in 2016 with an initial $225 million series A investment. The deal gives Bayer full rights to Bluerock’s cell differentiation technology that, the company reports, recapitulates the cell’s developmental biology to produce cell therapies, which are further engineered for additional function. Those cell therapies can be deployed to replace damaged or degenerated tissue and potentially restore or regenerate lost function.
It has been a busy period for Frequency Therapeutics Inc. In July, the firm partnered with Astellas Pharma Inc. to develop and commercialize the company's regenerative therapeutic candidate, FX-322, to treat sensorineural hearing loss (SNHL) for an up-front $80 million payment and a potential $545 million reserved for development and commercial milestones. Tokyo-based Astellas will develop and commercialize FX-322 outside of the U.S., and Woburn, Mass.-based Frequency will develop and commercialize it in the U.S.
Designed to treat the underlying cause of SNHL, FX-322 comprises a combination of small-molecule drugs designed to restore hearing function by activating inner ear progenitor cells already present in the body to induce hair cell regeneration. Inner ear hair cells do not spontaneously regenerate once damaged, although progenitor cells capable of regenerating hair cells remain inactive.
After closing a $62 million series C financing in July, Frequency followed with a successful IPO of 6.325 million shares of common stock, which included the partial exercise of the underwriters’ overallotment option for 325,000 shares, at $14 each for total gross proceeds of approximately $88.6 million.
The funds will help support a recently started phase IIa study of FX-322 to further establish the positive hearing signal observed in its phase I/II study, as well as continue to evaluate safety and define the potential dosing regimen.
The phase I/II study was one of the 1,052 clinical trials underway around the world identified at the close of the third quarter by Q3 2019 report released by the Alliance for Regenerative Medicine (ARM).
ARM found that 650 (62%) of those studies are focused in oncology and 55 (5%) are focused on central nervous system disorders. More than 35% (370) of the studies involve gene therapies, with 32 in late-stage trials.
Year to date, approximately $7.4 billion has been invested into public and private cell and gene therapy companies, with more than $2.6 billion flowing in the third quarter alone, according to ARM’s data.
The headline private company deal in the period was Philadelphia-based Century Therapeutics Inc., which attracted a total of $250 million in a financing led by Leaps by Bayer, committing $215 million, with founding investor Versant Ventures and strategic partner Fujifilm Holdings Corp. also participating. The proceeds will enable the company to advance its genetically engineered immune effector cell therapies, derived from induced pluripotent stem cells (iPSC) from healthy adults. Multiple programs are currently in development to target hematologic and solid malignancies.
Century explains its technology is built on iPSCs that have unlimited self-renewing capacity. That enables multiple rounds of cellular engineering to produce master cell banks of modified cells that can be expanded and differentiated into immune effector cells to supply vast amounts of allogeneic, homogeneous therapeutic products.