OUT-LAW ANALYSIS 10 min. read
Chancellor Rachel Reeves visited Quell Therapeutics. Photo: Adrian Dennis - WPA Pool/Getty Images.
18 Nov 2024, 4:02 pm
Advanced therapy medicinal products (ATMPs), such as new cell and gene therapies (CGTs), offer potentially life-changing health benefits to patients with different types of cancers and rare diseases, but there is growing evidence of the challenges businesses face in developing such treatments and making them accessible to patients.
In the UK, there is some hope for industry: recently, Iain McGill, chief executive of Quell Therapeutics, reportedly noted that “significant” funds would be needed for UK biotech companies to expand, a comment made on the sidelines of chancellor Rachel Reeves’ visit to his company, which investigates new treatments for immune and inflammatory diseases. As the new government’s industrial strategy begins to take shape, there is an opportunity over the winter months for businesses active in ATMP development to highlight how the challenges they face align with the areas the government intends to address with its strategy, to facilitate growth and productivity within the life sciences sector.
According to recent data published by the American Society of Gene & Cell Therapy (ASGCT) and Citeline, 76 CGTs have been launched globally since the first product obtained regulatory approval in 2004, with the bulk of those products coming to market in the past decade. Most CGTs to-date have been targeted at treating cancers and rare diseases. In 2023, eight new CGTs were launched, including the first cell therapy for type 1 diabetes (Lantidra), the first gene therapy for Duchenne muscular dystrophy (Elevidys), and the first topical gene therapy (Vyjuvek).
The US market is the most significant market globally to launch new products – 62% of the $5.9 billion spent on CGTs by payers globally in 2023 was spent in the US.
According to data from Evaluate, cited on cellandgene.com, the proportion of new products being approved by the US Food and Drug Administration (FDA) constituting CGTs has been increasing in recent years – 10% of all new approvals by the FDA last year related to CGTs, up from 7% and 6% in 2022 and 2021, respectively.
The UK too remains an important market for developing and marketing products. According to the Cell and Gene Therapy Catapult, in 2023, four new cell and gene therapies, for conditions including haematological malignancies and haemophilia A, received UK market authorisation. The UK’s position as a global leader in life sciences innovation was also reiterated when the Medicines and Healthcare products Regulatory Agency (MHRA) became the first regulator globally to approve Vertex’s Casgevy, a medicine that uses the gene-editing tool CRISPR to treat sickle cell disease and β-thalassemia, which are extremely debilitating and life-long blood disorders.
The Catapult’s data also revealed the number of approved and reimbursed therapies in the UK based on indication is steadily increasing – hitting 14 in 2024, up from 11 in 2023 and 10 in 2010.
However, other data brings into focus the challenges involved in taking ideas for new CGTs from concept and first-phase clinical trials through the remainder of the development process.
Kristina Cornish
Partner
Obtaining the finance needed to sustain R&D and scale up activities is increasingly challenging
While there has been a steady increase, over quarterly periods, in the number of gene therapies in development globally moving from the pre-clinical phase to phase-one clinical trials in the past year, there has been much slower growth in the number of candidates progressing from phase-one clinical trials to phase-two and from phase-two to phase-three. In fact, the ASCGT report featuring the data highlighted how there was a decrease in the number of phase-two and phase-three candidates in the second quarter of 2024 compared to the previous quarter – the first time there has been such a quarterly decrease in over a year. A similar trend is also seen globally in the number of pre-clinical gene therapy candidates: going from 1,539 candidates in Q2 2023 down to 1,436 candidates in Q2 2024.
The UK data reveals a similar picture: in the past three years, there has been a slight decrease in the number of ATMPs in phase-three trials in the UK. In part, this may reflect an overall trend concerning clinical trials for pharmaceutical products that industry body the ABPI flagged in 2022 – at the time, it said general clinical trial activity in the UK had fallen 44% between 2017/18 and 2021/22. This prompted a government-commissioned review and recommendations. In response, late last year, the previous Sunak-led government pledged to ensure that clinical trial testing requirements were streamlined and that more was done to root them in the work of the NHS. However, placing the UK data alongside the global data demonstrates more fundamental challenges facing the ATMP sector.
ATMPs are complex treatments at the cutting edge of life sciences technological and process innovation. They are expensive to develop – researchers have estimated that the clinical-stage R&D investment required to bring a new CGT to market exceeds $1.9 billion, and that figure does not include other operational and marketing costs attached to commercialising those products.
Obtaining the finance needed to sustain R&D and scale up activities is increasingly challenging. The ASCGT report revealed that the number of financings in the global CGT market in the second quarter of 2024 (Q2) fell to 52 from 68 in the same period last year. The data captures finance-raising via venture capitalists, from debt offerings, and private investment in public equity, as well as initial public offerings (IPOs). The overall number of deals recorded in Q2 – a figure that includes financings, alliances and acquisitions – was 20% down compared to Q2 in 2023, said ASCGT, which flagged that the number of seed and Series A financings, relevant to CGT start-ups, had fallen to just six in Q2, down from 20 in Q2 2023.
In Europe specifically, where deal volumes and values are typically lower than in the US, there is a greater reliance on venture capitalist investment. IQVIA data shows, however, that while venture capital activity has risen in the past three years and reached $3.4bn in 2023, this is down 43% on 2021.
The BioIndustry Association (BIA), however, recently said that biotech companies in the UK defied global market conditions to raise £808 million in Q3 2024 – with £536 million of that coming across 18 venture capital deals, which it said is “above the recent historical [quarterly] average”.
Beyond the challenges in securing investment, CGT companies face other barriers to effective development and commercialisation of their products, and around patient access.
The value derived and the quality of life provided to patients from these one-off, but potentially life-long treatments, cannot always be quantified using the same metrics used for other conventional treatments
Despite rising demand, current manufacturing capabilities are insufficient, creating a gap between production and patient needs. Products often need to be produced at such a scale for the operations to be viable, creating obstacles for CGT companies, which are often led by small teams of scientists and staffed by skilled technicians. Currently, most CGT manufacturers use disconnected single-step/modular or semi-automated solutions; however, the industry is migrating towards fully automated cell therapy manufacturing processes. This approach could significantly reduce manual intervention, risk of contamination, and human error; improve speed of delivery; and reduce production costs.
Manufacturing considerations are often therefore front and centre of deal decision-making. Larger pharmaceutical companies can offer state-of-the-art manufacturing facilities, access to skills, and economies of scale, or funding for access to such capabilities.
Recent examples of deals struck between CGT companies and ‘big pharma’ include a September 2024 announcement that Nordisk will provide funding for technology development activities at Evotec to support clinical and commercial manufacturing of stem cell-based therapies. Fresenius Kabi and Cellular Origins have also partnered to develop integration strategies for Fresenius Kabi's cell therapy technologies within Cellular Origins' automation platform.
A further challenge that can arise in relation to CGTs is their short shelf-life, relative to conventional medicines. In this regard, new rules developed in the UK to facilitate point-of-care manufacturing should help clear practical and regulatory barriers that have existed in relation to CGT manufacturing. They are due to take effect in the summer of 2025.
For CGT developers seeking to expand into new markets globally, the short shelf-life of products necessitates regional manufacturing. However, proposed new US rules under the BIOSECURE Act would prevent US companies from working with certain Chinese biotech service providers and could cause pharmaceutical companies around the world, including those involved in CGT markets, to untangle from contractual relationships with Chinese partners if they want access to the lucrative US market.
With the huge cost involved in developing CGTs, manufacturers naturally seek a fair return on their investment when bringing those products to market. Meeting that objective is challenging in the context of small patient populations and increasingly tight healthcare budgets operated by payers, particularly in Europe where economic growth has stagnated.
For instance, IQVIA reports that the average price per treatment dose across major markets for CAR T-cell therapies is more than $350,000. For gene therapies, it is $1.8 million. IQVIA has suggested the current commercialisation model may need to adapt to ensure the long-term sustainability of the sector. Some CGT developers have withdrawn from markets because of a failure to agree on pricing and reimbursement with payers – Bluebird Bio’s withdrawal of Zynteglo from the German market is an example of this.
Matthew Durdy, chief executive of the UK’s CGT Catapult, outlined a sensible blueprint for “the advanced therapies sector in the UK to thrive” in the body’s 2024 annual review.
He called for:
Some of those needs are already in the sights of the UK government, but industry now has a unique opportunity to convince the government that CGTs is the area of life sciences that it should devote more focused action towards over the next 10 years as part of its industrial strategy work.
Life sciences is one of eight growth-driving sectors the government said it wants to support in the name of driving economic growth in the UK. In its recent industrial strategy green paper (66-page/3.8MB PDF), it said the sector “offers unparalleled opportunities for future economic growth, propelled by new discoveries, data availability, AI, groundbreaking treatments, personalised healthcare, and innovative manufacturing processes”.
The next step in the evolution of the industrial strategy will be the publication of sector-specific plans. The government will focus these on “sub-sectors within these broad sectors that meet our objectives and for which there is evidence that policy can address barriers to growth” and intends to outline them in spring 2025.
Policy areas the government listed as important for growth-driving sectors and creating a pro-business environment include: people and skills; innovation; energy and infrastructure; regulatory environment; crowding in investment; international partnerships and trade.
There is clear alignment between these policy areas, the challenges CGT companies face, and the potential for solutions to those challenges to enable growth. The ATMP industry should use this opportunity to convince government that it is a sub-sector of life sciences that should be targeted for support.
Kristina Cornish
Partner
The ATMP sector in the UK now has a window of a few months this winter to further make the case for change on pricing and reimbursement models, and to further work with government to inform other policy actions that would address barriers to growth in their sub-sector of life sciences
Some steps have been taken by government to support the industry.
On funding, new UK chancellor Rachel Reeves pledged more than £20 billion of public funds will be poured into R&D in her maiden budget speech last month, despite wider pressures attached to balancing the UK’s public finances. She further committed £70 million in 2025-26 to the Life Sciences Innovative Manufacturing Fund, a scheme that supports businesses investing in life sciences manufacturing projects in the UK.
Further public funds will be diverted to support manufacturers adopt digital tech, and enhance productivity and sustainability, while a review of the barriers to adopting transformative technologies has also been commenced, which is to further inform the industrial strategy work the government has undertaken.
On infrastructure, the government’s continued investment in gigabit broadband and in developing East West Rail, a new rail network to better connect Oxford, Milton Keynes, and Cambridge where there is already strong partnerships between industry, universities and NHS bodies, also stands to benefit the ATMP industry.
The planned investment in new lab facilities at Addenbrooke’s hospital in Cambridge by the University of Cambridge, supported by grant funding from the National Institute of Health Research (NIHR), to support the manufacturing of CAR-T cells for clinical trials, is an example of how life sciences clusters, and the interconnectivity between these clusters, can offer real benefits.
There is, though, further scope for government to incentivise the involvement of big pharma in the ATMP sector, particularly given the manufacturing facilities and skills they can offer, and the power and the pockets they have to remedy the financing environment where capital is scare, especially for early-stage start-ups. Such partnerships might make increasing sense for big pharma companies as they lose exclusivity over other products and they turn to new product markets to derive high returns from.
Innovative pricing and reimbursement models for their therapies have been a constant demand from the ATMP sector. The value derived and the quality of life provided to patients from these one-off, but potentially life-long treatments, cannot always be quantified using the same metrics used for other conventional treatments.
The government previously committed to conduct “two new innovative payment model pilots to support access to ATMPs”.
In June 2024, CSL Behring’s Hemgenix became the first therapy to be recommended for managed access under the Innovative Medicines Fund (IMF) by the National Institute for Health and Care Excellence (NICE), the body responsible for negotiating agreements with life sciences companies in respect of reimbursement for NHS use in England. Casgevy, from Vertex, followed thereafter. Those reimbursement agreements allow for conditional access to treatment on the NHS while more data is collected to support routine reimbursement.
However, while these managed entry agreements can help secure faster access to innovative treatments, they do not offer a long-term solution to pricing and reimbursement model tensions, and nor do the models in these two cases apply elsewhere in the UK. The ABPI has pressed the government to honour its commitment to implement two innovative payment models – including an outcomes-based agreement, which are already used for ATMPs in countries like the US, South Korea, and Germany.
The ATMP sector in the UK now has a window of a few months this winter to further make the case for change on pricing and reimbursement models, and to further work with government to inform other policy actions that would address barriers to growth in their sub-sector of life sciences.
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