Biotechnology stocks are experiencing somewhat of a revival this year. It has even lifted some cell and gene therapy company share prices, though certainly not all of them. The continued lack of robust revenue for approved cell and gene therapies is a reminder that being innovative doesn’t necessarily translate into profitability.
Innovation in terms of novel therapies that address unmet need is unquestionably a good thing. Take for example, Elevidys (delandistrogene moxeparvovec). Last June, the Food and Drug Administration approved this first gene therapy for Duchenne muscular dystrophy via the accelerated approval pathway. Although questions remain about the long-term efficacy of the treatment, for the 3,500 boys who are affected by this debilitating genetic disorder Elevidys is addressing a serious unmet need. Most patients with the condition do not live past young adulthood.
When the product’s manufacturer, Sarepta Therapeutics, reported its fourth quarter 2023 earnings it was noted that the $200 million in net product revenue from Elevidys surpassed the combined 2023 revenue of the five other gene therapy launches from the past 18 months.
This tells us just how challenging an environment gene therapy manufacturers face. The regulatory hurdles are enormous to begin with, but manufacturing challenges following approval are considerable, too. And then there’s not a lot of revenue to squeeze out of the often tiny numbers of patients eligible for treatment. So while the price of each therapy is eye-popping, there aren’t many patients taking the treatments. This implies that revenue generation isn’t easy. On top of all of this, payers concerned about the high per unit costs often impose coverage barriers.
Parade of Approvals
Eleven regulatory approvals occurred in the E.U. and U.S. in 2022, which made it a banner year for cell and gene therapies. The year 2023 wasn’t too shabby either, with seven FDA approvals in the U.S., according to the Alliance for Regenerative Medicine. The year also closed out on a high note with the approvals of CRISPR/Vertex’s Casgevy and bluebird bio’s Lyfgenia, both for sickle cell disease.
With respect to marketing authorizations, this year has started out well, too. There’s an exciting novel therapy named Amtagvi, indicated for metastatic melanoma. And CVS Payor Solutions highlights a busy March in its report. Along with supplemental indication approvals for already existing cell therapies, including Carvykti (ciltacabtagene autoleucel), Abecma (idecabtagene vicleucel) and Breyanzi (lisocabtagene maraleucel), there could be two more novel approvals in the space soon, including two ultra-orphan (very small sub-populations) products in the pediatric space: Libmeldy (atidarsagene autotemcel), which targets metachromatic leukodystrophy; and Kresladi (marnetegragene autotemcel), indicated for severe leukocyte adhesion deficiency. Also, next quarter we could see the launch of another gene therapy for hemophilia B.
Among recent launches, there have been a few relative bright spots with respect to sales. Elevidys was mentioned above. The gene therapy Vyjuvek (beremagene-geperpavec), used in wound care, also appears to be achieving some success commercially.
But despite all recent approvals being characterized as important advances, thus far science continues to outpace the commercialization of cell and gene therapies.
Overcoming Hurdles to Market Adoption
Bluebird bio failed in its efforts to secure reimbursement for its beta thalassemia product Zynteglo (betibeglogene autotemcel) in Germany in 2021. It walked away from negotiations when German insurance authorities wouldn’t budge beyond what they considered a reasonable figure of $948,000, representing a 45% discount from the list price. Subsequently, the company refused to sell any of its treatments in Europe, including Zynteglo, Skysona (elivaldogene autotemcel) and Lyfgenia (lovo-cel).
Perhaps the lesson learned is that for successful commercialization of gene therapies it’s critical that value-based outcomes agreements are struck in which drug makers and payers share risks.
Bluebird bio’s approach to selling Zynteglo in the U.S. has focused on pursuing risk-sharing arrangements. Zynteglo can eliminate the need for blood transfusions. But if patients need transfusions, it appears the company will reimburse a payer up to 80% of the therapy’s cost, with some limitations, according to Life Science Leader.
And in December and January, bluebird bio announced in two separate U.S. Securities and Exchange Commission filings that it had signed outcomes-based agreements with national health insurers in the U.S. for its sickle cell disease treatment, Lyfgenia, listed at $3.1 million. While no specific details were divulged in the announcements, it’s presumed the company has offered to refund (at least partially) the cost of the treatment if the therapy doesn’t work. Evidently, the agreements with insurers may be applicable to as many as 200 million covered lives. Bluebird bio is still working on reaching similar agreements with Medicaid, which will be a primary insurer for its product.
Outcomes-based contract options offer payers meaningful ways to share risk, that is, tied to a claims-based metric for sickle cell—specifically, hospitalizations for vaso-occlusive events—with patients monitored for at least three years following the initial infusion.
Other manufacturers, including BioMarin, Krystal Biotech and CSL Behring have also been involved in outcomes-based agreement discussions for their gene therapy products.
Perhaps drawing from bluebird bio’s experience, BioMarin is working with European payers on long-term outcomes-based agreements for its hemophilia A treatment, Roctavian (valoctocogene roxaparvovec). According to BioMarin, most outcomes-based agreements with payers will be signed for a five year period. For example, if a patient returns to prophylaxis after four years, then 20% of the roughly $1.5 million price in Europe would be rebated back by BioMarin.
In the U.S. BioMarin is offering a warranty to avoid having to negotiate outcomes-based agreements separately with each individual payer. With a warranty, BioMarin seeks to, in its words, “simplify the process” of an outcomes-based agreement by offering a guarantee that includes a refund to the payer if a patient treated with Roctavian has to revert to prophylaxis treatment within a four year period. The question is straightforward, according to BioMarin’s CEO Jean-Jacques Bienaimé, “is the patient back on prophylaxis or not?”
Market Prospects Moving Forward
Less than six years ago, analysts predicted a slew of cell and gene therapy blockbusters would be approved and commercialized by the beginning of 2022. According to Evaluate Pharma, companies would rake in nearly $12 billion by the end of 2021. But in 2021, revenues for all 25 cell, gene and RNA* therapies approved and launched in the U.S. and E.U. totaled around $6.5 billion.
Evaluate Pharma wasn’t the only outfit predicting wildly unrealistic revenue growth. As recently as the end of 2022, analysts at Vision Research Reports were forecasting nearly 40% annual growth in revenues and more than $42 billion in annual sales by 2026. This is very unlikely to happen.
The unrealistic predictions led to overexuberance on the part of investors, companies, and scientists. In retrospect, it was premature to see so many initial public offerings and an investment spree that couldn’t last that long without having actual products in late stages of development or approved for marketing. When this didn’t materialize, the market crashed.
Still, despite all the setbacks investors aren’t giving up. For example, Syncona, an investment trust in Britain dedicated to life sciences investment, says in a January 2024 report that cell and gene therapies are gradually gaining traction in commercial settings and there will eventually be larger indications, meaning bigger numbers of patients, which would have more revenue potential.
Surely there is room for optimism based on an ever-expanding cell and gene therapy pipeline. Experts forecast a wave of new cell and gene therapy approvals in the coming years across numerous therapeutic areas, as more than 1,000 clinical trials were underway worldwide just a couple of years ago. These investigational compounds almost exclusively target therapeutic areas with high unmet need and limited availability of treatments.
But to succeed industry players will have to develop innovative payment arrangements. These will be critical to the long-term commercial success of cell and gene therapies due to the large per unit upfront costs of treatment. Even the FDA has gotten involved in the discussion regarding the need to establish creative ways to commercialize products, saying it’s a prerequisite to the cell and gene therapy industry’s viability.
