Biotech Values

[rfj1862]

I have to admit that I find it very hard to see the value proposition in gene therapy investment over the next 5 years. It requires a tremendous investment to get a gene therapy approved for a single rare disease, to the point where they can't charge even close to enough to justify development costs.

There is no doubt that there will be tremendous potential value in gene therapy in the future, but it will require a fundamental change in the way the FDA reviews and approves these treatments. Instead of requiring a full submission for each rare disease, the only way gene therapy for rare disease is going to be feasible is if the FDA moves toward a platform approval approach in which the FDA approves the gene delivery modality (AAV, lentiviral) and then has a much more streamlined and less stringent process for approving the transgene payload for individual diseases.

All of this will change if and when gene therapy can be utilized for more common diseases. Then it makes sense to do the full approval process.

In any case I don't see that happening soon. But all of these tiny companies trying to move gene therapies for a few hundred patients through the full approval process doesn't make a lot of sense from an investment standpoint. I'm not saying that these companies are necessarily a bad investment, just that you are going to be waiting a long, long time for value to be unlocked, and a lot of them are going to die of starvation before the landscape shifts.

If I were to invest in a gene therapy company, I would avoid the tiny companies and invest in those that have a large amount of capital and preferably not focused entirely on gene therapy.

"Gold Rush For “Gene Therapy”

After the FDA lowered the entry barrier for mRNA vaccines (thanks to Covid), biotech companies saw an opportunity in gene therapy. Now, they’re doubling down on it.
• For biotech companies, the logic is simple. Faster FDA approvals mean a shorter time to market for a new drug or therapy. This dramatically reduces the time frame and returns on investment for biotech companies and their investors.
• Historically, clinical trials take years when the therapy generates no revenue. But with mRNA vaccines, some pharmaceutical companies went from testing to Emergency Use Authorization (EUA) and revenue generation in a few months.
• There were 2,900 clinical trials for gene therapies from 1989 to 2018. Last year, it was about 2,500, reports the Center for Biologics Evaluation and Research.
• As such, the biotech industry has recently seen record venture capital and private equity investment, accelerating growth for some companies.
• See five biotech companies on Barchart’s radar this month."