State Of The Cell And Gene Therapy Sector — Clinical, Financial, And Regulatory Perspectives

The regenerative medicine sector is at a remarkable moment. Transformative products are now on the market and accessible to greater numbers of patients every day. Dozens of additional therapies are in late stage studies. The regulatory and policy environment has evolved rapidly alongside the science, enabling a surge of incoming innovation.

The Alliance for Regenerative Medicine (ARM), an international, multi-stakeholder advocacy organization, drives legislative, regulatory, and reimbursement initiatives needed to facilitate access to these transformative products. Here we summarize the state of the regenerative medicine sector from a clinical, financial, and policy perspective, drawing on sector-specific data we compile and curate in partnership with Informa.

As of end Q2 2018, ARM is tracking more than 875 therapeutic developers in the regenerative medicine space worldwide. Geographically, that breaks down to 466 companies in North America, 235 in Europe and Israel, 135 in Asia, 23 in Oceania (including Australia, New Zealand, and the Marshall Islands), 15 in South America, and one in Africa. ARM continues to add companies to this dataset regularly, as the sector grows and becomes more visible.

Our analysis of the financing, clinical progress, and policy environment surrounding this sector over the past seven+ years illustrates a robust and growing sector with significant clinical potential and a supportive policy environment worldwide. We expect that the momentum within this sector will continue to drive development forward.

Global Financial Overview

One factor in the recent success and growth seen in the regenerative medicine sector is sustained investor interest, illustrated by across the board increases in financing in recent years. In the second quarter of 2018, the regenerative medicine sector generated $4.1 billion in global financing, a 164 percentincrease from Q2 2017. These increases in financing can be seen across technology types, with $2.7 billion raised in gene and gene modified cell therapy (a 124 percent increase), $2.2 billion raised in cell therapy (a 416 percent increase), and $421 million raised in tissue engineering (a 526 percent increase).

In particular, the first half of 2018 has hosted an astonishing number of IPOs in the regenerative medicine space, with nine companies raising over $910 million. The financing from IPOs in the first half of 2018 alone is already over three times what was raised in 2017 and nearly twice what was raised in 2016. Follow-on public offerings in 2018 are also on track to surpass previous years, with nearly $3 billion raised in the first half of the year—already 75 percent of the total raised in 2017 and over three times what was raised in 2016. The total value of venture capital raised in the first half of 2018 ($1.9 billion) has also exceeded previous years, and up-front payments for corporate partnerships in 1H 2018 ($913.6 million) are poised to do the same.

In addition to global financing, the regenerative medicine sector has also seen some impressive merger and acquisition (M&A) activity as larger pharmaceutical companies decide to expand their presence in the field. M&A activity in the first half of 2018 is valued at $17.8 billion in up-front payments, significantly more than the $13.5 billion in up-front payments generated by M&A activity in 2017. The main deals driving this considerable figure are Celgene’s acquisition of Juno Therapeutics, worth $9 billion, and Novartis’ acquisition of AveXis, worth $8.7 billion.

Global Clinical Overview

Recent Product Approvals

Though a handful of tissue-based regenerative medicine products have been on the market since the late 1990s, it is only recently that the sector has matured to the point that a wider range of cell- and gene-based regenerative medicine products and technologies have received approval. Novartis’ CAR-T product Kymriah became the first gene-modified cell therapy approved by the FDA in August 2017, with Gilead/Kite’s CAR-T product Yescarta receiving approval just two months later. Spark Therapeutics’ Luxturna, indicated for the treatment of patients with confirmed biallelic RPE65 mutation-associated retinal dystrophy, became the first gene therapy approved by the FDA in December 2017.

In Europe, Takeda/TiGenix’s Alofisel, for the treatment of complex perianal fistulas in Crohn’s disease, became the first allogenic stem cell treatment to receive central marketing authorization approval in Europe in March 2018. Kolon TissueGene’s Invossa, which treats osteoarthritis of the knee and is currently in Phase 3 trials in the United States, received approval in South Korea in July 2017.

Anticipated Near-Term Significant Clinical Milestones

A number of late-stage clinical companies have reached or are expected to reach major clinical milestones in 2018, including, for example:

• Novartis released data in June from its JULIET trial of Kymriah, which demonstrated more than one-year durability of response in adults with relapsed or refractory DLBCL.
• Mesoblast released data on remestemcel-L for the treatment of acute graft versus host disease, showing an 87 percent 28-day survival rate and a 75 percent overall survival rate for the often-fatal condition. Mesoblast believes the data may allow the company to file for accelerated approval in the United States.
• bluebird bio presented positive data from its Phase 3 trial of its LentiGlobin gene therapy for patients with transfusion-dependent beta thalassemia and non-β0/β0 genotypes in June; it is on track to file for a Marketing Authorization Approval (MAA) in the European Union in the second half of 2018 and has been granted an accelerated assessment by the EMA.
• Kiadis Pharma is compiling an MAA in the EU for ATIR101, an adjunctive immunotherapeutic administered in combination with an allogenic hematopoietic stem cell transplantation; it expects to file by the end of this year.
• Novartis and Gilead/Kite have filed MAAs for their respective CAR-T products; both companies announced that they had received a positive CHMP opinion in late June.
• Enzyvant initiated a rolling Biologics Licensing Application (BLA) for RVT-802 for the treatment of complete DiGeorge anomaly in July; it is expected to be completed by the end of the year.

In addition to those products that are working toward near-term approval, updates on the following Phase 3 trials are expected by the end of 2018:

• bluebird bio’s LentiGlobin for beta thalassemia and sickle cell disease and Lenti-D for cerebral leukodystrophy
• Bone Therapeutics’ ALLOB for osteonecrosis of the hip
• Cytori’s Habeo for hand scleroderma
• Histogenics’ NeoCart for knee cartilage repair

As of midyear 2018, there are 977+ clinical trials of regenerative medicine products underway worldwide. Of these trials, 324 are in Phase 1; 560 are in Phase 2; and 93 are in Phase 3. More than half of the clinical trials are in oncology; nearly one in 10 are in cardiovascular disease. Musculoskeletal disorders and central nervous system disorders each make up an additional 6 percent of clinical trials. Given the robust clinical pipeline, ARM expects that the number of regenerative medicine products on the market will increase exponentially over the next few years, drawing greater emphasis to our regulatory and reimbursement focus.

Regulatory and Policy Impact

Regenerative medicine therapeutic approaches differ dramatically from conventional treatments that are more palliative in nature; that is, regenerative medicine therapies seek to address and correct the underlying cause of disease, rather than treating merely the symptoms. A supportive regulatory and policy environment that takes into account the highly unique research, development, manufacturing, and financing aspects of these incredibly complex medical advances is therefore critical to broadening patient access, as well as to the continued growth and success of the sector.

Accelerated Approval Pathways

Accelerated approval pathways are an important factor in the growth of the regenerative medicine sector, while continuing to adhere to internationally recognized regulatory agencies’ appropriately high standards for safety and efficacy.

For example, the FDA’s Regenerative Medicine Advanced Therapy (RMAT) designation, designed, developed, and implemented with significant input from ARM and other sector stakeholders, optimizes the FDA’s approval pathways for regenerative medicine products, similar to other accelerated approval programs such as the Breakthrough Therapy designation. Benefits of the RMAT designation include guaranteed interactions with the FDA, eligibility for priority review and accelerated approval, and flexibility in the number of clinical sites used and the possibility to use patient registry data and other sources of “real-world” evidence for post-approval studies.

The RMAT designation protects patients by maintaining the FDA’s high safety and efficacy standards, while providing therapeutic developers with the necessary regulatory clarity to bring regenerative medicine products to market in a timely manner. This designation addressed the need for further clarification on how the FDA intended to regulate regenerative medicine products and allowed the U.S. to compete economically with the U.K., Japan, and Canada, where special regulatory provisions for regenerative medicine products had already been established.

To date, there have been more than 60 applications for RMAT status, with 21 successful grantees announced publicly. Of those 21 products, 16 are for therapies targeting rare diseases, illustrating the success of the program at targeting disease areas with few to no currently available treatment options. Enzyvant’s RVT-802, which began its rolling BLA submission in July, is currently on track to become the first product with RMAT designation to reach the market.

In addition to the RMAT designation, 17 regenerative medicine products have also received Breakthrough Therapy designation in the United States. In Europe, 14 regenerative medicine products have received the EMA’s PRIME designation, and in Japan, three products have received SAKIGAKE designation. Many additional regenerative medicine products have also applied for and received designations such as the FDA’s Fast Track, Orphan Drug, and Rare Pediatric Diseases designations and the EMA’s orphan designation.

Support from the FDA & EMA

In addition to the RMAT designation, the FDA has shown tremendous support for the regenerative medicine sector through other regulatory initiatives. FDA Commissioner Dr. Scott Gottlieb, a frequent and vocal proponent of the sector, has emphasized the FDA’s role in establishing a supportive regulatory framework for regenerative medicine. This includes the recent release of six draft guidances on developing, manufacturing, and testing gene therapies. These guidances are intended to provide further clarity for therapeutic developers in this space.

In the EU, the European Commission and EMA have also been working to lay a framework to facilitate the development of regenerative medicine products, typically referred to as Advanced Therapy Medicinal Products (ATMPs). Their recent work includes the proposed regulation on Health Technology Assessment (HTA) and amending Directive 2011/24/EU, which would require joint clinical assessments to be carried out for many medicinal products undergoing the central marketing authorization. ARM supports the regulation, which will increase international harmonization of regulatory requirements for companies seeking product approval.

The Reimbursement Landscape

The transformative nature of regenerative medicine products has spurred discussion around the need for innovation regarding pricing and financing these unique therapies. Under many of the world’s current decades-old reimbursement systems, payers (both private and public) typically expect to pay for mitigating treatments of severe and chronic diseases incrementally over the course of the patient’s lifetime. Many regenerative medicine products, however, are designed to provide a durable and potentially curative benefit following a single administration treatment. While these therapies have the potential to provide significant cost savings to the healthcare system and society as a whole over time, the high up-front costs can create a burden for existing reimbursement systems.

One of the greatest challenges for regenerative medicine going forward is the implementation of innovative value-based payment models that recognize and account for the potential impact of these therapies over time. Payers, therapeutic developers, and other industry stakeholders are working together to identify financing and payment models, such as annuity models and pay-for-performance, that will ensure patients are able to access these life-changing therapies as they come to market.

And there seems to be growing acceptance among the payer community. In the United States, the Trump administration’s recently published American Patients First: Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs contains significant language promoting value-based payment models for healthcare. Spark Therapeutics has developed an outcomes-based rebate arrangement based on both a short-term efficacy measure and a long-term durability measure for Luxturna, as well as an innovative contracting model that supports patient access in the U.S. while aiming to reduce risk and financial burden for payers and treatment centers. Spark also has submitted a proposal to the Centers for Medicare & Medicaid Services (CMS) for an annuity-based payment model to spread payment over multiple years, while providing flexibility for greater outcomes-based rebates. These activities illustrate a growing recognition of the importance of value-based payment models for the future of healthcare from both private and public stakeholders.

Looking Ahead: 2019 & Beyond

In the coming years, the regenerative medicine sector, led by multi-stakeholder consortia including the Alliance for Regenerative Medicine and like-minded organizations, will continue to work to revamp traditional payment systems and foster value-based payment models. As additional products are approved, the sector will begin to address additional questions regarding scale-up and manufacturing of these products. International regulatory convergence, increasing the accessibility of these products to patients worldwide, will continue to be a key area of focus.

Despite the coming challenges, the past two years have been especially promising for the sector. Regenerative medicine companies have illustrated sustained investor interest, which continues to increase across the board each year. The clinical pipeline is incredibly robust, with an increasing number of products treating serious disorders poised to come to market within the next several years. There is a significant amount of support for the sector from regulatory agencies worldwide, with legislators and regulators who are willing to interact with sector stakeholders in order to foster a positive regulatory and reimbursement environment for these products as they are approved.

The data depicts tremendous forward momentum of this sector, as the extraordinary potential of this field continues to be realized.

About The Author:

Janet Lynch Lambert joined ARM in 2017 as the organization’s first CEO. She has more than 25 years of experience in public and private sector management, most recently serving as the acting head of engagement for the All of Us Research Program at the National Institutes of Health (NIH) and as head of the Outreach Office in the Office of the NIH Director. Prior to joining NIH, Lambert was VP of government relations and head of the Washington office of Life Technologies. She has also held leadership positions in government relations, marketing, and business development at life science organizations, and legislative and staff leadership positions in the U.S. Senate and House of Representatives. Lambert received her MBA in international business from Georgetown University and her B.A. in political science from Stanford University.