C&EN’s Year in Pharma 2018

Credit: Alnylam

Onpattro's approval was a critical milestone for the field of RNA therapeutics.

In August, the US Food and Drug Administration gave its blessing to Alnylam Pharmaceuticals’ Onpattro, making it the first RNA interference therapeutic to reach the market. The green light was a high point in a year that has brought a flood of money and attention to companies working on ways to harness RNA.

The approval of Onpattro, which treats a rare genetic disorder called hereditary transthyretin-mediated amyloidosis, is the culmination of 16 years of elbow grease at Alnylam, which began pursuing RNAi therapeutics just four years after researchers discovered that double-stranded RNA can silence genes.

In the early days, “there was a huge amount of enthusiasm without a lot of data,” recalls Alnylam CEO John Maraganore. “We had to figure out all the technical hurdles, and that led to a few years in the middle where many people gave up hope. We never gave up. We stuck with it, and now we’re seeing a period of time where there really is an appropriately data-driven sense of optimism for where this can go.”

A few hurdles remain. Alnylam, which expects to ask the FDA to approve a second RNAi therapeutic next year, needs to show its products can succeed commercially. And everyone would like to see more clinical evidence that the approach can work outside the liver, where the firm’s RNAi therapies tend to congregate.

But for researchers working in RNA therapeutics of any flavor—small interfering RNA, antisense oligonucleotides, messenger RNA vaccines, or newer approaches—excitement over this first milestone is palpable.

“This year has been wonderful for the field,” says Frank Slack, director of the Institute for RNA Medicine at Beth Israel Deaconess Medical Center. Researchers trying to develop RNA-based therapeutics have long been dogged by three main issues: delivery, stability, and toxicity. “I’ve always had the sense that once one can solve those . . . the flood gates would open,” Slack says. “I’m very optimistic that the field is about to enter an exponential growth phase.”

Indeed, researchers continue to build on the promise of other ways to modulate RNA.

One high-profile example came in October, when a researcher at Boston Children’s Hospital reported quickly developing a personalized antisense oligonucleotide for a girl with an ultrarare neurological disorder called Batten disease. The FDA granted special permission for the child to receive the homegrown therapy, which so far appears to be slowing the progression of her disease.

Related: FDA approves first-ever RNAi therapeutic

That work came on the heels of success for Spinraza, a spinal muscular atrophy treatment from Biogen and Ionis Pharmaceuticals. Approved in 2016, Spinraza has bolstered confidence that antisense oligonucleotides can be powerful tools for treating neurological disorders.

In April, Biogen committed another $1 billion to Ionis through a 10-year neuroscience-focused pact. And investors sunk significant cash into several new antisense companies, including Stoke Therapeutics, which has raised $130 million since its launch in January.

While RNA-based therapeutics are flourishing, this year also brought a crop of companies trying to use small molecules to wrangle RNA. New firms like Expansion Therapeutics and Ribometrix are designing molecules to inhibit the RNA that encodes for disease-causing proteins. Meanwhile, several firms emerged to target the proteins and enzymes that modify RNA, a field known as epitranscriptomics.

The companies taking a small-molecule approach are years away from the market, but they’ve attracted significant funding from venture capital firms.

Slack is a cofounder of one such start-up, Twentyeight-Seven Therapeutics, which in September raised $65 million in its first round of financing. He expects the momentum to continue. “It’s definitely a growth area, and we’ll see many more examples of these starting up around the country.”

Related: Have antisense oligonucleotides hit their stride?

Credit: Douliery Olivier/SIPA USA/Newscom

Scott Gottlieb has swiftly tackled problems he sees as most harmful to the public.

It’s been a busy year for Scott Gottlieb, commissioner of the US Food and Drug Administration. Bucking the Trump administration’s push for deregulation, Gottlieb has been using the FDA’s authority to tackle some of the country’s most pressing public health problems.

Notably, Gottlieb is trying to move the needle on drug prices, an area over which the agency does not have direct oversight. “He’s tried to find ways for the agency to play a role in controlling, or at least addressing, the high prices of drugs while also maintaining his focus on what is really the role of the FDA, which is to protect and promote public health,” says Kenneth Kaitin, director of the Tufts Center for the Study of Drug Development.

The main way Gottlieb is doing that is by speeding up the agency’s review of generic drugs, which make up the lion’s share of US prescriptions. For the 2018 fiscal year, which ended Sept. 30, the FDA approved 971 generic drugs, up from 937 in 2017. Although off-patent products should in theory be inexpensive, their prices can surge if little or no competition exists.

“We all should celebrate a healthy generic-drug market,” says Craig Garthwaite, director of health care at Kellogg School of Management at Northwestern University. “Once patents expire and once we’ve rewarded innovative firms for developing drugs that improve health, we want the generics to come in and drive prices down so more people can get access.”

While Garthwaite says Gottlieb’s efforts should be applauded, he’s not sure how much they’ll change costs for generic drugs. For many drugs, “it’s not because the barrier to entry is high for companies; it’s because there aren’t that many people who take the product.” Some local markets are just not attractive for multiple firms to be in.

To address that problem, the FDA is considering creating a common generic-drug application across regulatory agencies in other developed countries. That would make it easier for companies to apply for approval in multiple countries at once.

This year, Gottlieb has also focused on ways the FDA can help stem the opioid epidemic. The agency wants to increase the availability of naloxone, a medication designed to rapidly reverse the effects of an opioid overdose.

In a speech in November, Gottlieb also hinted that the agency would be cracking down on the doses of opioids that are being prescribed. “For too long, it’s been too easy for doctors to prescribe lots of pills. We want to make the easy and sensible decision—the one to dispense just a day or two of medicine, where that makes sense for the medical condition or procedure,” Gottlieb said.

Despite these efforts, the agency faced blowback in November when it approved a potent new opioid painkiller, Dsuvia. Although many doctors argue new pain medications are desperately needed, critics say more opioid-based medications will exacerbate growing rates of misuse and addiction.

Gottlieb is also using the agency’s power to curb nicotine use among teens. In September, the agency issued warning letters to more than 1,300 retailers and five manufacturers that illegally sold e-cigarette products, such as Juul, to minors. In November, Gottlieb announced that the FDA will look to more heavily regulate flavored tobacco products in an effort to make them less accessible to minors.

Related: How chemists are responding to the opioid epidemic

Investor enthusiasm for the biotech industry boomed in 2018. By the third quarter, both the number of companies to launch their initial public offerings (IPOs) and the amount of money they raised significantly outpaced the numbers in 2017, which itself was a strong year.

“We are currently in the longest and most active financing window in biopharma history,” Leerink Partners stock analyst Geoffrey Porges notes in a recent three-part analysis of the IPO market. From 2013 to 2018, the number of companies to go public and the amount of money they raised “were almost comparable to those in the entire preceding history of the biopharma industry,” Porges writes.

Not everyone is convinced the abundance of public capital is healthy. Many of the biotech firms taking advantage of the strong IPO market have yet to put a drug in the clinic, points out Brad Loncar, an investor who focuses on cancer immunotherapy. “Four or five years ago, there were a couple of preclinical companies that went public. Back then, it was almost scandalous—I think rightfully so,” he says.

For example, Allogene Therapeutics, which focuses on cancer cell therapy, pulled off one of the biggest IPOs in biotech history in October, even though its lead therapy is just in Phase I studies.

There are also signs that the public’s appetite for biotech is cooling. The companies that went public in the second half of the year have not, on the whole, done well on the stock market, says Nina Kjellson, a partner at the early-stage biotech venture capital firm Canaan Partners.

“There’s been this huge enthusiasm and high dollar commitment through the first half of 2018, but I think there’s a moment of pause and digestion,” she says. Several companies that were contemplating going public before the end of the year are now reassessing, Kjellson notes.

Wide window

Biotech firms looking to make initial public offerings (IPOs) found success in 2018.

Source: Leerink Partners. a Numbers are as of Oct. 8, 2018.

Related: Biotechs glimmer in dismal IPO market

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For the past several years, the biotech and pharma industries have publicly grappled with the lack of diversity in their top ranks. In 2018, the discussions—within organizations, at conferences, on social media, and at the watercooler—finally seemed to manifest in concrete action.

The shift in the culture “feels very visceral,” says Nina Kjellson, a partner at the life sciences venture firm Canaan Partners. “I love the current momentum.”

Kjellson says she’s seeing progress on three fronts: the number of initiatives to broaden opportunities for women, representation at key industry meetings and events, and the daily conversations among people committed to changing the landscape.

These efforts, whether formal or informal, appear to be chipping away at the gender imbalance in the industry, especially at new biotech companies building teams from the ground up.

C&EN analyzed the composition of the leadership, boards, and founders of 50 private biotech companies that debuted in 2018 with sizable series A funding, a firm’s first major financing round from investors. Roughly half had at least one woman in their executive suites (50%) or on their boards (52%), and nearly a quarter (24%) included at least one woman among its founders.

Related: Why can’t the drug industry solve its gender diversity problem?

That represents an across-the-board improvement, albeit a modest one, over start-ups tracked by C&EN that launched in 2017 and 2016. But as in previous years, those three domains continue to be overwhelmingly male. Women, for example, still often occupy just one seat on a board. People pushing for change hope that the current progress is more than tokenism and represents a genuine cultural shift toward equality in leadership roles.

“I know from my own experience that the first woman or first person of color makes the board more inviting to the next,” Kjellson says. “The aim should be 50-50 and not just representation. That’s where I think we need to keep the pace and keep up the push.”

Everyone acknowledges that large, public companies have been slower to evolve. On that front, the Biotechnology Innovation Organization, whose members include large and small firms alike, has established a workforce development, diversity, and inclusion task force. It seeks, by 2025, to raise the percentage of women in leadership positions from 20% to 50% and increase the share of women on boards from 10% to 30%.

Helen Torley, CEO of Halozyme Therapeutics and head of the task force, stresses that while gender is being used as a leading indicator, the BIO task force is focused on overall inclusiveness. One missing piece is good metrics on racial diversity, and BIO plans to gather those data in early 2019 to set broader goals.

“The work is not done, but we did see a step change in people’s appreciation of the value and need for diversity,” Torley says.

Related: Embracing uniqueness to develop a more inclusive culture

Credit: Molekuul/Science Source

CRISPR gene editing uses a Cas9 enzyme (blue-teal) and a guide RNA (purple-red) to cut DNA (green) at a location specified by the programmable guide RNA.

In the summer of 2012, scientists showed that a new gene-editing system called CRISPR/Cas9 could precisely cut DNA in a test tube. Now, just six years later, a company called Crispr Therapeutics is enrolling people for the first clinical trial that will use the gene editor to treat a genetic disease.

That trial is scheduled to begin before the year ends. The company will remove blood stem cells from people with a rare blood disorder called β-thalassemia and use CRISPR to edit a gene to increase the production of hemoglobin, which is deficient in the condition. Doctors will then reinfuse the permanently altered cells into the body.

It will be a momentous occasion for the field, but it hasn’t come without controversy.

A stream of high-profile studies published in the past 18 months has raised questions about the safety of using CRISPR in humans. The US Food and Drug Administration put a clinical hold on the β-thalassemia trial for four months this summer. And recently, scientists were shocked to learn that a Chinese researcher used CRISPR to edit human embryos.

“There is an immense amount of scrutiny and interest, not just from people in the field, but from a public perspective,” acknowledges Samarth Kulkarni, CEO of Crispr Therapeutics.

That interest has fueled hyperbolic news stories about CRISPR that have shaken the stocks of Crispr Therapeutics and two competitors, Intellia Therapeutics and Editas Medicine. For instance, in June, several outlets reported that CRISPR could cause cancer, citing two papers in Nature Medicine. But the studies simply showed that CRISPR works more efficiently in certain types of stem cells when a gene that safeguards against cancer is broken or missing. The companies are not working on therapies using these cells.

Related: CRISPR is coming to the clinic this year

Another paper, published in Nature Methods, claimed that CRISPR made unintentional cuts throughout the genome. Such cuts could create dangerous mutations and possibly promote cancer. The journal retracted the paper in April after criticism arose about the study’s design.

Several studies have reached different conclusions on how common, or concerning, potential off-target cuts are. But company executives say their scientists screen for such effects at a scale much larger than what’s published in most academic studies. Intellia, for example, has tested CRISPR in thousands of mice and well over 100 monkeys, according to CEO John Leonard. “We’ve looked for many, many months and not seen anything that would suggest a tumorigenic effect,” he says.

There’s a more pressing safety concern than off-target cuts, however. Studies published this year in bioRxiv and Nature Medicine suggest that many people possess immunity to Cas9, a bacterial enzyme in the CRISPR complex that cuts DNA.

“Bacterial enzymes are notorious for eliciting immune responses,” says Jeffrey Chamberlain, a scientist developing gene-editing therapies at the University of Washington. Immune responses were the biggest safety issue in the development of gene therapies, which Chamberlain worked on for decades, and he urges caution against moving too fast with CRISPR.

Companies, however, are forging ahead. Crispr Therapeutics will likely begin testing a gene-editing fix for sickle cell disease in the US next year. Editas recently asked US regulators for permission to begin tests of its first CRISPR therapy, to treat a rare genetic form of blindness. And Intellia plans to ask for permission to begin its trial for editing genes in the liver in about 12 months.

Kulkarni says, “2019 is a year of execution. We need to keep our heads down and ensure we are doing everything in the right way.”

Related: Untangling the CRISPR cancer scare

Merger and acquisition activity in 2018 did not live up to the lofty predictions made by industry analysts a year ago.

Although the year began in a flurry of deals, activity ended up modest save for Takeda Pharmaceutical’s proposed $62 billion takeover of Shire. Moreover, several of the year’s larger acquisitions carry an asterisk next to their price tags: the full deal value will be realized only if drugs being acquired actually make it to market and hit certain revenue goals.

“Deal volume is not what we had expected it to be,” says Peter Behner, global life sciences transactions leader at the consulting firm EY.

Industry watchers had anticipated an uptick in acquisitions in 2018 owing to corporate tax laws that went into effect this year. Many US-based companies had significant cash sitting overseas that, under the new guidelines, could be brought back at a favorable rate.

But that money did not translate into a boom in deals. In fact, the only true megamerger this year, the Takeda-Shire deal, was between companies based in Japan and the UK.

In a recent survey of industry executives, EY found big pharma and biotech companies were sitting on, rather than spending, cash for two reasons: geopolitical uncertainty—namely, potential trade conflicts between the US and China or Europe—and the high valuations of the most desirable biotech companies, which make it difficult to justify buying them.

The piles of cash are still out there, but unless price tags for firms come down significantly, 2019 will likely bring continued modest deal making.

Related: Drug industry deal-making starts year with a bang

Credit: Protein Data Bank

A crystal structure of AAV9, the viral vector used in the spinal muscular atrophy therapy that Novartis acquired from AveXis

Selling 42 vials of a drug may not seem like cause for celebration, but for Spark Therapeutics, that number, announced last month in its third-quarter earnings, is evidence that a decades-old idea is now a business.

Each of those vials contains 150 billion DNA-filled viruses, intended for injection in the eye to partially restore vision in people who have a rare inherited form of blindness. At the end of 2017, the treatment, called Luxturna, became the first gene therapy ever approved for sale in the US. Spark began selling the vials in pairs for $850,000 this year.

Since then, excitement about the business has exploded. Several well-funded start-ups with blueprints for the next generation of gene therapies have launched. Existing gene-therapy companies have collectively raised billions in initial public offerings (see page 34) and follow-on financings.

And Novartis spent $8.7 billion to acquire AveXis, a company developing a lifesaving experimental gene therapy for children with spinal muscular atrophy. It’s likely to become the second US Food and Drug Administration–approved gene therapy next year.

“People are not looking at gene therapy as a speculative technology anymore but as something that is here for the long term,” says Daniel Faga, Spark’s chief business officer.

By the end of September, 351 gene therapies were being tested in the clinic, according to the Alliance for Regenerative Medicine, an industry group. Preliminary data from many of these studies, including advanced-stage trials for genetic blood diseases like hemophilia and early-stage trials for muscular dystrophy, are exciting patients and investors alike.

“There is incredible enthusiasm for gene therapy right now,” Janet Lambert, CEO of the Alliance for Regenerative Medicine, says.

Still, some notable hurdles lie ahead. One is simply manufacturing the trillions of viruses needed to make the therapies. The increased demand has prompted contract manufacturers to expand the number of facilities dedicated to the task and spurred many companies to build their own manufacturing suites. Creating programs to monitor the long-term safety and efficacy of the onetime therapies presents another challenge.

And finally, the cost of the treatments could create backlash. Novartis recently said its spinal muscular atrophy therapy would be cost effective for patients if sold for between $4 million and $5 million, a price tag that would make it the most expensive drug ever.

Even if more setbacks arise, many think the field is now broad and advanced enough to maintain momentum. “Gene therapy used to be in the world of hope, promise, and expectation,” Lambert says. “Now we’ve entered the phase of commercialization.”

Related: First gene therapy for genetic disease approved

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It was another banner year for biotech company creation; dozens of new firms made their debuts with considerable cash. C&EN reviewed 50 drug-discovery-focused start-ups that this year secured their series A financing, the first significant investment round. We found that a hefty portion were focused on three therapeutic areas: oncology, autoimmune diseases, and neurological disorders. This year’s class of venture-backed firms was also clustered around a few technology trends, including next-generation cellular therapies, new approaches to gene therapy, small molecules that directly or indirectly inhibit RNA, and small molecules that bind previously inaccessible proteins. And with 70% of the companies launching with at least $40 million in the bank, these new technologies have the support needed to yield actual drug candidates.

Related: Controlling CAR-T: How scientists plan to make the engineered T cell therapy safer, and work for more cancers

Credit: GW Pharmaceuticals

GW Pharmaceuticals uses extracts from cannabis plants to make Epidiolex.

A green rush swept up drugmakers in 2018 as dozens of companies small and large grew their efforts to make drugs derived from cannabis.

This year’s weed fever included more legalization of medical marijuana in the US, Canada’s legalization of recreational marijuana, and the proliferation of supplements containing cannabidiol (CBD), a compound found in marijuana.

Credit: GW Pharmaceuticals

FDA approval of Epidiolex is giving research into cannabis-based pharmaceuticals a boost.

For drug companies, cannabis’s leap into legitimacy came in June, when the US Food and Drug Administration gave the green light to Epidiolex, a strawberry-flavored syrup with CBD as its active ingredient. Decades earlier the FDA approved drugs containing synthetic versions of tetrahydrocannabinol (THC)—the compound in marijuana that produces a high—but this was the first time the agency gave its blessing to a drug extracted from cannabis plants.

Related: CBD: Medicine from marijuana

Although Epidiolex was approved for a small patient population—children and young adults with the rare seizure disorders Lennox-Gastaut syndrome and Dravet syndrome—the FDA’s nod opened the door for others to pursue marijuana-derived therapeutics. And plenty of companies hope to see drugs from marijuana make it to market. According to the drug development database Pharmaprojects, the number of clinical development programs involving drugs that target cannabinoid receptors has blossomed from 28 to 78 in the past five years.

“Cannabinoid development holds the broad interest of 60 companies for almost 100 indications, and almost a third of these companies are involved in the development of more than one cannabinoid drug,” says Stephanie Yip, an analyst with Datamonitor Healthcare. Yip notes that the bulk of these companies are looking to treat pain. But a few are exploring other therapeutic areas, such as a chewing gum that releases THC to treat nausea and a CBD-based heart failure drug.

Epidiolex’s approval also led the US Drug Enforcement Administration to change the drug’s classification from Schedule I, the most restrictive class of drugs regulated under the Controlled Substances Act, to Schedule V, the least restrictive group. Yip says Epidiolex’s rescheduling will encourage other companies to develop their own drugs in this class because it’s now easier for them to get CBD for medical research.

The change is specific to Epidiolex, however, meaning CBD-containing supplements, cosmetics, and beverages—a booming market—are still considered Schedule I and are therefore illegal under federal law.

Related: Natural extracts and synthetics square off as cannabinoid drugs

Credit: Protein Data Bank

A crystal structure of Coxsackievirus A21, the virus used in Viralytics's tumor-bursting therapy acquired by Merck & Co.

In their search for new ways to treat cancer, big pharma firms are shining a new spotlight on an old idea: use the cell-bursting powers of viruses to destroy tumors.

The niche field, known as oncolytic virotherapy, has roots going back more than a century, when doctors made the astonishing observation that some people were cured of their cancer after a viral infection. In recent decades, scientists managed to engineer viruses that selectively infect and kill cancer cells in mice, but they were less successful in replicating the phenomenon in humans. So far, only one oncolytic virus therapy, Amgen’s Imlygic, has made it to market in the US.

That could soon change, thanks to a recent push to combine oncolytic viruses with an increasingly popular class of cancer immunotherapy drugs called checkpoint inhibitors. Checkpoint inhibitors release the brakes on immune cells, helping them spot and attack tumors. But tumors can create environments that keep immune cells away, meaning checkpoint inhibitors don’t always work.

Adding an oncolytic virus to the mix could help. When the viruses infect a tumor, they replicate and burst from the cells, which has the dual effect of spreading the cancer-busting viruses and creating inflammation that welcomes and reawakens the immune system.

The hope is that combination therapies could be a new strategy for treating cancers that don’t respond to either therapy alone. Three major drugmakers—Merck & Co., Johnson & Johnson, and Boehringer Ingelheim—all bought oncolytic virus companies this year to explore the concept.

And a number of clinical trials testing oncolytic viruses alongside checkpoint inhibitors are already underway. The most closely watched—and most advanced—is a Phase III trial combining Imlygic with Merck & Co.’s checkpoint inhibitor Keytruda.

“Everyone is holding their breath for it to work,” says Jean-Simon Diallo, a scientist studying oncolytic virus therapy combinations at the Ottawa Hospital Research Institute. “If that goes well, we will see an even bolder investment in the field. If it doesn’t go well, it might deflate the bubble a bit.”

Still, Diallo, who is about to launch an oncolytic virus company of his own, thinks the field will continue making progress even if the Imlygic trial’s outcome is negative. “Oncolytic virus science goes through waves, and right now we are going through the checkpoint wave,” he says. “The viruses will still be around even if the checkpoint inhibitor combination doesn’t pan out.”

Related: Merck plans to boost its immunotherapy drugs with tumor-bursting viruses