Gene edting… editn… editing, time to fix our genome (1/3)
Over 6k genetic disorders are known. Only ~10% are “treatable”, and only four are curable. It is estimated that 1 in 50 people is affected by a known single-gene disorder. Simple “text edits” in patients’ genomic information would be the holy grail for doctors and Biotechs. In this three-part series, we will unveil the world of gene editing and highlight the investment opportunities as it hits clinical trials.
The immense need for genetic medicine
Over the past 200 years, life expectancy has increased by 42 years. As a result, diseases that tend to develop later in the human life cycle and were once marginal have become more relevant.
Most diseases have a genetic component.
A hard market to size, potentially gargantuan ($77tn) but realistically just gigantic ($3tn).
From birth to death to rebirth: an historic review of the field
The '90s: the birth - first successes and hopes.
The '00s: the death - efforts in genetic medicine were stopped in their tracks by health scandals.
The '10s: the rebirth - renewed interest in the last 10 years came with breakthrough discoveries and patient stories. Now ~10 life-changing genomic drugs are on the market.
Fundamental roadblocks to a multi-trillion-dollar industry
Biology: like father like son, our cells are resistant to change.
Delivery mechanisms: are viruses our friends?
Gene editing tools: they are barely getting out of the labs to humans.
The immense need for genetic medicine
We outlive our optimal gene selection age
For most species, stringent gene selection happens from birth to the autonomous survival of the offspring, after which selection pressure fades. The shorter the time between birth and giving birth, the better for the evolution and apparition of fitter variants. Hence the reason bacteria and viruses are incredibly fast-evolving life forms.
We, as humans, have lengthened the time between birth and reproduction and long outlive the time for our progeny to be autonomous. The age at which the first child is conceived jumped eight years over the last 70 years. Life expectancy worldwide jumped over the previous 200 years from an estimated 30.5 years to 72.8 today. It is a change that no biological entity with such a slow reproduction time can adapt to. As anecdotal evidence, most women now live long enough to reach menopause and the associated complications. Similarly, most cancer-causing mutations happen pretty late in life, with the median age for cancer diagnosis being 66.
Incidence rates by age at diagnosis, all cancer types, Source: National Cancer Institute
The answer to most non-infectious diseases is in our gene
The discovery of genetic material and the sequencing of DNA opened a new world of understanding diseases and aging. It appeared clearly that our extended lifetime increases the risk of genetic defects appearing or present ones manifesting themselves. In other words, our cells may not have the "correct software running", and/or repair mechanisms fail over time.
The root cause of life-threatening conditions such as Huntington's disease, cystic fibrosis, and hemophilia was finally found: a mutation in a single gene, hence their classification as monogenic diseases. They are unsurprisingly the target of current gene therapies as they require only a change in a very defined region of the DNA.
For more complex diseases involving multiple genes, genome-wide association studies are required. Said studies compare genetic variants found in large human genome databases to find those statistically associated with a specific trait or disease. These studies are important, as 33 out of 50 (66%) of the FDA-approved new drugs in 2021 interact with or target genetic signals detected in previous studies. This validates the need for more genome-wide association studies. Genomic information is today the crux of the matter: better or faster data acquisition is critical.
A "Fermi estimate" of the genetic disease market, brace yourself!
Typical pharmaceutical products can practically never cure genetic-driven conditions. It means hospitals and doctors take the most significant part of the money spent for related cures to monitor, follow, and care for the patients. This is well reflected in that, of the $4tn U.S. total health expenditure, only a bit less than $400bn goes to the pharma. On a worldwide basis, the drug market (excluding infectious diseases) reached ~$1.2tn in 2021.
But what could a "Fermi estimate" of the genetic medicine TAM be?
Quick reminder: Enrico Fermi, one of the 20th century's most acclaimed physicists, had a knack for making roughly-accurate estimates with very little data, and therefore such an estimate is known today as a Fermi estimate. One of his most famous ones is the measure of the blast power of the first nuclear testing, whereby dropping pieces of paper during the blast and measuring their displacement, he estimated the energy of the explosion knowing only the distance to the blast - the result was mind-blowingly close to the actual power.
Now back to our Fermi estimate, the total economic burden of almost 400 genetically driven rare diseases in 2019 was $997bn in the U.S., including a direct medical cost of $449bn and an additional $548bn in indirect, non-medical expenses, and healthcare costs not covered by insurances. Considering only the direct medical cost, knowing there are 6'000 genetic diseases, Earth's population is ~26times the U.S., and their healthcare cost is 2.5 times lower on average than in the U.S. - we end up with an initial global TAM estimate of ~$70tn, i.e., ~80% of the 2022 World GDP.
Of course, not all diseases are so debilitating that they require treatment. As an anecdotal confirmation of the debilitating level of genetic disease, they accounted for nearly half (42.5%) of the U.S healthcare paid claims cost in 2014 for children. So we can prudently reduce the initial TAM estimate by 50%. Also, we can assume that only ~10% of patients would ever have access to such treatments. As a result of these adjustments, we end up with a rough TAM estimate for global genetic medicine of ~$3.5tn, which is still ~3 times the current TAM of the total drug market (excluding infectious diseases).
Currently, the genetic medicine market TAM is estimated at just $135bn by 2026 (CAGR 16%), i.e., <5% of the potential $3tn TAM. This gives a taste of how early we are in the genomic revolution. Furthermore, this TAM estimate only accounts for the human medical genomic revolution and doesn't consider other uses of genetic engineering.
This series of articles will focus on the gene editing segment (Top section of the following chart), representing only $14bn of the $135bn market but growing at >25% CAGR.
From birth to death to rebirth: an historic review of the field
The following section is a reminder of how we went from a $0 to $14bn market over the last 30 years.
'90s-early '00s: the first attempts at correcting the patient's genomes went from hope to fear
If genetic defect identification has become more accessible over the years, the curative part is another story. Curative hope was sparked in 1990 when 4-year-old Ashanthi de Silva was inserted with a gene correctly coding for an enzyme she was missing - she is alive and well today. It happened around the same time the Human genome project was started (1988). Both news delivered a beautiful way to kickstart the era of genetic medicine.
On the other side, fear was sparked in the U.S. when 18-year-old Jesse Gelsinger died in 1999 after receiving gene therapy for a rare metabolic disorder in what turned out to be a breach of rules of conduct: Jesse should have been excluded from the trial in the first place. Fear spread to Europe when four kids in a cohort of 20 developed leukemia a few years after receiving therapy in 2000.
Both gene therapies were carried out using a hollowed virus containing the desired gene therapy that either triggered an oncogene, a gene whose mutation or change in expression level leads to cancer, or caused a fatal immune response. So, in both cases, the blame was on the delivery mechanism, not the therapy itself. But the field was scarred forever.
'00s-early '10s: new tech and the FDA helped restart the field
A renewed interest came from academia with improvements in genetic engineering tools and from advances in DNA sequencing. In the mid-2000s, Roche and Illumina devised a new way to sequence DNA soberly called Next-Gen Sequencing. With DNA sequencing reaching unprecedented speed and accuracy, finding genes to target for modification and confirming a successful modification (with any technics) from10 to 1'000 times faster (and cheaper) was finally possible. It took ~10 years and $3bn to sequence the human genome with the previous method called Sanger sequencing; at its onset, Next-Gen Sequencing made it possible to do it in months for $1 million, and very quickly, it became possible to do it within a couple of months for ~$100k. Today we are at 1-3 weeks and below $1k.
Scientists worldwide threw themselves into a race to develop the best genetic scissors to perform genetic editing. Seminal papers published in that period on harnessing the power of nucleases (enzymes that cut genetic material) and DNA sequencing acted as game changers. One could disrupt genes and study the effects in months instead of years. This ability to modify and read the genome is also the foundation for synthetic biology to rise.
With tools in their hands and proof of concept, the start-ups needed a regulatory framework from the FDA. In healthcare, the FDA is the gatekeeper that lets innovation turn into money. The big break for them came as the agency introduced the new regulatory pathway "breakthrough designation" in 2012. The breakthrough designation is particularly suited to shorten development timelines for rare diseases, and most genetic diseases are considered rare diseases. Shortening development timelines means faster market access, therefore, faster profit generation. Thus, gene therapy's economic prospects surged and attracted new investments. As proof of the policy's success from 2013 to 2017, more than 70% of drugs with breakthrough designation were for indications stemming from genetic defects.
2010s - now: four major success stories have reshaped our view on gene therapies
The first one started in 2010 with a breakthrough study showing that genetically edited immune cells could detect and destroy cancer cells when reinjected in the patient. The first patient, which had massive amounts of tumors in his chest and belly, underwent a regression still lasting after 12 years. The field of cell therapy materialized. It now represents a ~$9bn market expected to grow at a 26% CAGR until 2030.
The second story struck in 2017 when the FDA approved the first in vivo gene therapy after several clinical trials. Called voretigene neparvovec-rzyl (marketed as Luxturna, for everyone to pronounce it), it treats any heritable retinal dystrophy caused by the mutated RPE65 gene. In other words, several patients, almost blind, could see again. A follow-up with 29 of the first patients shows exceptional results after five years. The in vivo gene therapy market materialized and now represents a ~$2bn market growing at 17% CAGR until 2030.
The third story surfaced in 2019 with the development of a treatment against Spinal Muscular Atrophy (SMA). SMA is a neurodegenerative disease in which motor neurons - the nerves that control muscle movement and that connect the spinal cord to muscles and organs - degrade, malfunction, and die. The four types of SMA are ranked by severity, and infants diagnosed with type I SMA have a 90% mortality rate by year one. In 2019 Novartis bagged the approval for the most expensive drug in the world at the time, but it was both better and at a discount compared to alternative treatments. With a one-time injection, children that should have died in the first year are alive and walking at age 5. Genetic medicine does not mean cheap, but it can be more affordable than alternative (and often sub-optimal) solutions. Novartis secured the idea that Luxturna's success in gene therapy is not a one-time wonder.
The fourth story started in 2012 and is still unfolding. It began when the seminal paper (crowned later with a Nobel prize) on using CRISPR to modify human cells genetically was published. Within only eight years since the paper was published, the first clinical trial data were out by CRISPR Therapeutics, followed by Intellia Therapeutics. Both represent the application split in the CRISPR market: CRISPR Therapeutics is in the field of cell therapy for blood diseases, Intellia Therapeutics is in the first of in-vivo gene editing for patients with liver disease. The first results for both are more than encouraging. Today the CRISPR market represents ~$1bn but will grow at 29% CAGR until 2030. First approved drugs should be on the market by 2023-26.
With growing markets, proof of concepts, and a few FDA approvals, venturing into gene therapy appears less daunting. In the following part, we will dive into how today's genetic engineering pushes the boundaries beyond proof of concepts and what are the major roadblocks still to be lifted.
Fundamental roadblocks to a multi-trillion-dollar industry
Copy/pasting DNA information may sound simple, but it isn't straightforward
In theory, we know disease-causing mutations for the top10 monogenic diseases and which cells in the body are affected by the mutation. Why is it then so complicated to fix it?
We do not know how to target the delivery of the drug efficiently, and this is where most gene therapies stumble first.
All humans are born out of the successive duplications of a single fertilized egg cell. It means that virtually all cells in our body contain the same DNA. Only defined segments of DNA, called genes, will see their expression pattern change over time. Said gene expression pattern, related to epigenomics (more on this later), will determine the fate of the cells, from red blood cell progenitors to neurons to liver cells.
But then, if all cells have the same DNA information, it is likely that many markers are shared. For example, the protein CD24 can be found on the surface of neurons, red blood cells, or some cancer cells. Generally, the presence of markers is not a simple "on/off" matter but rather a function of precise quantity. A thorny question arises: if it is more about quantity than presence or absence, how to make sure a genetic treatment will reach the desired cell before being destroyed, intercepted, or undesirably absorbed by other cells? No one wants to give its neurons a piece of gene therapy meant for a blood disorder.
Our immune system targets circulating genetic material
The second difficulty is that our immune system evolved to recognize any circulating DNA, or even RNA for that matter, as a threat. This free-floating genetic material either means cells are dying and need to be cleaned out, or that viruses or bacteria are around. In all cases, it triggers a reaction from the immune system and gets destroyed.
To make matters even more complicated, cells have internal detectors for genetic material outside of the nucleus. No human cell exchanges genetic material, so genetic material outside the nucleus is strictly controlled. No cell wants its machinery hijacked by pathogens and therefore has an internal defense mechanism to destroy free-floating genetic material.
These two layers of protection, outside the cells and within the cells, add to the difficulty of accessing the genome. and deliver gene therapies.
The race to better drug delivery system is raging
In laboratories, the gold standard is to use chemical and/or physical procedures to deliver genetic material to cell cultures to circumvent their innate immunity. Although highly efficient, they are not cell-specific, meaning one cannot target only muscle cells or neurons and, therefore, cannot be used on actual animals.
For us living organisms, viruses were the first delivery vector used. Viral vector techniques use the innate aptitude of viruses to deliver genes directly into target cells. Adenoviruses were harnessed as early as in the 50s to carry gene delivery. Unfortunately, viruses present a risk for marked immunogenic responses, insertional mutagenesis, and cytotoxicity - in layman's terms, your immune system will overreact, or the virus will be inserted at the wrong place in your DNA, increasing cancer risk, or it will trigger cell damage or death. All three risks have unfortunately been observed in various clinical trials. Lately, two children have died of liver failure after injection of Novartis' Zolgensma. It is small compared to the 2300 previous patients saved from death at age one but nonetheless relevant.
As a response, the industry split in two ways long ago: keeping improving viral vectors or developing non-viral vectors. One of the most famous non-viral vectors to deliver genetic medicine is lipid nanoparticles (LNPs). LNPs are small vesicles (30 to 200 nm in diameter) composed of fatty acids (lipids) capable of carrying and delivering a therapeutic load within our body. LNPs have been in the clinics and approved drugs or diagnostics agents since the mid-90s but were limited to transporting small molecules. It needed quite a substantial tweaking to accommodate genetic material. Worldwide attention was bestowed upon them in 2020 with the mRNA Covid19 vaccines from BioNtech and Moderna encapsulated in LNPs. Of course, those privy to biotech information know that the first LNPs encapsulated genetic drug was first approved for Alnylam 's ONPATTRO drug in 2018. One can guess how hard it is to make LNPs encapsulated genetic drugs by looking at all the patent infringements trials ongoing in the space: Arbutus & Genevant vs. Moderna, Moderna vs. BioNtech, Alnylam vs. Moderna and Pfizer, Acuitas v. Arbutus and Genevant, CureVac vs. BioNtech and Pfizer.
Today there are ~280 active clinical trials for viral-vector‐based in-vivo gene therapies and around ~30 for LNP. The race is on to find the best drug delivery vector.
The gene editing tools are actually newcomers
Putting aside the delivery, DNA modification is no easy task either. Currently, gene therapy focuses on the primary form of "text editing" – "copy/paste". A segment of DNA is inserted to replace an incorrect segment of a gene in a copy & paste manner – the company does the "CTRL+C" with a correct version of the gene, and the delivery mechanism does the "CTRL+V" to replace the DNA in the cell with the correct version. This copy/pasting is mainly done using the natural mechanism viruses possess, as described above.
Gene editing tools aim to go one or a few steps beyond by rewriting the code more precisely - "delete/rewrite". Among these tools, we find notably CRISPR (the technology, not the company ticker), TALENs, MegaTAL, and zinc finger nucleases. All these tools are engineered and epitomize our venture into biological engineering. They do not fulfill the same role they have in nature. For example, CRISPR is the immune system of bacteria to face viruses, *TALEs are infection factors produced by bacteria to spread in plants, and Zinc fingers are domains of protein that confer the ability to bind DNA.
Including CRISPR, all these systems have been turned into genome editing tools between 2005 and 2014, so it's been barely a decade since each has seen clinical trials emerge. The gene editing sector is all but mature. This lack of maturity fosters all the hope and all the fears.
*the "N" in TALEN is explained in the second part of the series.
A word to conclude
To summarize this first article, we reviewed the immense need to improve the treatment of genetically driven diseases and technical roadblocks. We are earlier than we think, but the market is bigger than expected.
Within our biotech strategy, we have ~35% of our exposure to cell and gene therapies (CGT). It reflects our strong conviction that improving our capacity to engineer, improve, or "factory reset" genome is crucial. Within this exposure, 20% is dedicated to gene-editing tools and techniques. The following article will detail the market and the technology associated with gene editing.
More CGT drugs approved. With over 300 assets in development, every success will help better size the TAM.
Better regulatory framework. Progress is slowed by the lack of guidance, new guidance will reinforce confidence and ease innovation. (addressed in part 3)
Advances in drug delivery. Better viral delivery and nanoparticles are the dream for targeted genetic therapies. It will increase 10x the addressable market for numerous actors.
Clinical setbacks. No rewards come without risks. Today hopes calmed down with valuations cratering, but there is still room below if clinical failures happen.
Additional safety controls. Today, 18 months is a common time point to check for continuous efficacy; what if it is expanded to 24/36 months? Earnings would be delayed.
A continuous downtrend in biotech. Cash infusions are the norm in biotech. If the money taps are reduced to a drip, the whole sector slows down.
Companies mentioned in this article
Alnylam (ALNY); Arbutus (ABUS); BioNtech (BNTX); CRISPR Therapeutics (CRSP); CureVac (CVAC); Intellia Therapeutics (NTLA); Moderna (MRNA); Novartis (NOVN); Pfizer (PFE)
- AtonRâ Partners
- Companies' website
- National Cancer Institute
- Online Mendelian Inheritance in Man
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