Morgan Stanley
  • Thoughts on the Market Podcast
  • Feb 6, 2023

U.S. Pharmaceuticals: The Future of Genetic Medicine

With Terence Flynn and Matthew Harrison


Terence Flynn: Welcome to Thoughts on the Market. I'm Terence Flynn, Head of U.S. Pharma for Morgan Stanley Research.

Matthew Harrison: And I'm Matthew Harrison, Head of U.S. Biotech.

Terence Flynn: And on this special episode of Thoughts on the Market, we'll be discussing the bold promise of genetic medicine. It's Monday, February 6th, at 10 a.m. in New York.

Terence Flynn: 2023 marks 20 years since the completion of the Human Genome Project. The unprecedented global scientific collaboration that generated the first sequence of the human genome. The pace of research in molecular biology and human genetics has not relented since 2003, and today we're at the start of a real revolution in the practice of medicine.

Terence Flynn: Matthew what exactly is genetic medicine and what's the difference between gene therapy and gene editing?

Matthew Harrison: As I think about this, I think it's important to talk about context. And so as we've thought about medical developments and drug development over the last many decades, you started with pills. And then we moved into drugs from living cells. These are more complicated drugs. And now we're moving on to editing actual pieces of our genome to deliver potentially long lasting cures. And so this opens up a huge range of new treatments and new opportunities. And so in general, as we think about it, they're basically two approaches to genetic medicine. The first is called gene therapy, and the second is called gene editing. The major difference here is that in gene therapy you just deliver a snippet of a gene or pre-programmed message to the body that then allows the body to make the protein that's missing, With gene editing, instead what you do is you go in and you directly edit the genes in the person's body, potentially giving a long lasting cure to that person. So obviously two different approaches, but both could be very effective.

Matthew Harrison: And so, Terence, as you think about what's happening in research and development right now, you know, how long do you think it's going to be before some of these new therapies make it to market?

Terence Flynn: As we think about some of the other technologies you mentioned, Matthew, those took, you know, decades in some cases to really refine them and broaden their applicability to a number of diseases. So we think the same is likely to play out here with genetic medicine, where you're likely to see an iterative approach over time as companies work to optimize different features of these technologies. So as we think about where it's focused right now, it's being primarily on the rare genetic disease side. So diseases such as hemophilia, spinal muscular atrophy and Duchenne muscular dystrophy, which affect a very small percentage of the population, but the risk benefit is very favorable for these new medicines. Now, there are currently five gene therapies approved in the U.S. and several more on the horizon in later stage development. No gene editing therapies have been approved yet, but there is one for sickle cell disease that could actually be approved next year, which would be a pretty big milestone. And the majority of the other gene editing therapies are actually in earlier stages of development. So it's likely going to be several years before those reach the market. As, again as we've seen happen time and time again in biopharma as these new therapies and new platforms are rolled out they have very broad potential. And obviously there's a lot of excitement here around these genetic medicines and thinking about where these could be applied.

Terence Flynn: But I think before we go there, Matthew, obviously there are still some hurdles that needs to be addressed before we see a broader rollout here. So maybe you could touch on that for us.

Matthew Harrison: You're right, there are some issues that we're still working through as we think about applying these technologies. The first one is really delivery. You obviously can't just inject some genes into the body and they'll know what to do. So you have to package them somehow. And there are a variety of techniques that are in development, whether using particles of fat to shield them or using inert viruses to send them into the body. But right now, we can't deliver to every tissue in every organ, and so that limits where you can send these medicines and how they can be effective. So there's still a lot of work to be done on delivery. And the second is when you go in and you edit a gene, even if you're very precise about where you want to edit, you might cause some what we call off target effects on the edges of where you've edited. And so there's concern about could those off target effects lead to safety issues. And then the third thing which we've touched on previously is durability. There's potentially a difference between gene therapy and gene editing, where gene editing may lead to a very long lasting cure, where different kinds of gene therapies may have longer term potential, but some may need to be redosed.

Matthew Harrison: Terence, as we turn back to thinking about the progress of the pipeline here, you know, what are the key catalysts you're watching over 23 and 24?

Terence Flynn: You know, as everyone probably knows, biopharma is a highly regulated industry. We have the FDA, the Food and Drug Administration here in the U.S., and we have the EMA in Europe. Those are the bodies that, you know, evaluate risk benefit of every therapy that's entering clinical trials and ultimately will reach the market. So this year we're expecting much of the focus for the gene editing companies to be broadly on regulatory progress. So again, this includes completion of regulatory filings here in the U.S. and Europe for the sickle cell disease drug that I mentioned before. And then something that's known as an IND filing. So essentially what companies are required to do is file that before they conduct clinical trials in humans in the U.S. There are companies that are pursuing this for hereditary angioedema and TTR amyloidosis. Those, if successful, would allow clinical trials to be conducted here in the U.S. and include U.S. patients. The other big thing we're watching is additional clinical data related to durability of efficacy. So, I think we've seen already with some of the gene therapies for hemophilia that we have durable efficacy out to five years, which is very exciting and promising. But the question is, will that last even longer? And how to think about gene therapy relative to gene editing on the durability side. And then lastly, I'd say safety. Obviously that's important for any therapy, but given some of the hurdles still that you mentioned, Matthew, that's obviously an important focus here as we look out over the longer term and something that the companies and the regulators are going to be following pretty closely.

Terence Flynn: So again, as we think about the development of the field, one of the other key questions is access to patients. And so pricing reimbursement plays a key role here for any new therapy. There are some differences here, obviously, because we're talking about cures versus traditional chronic therapies. So maybe Matthew you could elaborate on that topic.

Matthew Harrison: So as you think about these genetic medicines, the ones that we've seen approved have pretty broad price ranges, anywhere from a million to a few million dollars per patient, but you're talking about a potential cure here. And as I think about many of the chronic therapies, especially the more sophisticated ones that patients take, they can cost anywhere between tens of thousands and hundreds of thousands of dollars a year. So you can see over a decade or more of use how they can actually eclipse what seems like a very high upfront price of these genetic medicines. Now, one of the issues obviously, is that the way the payers are set up is different in different parts of the world. So in Europe, for example, there are single payer systems for the patient never switches between health insurance carriers. And so therefore you can capture that value very easily. In the U.S., obviously it's a much more complicated system, many people move between payers as they switch jobs, as you change from, you know, commercial payers when you're younger to a government payer as you move into Medicare. And so there needs to be a mechanism worked out on how to spread that value out. And so I think that's one of the things that will need to evolve. But, you know, it's a very exciting time here in genetic medicine. There's significant opportunity and I think we're on the cusp of really seeing a robust expansion of this field and leading to many potential therapies in the years to come.

Terence Flynn: That's great, Matthew. Thanks so much for taking the time to talk today.

Matthew Harrison: Great speaking with you, Terrence.

Terence Flynn: As a reminder, if you enjoy Thoughts on the Market, please take a moment to rate and review us on Apple Podcasts app. It helps more people to find the show.

New gene therapies are undergoing research, development and clinical trials, but they have hurdles to overcome before they are commonly available.

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