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Getting real about the R&D capabilities required to win in the gene therapy space.
As the New Health Economy1 continues to unfold, the promise of curative or near-curative gene therapies is one of the most exciting developments. The landscape is rapidly advancing, meaning successful development of the drug pipeline is front and center. Players already in the gene therapy space are under pressure to maximize the success of their portfolio while managing the realities of time, talent, and budget constraints. Meanwhile, those looking to enter the space are wondering what it really takes to develop a gene therapy and which capabilities are truly different from those required for traditional R&D. The transformational potential of gene therapies and the increased investment in the space have raised the stakes for R&D executives to develop these medicines successfully. To help executives navigate the challenges of drug development in gene therapy, PwC has identified “Five Pillars of Gene Therapy Development Success.” These pillars will help R&D leaders to prioritize what is really important to ensure their capability investments and management dialogs are aimed at what matters most.
1. Building a Gene Therapy Workforce
Gene therapy talent is at a premium in today’s market. As strategies shift to prioritize resources for work in gene therapy, executives are wondering if and how they can obtain the talent they need. While some R&D functions may be able to transition from current modalities (e.g., large and small molecules, vaccines) to support gene therapies, others require different skills and experience. Upskilling in these areas can be accomplished internally through staff training or externally through new hires and collaborations. Generally, operational and basic science capabilities can be transferred to support gene therapy R&D given limited differences in day-to-day activities. Alternatively, strategic development roles (e.g., regulatory strategist), manufacturing, and gene therapy-specific science roles are difficult to adapt from traditional development pathways at the pace needed. Evolving regulatory landscapes, unique clinical trial designs, mounting manufacturing challenges, and technical viral vector specifications all underscore the need for experienced talent with specialized knowledge and existing relationships in these areas. In a highly competitive market where $10,000 watches are offered to lure talent,2 there are two approaches to obtaining talent to fill these “non-transferable” gene therapy roles: build or acquire.
Co-locating in hotbeds of gene therapy innovation such as the Bay Area or Cambridge, MA has been the preference of smaller biotechs for years. In 2012, Sarepta transplanted its entire company from Seattle, WA to Cambridge, MA in an attempt to garner the talent it needed for rare disease (the primary target of many gene therapies).3 More recently, the Duchenne muscular dystrophy-focused company announced they would establish a Gene Therapy Center of Excellence as a result of their manufacturing partnership with Paragon Bioservices, giving them access to 300 trained Paragon employees.4 While companies and talent continue to wager bi-coastal moves, there is a rise in co-location in emerging hotbeds such as Philadelphia, PA and Columbus, OH. Amicus Therapeutics, a rare disease company who advanced into the gene therapy space through the acquisition of Celenex and partnership with The University of Pennsylvania’s Gene Therapy Program, recently established a Global Research and Gene Therapy Center of Excellence in Philadelphia.5 Breaking out of central New Jersey grants the newcomer access to the talent of partners down the street within the burgeoning gene therapy hub of Philadelphia. Through co-location and collaboration with partners, companies are able to maintain their current employee base while gaining exposure to industry-leading modality experts, enabling successful asset development.
Larger biopharma generally leans towards acquiring smaller, gene therapy-focused companies to accelerate their move into the space. Celgene’s acquisition of Juno,6 Novartis’ acquisition of AveXis,7 and, more recently, Biogen’s Nightstar acquisition8 are examples of acquiring assets and talent. To help protect and retain the talent, more often than not, the acquired operates as an independent, wholly owned subsidiary of the parent company. This holds true for major players like Kite,9 Juno,10 and Spark11 when acquired by their respective parent companies. In the case of Roche’s Spark buyout, Roche has specifically indicated that Spark will continue to operate as an independent company, serving as a Roche center of excellence in Philadelphia.12
2. Managing a Gene Therapy Portfolio
Interested companies are competing for a select number of targets and patients, especially as many of these therapies target rare disease patient populations. Competition for gene therapy development is further increased by their curative-like features. Boasting the potential for one-time administration of treatment, gene therapies create potential for whoever reaches the market first to treat the majority or entire available patient population, ostensibly eliminating the market for other developers. Together, these factors have compressed development timelines of gene therapies, creating the need to make decisions in a new ambiguous space quickly and accurately. This begs the question: how can an organization prepare for accelerated movement and mitigate the operational risks of managing a gene therapy portfolio? The answer lies in bolstering, upskilling, or even reorganizing present-day project and portfolio management (PPM) groups to support gene therapy development.
The PPM team must have a fundamental understanding of the unique organization and processes associated with gene therapy development. To ensure success, some organizations relegate rare disease to a stand-alone therapeutic area with independent development processes and core capabilities. Appreciating the heightened sensitivity for gene therapy development timelines, internal PPM groups must have strong cross-organizational acumen and ensure siloing of work does not occur. This may serve as a change from traditional approaches in which one portfolio manager shepherds several preclinical assets towards phase 1 then hands-off development to another portfolio manager. In the case of gene therapy assets, there is an advantage to a single dedicated resource providing program management oversight throughout the research and development lifecycle.
PPM teams must also work with internal product development experts to establish stage gates and milestones before beginning work on gene therapy assets. Many of the traditional stage gates and milestones used to progress traditional large- and small-molecule therapies today would most likely suffice for gene therapies. The differences lie in the cadence and criticality of these key evaluations and the go/no-go decision-making process. In contrast to a traditional portfolio, a gene therapy portfolio may necessitate input from a more diverse group of stakeholders. Early gene therapy development plans should include perspectives from commercial, manufacturing, and applicable patient advocacy groups. Commercial stakeholders may offer needed insights into the unique pricing and reimbursement structures of gene therapies to help guide investments and go/no-go decisions. As manufacturing remains the largest hurdle to gene therapy development, manufacturing (CMC) should provide intel on the feasibility of pursuing certain gene therapies or platforms. Finally, the particulars of gene therapy regulations and patient population selection suggests including patient advocacy groups to 1) assist in writing protocols that result in better enrollment and retention and 2) increase patient outcomes, a focus of regulators. Cross-functional interactions and leadership awareness at key milestones and stage-gates support the critical path for development. Furthermore, to drive transparency and streamline asset development, each stage-gate and associated milestone must be backed by clear guidelines and ways-of-working.
A pertinent example for gene therapy is the Technical Transfer (the process of moving technical or scientific information, expertise, methodologies, best practices, and ownership between organizational groups) between research and CMC groups. The nascence of gene therapy manufacturing techniques requires earlier involvement of CMC with research and an extended role for research in CMC. This non-traditional overlap between CMC and research requires new stage gates, milestones and updated ways-of-working. Project ownership and handoffs must be pre-defined and agreed upon to ensure decision rights are not disputed nor made diffuse during this process. Establishing clear decision rights and interface methods between these two groups allows for each group to offer the expertise needed without inhibiting progress.
3. Navigating the Evolving Gene Therapy Regulatory Landscape
Health authorities are cautiously optimistic about the promise of gene therapies. Hyper-awareness of gene therapy’s safety track record13 and manufacturing-related safety concerns14 has resulted in heightened regulatory involvement requiring long-term patient tracking and innovation in clinical trials. However, regulators are increasingly modernizing regulations to guide the advancement of gene therapies while continuing to address patient safety concerns. In July 2018, the Food and Drug Administration (FDA) released six new draft guidances,15 three focused on disease specific areas (hemophilia,16 retinal disorders,17 rare diseases18), two related to manufacturing,19-20 and one discussing long-term care after administration.21 Shortly following, the National Institute of Health (NIH) and FDA released a joint statement streamlining regulations by eliminating duplicative U.S. oversight that has developed as a result of increasing gene therapy regulatory concerns over the past three decades.22 In sum, authorities are beginning to accept a level of uncertainty at time of approval for gene therapies, but the journey to and following approval remains more fluid than that of other modalities.
While gene therapy safety and efficacy has been a concern for decades, a new risk consideration has emerged as these therapies have reached commercialization: reimbursement. The six- to seven- figure price tags for a single gene therapy treatment have grabbed the attention of the press, payers, and regulators alike.23-27 As U.S. regulators turn an increasingly critical eye to skyrocketing drug costs, it remains unclear whether companies invested in gene therapies will be compelled to change their price structure.28-29 Additional ambiguity about how payers will handle these reimbursements and what avenues they might pursue to lessen their burden further increases reimbursement risks.30 While the argument for commanding such prices is that this one-time treatment payment pales in comparison to the aggregated costs of treating life-long chronic illnesses, the political landscape suggests changes may be in order.
Surmounting gene therapy regulatory hurdles must begin internally within the R&D organization and extend outward to health authority relationships.
The curative qualities of gene therapies continue to pose a theoretical quandary for regulators and companies alike: If the effects of the drug are intended to last the lifetime of the patient, when can we (or should we) ultimately deem the drug effective and safe? For the approval of Luxturna, the FDA and Spark’s answer was a novel primary endpoint and a 15-year follow-up study.31 In the lead-up to an expected 10 to 20 cell and gene therapy U.S. product approvals per year by 2025,32 new guidelines will continue to unfold, and biopharma companies should jump at the chance to shape the regulatory pathway for the future of medicine.
While regulatory hurdles endure, gene therapy developers can also take advantage of regulatory accelerators and unique development pathways to speed time to market. Given many gene therapies target rare and serious conditions, they often qualify for one of the four Expedited Programs for Serious Conditions33 (i.e., Fast Track, Breakthrough Therapy, Accelerated Approval, and Priority Review), introduced by the FDA to help expedite approval of drugs targeting serious conditions, or the Regenerative Medicine Advanced Therapy (RMAT) Designation,34 inked by congress into the 21st Century Cures Act at the close of 2016. In a January 2019 statement, former FDA commissioner Scott Gottlieb pledged to work with gene therapy developers to make use of the various expedited programs and to increase FDA staff dedicated to gene therapy Investigational New Drug (IND) review.32 In the wake of guidelines that allow for approval based on Phase 1 data only, drug developers must be prepared to take advantage of new legislature, adapting to accelerated timelines and managing the portfolio accordingly.
4. Developing a Secure, Consistent, and High-Quality Manufacturing Network
Manufacturing has proven a rate-limiting step in the development and commercial production of gene therapies. Technological hurdles aside, challenges in capacity scale-up, talent acquisition, and secure distribution of materials all lead to strategic network implications as biopharma companies continue to expand into new patient populations. Although in-house gene therapy manufacturing requires massive investments in new capabilities, dedicated facilities, and experienced or upskilled talent, there is increasing evidence that the burgeoning Contract Manufacturing Organization (CMO) market faces these same challenges and, therefore, lacks bandwidth to fully support industry-wide demand. Mega-deals are occurring not just for gene therapy companies but also for gene therapy CMOs (e.g., Thermo-Fisher Scientific’s purchase of Brammer Bio).35 Confirming a CMO partnership as soon as possible and/or defining a comprehensive manufacturing strategy to ensure adequate capacity and capabilities for upscaling drug product when the time comes is becoming table stakes for those entering the gene therapy space.
While many companies have decided to build internal manufacturing capabilities-Spark,36 Astellas,37 Biomarin,38 and Pfizer39 to name a few-it may not be necessary or possible to build and maintain new facilities for all participants. Partnering with a CMO, however, may require more time and cost than traditional pipeline products, as well as risk sharing beyond typical practices. How, then, can an interested party calculate best options for manufacturing these novel therapies?
The answer lies in ensuring that commercialization and manufacturing is at the center of strategic portfolio decisions regarding the acquisition or development of gene therapy assets. Whether managing pre-clinical assets or a late-stage development product, a comprehensive manufacturing and technical operations capability strategy and implementation plan should be put in place as early as possible for internally developed assets and before an asset is brought into the pipeline through acquisition or licensing. These plans should account for the stage of the asset and include end-to-end commercialization considerations through clinical development and commercial production. This approach builds needed time and flexibility into manufacturing and supply chain requirements critical to accommodating the uncertainty of gene therapy clinical trials as well as a competitive commercial landscape.
5. Acquiring Gene Therapy Assets
Gene therapy assets are associated with a heightened degree of risk compared to traditional large- and small-molecule therapies. Once a deal is on the table, be it a partnership or acquisition, the expertise requirements, entry dynamics, long-term liability, patient safety concerns, and need for quality manufacturing should shape the agreement made between parties. As the gene therapy deal space continues to accelerate with no sign of slowing down, deals should focus on the unique qualities and challenges associated with gene therapies-namely, those explored in pillars one through four.
Pillar 1: Building a Gene Therapy-Capable Workforce
In any acquisition, the buy-side seeks to drive synergies and capture value. In the gene therapy realm, identifying sell-side roles and responsibilities for retention and integration into the buy-side versus those that are duplicative or no longer applicable for development requires unique modality-specific considerations. Understanding where gene therapy development is similar to or different from the buyer’s development value chain is the first step to creating this integration plan. For example, sell-side manufacturing and regulatory talent may be labeled “critical” while clinical operations talent may not be.
Pillar 2: Managing a Gene Therapy Portfolio
For acquisitions, pipeline management will likely fall into the hands of the already-existing PPM functions. For partnerships, however, pipeline management approaches may vary. While alliance management is central to any partnership, these capabilities should permeate PPM, allowing a comprehensive understanding of an asset’s progression. In order to appropriately manage a pipeline infiltrated by gene therapy assets, a designated alliance management role with gene therapy expertise is key. Furthermore, some partners have chosen to forgo the traditional Joint Operational Committees in favor of a flexible governance model to appeal to the desires of the gene therapy company.
Pillar 3: Navigating the Evolving Gene Therapy Regulatory Landscape
The life-long effects of gene therapies raise concerns around liability and associated timing. Given there is no clinical evidence-based guarantee to the lifetime safety and efficacy of these drugs, companies must be willing to take on a certain level of risk in order to reap key benefits. The long-term follow-up required for gene therapy clinical trial patients and associated uncertainty necessitate well defined key factors surrounding roles and responsibilities, including level of risk-share and opt-out criteria, for all parties involved.
Pillar 4: Developing a Secure, Consistent, and High-Quality Manufacturing Network
Manufacturing continues to be the cornerstone of most deals in this space given the importance and difficulty in commercializing gene therapy assets. Proprietary manufacturing capabilities continues to be cited as a key reason for buyouts across the industry.40 In the case of partnerships, two possible paths emerge: clearly delineate transfer of responsibilities from one party to another or assume the liability together. Generally, the first path is recommended. Deal terms for the AbbVie and Voyager Therapeutics partnership, announced in early 2019, clearly delineated the distinct pre-clinical, vector development obligations of Voyager and clinical through commercialization responsibilities of AbbVie41. This type of arrangement is often the case in a space where pre-clinical manufacturing of vectorized therapies paramount to asset success. The second path may be turned to in partnerships where GMP-grade gene therapy manufacturing capabilities do not exist on either end. In the case of the Janssen and MeiraGTx strategic collaboration, the two agreed to share costs to co-develop commercialized AAV manufacturing technologies42.
“The Multiplier Effect”
The competitive advantage in the gene therapy deal making space lies in building the key capabilities explored in pillars one through four. In other words, preparation is key, allowing for sharper up-front due diligence and the potential to outbid competitors given increased odds of success.
There is an imperative to bring innovative, breakthrough solutions to confounding medical questions, and gene therapies represent an exciting platform to meet the challenge. While there are big strategic questions beyond the drug development process (e.g., pricing, patient engagement), successful drug development is a critical first step. Bringing these exciting therapies to fruition requires 1) an understanding of the capabilities most important to gene therapy development and 2) a perspective on an organization's ability to design, build, and execute upon these capabilities effectively. Developing a coherent system of capabilities around The Five Pillars of Gene Therapy Development Success (talent, portfolio management, regulatory, manufacturing, and deals) will convey significant advantage as the shift to gene therapy continues.
Greg Rotz, Principal; Anup Kharode, Principal; Mike DeMarco, Senior Manager; Katelin Patterson, Senior Associate; Gabrielle Manoff, Senior Associate; all with PricewaterhouseCoopers Advisory Services LLC.