How Genetic Medicine is Revolutionizing the Way We Treat Patients

By Luca Issi
Published November 4, 2021 | 16 min listen

Genetic medicine is already a billion-dollar industry, with forthcoming research and drug development that could potentially cure the incurable. Luca Issi, Senior Biotech Analyst at RBC Capital Markets, explains how it all works and what lies ahead for this innovative industry on the Industries in Motion podcast.

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It's hard to believe that there was a time when little was known about human DNA. Today, not only have scientists mapped the genome, we can discover our ancestry with home kits, and drugs are being developed from the manipulation of our genes that have the potential to cure the incurable. In the last few years, $150bn has been deployed in genetic medicine across VCs, equity, market partnerships, and M&A, and the impact of this capital is being felt. There are 18 drugs currently approved in the space, and there are ten more that RBC Capital Markets Senior Biotech Analyst Luca Issi believes will come down the pipe in the next few years.

“The COVID vaccine is the epitome of what genetic medicine can do,” he says. “And this vaccine has made a huge impact for both humanity and shareholders. A recent publication from Yale suggests that this vaccine has prevented 280,000 deaths and 1.2 million hospitalizations. And at the same time, Pfizer and Moderna together this year will generate more than $50 billion in revenues from these vaccines. It’s a perfect example of genetic medicine making an impact for shareholders, as well as patients and humanity.”

The four ways genetics can help

These COVID vaccines are delivered using mRNA – messenger RNA that teach our cells how to make a protein that will trigger an immune response inside our bodies. It’s just one subset of a number of ways that genetics is being applied in drug development.

“So there is a way to turn off genes, which is called RNAi, or RNA interference. There are ways to do the exact opposite – instead of turning off genes; you want to turn on genes. And you can do that either with gene therapy or mRNA,” explains Issi.

“And then you have the latest and greatest, which is gene editing. This is essentially a way to edit genes, and you can edit them in a variety of ways, including correcting them or inserting sequences; this is a very, very exciting space. And then the fourth one is really cell therapy, which is a way of using cells as a therapeutic. So instead of utilizing a drug or a monoclonal antibody, you're essentially delivering cells. And we already have a few drugs in this space too.”

The long road to innovation

Andrew Fire and Craig Mello started scientists on the path to using RNAi, winning the 2006 Nobel Prize for Physiology or Medicine for its discovery. But it took some time to go from their initial work to commercialization.

“Their work actually started in the late 90s, showing that if you deliver a small piece of RNA in worms, you can turn off certain genes. These were tiny little one-millimeter worms called C. elegans. And, you know, the exciting part of that is that other researchers soon after essentially replicated those findings from worms to mice. And so, once you prove that this technology could be used in mammalian cells, the race was on,” Issi says.

“So we got a lot of companies starting, a lot of VC money getting to this space. Pharma was absolutely all over it. And then, in early 2010, data didn't pan out, and there were multiple issues, including a few deaths in non-human primates, which was problematic. And investors gave up hope. And this was a space that was no longer sexy.

“If you look at the charts, from 2015, very few investors stuck around, but today, companies in this space are multi-billion dollar cap companies. So I think this is a great example where innovations took many twists and turns, it was a roller coaster ride, but the investors that stuck with this technology were incredibly well-rewarded.”

Gene therapy is another area where there have been setbacks, and investor sentiment has waxed and waned.

“Up to nine months ago, cumulatively, gene therapy was a $60 billion market in terms of market cap. Now it's a $40 billion market cap, so you've got $20 billion in value that has been destroyed,” says Issi. “But I do believe that now is a great time to look into gene therapy. The reason why I believe that is the froth is gone; the valuations have materially pulled back. And we have clarity on the regulatory path. There was an FDA advisory committee meeting just weeks ago that gave companies and sponsors great transparency on what they need to do to get these drugs over the finish line.”

While interest in gene therapy has been hit, gene editing is currently in a fascinating phase. Data over the summer has shown great progress in therapy for forms of transthyretin amyloidosis, a rare disease that is currently treated mainly through managing symptoms and underlying causes. But with gene editing, there is potential for a single-dose, novel treatment that may cure the disease.

Meanwhile, cell therapy is evolving from the autologous CART, a fairly complex process, to allogeneic CART, which would be a more off-the-shelf approach.

“That would be very, very important, especially for patients that are rapidly progressing with neurological lymphoma or multiple myeloma or other indications. And so far, the data has been encouraging, and the radiographic response rate has been pretty good. The issue has been around durability; these T-cells don't stay in the bloodstream for as long as we would like them to stay,” says Issi.

M&A and partnerships

Pursuing such a long road to innovation requires commitment and support, which is why this is usually an active space for M&A and partnerships.

“Pharma's have two things – they have lots of patents expires come coming down the pipe soon and lots of cash. And if you look at this whole space and where innovation has happened, most of the transformative innovation has not happened organically in pharma, and it has happened in biotech companies that then end up being acquired by a pharma company. So M&A has been disappointing so far this year; we have not had the number and volume of the transactions we have had in prior years.

“But pharma is the lifeblood of this industry. And I think it's just a matter of time before M&A will come back. I think that a strategic appeal of biotech companies for pharma is only bound to get larger over time, primarily because these companies are now in a position to potentially graduate from developing drugs for rare genetic diseases to much, much larger indications.”

HealthcareIndustries in Motion podcastLuca IssiMark Odendahl

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