December 13, 2023
Participants
Introduction and Upcoming Events
Oliver Ball: Hey! Welcome, everybody who's just dialing in. We're just going to give it a few more moments for people to join the line, and we'll get started in just a few seconds.
Okay, so I think we'll get going today. Welcome, everybody and welcome to the fifth of the Unbridled Excellence webinars hosted by Dark Horse Consulting. This is the last one of the year, but there will be some more coming up next year, so keep an eye out for announcements on that in the next few weeks.
We have a really interesting and exciting topic for today, where our 3 managing partners are going to be reflecting on the year and looking around the corner to see what 2024 is looking to bring us. Before we get into the topic, I just want to highlight another opportunity that the audience might find interesting to get insights of this nature.
Next month, JP Morgan will be hosting a half day session on Wednesday, January tenth, at the Hotel Nico, which is just a block away from Union Square in San Francisco. And so this forum, we're going to be putting together a couple of really high level panel discussions. First focused on the outlook for investing in the therapeutics landscape for cell and gene that will be featuring folks from Inverse, Blackstone, Novo Seeds, and RGA Capital. And the second on the outlook for investing in challenging tools and technology companies and services businesses that will feature a mixture of venture capital, private equity and strategics in the space, including Warburg, GH, and others listed there.
If you're interested in attending this, please do RSVP at the link that I can also post this in the chat so you can click on that directly. The spaces in the room will be limited, so if you want to come, please do submit the RSVP. But this should be a really interesting discussion. So do encourage anybody who's attending JPM to come along to that. We'll also be at the Phacilitate Miami Conference next month in the middle of January. So if your plans include being in Miami, then there'll be another opportunity to meet us there.
So the panel for today is really our 3 managing partners at Dark Horse. Anthony Davies, the founder and CEO, Katy Spink, our chief operating officer, and Rob Allen, general manager for Dark Horse Europe. These 3 have been in the field now, really, since the very early days of cell and gene therapy. So they benefit from a privileged perspective on how the industry has developed over more than a decade now. They've been watching closely what the market has been doing this year, and we're lucky to have that insight into what 2024 might be bringing today.
Just a quick reminder that the webinar will be available for on demand viewing. So if you'd like to look at it again, share the link with any colleagues who weren't able to join us live today, then you can access that on our website, and you can find details for that on how to access that following the webinar today.
So without further ado, I will hand over now to Anthony Davies, the founder and CEO, to get stuck into the meat of the topics. So, Anthony, over to you.
2023 Year in Review: Major Approvals and Market Developments
Anthony Davies: Thank you, Oli, thanks for the intro. Let's get stuck into it. Basically 2 topics: this year and next year. Well, we'll talk about some of the bad stuff that happened this year, as it's been quite the year, right, everyone. And then, you know, we'll see if we can see round the corner, as Oli said. I don't know, it's a very hard thing to do at the best of times, but I think after this year perhaps harder than usual.
Lots of approvals this year, though. Lots of hard to pronounce brand names got approved in 2023 for new drugs and new indications. Omisirge by Juvic, Roctavian was a big approval. But perhaps the most interesting thing for me that happened in this part of the field, which is the most important part of the field I want to emphasize to everyone, has commercial approvals, is that the FDA brought the action date for Bluebird's sickle cell drug forward from the twentieth of this month, so it shouldn't have happened yet by the limit of the period they had to make the action, and they brought it forward and issued the action on the same day as Vertex's sickle cell drug, which was the eighth of December.
So we had the really unusual situation of 2 approvals for the same disease from 2 different companies with broadly similar modality, although we might get stuck into that as well. So Exagamglogene and Lovotibeglogene as they were known, became Casgevy and Lyfgenia. Pretty interesting that they accelerated the dates. I think maybe they were trying to prevent either of those 2 companies claiming to be the first, although I think one of them had really been in development for longer than the other. And of course Exagamglogene 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.
Well, we were talking about this the other day.
Rob Allen: Yeah, 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 that's clearly quite the opposite that's actually played out. That's probably not a few reasons that play into this. I mean, Katie, what do you think? It is a great shame to have seen them beaten up like this in the market.
Katy Spink: Yeah, I mean, 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, right. And I guess the other 100 million could you could either view as an overswing response to the market, or perhaps more likely, the response to the black box warning.
Interestingly, I mean 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, so they'd gone up a lot after the AdCom. They'd gone up again after the MHRA approval. And so you know, today, even after they went down a little bit post the FDA approval, they're still trading at 57 today versus 38 before the AdCom. So pretty big uptick overall in the last 6 weeks.
Anthony Davies: And the price, right? The price was a price differential between these 2 drugs.
Katy Spink: Yeah, I think the fact that the Bluebird drug came in almost a million dollars more than Casgevy certainly didn't help them as well.
Anthony Davies: People sold on the news, I suppose. I think Bluebird's was run up as well before the action date, if I remember right. So I think it's spot on there with that analysis. It's 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: Yeah, I think, unfortunately, the one who paves the road is often not the one who makes the money at the end of the day, right? I think we know that from our work. I also read something really putting forward a pretty strong argument that because Bluebird already had approved drugs of a similar modality, that treatment centers are 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: I mean, it could be interesting which is the second mouse to get the cheese, you know, when they both come out the track on the same day as you mentioned. You have 27 of those Bluebird treatment centers versus 9 established for Vertex, you know, 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?
Katy Spink: Yeah. So on another topic for this past year, I'd like to mention that I was noticing the other day, we are very likely to hit 5 billion dollars in annual global sales of cell and gene therapy products for the first time this year. So you know, 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 3.8 billion in total sales through Q3, and with several drugs ramping and new approvals, I think maybe not by a lot, but quite likely that we will be over 5 billion in total sales when all is said and done for 2023.
Anthony Davies: Yeah, that's quite the milestone. You know, completely artificial though it is, it's quite a milestone. But I don't know, I mean, if you look at the composition of that, what will be that 5 billion? And right now, as Katie said, we're just under 4, and by our math, 2 drugs comprising exactly half of that: Zolgensma and Yescarta. And everything else is 3 fold or more lower than those drugs in sales. Not bad numbers, and there's multiple multi-hundred million dollar drugs out there now. You all know what they are.
But Zolgensma, I think 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 pretty small, so they'll be hoovering up tens, maybe 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 brought revenue down to 0. I'm not sure all 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 train. It's awesome. It's really the dominant CAR-T therapy by 3 or 4 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, right. Is that a fair comment?
Rob Allen: I think so. I mean, sorry, Katie, go ahead.
Katy Spink: Oh, yeah, I was just going to say, I think that's something that's really interesting about cell and gene therapy. Other than Sovaldi, we've not really had an example in the past of the ability to dry up your own market, right? But I mean, 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 Elevidys that all dosed their first patient in the last 6 months. So I think those will be new ramps for 2024, not to mention Lyfgenia that was just approved.
Rob Allen: There was the AdCom, etc. They announced their first full quarter of sales, 69 million, which, compared to Yescarta, is obviously relatively small at the moment. 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, their first full quarter of revenues, just shy of 70 million, is a fair start, right?
Anthony Davies: I think a lot of the ramps have been a bit disappointing, I think. I think there's a lot of growth left in some of the sort of backlog brands of this year's new drugs. And partly manufacturing related. You know, we hear things about manufacturing being challenging. But I think 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. Yeah, I think we're still at the point where treatment centers don't necessarily have all the logistics locked in.
Rob Allen: Yeah. 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 obviously work to do when they get over the start line of approval. They should obviously be preparing for it during the phase 3, but still obviously work to do to iron things out when they get to commercial manufacturing, testing and release on a routine basis.
Let's stick with some more good news for the field. Given the number of entrants that have tried and walked away in Europe, let's think about Europe for a moment. BioMarin's news at the end of November regarding Roctavian where they announced agreement with GKV-SV on the reimbursement amount for Roctavian, I thought, was really great news for the patients with severe hemophilia A, and also for the organization that has the product approved and they're going to commercialize it.
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 30K euro per vial equates to about 900K in dollars per patient in net revenue for BioMarin. I thought that was really great news. A couple of patients dosed, 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 potential patients on the pathway as eligible for next steps. So there is a pipeline there to come in Germany that all feels like good news to me, Katie and Anthony.
Katy Spink: Yeah, agreed. I think a topic that I've beaten the drum on a lot, and I know Anthony does as well, is cost of goods. So probably no one listening will be surprised to hear that I'm going to relate this to a topic on COGS. Which is, given that the agreed price in Germany is less than half that of the post-discount US 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, I think most people will remember that this approval was much delayed in the US 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 the phase 3. And 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 that aren't comparable to those in the initial phase 1/2 clinical lots. So I think that speculation was probably true.
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 longer term success of being able to have a manageable cost of goods that will allow them a good commercial runway.
Anthony Davies: Yeah, I mean, you've got to wonder, looking from the outside in. I think people are wondering whether it was deliberate or whether they found a silver lining in their delay. But we'll look at the Roctavian revenue, Katie, over the first year, and I'm sure that BioMarin will be imagining what might have been if they'd had that revenue, because it was a big delay. It was more than a year delay. I think it was 3 years, and I'm not trying to argue that it 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 longer term success, right?
Talking of end of days, I can't believe nobody's mentioned that as of a few days ago, BioMarin has a new chief executive. I think people have seen it on the news, but the identity and the history of the new CEO I think is pretty interesting. I mean John Oyler was there forever. He turned BioMarin from a small to midsize biotech company into the massive BioPharma company that it is now. But they hired the CEO of Genentech, guys. Isn't that just an amazing move? The CEO of Genentech for the last, I don't know how long, a material number of years, about a decade. They must have launched a dozen new drugs while he was there.
Really interesting is when he was at Genentech, Alex Schiff is his name and he is, I have to say, British, 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 for a generic, you know. 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 going to say, congratulations to BioMarin for landing one of the biggest name CEOs in the business. BioMarin are going to try and turn themselves into the Genentech of cell and gene therapy, I think, or at least gene therapy.
Katy Spink: Yeah.
Financial Challenges and Market Conditions
Anthony Davies: Okay, well, that's enough good news, isn't it? We can moan and groan about some things now. I think any top 5 for last year which doesn't mention financial stress will 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.
You know, 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. There's 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 pullbacks, and this is number 4 or something that I've been through, is that unfortunately, some good companies are getting dragged down, too.
If you just were unlucky enough to time it wrong, and you hadn't done a raise for a year or two, and then you came into 2023 expecting to go out either to the street or the private market, boy, bad choice of year to do it. And I don't want us to pussy foot around this thing. It was such a terrible year. It was a nuclear winter for funding.
However, I think we see some, I think genuinely, we see some green shoots 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 pullbacks. And I'd like to highlight a couple of private market placements: Solaris, which is an equipment company for manufacturing cell therapies, that was, I think, about a 250 million Series C or 1 billion dollar raise this year. Ray Therapeutics, which 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 their Series A. Those are big raises, right?
Katy Spink: Yeah. Well, and Tom yesterday, 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 8 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. And then 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, the consideration of big biopharma, big biotech playing hard in the space in terms of investment in cell and gene, let's say some are. Some have. Look at the deals here. I'll mention a couple: Editas and Eli Lilly in terms of partnership, the Arcellx and Gilead deal. One is more of an established player, obviously, with Yescarta and Tecartus in their portfolio already going great guns. But I think there's still continued evidence of appetite for further partnerships on the gene therapy side, cell therapy side as well. Numerous other examples where mature commercial organizations have these types of assets as part of their thesis.
Anthony Davies: Yeah. I think that's a pretty good combination there. That's 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, "Oh, the rebound started in..." Well, I'm just going to say toward the end of the third quarter of this year. That's where I'll put my stake in the sand. Maybe it may be the beginning of the fourth quarter of this year is when the rebound started.
Regulatory and Safety Considerations
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 that I honestly don't know which one it is. But I think certainly has been a very interesting development for the field in the last year. And that is the approval of Elevidys over the objections of the review team followed by the failure of its confirmatory trial.
So I think 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 FDA for approval of drugs under accelerated approval when there is very, very significant unmet need that can't wait, and sufficient evidence of safety. Sort of reminiscent of the HIV drug approvals that we'll all remember from the eighties if we're old enough.
But then an interesting twist on that: the confirmatory trial failing recently, falling short of its primary endpoint, though it met several secondary endpoints. So there's potential for some backlash and some tightening of FDA's approach to accelerated approval on that basis. Just curious what, 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? I mean, not everyone does. And I think there's a whole thing out there that our regulatory team discusses frequently, which is the sort of the lack of post approval teeth to the process that if you don't do that confirmatory trial, then it just seems to be ignored a little bit.
But I think Sarepta 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 I think he's also said, I don't think I know, he's also said that 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 a big if - 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, they did, the trial did fail. So I'm not quite sure my, the Peter Marks argument there holds water necessarily, right?
Katy Spink: Yeah, well, you know, so far, it's a lot more than 10%, but within n of one it was either going to be 0% or 100%, right? So...
Anthony Davies: Yep, no, you're absolutely right. What do you think, Rob?
Rob Allen: Provided, I think 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 to have benefit. There is a label, 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.
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: Yes. It's, I mean, you know, safety events are awful. That's 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 what perhaps we all forget about CAR-Ts and other cell and gene therapies. These are unbelievably bioactive 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 is 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 see it as numerically significant. I think this is sort of a non-event for the field as a whole.
Katy Spink: Yeah, 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 just really doesn't stack up.
2024 Predictions and Outlook
Anthony Davies: Yeah. Well, how about this then, Rob? We'll take that thing and say it's not a retrospective 2023 thing, but it can be our first prediction for 2024. And the prediction is, well, I mean, again, safety issues really bad. We're not just saying this doesn't matter because we're CAR-T sales or our cell and gene therapy strategy. 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 an increasing number of trials is what you expect. I've seen data showing that cell therapies get put on hold more, the holds last a different period of time. But I think 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 I think 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, someone in the press says the sky is falling, right?
Anthony Davies: And every day thousands of planes land safely, right? Not a headline, not newsworthy, nothing to say. Yeah, you're right. You're spot on on both of it.
Katy Spink: Alright. So for another 2024 prediction, I think we've already perhaps started seeing this year, a lot of consolidation in the CDMO landscape. I think 4 or 5 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 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, have been with us since the dawn of biologics or before, and I think that the stress that, I'm not going to deny some CDMOs are under stress at the moment, okay? And that's another thing that's been happening for decades. Is that 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 off and on. It's CDMOs that buy those facilities because they know that down the road.
I will say 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 monoclonals 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 math of compounding, that's a massive growth rate. So I think CDMOs are going through a little bit of hurt at the moment, but in the medium term, and certainly the long term, I don't think, there might be some more consolidation, Katie, which is, I think, specifically 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? It 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 we ran recently when there were 5 attributes that we graded on importance as things stand today: quality, experience, availability, expertise and price. And then we said to the group, on mass, how do you see these factors being graded in terms of importance in 5 years time? I mean in the interest of time I won't ask you to guess, but quality was number one, and quality remains number one in terms of attributes.
The organizations, client organizations looking to receive external manufacturing support or CDMO support of different sizes, quality remains number one consideration. Experience, which is partly the actual expertise in 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. Price, and Sean, our head of BD, would argue about the use of cost versus price versus value, but price is seen as the least 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 number one as we look out 5 years from now.
Anthony Davies: Yeah, I think, yeah, I mean, quality capacity is a phrase we use. We don't look at capacity, but we look at quality capacity. Look at capacity. There's actually any good. And you legitimately can never have too much of that. And I hope that increases, and this is the league table of CDMOs. Have everybody. They will move to the top half of the league.
Alright. So another topic for us.
Katy Spink: 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. So at the ASTCT policy summit a couple of months ago Nicole Verdun mentioned that they're making good progress in standing up their leadership structure and hiring additional staff. And I know Peter Marks has been quoted saying similar things as well.
And I definitely think we've seen some signs of that in our interaction with clients, 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. So 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, even in meeting formats as a result of that. What do you think?
Rob Allen: I mean I'll tie it together with the number of approvals from an inspection perspective from the PLI front. I think there have been obviously multiple inspections given that some of these therapies that were applying for licensure use 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 DMPQ and obviously other inspector offices within the agency are still probably overcoming the backlog associated with the pandemic, because 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, I think, for these therapies that cross the start line receive approval. The BLA, having been successfully inspected by DMPQ. I think what will be interesting for these therapies is they move into routine, commercial manufacturing, and supply, 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 a 2 year cycle approximately. 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. I don't know what you both think.
Anthony Davies: Yeah, yeah. I agree strongly with those comments about inspectional readiness post approval. I think it's, 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. And I think there's been a disproportionately, I think there is a, as a place where the field, perhaps, is not done as well as biologics did in the early days. I think you're right. The DMPQ and Team Biologics coming in once every 2 years post approval will be a moment, a serious moment for many of these manufacturers. Proper, as you say, proper, commercial manufacturing, and all that entails with recalls and retains, and everything else mechanisms. All of those processes is a lot more serious than your quote unquote just getting your BLA manufacturing, your license enabling manufacturing done.
Rob Allen: I know Heath, our ex-DMPQ inspector would say, you don't start preparing. It's more that you don't stop preparing. That has to be a continuous piece where your facilities are concerned.
Katy Spink: Yeah. 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, at least a little bit of an easier road from any sponsors. So I wouldn't be surprised to see as that backlog clears, more inspections staying for more days, uncovering more items.
Anthony Davies: Yeah, I agree. So I think commercial inspection readiness is, 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. And I think so long anticipated. I think that 2024 will see the first solid tumor approval for the field. Might actually see more than one.
So I have Iovance. It's been a challenging road for them as well, multiple delays as they got their BLA filing together, but we have an action date in February of this year. By my math, if you exclude cell products, and so on and so forth, this will be approximately the twenty-fourth or twenty-fifth new cell and gene therapy product, not counting line extensions, being very conservative with that number, and that action date is up for the end of February.
What about Adaptimmune as well, right?
Katy Spink: Yeah. Yeah. You mentioned there might be a second. So just a few days ago, we saw the announcement from Adaptimmune that they completed their rolling BLA for afami-cel. So barring any RTF or major amendment that would put their PDUFA date up in the third quarter next year.
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 action date in February, very approximately, maybe less. I don't know.
I think the solid tumor thing is 2024 will be the year when the solid tumor thing should happen. Larger patient numbers. The challenges of 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 hem-onc and liquid tumors. So I think this is another potentially massive set of patient populations for the field to address.
Cost of Goods and Technology Considerations
Katy Spink: Yeah. And 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.
So I think there's a lot of room for improvement in those cost of goods based on improvements in efficiency. And of course, automation. And 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 autologous versus allogeneic debate. I was asking an interesting question, and I want to tie it back from the first thing we talked about, which is the price of those 2 drugs that were approved this month. If you compare the Bluebird drug here, using a viral vector and a bone marrow harvest cell source with the CRISPR Vertex drug, which is an electroporation unit operation to get the DNA, to get the RNA in electroporation. Excuse me, the RNA and electroporation with an RNP complex, no viral vector, probably a much cheaper process. Of course, we can't possibly disclose any analysis we might have done there. But maybe that contributes also to the differential in price.
I think Katie and I are, as we like to say, in violent agreement on this, at least, if not the auto versus allo question. 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. The field has got to come to terms with it before we hit massive indications, before we hit larger indications in other fields like hematology, where Roctavian and those drugs are chipping away at these larger patient populations.
And finally, looking at the question, yes, apparently Katie did miss the memo about zippered sweaters. Best so nice to see that. Yep, I toyed with the idea of changing, but I just couldn't do it earlier. It's a good question. Thank you.
I want to not forget to say that I'm going 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 all APAC. We look at Europe.
For that, if we look at our PDUFA tracker database, it's a little 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 next year, again, by very stringent criteria, it has to be both a new drug, and it has to be a new drug, and you can't, we're not counting line extensions or same drug with different diseases. We're seeing 5 or 6 in the first half of next year, probably including some we've mentioned today, like Iovance's drug, and Adaptimmune will be later in the year. But Orchard have got a drug up, Rocket got a drug up, Pfizer Spark, Abiomed, and probably also others as well. And that's just the first half of this year.
This year we saw 6 approvals by our own criteria. And I'm talking about 6 approvals potentially basically in the first half of next year. So I think it's going to be, I think we might hit 10, we might hit the magic number 10 which I predicted in 2018 that the number of approvals by 2024 would exceed 10 commercial approvals a year through the FDA, and we might hit it 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, 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: Yeah, agreed. I mean, we will have had, I guess, 8 approvals this year, and with the 5 with established PDUFA dates, plus, Adaptimmune, as we discussed, likely already being up to 6 potential approvals before the year has even started, is definitely looking optimistic for beating that 8, if not even the 10.
Q&A Session
So we had a question come in in the Q&A. With the FDA announcement on lymphomas from CAR-T, I believe all has 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 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 call with: the 2 sickle cell drugs, one of which is gene edited and does not have a black box, 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 don't think that viral, that standard viral processes are outdated, or dead, and 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, hi, Marty, it's nice to see you asking these questions. Marty is a CMC expert in the field, who is artfully hiding the fact he has a whole wealth of preclinical experience in the early part of his career as well. So he really knows what he's talking about here.
I agree with Katie. I think the obvious drawbacks of viral vectors. But many, many more patients have been treated with viral vectors than have been treated with nonviral methods at this point, and there are hundreds of clinical trials involving viral vectors, doing pretty nicely in the clinic.
CRISPR, as a technology not referring to the company CRISPR, has on target and off target effects. Relatively few patients have been treated with those. And, Marty, you'll know that the preclinical analysis, CRISPR on target and off target is extremely complex and is a relatively immature field so far.
Viral vector manufacturing from a CMC perspective that could use some work. And I think I do think it's probably a contributor to the pricing of drugs like Bluebird.
There are a couple more questions there on the MSC therapies. I mean, I think drugs fail. Okay, I'm not, we don't really have time to get stuck into the specifics of these 2 products that failed this year. 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 of something which, let's be honest, when I founded Dark Horse 10 years ago, CRISPR wasn't really a thing, all right, and 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 a load of CRISPR work. And that happened in less than a decade, and we got an approval.
So I think that was warp speed. And I think 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.
Closing Remarks
Oliver Ball: Okay? Well, any more comments from the panel, because I think we are almost out of time for today, and thank you all for joining us for this session. It's been really interesting conversation. I'm sure that there are plenty more to talk about. But only so much you can fit into an hour. As I mentioned at the beginning, we will be having a really similar discussion at JPM in the middle of January. So that will be another opportunity, I think, to get some of these types of insights if you're attending. And again, at Phacilitate Miami.
Do meet us there if you're attending. Just as a final reminder as well, the webinar will be available on demand on the website after it's finished, so you can access it that way if you want to share it with colleagues, or watch again. And look out for additional Unbridled Excellence webinars coming up in the New Year. We will have a program running over the coming calendar year. So there's more content coming. Stay tuned for that, but in the meantime, wishing everyone a very happy end to the year. And thanks for dialing in today.
Anthony Davies: Yeah, thank you, everyone. And thank you, Oli, for putting on this great series this year. Unbridled Excellence has been outstanding this year. Looking forward to, my final prediction for 2024 is that our Unbridled Excellence webinars will continue to be outstanding.
Oliver Ball: Very good. Okay, thank you. Everybody. See you next time.