DRUG MAKER LONZA BETS BIG ON GENE AND CELL THERAPIES
Swiss company hopes to cash in on a market expected to be worth up to $21 billion by 2025
Swiss medicine maker-for-hire Lonza is betting that trillions of customised viruses made at a giant factory in Texas will be the lucrative raw materials of a medical revolution.
The 121-year-old Basel-based contract manufacturer (CMO) has a long history supplying ingredients for other companies’ medicine.
Its 23,225 square metre Houston plant is able to mass produce key components for emerging gene and cell therapies to treat everything from blindness to cancer.
It is the biggest factory of its kind in the world, according to Reuters.
As the industry grapples with a shortage of engineered viruses needed to transport healthy gene material into the cells of sick people, Lonza is calculating demand will remain strong from cashstrapped early-stage companies to more established clients fearful of getting caught in the squeeze.
“Making the investment to build in-house is not an easy decision for a clinical-stage company,” Lonza emerging technologies head Andreas Weiler told Reuters.
Chief executive Richard Ridinger expects Lonza’s push into cell and gene therapy will help him lift sales by half to $7.8 billion and boost core Ebitda margins to 30 per cent by 2022, from 24.8 per cent last year. The strategy is not risk-free.
The use of gene-based medicine remains in its infancy, and hitting quality standards is tough. But the Association of the British Pharmaceutical Industry estimates the global cell and gene therapy market will be worth up to $21bn annually by 2025.
Pharmaceutical and biotechnology companies are racing to develop therapies that rely on materials like those Lonza sells, for treatments that command some of the highest prices in medicine.
Spark’s blindness treatment Luxturna, approved in December, runs at $850,000 per patient in the United States, while Swiss drug maker Novartis’s CAR T-cell therapy Kymriah, approved for children with leukaemia, costs $475,000.
At its $373,000 list price, Gilead’s Yescarta for large B-cell lymphoma seems comparatively cheap.
Industry figures show that other CMOs, as well as drug makers including Pfizer, bluebird bio and BioMarin, are pumping hundreds of millions of dollars into new facilities of their own.
Lonza’s supply-chain rivals include Brammer Bio in Massachusetts, France’s Novasep and ABL, the Netherlands’ Batavia Biosciences, and Britain’s Oxford BioMedica, which supplies viruses for Novartis’s Kymriah.
Access to gene therapy manufacturing is also spurring M&A. Novartis said on Monday its $8.7bn deal for AveXis was driven not just by the US company’s potential blockbuster gene-fixing therapy but also its newly built facilities in the Chicago suburbs.
Last year’s wave of approvals prompted US Food and Drug Administration commissioner Scott Gottlieb to proclaim the sector at a “turning point” after a long haul that has seen more than 1,000 cell and gene therapy trials approved in the past decade, according to the Journal of Gene Medicine.
One telling sign that the industry is maturing is the growing commercial focus of trials. In Britain, 42 per cent of cell-and-gene therapy trials in 2017 were commercial, up from just a quarter in 2012, the UK group Cell and Gene Therapy Catapult said.
The downside of increased interest is an industry-wide shortage of cell and gene therapy products, including complaints about two-year waits for a batch of viral vectors.
“The entire cell-based manufacturing market is currently undersupplied,” said Jens Lindqvist, an analyst at N+1 Singer in London.
As a result, academics face challenges getting materials at prices they can afford, Dr Uta
Griesenbach, an Imperial College molecular medicine professor and president of the British Society for Gene and Cell Therapy, told Reuters.
“It’s really an important bottleneck that needs to be addressed,” Dr Griesenbach said. Otherwise, she said, “the development of advanced therapeutic medicinal products might slow down or come to a halt”.
For investors, publicly traded CMOs like Lonza or Oxford BioMedica are vehicles to invest in the cell-and-gene therapy boom without exposing themselves to the risk of individual drug flops.
“They aren’t an all-or-nothing proposition, where a single therapy’s failure can lead to a 60 or 70 drop in a company’s stock inside of a day,” said Martin Lehmann, whose Zurich-based 3V Invest Swiss Small & Mid Cap fund owns Lonza shares.
“Your upside might be a bit less with a CMO, but because Lonza is so broadly positioned, you are insulated from crashes.”
Lonza’s shares have risen 51 per cent since the start of 2016, despite a recent dip. Even so, things can go wrong, like last year, when Lonza’s biotech manufacturing facility in Walkersville, Maryland, was hit by quality-control problems – and an FDA warning letter – that temporarily halted some production.
Another risk is that insurers and governments may push back on gene therapies’ high prices, reducing financial returns. Spark’s Luxturna has already been caught in critics’ crosshairs. For most patients, “the cost is not in line with what’s considered cost-effective”, the healthcare value advocacy group Institute for Clinical Review said in January. High prices mean such therapies, for now, remain largely suited for rare diseases.
Still, Novartis research chief Jay Bradner is optimistic treatments like his company’s Kymriah will evolve from being last-ditch options for desperate patients to more affordable weapons suited for mass maladies.
Industrialisation in manufacturing procedures “will bring a revolution in access to these medicines”, Mr Bradner told Reuters.
And that cannot come soon enough: “nightmare bacteria” with unusual resistance to antibiotics of last resort were found more than 200 times in the United States last year in a first-of-a-kind hunt to see how much of a threat these rare cases are becoming, health officials have said.
That’s more than they had expected to find, and the true number is probably higher because the effort involved only certain labs in each state, officials say.
The problem mostly strikes people in hospitals and nursing homes who need IVs and other tubes that can get infected. In many cases, others in close contact with these patients also harboured the superbugs even though they weren’t sick – a risk for further spread, according to AP.
Some of the sick patients had travelled for surgery or other health care to another country where drug-resistant germs are more common, and the superbug infections were discovered after they returned to the US.
“Essentially, we found nightmare bacteria in your backyard,” Dr Anne Schuchat, principal deputy director of the US Centres for Disease Control and Prevention, told AP.
“These verge on untreatable infections” where the only option may be supportive care – fluids and sometimes machines to maintain life to give the patient a chance to recover, Dr Schuchat said.
Lonza, which last year acquired PharmaCell, the Dutch CMO that helped produce the viruses behind Gilead’s Yescarta, is counting on that mass availability, too. Its new Houston site is five times larger than the group’s old Texas facility, bringing clinical and commercial supply under one roof.
“Cell and gene therapies will become mainstream,” Mr Weiler said.
“We already see this from the investments of our large pharma and biotech customers.”