DHC's MPs on 2023 and 2024

January 24, 2024
DHC's MPs Anthony Davies, Katy Spink, and Rob Allen are shown here next to a title describing notable events in 2023 and predictions in 2024

In our final Unbridled Excellence expert webinar for 2023, we heard from our Managing Partners (Anthony Davies, Katy Spink, and Rob Allen) on the topic of takeaways from the past year and predictions for the next. Here’s a summation of that webinar for ease of review. If you wish to listen to the entire discussion from our thought leaders online, just go here.

Oliver Ball: For this Unbridled Excellence we bring in our three Managing Partners, reflecting on the year 2023 and looking around the corner to see what 2024 might bring us.  Anthony Davies, our founder and CEO, Katy Spink, our Chief Operating Officer, and Rob Allen, General Manager for Dark Horse Europe. These three have been in the field now, really, since the very, very early days of cell and gene therapy. So, they benefit from a privileged perspective on how the industry has developed over more than two decades. They've been watching closely what the markets have been doing this year, and we're lucky to have that insight into what we might be seeing in the next year.

Anthony Davies: First, we'll talk about some of the bad stuff that happened this year, as it's been quite the year, right, everyone? Then we'll see if we can see ‘round the corner. It’s a hard thing to do at the best of times but after the year the field has had, perhaps harder than usual. So, there were lots of approvals in 2023 for new drugs and new indications. Omisirge®… and ROCTAVIANTM was a big approval. But perhaps the most interesting thing for me that happened in this part of the field was that the FDA brought the action date for bluebird's sickle cell drug forward from the twentieth of December and issued the action on the same day as Vertex's sickle cell drug, the 8th of December. So we had the really unusual situation of two approvals for the same disease from two different companies with broadly similar modalities. So, exa-cel and lovo-cel, as they were known, became CASGEVY™ and LYFGENIA™. It was pretty interesting that they accelerated the dates. I think maybe they were trying to prevent either of those companies claiming to be the first, although one of them had really been in development for longer than the other. And of course, exa-cel became the first gene edited cell therapy to be approved using CRISPR technology. Vertex should be very pleased. Bluebird…I don’t know, they got the approval, but….

Rob Allen: I mean, it is a great shame if you look at the market performance. Since the approval, one might reasonably expect share prices to increase, following a significant approval like this. But, clearly, quite the opposite of that's actually played out. There’s probably quite a few reasons that play into this. I mean, Katy, what do you think? It is a shame to have seen them beaten up like this in the market.

Katy Spink: Yes, I think so. Bluebird lost about $200 million off their market cap. So I think a hundred of that is easily attributable to what they had sold the priority review voucher for. And I guess the other 100 million could either be viewed as an overswing response by the market, or perhaps more likely, the response to the black box warning. Interestingly, CRISPR actually went down a bit, too. But I think in that case it's pretty clearly just that the approval was already baked in, as they'd gone up a lot after their AdComm and then gone up again after the MHRA approval. And so today, even after they went down a little bit after the FDA approval, they’re still trading at 57 versus 38 before the AdComm. That’s a pretty big uptick overall in the last 6 weeks.

Anthony Davies: …and the price, right? There was a price differential between these two drugs.

Katy Spink: I think the fact that LYFGENIA came in at almost a million dollars more than CASGEVY certainly didn't help them as well.

Anthony Davies: People sold on the news. I think bluebird’s stock was run up as well before the action date, if I remember right. So I think it's spot-on there with that analysis. Been a long road for bluebird, you know. Real pioneer. Not that Vertex and CRISPR hadn't been around for a while as well, but it's been a long road to their approvals, and I think they've had some challenges with each of them.

Katy Spink: Yes, the one who paves the road is often not the one who makes the money at the end of the day, right? We’ll see.

Anthony Davies: I also read something putting forward a pretty strong argument that because bluebird already had approved drugs of a similar modality, their treatment centers were up and running, ready to roll. Maybe they will make the money at the end of the day in terms of revenue. But yeah, certainly the stock price wasn’t pretty.

Rob Allen: It could be interesting—which is the second mouse in this cheese when they both come out of the trap on the same day, As you mentioned, there are 27 of those bluebird treatment centers versus 9 established for Vertex, so…is that going to factor into uptake? How much has been done in terms of physician education? I guess we'll see over the next few months, won't we?

2023 top five notable events, #1. Dual BLA approval for sickle cell (CASGEVY and LYFGENIA)

Katy Spink: So, in another topic for this past year, I’d like to mention something I was noticing the other day: we are very likely to hit $5B in annual global sales of cell and gene therapy products for the first time this year. Despite what has in many ways been a challenging and difficult market for fundraising, I think that's a pretty compelling milestone for the field. We're at $3.8B in total sales for Q1 through Q3 and with several drugs ramping and new approvals, I think…maybe not by a lot, but it’s quite likely that we’ll be over $5B in total sales when all was written for 2023.

Anthony Davies: Yeah, that's that's quite the milestone. You know, completely artificial though it is. But I don't know, if you look at the composition of what will be in that $5B…and right now, as Katy said, we're just under 4, and by our maths, there are two drugs comprising exactly half of that: that’s ZOLGENSMA® and YESCARTA®. Everything else is three-fold or more lower than those drugs in sales…not that they’re bad numbers….and there’s multiple multi-million dollar drugs out there and you all know what they are. Now, ZOLGENSMA, this will be the last year of high sales, I think, because the incident population is essentially treated and the prevalence of this disease is is pretty small, so they'll be hoovering up tens, maybe, or dozens of patients next year because the heavy lifting is done. We were talking about it being “Sovaldi’d.” SOVALDI® was the hepatitis C drug from Gilead, which eliminated the disease which it was developed to treat, and thereby drove its own revenue down to zero. I'm not sure the good people at Gilead want their brand name to be used as a verb in that way. But I think that ZOLGENSMA is going to Sovaldi itself. YESCARTA is a freight train…it’s really the dominant CAR-T therapy by three or four-fold at the moment. But I don't think it's all that bad. I think there will be plenty of other small indications like the spinal muscular atrophy that ZOLGENSMA treats that will come and go as they're sort of taken care of by cell and gene therapy, which I suppose is great. Is that a fair comment?

Rob Allen: I think so.

Katy Spink: I was going to say, I think that's something that's really interesting about cell and gene…other than SOVALDI, we've not really had an example in the past of the ability to  dry up your own market. YESCARTA is still ramping…it was 1.1 billion in 2022, and it's on track for 1.5 billion this year. And then we've got HEMGENIX®, ROCTAVIAN, and ADSTILADRIN® who’ve all dosed their first patient in the last 6 months. So I think those will be new ramps for 2024…not to mention CASGEVY and LYFGENIA that were just approved.

Rob Allen: …and Sarepta, fairly recent approval. They announced their first full quarter of sales at 69 million, which, compared to YESCARTA is still relatively small at the moment. But I think the interesting fact is, by how far they beat the analyst range that was anticipated of 20 to 24 million. So while they don't disclose patient numbers, for their first full quarter of revenues To be just shy of $70M, it's a fair start, right?

Anthony Davies: A lot of the ramps have been a bit disappointing, I think. You know, there's a lot of growth left in some of the ABECMA®s and BREYANZI®s of this year’s new drugs…partly manufacturing related. We hear things about manufacturing being challenging. But I'm starting to think that ramping for cell and gene might be slower than for biologics at this point in the development of the field, at least.

Katy Spink: Yeah, I think we're still at the point where treatment centers don't necessarily have all the logistics locked in.

Rob Allen: I think the aspect of commercial supply is still, fairly new to the organizations that have gone it alone. This is the first product they take into the market as well. So it's obvious there’s work to do when they get over the starting line of approval. We should be preparing for this during Phase 3, but still obviously work to do to iron things out when they get to commercial manufacturing, testing, and release, you know, on a routine basis.

2023 top five notable events, #2: Likely new high water mark of $5B in annual global sales of CGT products

Rob Allen: Let's stick with some more good news for the field: given the number of entrants that have tried and walked away in Europe. BioMarin’s news at the end of November where they announced an agreement with GKV-SV on the reimbursement amount for ROCTAVIAN. I thought it was really great news for the patients with severe Hem-A, and also for the organization that's had the product approved, and they're going to commercialize it. You know, it's the first gene therapy for Hemophilia to receive an agreed federal price in Germany. There’s been news about others that have tried, and had a price and walked away from it. One-time single dose therapy delivered as an IV-infusion at 30 k a vial equates to about 900 k in dollars-per-patient in net revenue for BioMarin. I thought that was really great news. Let's see how this plays out. Another interesting factor is the way they've gone in terms of the companion diagnostic for AAV5 antibodies that put 60% of potential patients on the path as eligible for next steps. So there is a pipeline there to come in Germany…that all feels like good news to me, Katy and Anthony.

Katy Spink: Agreed. I think you know a topic that I've beat the drum on a lot, and I know Anthony does as well, of late, is COGs, and so probably no one listening will be surprised to hear that I'm gonna relate this to a topic on COGs. Which is, that, given that the agreed price in Germany is less than half that of the post-discount U.S. price, to me—this implies that BioMarin did their homework on getting COGs down and therefore is able to market in Germany at that much lower price without losing money, as may not have been the case for previous companies in Europe. And it brings me back to something that most people will remember, which is that this approval was much delayed in the U.S. by some disagreement with FDA around the ability to use the Phase 1/2 trial long-term data to support the approval, and therefore the need to collect longer term data on Phase 3. In fact, at the end of the day, the summary basis for regulatory action from the FDA specifically stated that the current manufacturing process produces drug product with a subset of Critical Quality Attributes (CQAs) that aren't comparable to those of the initial Phase 1/2 clinical lots. But at the end of the day, by making those changes between Phase 1/2 and Phase 3, I wonder whether BioMarin set the stage for a longer-term success of being able to have a manageable cost of goods that will allow them a good commercial runway.

Anthony Davies: Yes, I mean, you’ve got to wonder. Looking from the outside in, I think people are wondering whether it was deliberate or whether they may have found a silver lining in their delay. But I will look at the ROCTAVIAN revenue, Katy, over the first year, and we’ll know…I'm sure that BioMarin will be imagining what might have been if they'd had that revenue, because it was a big delay—

Katy Spink: I think it was 3 years, and I'm not trying to argue that that was something that was good. Obviously they were hoping to be approved in 2020, but at the end of the day maybe it all paved the way for a longer-term success, right?

Anthony Davies: Talking of ends of days. I can't believe nobody's mentioned that as of a few days ago, BioMarin has a new chief executive…you know, I think people have seen it on the news but the identity and history of the new CEO is, I think, pretty interesting. I mean Jean-Jacques Bienaimé was there forever and turned BioMarin from an, oh, small-to-midsize biotech company into the massive biopharma company that it is now. But they hired the CEO of Genentech…isn’t that just an amazing move? The CEO of Genentech for the last, I don’t know, about a decade, they must have launched a dozen new drugs while he was there. Really interesting…when he was at Genentech—Alex Hardy is his name and he is, I have to say, a Brit—but when he was at Genentech he presided as CEO over a period where a bunch of their medicines went off-patent. I think that's pretty interesting in terms of, especially when you talk about an approval delay, Katy…I wonder when that will happen to ROCTAVIAN, and maybe that will precipitate the era of gene or cell therapy biosimilars, which has been—I think a lot of people are in denial about personally—but that's a whole other diatribe for me. But look at BioMarin. I'm gonna say congratulations to them for landing one of the biggest-name CEOs in the business. BioMarin are going to try to turn themselves into the Genentech of cell and gene therapy, I think, or at least, gene therapy.

2023 top five notable events, #3: ROCTAVIAN approved in US, first patient dosed in Europe.

Anthony Davies: OK, well, that's enough good news, isn't it? We can moan and groan about some things now. Any top 5 for last year that doesn’t mention financial stress would be wrong. I'm not a biotech CEO; I'm a pharma services CEO…so I don't have to be an eternal optimist. But, boy, it was a year of massive financial stress. We don't have to get into the politics and the macro of interest rates and inflation, and finding better things to do with your money than have a flutter on a biotech company, but this has made it an unbelievably hard year to raise. Is there a Darwinian process going on now? A whole bunch of weak companies have died, or are in the process of dying. I think what we've seen in all of these pull backs (and this is maybe the fourth biotech pull back that we’ve been through historically) is that unfortunately, some good companies are getting dragged down, too. If you were unlucky enough to time it wrong, and you hadn't done a raise for a year or few, and then you came into 2023, expecting to go out either to the street or the private market…a bad choice of a year to do it. And I don’t want us to pussyfoot around this thing. It was such a terrible year. It was a nuclear winter for funding…however, I genuinely think we’re seeing some green shots of recovery. I know there've been other groups saying that for a while. It's very hard to predict rebounds in biotech, but historically, rebounds have always been bigger than the pull backs. I'd like to highlight a couple of private market placements.  Cellares which is an equipment company for manufacturing cell therapies. That was, I think, about a $250M/quarter of a billion dollar raise this year… Ray Therapeutics, which you know, just when you think that there's nothing left to do in AAV and ophthalmology. Ray comes along with a really interesting optogenetic platform, and they raised well over a hundred million in series A. Those are big raises. Right?

Katy Spink: Yeah. Well, and Tome Biosciences just the other day with $213 million, I think it was…and even some green shoots in the IPO market, maybe. We've got Lexeo raising $111 million in November: now, they did price below their range. But at the end of the day I think, most biotech CEOs this year would still be happy with raising eight figures. And then, of course, Cargo pricing that $280 million IPO in November as well. So I mean, I think we were seeing some green shoots, maybe in Q1 and then, you know, Silicon Valley Bank and First Republic happened. So, my crystal ball may be a little hazy. But I would say, in the last quarter of the year it's been starting to look interesting.

Rob Allen: So, if you think about partnerships as well, consideration of – are biopharma/big biotech playing hard in the space, you know, in terms of investment in cell and gene. I'll mention a couple: the Akouos deal with Lilly …the ArcellX deal with Gilead, as one of the more established players with YESCARTA in their portfolio already going great guns. But I think there's still continued evidence of an appetite for further partnerships on the gene therapy side and the gene-edited cell therapy side as well, you know…numerous other examples where mature commercial organizations have these types of assets as part of their thesis.

Anthony Davies: Yeah. I think there’s a really good combination there. There’ve been private raises, public raises, partnerships, pretty good acquisitions. The thing is, you never know you're in a rebound until you've been in the rebound for quite a while, and then you look back and say, ah, the rebound started in…well, I'm just gonna say, toward the end of the third quarter of this year. That's where I'll put my stake in the sand. It may be that the beginning of the fourth quarter of this year is when the rebound started.

2023 top five notable events, #4: Financial stress across biopharma…however, we’ve noticed some possible upsides and signs of rebound during Q4

Katy Spink: So, we've had some good news, we’ve had some bad news. I'm going to throw in an item from this year and I honestly don’t know which one it is (good or bad)…but it’s certainly been a very interesting development for the field in the last year. And that is the approval of Sarepta’s ELEVIDYS over the objections of the review team followed by the failure of its confirmatory trial. When first approved, I would have said, this is definitely positive news for the field. It's indicating that there's some room for flexibility within CBER for approval of drugs under accelerated approval when there is a very, very significant unmet need that can't wait, and sufficient evidence of safety. Sort of reminiscent of the HIV drug debate that we'll all remember from the eighties if we're old enough. But then, you know an interesting twist on that, with the confirmatory trial failing recently, falling short of its primary endpoint, but again met several secondary endpoints. There's potential for some backlash and some tightening of FDA's approach to accelerated approval on that basis. Just curious how both of you come out on that balance: what you think about those developments and what they might mean for the field going forward?

Anthony Davies: Yeah, I think it's really hard to parse. I mean, they did the trial, and they completed it right? And I think there's a whole thing out there that our regulatory team discuss frequently, which is the lack of post-approval teeth to the process. But I think, Sarepta going in must have understood that there was risk associated with this situation. But they took the risk, and I suppose it didn't pay off. But Peter Marks is not shy in saying that he thinks there are many examples of drugs, especially in the cell and gene field, where the benefit of the doubt should be given around the approval milestone, and he's also said to me that if you're not withdrawing some drugs you're probably not approving enough, because it's better to—as long as a drug is safe, obviously—it’s better to approve it, maybe hitting some secondaries with a confirmatory trial ongoing than it is to deny. And then you never know, because let's be honest—in the real world, drugs behave differently when they're addressing the real-world population sometimes from when they're addressing the curated, highly studied Phase 3 populations and Phase 2 and Phase 1 populations. Having said that, the trial did fail. So, I'm not quite sure if the Peter Marks argument holds water there, necessarily.

Katy Spink: Yeah, well, you know, so far, it's a lot more than the 10% I think Peter Marks has sometimes referenced in those comments. But within one it was either going to be 0% or 100%. Right?

Rob Allen: I’m a fan of trying, provided it’s safe. I mean, if you think of a condition like that, you could consider ultimately life-limiting severe negative impact on quality of life, pretty much otherwise undruggable. Provided it's safe and has been deemed a benefit. There is a label, you know, if you're 4 to 5, we've seen patients treated at 4 years and 364 days. I can fully understand as a parent why people would be willing to pursue that as an option where there are no other options.

Katy Spink: Yeah, I'm as skeptical a scientist as they come. But as a parent, absolutely.

2023 top five notable events, #5: ELEVIDYS is approved over objections of review team, then fails its confirmatory trial

Rob Allen: Are we going to round out a review of ‘23 before we go into a crystal ball for ‘24 without talking about the FDA's recent communication on CAR-T safety?

Anthony Davies: I mean, you know, safety events are awful. They’re every company's nightmare. I'm sure the FDA hates it, too, and obviously for the patients it’s just awful. But this is a big field now, with a lot of trials and a lot of patients. And these are, I think, perhaps something we all forget about CAR-Ts and other cell and gene therapies. These are unbelievably bio active drugs. They're potent. They do lots of things to the body. I mean, look at the field of treating the side effects of CAR-T cells…it’s a massive field in and of itself, and has been since day one with the earliest patients with cytokine release and the neurological complications and so on and so forth. So I said, we weren't going to talk about it. But I'm so not surprised. I guess we're talking about it! Well, I just don’t see it as numerically significant. I think this is sort of a non-event for the field as a whole.

Katy Spink: Yes, I don't want to dismiss it without acknowledging that for the patients it impacts, obviously, it’s terrible. Having said that, I agree with Anthony, over 30,000 patients for sure, treated between these products by now…and 12 reported cases. So when you think about the level of unmet need and the lack of alternatives for these patients, a less than 0.1% chance of developing a secondary lymphoma is, in the overall risk-benefit ratio calculation…well, it just doesn’t really doesn't stack up.

Anthony Davies: So, how about this, then, Rob…we’ll take that and say that it’s not a retrospective 2023 thing, but it can be our first prediction for 2024. And the prediction is that, well, again, safety issues are really bad. We're not just saying this doesn't matter because we're rah-rah-CAR-T-cells or rah-rah-cell-and-gene-therapy, but I think what we will say is that the CAR-T safety issue will blow over this year. But we'll also say: there'll be more. There'll be more safety issues. There'll be trials put on hold. There'll be trials coming off hold, and with an increasing number of trials this is what you expect. I've seen data saying, oh  cell therapies get put on hold more and the holds last a different period of time, but what I see when I look at the totality of the data is that cell and gene therapies get developed at approximately the same rate as all drugs—certainly as all biologics, historically. So, my first prediction for 2024 on the drug development side is that there's going to be a still-increasing number of trials and developers worldwide and there will be challenges.

Rob Allen: Hmm.

Anthony Davies: Is that too obvious for a prediction?

Katy Spink: Perhaps, but I think it's worth reminding folks, because inevitably, every time this happens, you know, someone in the press says the sky is falling.

Rob Allen: And every day, thousands of planes land safely. Right?

2024 top five predictions, #1: CAR-T safety issues blow over

Katy Spink: All right. So for another 2024 prediction, I think we've already perhaps started seeing this year (in 2023) a lot of consolidation in the CDMO landscape. Four or five years ago everyone wanted to be in the cell and gene therapy CDMO industry after that famous New York Times article about shortages in viral vector manufacturing. But now it seems like many of the smaller players that got in in that timeframe are getting out and are consolidating into the larger players. Would you guys agree with that trend? And what do you think that that means for the cell and gene therapy CDMO industry and also for those developers who rely on the cell and gene therapy CDMO industry?

Anthony Davies: Yeah, I'm a deep skeptic here. I think that CDMOs are always going to be with us. They have been with us since the dawn of biologics or before, and I'm not going to deny that some CDMOs are under stress at the moment. Okay? And another thing that's been happening for decades is that there are quite a few therapeutics developers who've had a dodgy Phase 3 or something like that, and they've built their in-house manufacturing capacity…they’ve had to sell that. Well, look who buys them? It’s CDMOs that buy those facilities. Because they know that down the road, it is very hard to have too much CDMO capacity in the long term. I want to remind people…why does cell and gene therapy have this sort of peculiar codependence with CDMOs to a much greater extent than biologics, and certainly than small molecules? I think it's because the early speed of development of these drugs as they come out of academic labs, is so fast that most of these, either academic labs or even companies developing early-stage cell and gene therapies, have not stood up manufacturing yet. So, I think there's been a disproportionate utilization of CDMOs early in the history of this field. So maybe there has been a bit of an overbuild and we're going through a small correction now. But I read an article earlier this year by Dan Stanton, who's been following both biologics and cell and gene manufacturing forever, where he noted that the cumulative annual growth rate of liters for monoclonal manufacturing once again this year increased by high single digit percent. The biologic CDMO industry has been growing at this rate for decades now, and that's—with the maths of compounding—that's a massive growth rate. So, CDMOs are going through a little bit of hurt at the moment, but in the medium term, and certainly the long term, there might be some more consolidation, Katy, which I think is what you’re talking about. But long term, I think they're going to be fine, and the field needs them, and the good ones are especially needed.

Katy Spink: I think consolidation is not always a bad thing, either, right? Allows for increased quality…increased standardization.

Rob Allen: I think it's interesting to look at where things are now…if this is a slight downward blip on what's otherwise a fairly solid general upward trend, to Anthony’s comments. If you think about the internal VOC (voice of customer) that we ran recently: there were five attributes that we graded on importance in selecting a CDMO. As things stand today, [the order of importance was] quality, experience, availability, expertise, and price. And then we said to the group, en masse, how do you see these factors being graded in terms of importance in five years’ time? Quality was number one and remains number one in terms of attributes. For client organizations looking to receive external manufacturing support or CDMO support…quality remains the number one consideration. Experience, which is partly the actual expertise. You know, the unit operation, manufacturing and compliant GMP environment, coupled with the tenure of the team. So I think that's a big feature as well that we see as being critically important where these manufacturing organizations are concerned. For price, Sanjin Zvonić, our head of BD, would argue about the use of cost versus price versus value, but price is actually seen as the least most important attribute when making consideration around selection of a partner. I'll pause there for your thoughts. But I thought it was a really interesting exercise. Quality remains #1 as we look out five years from now.

Anthony Davies: Yeah, I mean, “quality capacity” is a phrase we use. We don’t look just at capacity, but we look at capacity that’s actually any good. And you legit can never have too much of that. And I hope that that increases.

2024 top five predictions, #2: Continued consolidation in CDMO landscape

Katy Spink: All right, so, another topic for us. I think we've seen over the last couple of years some challenges at FDA to keep up with the growth of this field. And some pain associated with the transition to the new super office structure. Personally, from where I sit, I feel that we are starting to see some signs of stabilization in that dynamic. At the ASGCT Policy Summit a couple of months ago, FDA’s Nicole Verdun mentioned that they're making good progress in staffing up their leadership structure and hiring additional staff. Peter Marks has been quoted saying similar things as well. And I definitely think we've seen some signs of that in our interaction on behalf of clients at DHC, so we're starting to see, for example, meetings being awarded for pre-INDs, which used to be almost universally written-response-only in the last couple of years. My prediction for 2024 would be that we do see stabilization there, and better ability for clients to interact with FDA and to receive timely and actionable feedback…and even in meeting formats as a result of that. What do you think?

Rob Allen: I'll tie it together with the number of approvals from an inspection perspective on the PLI front. There have been obviously multiple inspections given that some of these therapies that were applying for licensure used multiple manufacturing facilities, different organizations covering different geographies, etc., by jurisdiction. I think it's interesting, where those PLIs are performed by DMPQ…to think that DMPQ and obviously other inspector offices within the agency are still probably overcoming the backlog associated with the pandemic. There were facilities manufacturing Covid vaccines, but also the ability to actually physically get on-site played into it as well. I think that backlog's going to get cleared. I think the inspection schedule gets set at the start of the year. For these therapies that cross the start line and receive approval of the BLA, having been successfully inspected by DMPQ, what will be interesting for these therapies as they move into routine commercial manufacturing and supply, you know, with all the additional challenges that come in that regard as opposed to supplying IMP for a trial…when the surveillance inspections start to kick in, performed by team biologics on an approximate two-year cycle. But that's driven obviously by perceived facility risk at time of inspection. I think there will be a new era for the field where facility, conformance, and compliance becomes more of a thing as more of these therapies become approved.

Anthony Davies: I agree strongly with those comments about inspectional readiness post-approval. There's been a big sort of sigh of relief when all of these approvals have come through, and the manufacturing facilities have been blessed. But let's remember that several fairly recent approvals have been significantly delayed by 483s being issued, pre-BLA. I think there is a place where the field has not done as well, perhaps, as biologics did in the early days. I think you're right—team biologics coming in two years post-approval will be a serious moment for many of these manufacturers. As you say, proper commercial manufacturing—and all that entails—with, you know, recalls and retains, and everything else…mechanisms for all of those processes are a lot more serious than your quote-unquote just getting your BLA and licensure-enabling manufacturing done.

Rob Allen: Heath Coats, our ex-DMPQ inspector would say, “you don’t start preparing…it’s more than you don’t STOP preparing.” That has to be a continuous piece where facilities are concerned.

Katy Spink: And I think the demands of Covid, between the additional inspections as well as the challenge with on-site inspections, have perhaps given—if not a free pass—maybe a little bit of a easier road for many sponsors, so I wouldn't be surprised to see as that backlog clears that we’ll see more inspectors staying for more days, uncovering more items.

2024 top five predictions #3: Stabilization at FDA as OTP staffs up

Anthony Davies: Yeah, I agree. So I think you know, commercial inspection or readiness…there's another reason that's going to become more important in 2024 than any previous year for the field. We've got some really interesting new approvals coming up that are long anticipated. I think that 2024 will see the first solid tumor approval for the field. Might actually see more than one. Iovance’s Lifileucel: it’s been a challenging road for them as well with multiple delays as they got their BLA filing together, but there’s an action date in February of 2024. By my maths, if you exclude cord blood products and so on and so forth, this will be approximately the 24th or 25th new cell and gene therapy product, not counting line extensions (being very conservative with that number) and that is up for the end of February. And then there’s Adaptimmune as well, right?

Katy Spink: Yes. You mentioned there might be a second. So just a few days ago [as of mid-December], we saw the announcement from Adaptimmune that they completed their rolling BLA for afami-cel. So, barring any RFT or major amendment that would put their PDUFA date up in the third quarter of 2024.

Anthony Davies: And again, sarcoma is a legit solid tumor, so we'll have melanoma and sarcoma and Iovance has essentially the same product to treat cervical carcinoma, which will be about a year behind their February action date. Approximately – maybe less, I don’t know. I think 2024 is the year when the solid tumor thing should happen, and that has larger patient numbers. You know, getting cells into a solid tumor has been a scientific challenge for many, many years. And I think it's extremely exciting to see multiple companies and multiple indications start to chip away at this area. Because let's face it: we’re disproportionate in oncology for cell and gene. It's been disproportionately focused on HemOnc and liquid tumors. So I think this is another potentially massive set of patient populations for the field to address.

2024 top five predictions #4: First solid tumor approval (maybe two!)

Katy Spink: We actually had a question in the Q&A about cost of goods. And maybe this is a good place to tackle it. Because I know one thing that we've talked about a lot, Anthony, is that the high cost of goods for these products today is manageable in rare indications. But it's going to be a real challenge as the field moves into more prevalent indications. There is a lot of room for improvement in those cost of goods based on, you know, improvements in efficiency and, of course, automation. One thing that I've said repeatedly is: you can't just automate the process…you have to automate the assays as well, because they're a very significant component of the cost for most of these products, especially the autologous ones. But for me, my view is that ultimately to get into the really large indications, most likely we are going to need to get into allogeneic approaches to enable that scalability in production. I know that's not necessarily something you always agree with, though, when we talk about it, Anthony.

Anthony Davies: I'll just ask a question about how many allogeneic products are approved at this point in time. But we will not get stuck into the auto vs allo debate! Vijay Mohan is asking an interesting question, and I want to tie it back to the first thing we talked about, which is the price of those two drugs that were approved in December of 2023. If you compare the bluebird drug here, using a viral vector and a bone marrow device cell source with the CRISPR Vertex drug, which is an RNA electro operation with an RNP complex, no viral vector….probably a much cheaper process. Of course, we can't disclose any analysis we might have done there. But maybe that contributes also to the differential in price. Katy and I are, as we like to say, in violent agreement on this. And I think any technology that bends that cost curve, as the person asking the question says, is a legit target for investment and acceleration, and the field has got to come to terms with the COGs before we hit massive solid tumor indications…before we hit larger indications in other fields like hematology, where you know, ROCTAVIAN and those drugs are chipping away at these larger patient populations.

Anthony Davies: Not to run out of time, I’d like to predict that yet again, 2024 will see a record number of commercial approvals. We tend to follow the FDA approvals closer than others, but I think that's actually foolish. And we take a global perspective on this: we look at APAC, we look at Europe…if we look at our PDUFA database it’s a bit hard to enumerate sometimes, because PDUFA dates, especially for rolling BLAs and so forth are a little bit hard to predict, but looking at the first half of 2024 again, by very stringent criteria…it has to be a new drug…we’re not counting line extensions or the same drug for different diseases…we're seeing 5 or 6 in the first half of next year. Probably those include some we've mentioned today, like Iovance’s and AdaptImmune’s. Orchard have got a drug up, Rocket have got a drug up, Pfizer, Spark, Abeona, and probably Autolus as well. And that’s just the first half of the year. This year we saw 6 approvals total (by our own criteria) and I’m talking about 6 potential approvals basically in the first half of next year. So, I think we might hit 10. We might hit the “magic Gottlieb 10” which, as predicted in 2018, said that by 2025 we’d exceed 10 approvals a year by the FDA. We might hit that a year early. Even if we don’t, it’ll be another record year and I really want to emphasize for everyone listening: the ultimate updraft for this field is commercial approvals. That's what completes the virtuous cycle of investment. Investors: look at commercial approvals, revenues, margins, and then think hmm, yes, I think I will invest in the next round of drugs in this field, so it is of absolutely critical importance. And I think it's going to be a really strong metric next year.

Katy Spink: Agreed. I mean, with the 5 with established PDUFA dates, plus Adaptimmune, as we discussed as being likely in Q3, already being up to 6 potential approvals for next year before it’s even started is definitely looking optimistic for a record year of approvals, if not even the Gottlieb 10.

2024 top five predictions #5: Likely, a record # of approvals in 2024

Katy Spink: So we had a question come in the Q&A. With the FDA announcement on lymphomas from CAR-T, I believe all have been with viral vector processes…do you think it will drive process development towards targeted editing…for example, CRISPR? I'm happy to take a first stab at this and then hand it over to my colleagues as well. I do think that in many ways that is where the field is already heading anyway and it’s interesting to think about that in the context of what we started this session with: the two sickle cell drugs, one of which is gene edited and does not have a black box, and and one of which is viral vector and does. So, I would say overall, yes...but, I would also circle back to our discussion around CAR-T safety and overall risk-benefit profile for these products, and say that while we should always strive for the safest possible therapies using the best possible technology to deliver that, I in no way think that standard viral processes are outdated, or dead, or that everything will move to CRISPR. I think, as my UK colleagues would say, there's horses for courses, and we should try to deliver the best product for each indication.

Anthony Davies: Yeah, I agree with Katy. There are obvious drawbacks of viral vectors. But many, many more patients have been treated with viral vectors than have been treated with nonviral vectors at this point and there are hundreds of trials involving viral vectors doing pretty nicely in the clinic. CRISPR, as a technology (not referring to the company) has on-target and off-target effects. Relatively few patients have been treated with those. And, the preclinical analysis of CRISPR on-target and off-target is extremely complex. And is a relatively immature field so far. Viral vector manufacturing from a COGs perspective: that could use some work. And I do think it's probably a contributor to the pricing of drugs like bluebird.

Anthony Davies: There are a couple more questions there on the MSC therapies. I mean, I think…drugs fail. We don't really have time to get stuck into the specifics of these two products that failed in 2023. Very different products, very different indications. Very different FDA processes between them…not really comparable. But I think it's also part of the evolution of the field and the maturation of the field, that you will see drugs fail. It doesn't mean the entire modality is flawed. But sometimes what it means is that the modality needs to adapt and perhaps become a little more technically sophisticated. It takes so long to develop drugs that the science and technology at approval tends to be 10, even 20 years out of date. And I think CRISPR is a good example. When I founded Dark Horse 10 years ago, CRISPR wasn't really a thing, all right? I only sort of heard about it, because my mother kept sending me newspaper articles about this new technology, which eventually I decided I had to find out about. Now we've got tons of CRISPR clients. We do loads of CRISPR work. And that happened in less than a decade, and we’ve got an approval. So I think that was warp speed. And I think that that's the way these fields evolve. Everything gets faster and faster, and there is some risk associated with that. You'll see successes, and you'll see failures.

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