Gene therapy companies could be continued M&A targets for larger ones as more and more companies are looking to broaden their therapeutic focus with potential one-time therapies for various diseases.
In a note to investors, Canaccord Genuity analyst Michelle Gilson, pointed to the M&A activity already occurring around AAV gene therapy platforms and anticipated that more activity will follow due to scarcity value.
“… for companies looking to make their initial investment into AAV gene therapy, acquiring a platform with initial proof-of-concept clinical data and manufacturing investments already in place seems to be essential–but increasingly expensive as these platforms command scarcity value,” Gilson said in her note.
Over the past couple of years several larger companies, such as Novartis and Roche, have dived into gene therapy with the acquisitions of companies such as AveXis and Spark Therapeutics. In May, Novartis’ AveXis won approval for its spinal muscular atrophy gene therapy Zolgensma. Novartis acquired AveXis last year for $8.7 billion. Earlier this year, Roche snapped up Spark for $4.8 billion. The deal provided Roche with Luxturna (voretigene neparvovec), a gene therapy for a rare, genetic form of blindness. Other AAV-associated acquisitions include Biogen’s $800 million deal for U.K.-based Nightstar Therapeutics, a company focused on ophthalmology gene therapies, and Ultragenyx’s 2017 acquisition of Dimension Therapeutics.
In analyzing the four big AAV-associated deals of the publicly-traded companies, Gilson said there were several hallmarks that each of the companies shared that made them such attractive M&A targets. Those four acquisitions were bolstered by “clear evidence of activity” in the clinic in at least one gene therapy program. Also of note, Gilson said the companies had made “major manufacturing investments” at the time of the acquisitions. Additionally, she said that pricing comps were clear for the lead programs. With those three common threads in mind, Gilson said for companies looking to make a move into the AAV area, there are “likely a limited number” of platforms that could make good near-term targets for pharma companies.
With those three benchmarks in mind, multiple gene therapy companies have been making similar internal moves, which could potentially put them on the radar for other companies. For example, in April, Audentes Therapeutics expanded its scientific platform and pipeline to advance vectorized antisense treatments for the treatment of Duchenne muscular dystrophy (DMD) and myotonic dystrophy type 1 (DM1). The company combines the delivery power of AAV with the precision tools of antisense oligonucleotides to develop potential best-in-class therapeutic candidates for these neuromuscular diseases.
Maryland-based REGENXBIO announced plans to build a new manufacturing facility to support future clinical and commercial production for its NAV technology-based AAV gene Therapies. The facility will be added on to the company’s 132,000 square foot headquarters, which is currently under construction. The new site is expected to be operational in 2021, the company announced in May. That new construction came ahead of the company announcing an expansion of its pipeline to include AAV-based therapies to include treatments for hereditary angioedema (HAE) and neurodegenerative diseases, including tauopathies, using NAV Vectors. Only days ago REGENXBIO and Pfizer announced a partnership to develop a gene therapy treatment for Friedreich’s ataxia, the most common hereditary ataxia.
Also in July, Philadelphia-based Passage Bio, which is developing AAV-delivered gene therapies for the treatment of rare monogenic central nervous system diseases, announced it entered into a collaboration agreement with Paragon Gene Therapy, a unit of Catalent Biologics, for the development of a dedicated manufacturing suite at their facility near Baltimore. The facility is expected to be operational in the second half of 2020.
