Biotech companies could leverage immunotherapy, gene-editing and other new cutting-edge methods with names like CRISPR and CAR-T into treatments for just about any disease come 2019.
XBut that's only if researchers can identify the aberrations causing those maladies, says Alexis Borisy, a partner with Third Rock Ventures, which invests in life science companies. Borisy tells Investor's Business Daily the toolbox for treating disease has never been bigger.
In 2018, Alnylam Pharmaceuticals (ALNY) grabbed approval for a drug that silences RNA, a messenger for DNA. Spark Therapeutics (ONCE) launched the first gene therapy approved in the U.S. And Novartis (NVS) and Gilead Sciences (GILD) furthered their cell therapy approaches in cancer.
"If we can say, 'For this set of patients, here's why they have this disease and here's what we want to do,' we can change it," Borisy told Investor's Business Daily. "We can fix it. Our toolset to do that today is so much broader than it has ever been."
That will be a continuing theme in 2019 for biotech companies. Gene-editing therapies known as CRISPR from Editas Medicine (EDIT), Crispr Therapeutics (CRSP) and Intellia Therapeutics (NTLA) will move further into clinical testing. Some companies will have data for gene therapy in hemophilia, and others could push the bounds of cell therapy.
"We now have the tools to fix disease — not all of the time, but most of the time," Borisy said. "This is a long-term secular bull (market) we're in (for biotech companies)."
Gene-Editing And CRISPR
Perhaps the most hyped trend for biotech companies in 2019 lies in gene-editing via CRISPR. It's important to note that CRISPR is a method of gene editing, but it's not the only one. Other biotech companies, like Bluebird Bio (BLUE) and Sangamo Therapeutics (SGMO) are using gene-editing technologies called TALENs and zinc finger nucleases.
CRISPR stands for Clustered Regularly Interspace Short Palindromic Repeats. The process uses specialized strands of DNA that act as molecular "scissors." These are capable of making cuts in the DNA at specific points, allowing researchers to edit, add or remove faulty genes.
In 2019, it's possible the companies involved — Crispr, Editas and Intellia — could provide a look at data from the first tests in humans, ARK Invest analyst Manisha Samy told IBD. That, for better or worse, will push the CRISPR story along, she said.
"The first in-human trial data will be telling for CRISPR as a class, looking at the safety profile," she said. "I think these first human trials will be paramount to establish the safety and show it is (effective) in human models."
Crispr Collaborations
Crispr — the company, not to be confused with the therapy — is collaborating with Vertex Pharmaceuticals (VRTX). Both U.S. and European officials have given them the go-ahead to begin clinical studies. In the U.S., the duo will test their gene-editing therapy in sickle cell disease. Then, they'll study patients with beta thalassemia in Europe.
In August, Allergan (AGN) opted into a development program with Editas for its drug called EDIT-101. The companies are soon expected to ask the Food and Drug Administration to let them begin a study of EDIT-101 in treating an eye disease that can lead to blindness.
Intellia hasn't said when it plans to begin clinical studies, though analysts have suggested those studies could begin in late 2018 or early 2019. It partners with Regeneron Pharmaceuticals (REGN) and Novartis (NVS).
Gene Therapy And Hemophilia
Gene therapy is likely to be in vogue in 2019, analysts say. Biotech companies use gene therapy to override a disease-causing mutation. It differs from gene editing, which changes the native genome and is more likely to be permanent.
Brad Loncar, who manages a portfolio of immunotherapy-focused biotech companies, says gene therapy is "one of two technologies everyone has been talking about for a while." The other one is, of course, gene editing.
Gene therapy got a lot of attention this summer on news from Sarepta Therapeutics (SRPT) in treating Duchenne muscular dystrophy, a potentially fatal muscle-wasting disease.
Biopharmas Solid Biosciences (SLDB) and Pfizer (PFE) also are working in this area.
Finding A Cure For Hemophilia
Meanwhile, an alphabet soup of biotech companies are looking at hemophilia gene therapy. Spark and BioMarin Pharmaceuticals (BMRN) are working in hemophilia A, with UniQure (QURE) in hemophilia B. Spark also has a partnership with Pfizer in hemophilia B.
"The hemophilia pivotal trials might be finishing up and those might be in front of the FDA," Loncar said in an interview with IBD. "I think in gene therapy, one thing we have to see is how it's looking from a commercial standpoint."
Raymond James analyst Reni Benjamin told IBD hemophilia is "an intense focus because we know the biology of the disease." In hemophilia, the blood doesn't clot normally because patients lack sufficient blood-clotting proteins.
"This is a multibillion-dollar market which has solutions for it," he said. "It's not a totally unmet need. But it's clearly one of those poster children as a monogenic disease (caused by a single genetic mutation) where gene therapy can hit the mainstream."
Checkpoint Inhibitors In Cancer
Biotech companies also expect to push into second-generation versions of immunotherapy drugs to treat cancer. Immunotherapy leverages the body's immune system to seek out and kill cancer cells. Prime examples include Merck's (MRK) Keytruda and Bristol-Myers Squibb's (BMY) Opdivo.
"Despite all the hoopla around immuno-oncology, we're still really in the early innings in terms of targeted therapies," said Jason Tauber, co-portfolio manager of the Neuberger Berman Disrupters All-Cap Growth Portfolio. The fund invests in new, and potentially disruptive, technologies.
But there are other ways of directing the immune system. JMP Securities analyst Konstantinos Aprilakis says 2019 could provide a deeper look for those. He acknowledges checkpoint inhibition cooled off this year amid disappointments from Incyte (INCY) and Nektar Therapeutics (NKTR).
"I personally refuse to believe the best we can do, meaning the medical scientific community, is combining checkpoints with chemo," he told IBD. "That's so boring and disappointing, frankly. I want to see a targeted approach. We have a lot more work to do."
Infiltrating Tumors
To that end, he notes some interesting work from Iovance Biotherapeutics (IOVA). Iovance is working to tackle solid tumors using tumor-infiltrating lymphocytes, or TILs. It's tricky for medicines to get into solid tumors. TILs, though, naturally exist in the body to fight cancer.
Iovance extracts TILs from a tumor. Then, it amplifies those TILs before infusing them back into the body.
The entire process takes about 22 days and gives the immune system a fighting chance against cancer, Chief Financial Officer Tim Morris told IBD in an interview.
"I have a hunch you might see a solution to that solid-tumor problem, but not in the package you might expect," JMP's Aprilakis said.
Deeper Work In CAR-T
The first cell therapy drugs were approved in 2017. Now, analysts are calling for the second wave. These drugs are also known as CAR-T therapies. CAR-T is a form of immunotherapy that involves removing immune cells from a patient's body before reprogramming and reinfusing them to kill tumor cells.
Excitement in CAR-T hit a fever pitch in 2017. Novartis was the first to gain approval for a CAR-T treatment in a blood cancer. Gilead later acquired Kite Pharma before its CAR-T drug grabbed the FDA green light in another blood cancer.
Now, biotech companies are trying to do the same with donor cells in what's called an allogeneic approach to CAR-T. Doing so could be quicker and less expensive, analysts say. But it could also be less effective and prompt a damaging immune response.
"Allogeneic CAR-T will become the standard of care eventually," ARK's Samy said. "Having something ready in a day as opposed to waiting two weeks, that's life or death."
Kite Directors Branch Out
The original directors from Kite Pharma — acquired by Gilead — have started their own private biotech company called Allogene Therapeutics. Allogene is working with Cellectis (CLLS) on an allogeneic CAR-T. Samy notes Intellia and Novartis are also working on a more "hush-hush" allogeneic CAR-T product.
Neuberger's Tauber says Gilead and gene-editing player Sangamo are also working on an allogeneic approach to CAR-T. He expects that to enter clinical tests in 2019. They plan to edit out the genetic materials that would cause a damaging immune response.
The other question on analysts' minds: Can CAR-T work in solid tumors? Solid tumors are much more difficult to treat. That's also where most of the monetary opportunity for biotech companies working in cancer lies, ARK's Samy said.
Precision Medicine Goes Further
Eli Casdin is a big believer in precision medicine. Casdin is the chief investment officer for Casdin Capital, an investment firm for life science companies. Precision medicine works to match drugs with specific groups of patients on a genetic basis.
It's a relatively new area of medicine, one where JMP's Aprilakis has noted Blueprint Medicines (BPMC), Deciphera Pharmaceuticals (DCPH) and Loxo Oncology (LOXO) are working.
These precision medicine-focused biotech companies are working on drugs for cancers caused by single genetic mutations.
"Cancer is truly a molecular disease," Casdin told IBD. "Matching patients and the drug, that's just rational drug development. The other area is what we call rare disease. By definition rare disease is a genetic disorder."
Near Approval On One Drug
Loxo is nearing approval of a drug to treat cancer caused by mutations of the TRK gene. It's also working on a follow-up to that drug. Blueprint, on the other hand, has precision medicine efforts in a form of stomach cancer, a blood and soft-tissue cancer and a type of liver cancer.
Casdin acknowledges the precision medicine-market is small, because — when split up based on their genetic profiles — patient groups tend to be small. It's not a good area to replace sales from patent-challenged blockbuster drugs, he said.
But it could be transformative for certain cancers and some patients, he said.
"If this holds up and works out the way we think, it will transform certain types of cancer," Casdin said. "Loxo will have an approved drug, potentially, moving into commercialization next year."
YOU MIGHT ALSO LIKE:
How Do You Spot A Major Market Top? Easy: Look For Heavy Distribution
How To Invest In Stocks For Free: New Apps Aim For Beginners
