Published January 30, 2023 | 4 min watch
Key Points
- Genetic medicine is the next wave of innovation in biotech given unprecedented understanding of disease genetics and novel technologies to tackle them.
- The COVID vaccine is a powerful example of what genetic medicine can do to innovation, patients and shareholders.
- Gene editing is the latest and greatest within genetic medicine as it may disrupt chronic administration and deliver functional cures with a single infusion.
- However, until scientists fully understand the long-term consequences of the technology, investors need to weigh its promise against the potential for safety and regulatory risk.
- The ultimate winners? Not necessarily the companies with the most attention-grabbing technology, but those that can pragmatically prioritize targets/indications and execute on well-designed clinical trials.
Biotech is evolving at lightning speed and genetic medicine is at the forefront of innovation. The genetics of human diseases are understood to a degree never achieved before and we now have the tools to intervene. Need to turn on genes? Welcome to mRNA or gene therapy. Need to turn it off? Let’s use RNAi. Need to edit a gene? Please meet Jennifer Doudna and Emmanuelle Charpentier, the first ever all-woman duo to win the Nobel Prize for gene editing. At RBC Capital Markets, we track the latest development within genetic medicine, its potential far reaching impact to patients and how to capitalize on these scientific breakthroughs.
Genetic Medicine Is the next wave of innovation in biotech
DNA is the code of life and in humans it is a string of ~3 billion nucleotides coding for ~20,000 genes arranged in 23 pairs of chromosomes. Genes, together with environmental factors, makes us who we are and influence essentially all human traits including eye color, height, weight, blood pressure and even personality or cognitive ability.
Unfortunately, DNA can also contain mutations that cause diseases. There are around 6,000 monogenic disease (caused by a mutation in a single gene) and many more that are polygenic (caused by mutations in multiple genes). The genetic basis of many of those diseases have been known for years, but, for the first time in human history, we now have tools to tackle them.
Scientific breakthroughs and record-breaking capital (we estimate $150 billion over the last few years across VC, equity, partnerships and M&A) are creating a robust product pipeline that is progressing rapidly. There are now multiple drugs approved across indications like spinal muscular atrophy, Duchenne muscular dystrophy and Beta-thalassemia. Most of these diseases are rare but with the technology continuing to advance, approval for much larger indications like oncology or cardiovascular disease is around the corner.
Overall, genetic medicine is a great example of personalized medicine as the individual genes that cause diseases can be manipulated to make an impact for patients. RNAi, mRNA and gene editing - all tools used in academia to study basic biology up to few years ago - are now an integral part of the way we treat patients.
“Genetic medicine is the epitome of personalized medicine as the individual genes that cause disease can be manipulated to make an impact for patients. RNAi, mRNA, gene editing – all tools used in academia to study basic biology up to few years ago – are now an integral part of the way we treat patients.”
Luca Issi, Biotechnology Analyst, RBC Capital Markets
The COVID vaccine is a powerful example of what genetic medicine can do
The COVID vaccine is a powerful example of what genetic medicine can do for innovation, patients and shareholders. The vaccine is based on mRNA, a molecule coding for a protein that triggers an immune response that protects us against COVID.
Developing traditional vaccines usually takes many years, how long did it take to develop the mRNA COVID vaccines? Around 10 months from inception to approval. Its impact to patients? 280,000 US lives saved and 1.2 million hospitalizations prevented. What about shareholders? $55 billion in revenue, almost tripling the number one selling drug the year before (Humira).
Importantly, mRNA is also cheaper to manufacture and its modularity allows expression of virtually any protein so it may be quickly leveraged for other endemic infections (flu, RSV, HIV, CMV, EBV) or other indications like rare diseases or cancer.
"The COVID vaccine is a powerful example of what genetic medicine can do for innovation, patients and shareholders. Developed in record-breaking 10 months, the vaccine spared 280,000 US lives, 1.2 million hospitalizations and generated $55 billion in revenue, almost tripling the number one selling drug the year before."
Luca Issi, Biotechnology Analyst, RBC Capital Markets
Disruptive innovation takes time, but resilience is often rewarded
Along with the successes, there have been notable setbacks as the field took time to mature. A great example of this is RNAi. Andrew Fire and Craig Mello discovered the technology in tiny worms and won the Nobel Prize in 2006. The data was subsequently replicated in mammalian cells and the race was on. VCs deployed material capital and pharma showed strong interest in the technology.
However, in the mid-2010s, multiple setbacks occurred including a mortality imbalance for revusiran and a few deaths in non-human primates. Most investors gave up on the technology. However, a few stuck with it, the technology made progress, and we now have multiple drugs approved and a cumulative market cap for the space of ~$50 billion. What’s the lesson learned? Disruptive innovation takes many twists and turns and it can feel like a roller coaster, but following the science and being resilient is often rewarded.
Genetic editing is the new kid on the block
Gene editing has quickly emerged as one of the most promising approaches within genetic medicine as highlighted by the 2020 Nobel Prize in Chemistry awarded to Emmanuelle Charpentier and Jennifer Doudna for their pioneering work on CRISPR-Cas9.
This technology, which involves deletion, insertion or correction of DNA, enables scientists to precisely tackle the genetic root cause of diseases. The approach is “one-and-done” and avoids the chronicity of current standard of care.
Rapid advancements in this field are creating a robust pipeline and attracting record amounts of capital. The first gene editing approach may get approved for sickle cell disease as early as this year and we count ~40 gene editing companies between public and private.
Despite all the enthusiasm, companies will need to tread cautiously with this technology. Gene editing cannot be reversed and we do not fully understand its long-term implications and potential for on- and off-target toxicities.
Until more clinical data plays out, investors need to weigh its promise against safety and regulatory risks. The ultimate winners in this field may not necessarily be the companies with the most attention-grabbing technology, but those that can successfully prioritize targets/indications and execute on well-designed clinical trials.
