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Gene Therapy's Big Comeback

This article is more than 10 years old.

This story appears in the April 13, 2014 issue of Forbes. Subscribe

Elliott Sigal earned a reputation at Bristol-Myers Squibb as one of the drug industry's best research chiefs. His bets on risky technologies like cancer immunotherapy and new types of diabetes drugs helped Bristol turn from a laggard into a growth stock. But there was one technology he wouldn't touch: gene therapy, which tries to use engineered viruses to defeat disease at the DNA level. "I was burned on it myself 20 years ago," he says. "When they told me gene therapy was back, I couldn't believe it."

So what's Sigal doing now? As a venture partner at New Enterprise Associates, he just took his first board seat--at a gene therapy company, Philadelphia's Spark Therapeutics, which raised $50 million last October from the Children's Hospital of Philadelphia and hopes to launch a treatment for a genetic form of blindness in as little as two years.

Spark is far from alone. The once abandoned gene therapy field has become a hotbed, with 11 different companies raising at least $618 million from venture capitalists and the public markets since the beginning of 2013, and one more, AGTC, plans a $50 million initial public offering soon. Top venture capital firms are among their backers, and some of the industry's top talent is being attracted to what was once seen as a lost cause. The iShares Nasdaq Biotechnology Index is up 65% in 12 months.

"It's no longer a theory. There's data showing the real impact on patients that this kind of therapy can have," says Nick Leschly, the chief executive of Bluebird Bio, a firm in Cambridge, Mass. that's backed by Third Rock Ventures and ran a $116 million IPO in June.

Even a few years ago Leschly's statement would have drawn guffaws. Gene therapy was an obvious idea. If defective genes cause disease, why not replace them? Genetically modified viruses do just that, inserting their DNA into our cells. (This is normally how viruses reproduce.)

After Francis Collins, now head of the National Institutes of Health, found the gene for the lung disease cystic fibrosis, a decade of work by many groups found the engineered viruses just couldn't get into the lung.

A lack of efficacy in gene therapy wasn't the worst problem. In 1999 Jesse Gelsinger, a teenager with a genetic liver disease, died when the adenovirus carrying a corrective gene made him very, very sick. Investor money dried up.

But a small group of scientists kept the field alive. One of them was Kathy High of the Children's Hospital of Philadelphia. She thought gene therapy researchers had been making two mistakes: using a virus that might make the patient very sick (the adenovirus) and not carefully picking the diseases they would treat. "People were choosing targets based on high unmet medical need and the size of the market, not based on the scientific evidence that gene therapy would impact the disease," she says.

High decided to use not adenovirus but another, apparently harmless virus, called adeno-associated virus (AAV), which seems to piggyback on adenovirus infections in the wild. The gene therapist's modified AAV sneaks little pieces of DNA into patients' cells. That piece of DNA can contain a gene that makes a healthy version of a defective protein in a particular patient.

To further boost her odds, High focused her early work on eye disease. The inside of the eye, and also, amazingly, the brain, is walled off from the immune system, unlike the lungs or skin. That makes a gene therapy far more likely to work, because existing antibodies won't treat it as an invader.

In adults and children who had gone blind because of a bad version of a gene called RPE65, High's approach yielded amazing results. In one trial 12 patients, 5 of them kids, had dramatic improvements in their sight. The children were able to move from Braille classrooms to sighted ones. A late-stage study that could result in the treatment's ?approval is ongoing.

Bluebird has another rare disease in its near-term sights: adrenoleukodystrophy, better known as the disease featured in the movie Lorenzo's Oil . In the disorder a malfunction of the gates that transport fats into and out of cells causes buildups of fatty acids throughout the body, including in the brain. Instead of injecting the virus into the body, in Bluebird's approach cells (in this case, bone marrow stem cells) are removed and treated with another virus, lentivirus. Unlike AAV, lentivirus inserts the genes permanently into the cell's DNA-containing chromosomes. These stem cells are reinjected; Bluebird is running a phase III trial in 15 patients and aims to get its treatment on the market in the next several years.

These treatments won't be cheap. The first gene therapy ever to clear a regulator was approved in Europe in 2012 by the Nasdaq-listed firm uniQure. Reports pegged the price at $1 million; CEO Joern Aldag disputes that any price has yet been set. The treatment is not yet on the market. But that kind of pricing power--beyond even the norm of $300,000 per patient per year and up for rare-disease drugs--is enticing more and more companies to enter the field.

One of the hottest areas is already one of the biggest markets for expensive biotech drugs: hemophilia A and B, the genetic diseases that cause the blood not to clot properly, potentially leading patients to bleed to death.

"Gene therapy for hemophilia A possibly could be our biggest product," says Jean-Jacques Bienaime, chief executive of rare-disease specialist Biomarin, which forecasts revenue of at least $650 million this year.

Bienaime says his company estimates there are 50,000 type A hemophiliacs in territories where it markets drugs and who are receiving hemophilia medicine; that would be his addressable market. A company called Dimension Therapeutics is competing with Biomarin; Spark, Dimension and hemophilia expert Baxter International are chasing hemophilia B.

The promise of the technology has some venture capitalists pushing far beyond rare genetic diseases. San Diego's Celladon, which raised $51 million in an IPO earlier this year, is aiming to treat heart diseases like advanced heart failure, in which the heart muscle becomes too weak to function.

Mark Levin, the former chief executive of Millennium Pharmaceuticals and founder of Third Rock Ventures, is now serving as interim chief executive of a company named Voyager Therapeutics, which aims to treat Parkinson's disease. Patients now get a drug to raise dopamine levels, but it eventually stops working; Voyager's gene therapy would cause the brain itself to produce more dopamine.

"It is really exciting to see how rapidly science and medicine are changing to make a big difference for patients," Levin says.

The viruses used in gene therapy have also joined the war on cancer. Novartis , Bluebird and Juno Therapeutics, which raised $120 million in venture capital last year, are all working on cells genetically engineered to hunt down tumors. Early results in blood cancer show dramatic reductions in the number of cancer cells in patients who had few other options.

And biotech researchers are dreaming of doing far more. Even viruses like lentivirus, which write DNA directly into a cell's chromosome, can make only limited additions to the patient's genes. They're like adding an ingredient to life's recipe book. But what if you need to change the recipe?

Recently, researchers have been working with a series of proteins, originally found in the immune systems of bacteria, that allow them to cut DNA in specific places and splice it back together. This technology, called CRISPR/Cas9, might be deliverable to cells using gene therapy. Editas Medicine was launched in November with $43 million in capital by Flagship Ventures, Polaris Partners and Third Rock to turn that dream into a reality.

Still, laboratory success doesn't ensure financial success. "We may be taking a really simplistic view that if you're able to come close to treating grievous illness, the pricing and getting paid and developing a valid business model will take care of itself," says Kevin Bitterman of Polaris, who is serving as Editas' interim president. "The goal very simply is to leverage this technology to develop a new class of therapeutics against genetic disorders." Eager investors, take note.