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Gene Therapy Firms Take A New Tack
Restructuring: It started in earnest late last spring, gathered momentum in the fall, and could continue to pick up speed through much of this year, driven by crushing market pressures and a financing well run dry. In fact, it often seems like nearly every company in the biotech sector (save those few that have achieved top-tier status) has initiated some sort of overhaul. Some restructuring efforts are radical, and involve paring back staff and research programs to the bare bones. Others are less severe, preserving the company as it was, more or less, but with a sharpened focus on its most promising product candidate and an ever-watchful eye on expenses. And, in a few cases, biotech firms have repositioned themselves, shifting their attentions to new arenas.
One can look almost anywhere within the biotech sector to spot these various tactics at work, including the gene therapy space. Three of the sector’s most stalwart companies – Targeted Genetics Corp., Vical Inc. and Cell Genesys Inc. – all of which have been in the gene therapy game since the late 1980s, have adopted new business strategies. Targeted Genetics, which has limited financial resources and recently lost the support of several collaborative partners, chose to focus its efforts on three key product opportunities. Vical opted to turn its attentions to developing vaccines for infectious diseases. And Cell Genesys decided to concentrate on its cancer therapies.
Like many biotech firms today, Targeted Genetics has had to lay off employees and cut back on research programs to stretch its cash. In fact, the Seattle-based firm, which was founded in 1989, was forced to restructure twice in 2002, the second time largely due to the fact that it lost some of its collaborative partners.
For instance, when Elan Corp. plc initiated massive restructuring efforts last fall, its joint venture in oncology with Targeted Genetics was one of many to get the axe. (For an in-depth look at the fate of Elan’s joint ventures, see the Signals article, “Deconstructing Elan.”) And Celltech Group plc terminated its cystic fibrosis (CF) gene therapy program with Targeted Genetics in December. Celltech inherited the alliance when it acquired Medeva plc in January 2000, but the respiratory product fell outside Celltech’s areas of interest. Targeted Genetics regained full rights to the Phase II product, which had already demonstrated encouraging results. Not only was the gene therapy safe on repeat dosing, but importantly it also demonstrated a statistically significant improvement in lung function. Armed with results like these, Targeted Genetics stands a good chance of finding a new partner to carry the clinical program forward. “This is a good time to have the rights back,” said Barrie Carter, the firm’s executive VP and CSO.
Moreover, Wyeth, Targeted Genetics’ one-time partner in hemophilia, gave notice in mid-November that it was bowing out of the relationship. According to Carter, “Wyeth stopped all new initiatives until it decides how to deal with the drastic impact caused by the loss of sales from Prempro.” In mid-summer 2002, a new study demonstrated that the product, a hormone replacement therapy, increased the risk of breast cancer and cardiovascular disease in women patients. The repercussions were swift and severe.
Losing three partners – not to mention the funding they provided – is a tough pill to swallow for any company. For Targeted Genetics, it meant narrowing its focus to concentrate on its most promising product opportunities – gene therapies for rheumatoid arthritis, AIDS (a vaccine being developed through a partnership with the International AIDS Vaccine Initiative and Children’s Hospital in Columbus, OH) and cystic fibrosis. It’s also looking for partners – not only for the CF trials but also for the hemophilia program, according to Carter.
Given the recent high profile press coverage of the X-SCID gene therapy trials – in which two of the treated children recently developed a condition resembling leukemia – it would not be unreasonable to surmise that potential partners might be more wary of gene therapy than they were in the past. Not so, Carter said. “I would argue that there is more clarity about gene therapy than there was. The fundamental concept is proven. Gene therapy has come of age.” Indeed, the French trials on baby boys born with X-linked severe combined immunodeficiency syndrome proved for the first time that it is, indeed, possible to correct a disease by means of gene therapy. (For background on the trials, refer to the Signals article, “Gene Therapy’s ‘Right On Track.’”)
Most researchers, in fact, now think that the process of developing gene-based drugs is no different than developing any other sort of drug. “It’s much clearer how to move forward” than it was a decade ago, Carter added. “Gene therapy really has become an area of drug development.”
Both Vical and Cell Genesys now downplay the gene therapy nature of their businesses and highlight the biopharmaceuticals aspect – but they are not reinventing themselves to gain distance from the oft-beleaguered field or to send a more appealing message to investors, nor are they abandoning the core technology.
Vical, for instance, has decided to turn its efforts towards developing DNA vaccines for infectious diseases – including cytomegalovirus (CMV) and anthrax. The CMV vaccine should enter the clinic late this year in patients undergoing bone marrow or solid organ transplantation. And Vical also plans to start trials of the anthrax vaccine in 2003.
The San Diego company, which has been around since 1987, also has a product candidate in the clinic for treating advanced metastatic melanoma. And it already has some experience developing infectious disease vaccines through two partnered programs – with the U.S. Navy on a malaria vaccine and with Merck & Co. Inc. on an AIDS vaccine. Importantly, the firm will be developing the new vaccines independently.
President and CEO Vijay Samant, who was COO of Merck’s vaccine division before he joined Vical, said that the decision to focus on infectious diseases was based on the advances being made in this arena – including those by Merck. “Merck and Vical worked together early on [developing an influenza vaccine], when the technology was very new,” he explained. “Merck spent a lot of money and was not very successful…but then it took the technology on its own and made a lot of improvements,” Samant said. Moreover, there’s a considerable amount of research in the public domain that Vical has been able to “piggyback on,” he added.
“We have acquired expertise in vaccines. We could make a lot of progress where others haven’t. Our technology gives us the ability to create constructs very quickly to test in animals.” As well, “there are a whole lot of infectious diseases for which no vaccine is available, giving us a lot of niche opportunities to work on.”
And, even though The Street generally regards vaccine development as a low-margin business, Samant sees things differently. For instance, he predicts that the CMV vaccine could become a $200-$300 million product. “CMV is an important target for us. There is no approved vaccine and few programs [at other companies] in any stage of development. In bone marrow transplant trials, we will know the identity of both the donor and the recipient. We can inoculate both and follow them.” This strategy should allow for a relatively small trial, as well, an important consideration for a small company that will be shouldering all the costs. “It’s a decent opportunity for us,” Samant said.
While Vical is shifting away from its cancer vaccine programs, Cell Genesys is doing just the opposite. The South San Francisco company, which was founded in 1988, will no longer pursue its preclinical gene therapy programs in hemophilia and other genetic deficiency diseases; it also has stopped investing in gene therapy technology development. Instead, Cell Genesys will concentrate on its cancer vaccines and adenovirus-derived oncolytic virus therapies, areas that it has determined hold the greatest chance of commercial success.
For instance, the company’s GVAX vaccines are in the clinic for treating prostate, lung and pancreatic cancer as well as leukemia and myeloma; its oncolytic virus therapy is being tested in prostate cancer patients. The GVAX vaccines consist of irradiated tumor cells that have been genetically modified to secrete granulocyte macrophage- colony stimulating factor (GM-CSF, an immune stimulator). In some cases, the vaccines are non patient-specific; in others, they are customized on a patient-by-patient basis. (For a detailed discussion of cancer vaccines, including those being developed by Cell Genesys, please refer to the Signals article, “Vaccines Keep Cancer In Check.”)
The company’s decision to focus on biological therapies for cancer was “an evolution of philosophy,” explained Peter Working, senior VP of R&D. “Gene therapy is no longer the core of our business. There’s been a gradual shift away from ‘pure’ gene therapy to the current approach.” (However, Cell Genesys’ subsidiary Ceregene Inc. will continue to work on gene therapies for neurological disorders.)
Streamlining the pipeline is a portfolio management decision. The company will now be able to “reallocate our resources away from early-stage programs to product development and manufacturing,” Working said. In fact, the company recently built its third GMP manufacturing facility, giving it the capacity to make enough product for multiple Phase III trials as well as commercial launch.
With six products in the clinic and more trials slated to start this year – including an all-important Phase III trial for the company’s GVAX prostate cancer vaccine – Cell Genesys has a full plate even without the programs it’s now decided to close. “There is no shortage of things for us to do,” Working added.
originally published 03/14/2003 |