[creativ_pullleft colour=”light-gray” colour_custom=”” text=”Episode 062″]
In July, Biogen signed a potential $1 billion-plus deal with Applied Genetic Technologies Corp. The deal, which included an equity investment, centered around AGTC’s leading gene therapy programs developing treatments for rare ophthalmic conditions X -Linked Retinoschisis (XLRS) and X-linked Retinitis Pigmentosa (XLRP).
In this podcast, Josh Mandel-Brehm, Director, Business Development and M&A at Bio-gen, discusses how Biogen and AGTC spoke for over a year before the deal came together. Calling the eye, “the window into the brain,” Mandel-Brehm says neurology-focused Biogen might be looking to find new partners in the future.
Josh current works in Biogen’s in business development group. His efforts are primarily focused on gene therapy with an emphasis on neurology, ophthalmology, and non-malignant Hematology.
Tom Salemi: All right, Josh, welcome to the Podcast.
Josh: Thanks for having me.
TS: So Biogen obviously made some news earlier this year in July with its deal with AGTC. You had already done some work in ophthalmology, or Biogen had with your anti-LINGO product a while back. But does this deal with AGTC really represent a new push into ophthalmology?
J: Well, it’s a two-part answer. The first one is that Biogen has had a longer standing interest in the eye, and there’s a few reasons for that. The first is we’re a neurology company, as one of having a portfolio of MS products as well as Alzheimer products and other CMS products. And we look at the eye as actually an extension of the CNS, or more specifically, the back of the eye. And so one element of this is that using the eye as a window to the brain, and what I mean by that is it’s important for diagnosing diseases, you can follow biomarkers. The eye also has good models for targets that we want to make – we may pursue for regenerative targets or purposes. So that being an example of LINGO. Going after that disease is actually a good model, we felt, that could be a proof of concept for a regenerative medicine that could be used for things such as MS as well. So that was a bit more of a path to get to a broader patient population in terms of LINGO. As far as a business perspective, we do see a lot of unmet needs in back of the eye diseases, so glaucoma, AMD, orphan ocular diseases, which is what we’re going after with AGTC, diabetic retinopathy and a few others. And so from a Biogen perspective, there’s a convergence here of gene therapy and back of the eye diseases, and so that’s really the perspective that we’ll bring to the table when we chose to partner up with AGTC.
TS: And gene therapy obviously made some news earlier this week with Spark reporting some great phase 3 clinical data. Do you feel in a broader sense that this is really the time for gene therapies to emerge in ophthalmology and in other conditions as well?
J: I think the way we look at it is, first of all, gene therapy I think we see as a very broad field. So I think when people – lots of people talk about gene therapy, they think about AAV, what Spark is doing. And that’s certainly something where, for certain diseases, using AAV and what I call classic gene replacement is a great way to move forward and use the technology that we have in our hands today. So certainly RP65, LCA2, more commonly known, is the right disease to go after with an AAV approach. And there’s a few others that we think fall into that category. And so that’s something we could talk a little bit more about. But we think that gene therapy also encompasses gene editing, it encompasses cell therapy, it encompasses, quite frankly, anti-[sense?] approach and RNAI approaches. So we see this as both a research and also a clinical element. And so today we recognize that there’s certain products or diseases where you could move forward with a technology that, like the AAVs, that could be used today, that we think it’s important to be in the clinic in some of these diseases. And so back to your initial question, for orphan ophthalmology, certainly there’s diseases such as the one that Spark is going after where it makes sense to use what we have today to move into the clinic and try and help these patients.
TS: What areas – the deal with AGTC, how did that come together, and how did you identify these areas of the eye that were ones that you wanted to address?
J: So we’ve been talking with AGTC before the deal, I think for more than a year. And it was quite the song and dance. And it was initially through the perspective of gene therapy, just getting to know them. And at the same time we were thinking about ophthalmology and if it made sense for Biogen to make an investment in that area. Again, we knew there was unmet needs there; it was just a question of the right strategy for Biogen. And so there was some serendipity in we felt like going into the eye with gene therapy, an area where we do have expertise, but continuing to build that expertise, so working with a player like AGTC who has focused their mission on gene therapy and the eye made a lot of sense. And so the conversations morphed over time to be something that was pretty narrow when we talked to AGTC, and Sue Washer is their CEO, so we had a good relationship there, to something that became much more broad in terms of well, what the two parties could accomplish together. And so I do think it was – it took a long time, but more so because I think we realized the possibilities as we both started to carve out more of our interests as the market started to change and as we started to evolve our thinking on both sides, I think AGTC and Biogen. And so we ended up with what you see today, which is a collaboration around XLRS, XLRP and then some very early stage targets as well, which I can tell you when we first started talking, it was a much more narrow conversation. So I think both groups feel pretty good about where we ended.
TS: Yeah, it’s a complex – or I should say it’s a broad agreement. There’s a lot of areas where you’re working together. Did the conversations, as you sort of indicated, just sort of keep expanding, start at one point and just got bigger and bigger and bigger?
J: No. I think it was more stepwise, actually. We started with something that Sue had in mind for her company in terms of a particular program they wanted to work around. And we realized that we wanted to make some bigger investments in gene therapy, and quite frankly, it’s always easier to work with a few partners rather than work with a bunch of different partners. And so we have a lot of faith in Sue and her team. That was one component of this. They’ve been around for a very long time. I think a lot of these other gene therapy companies, they’re also doing great things, but they’re not nearly as mature. And so we liked the fact that Sue’s knowledge base and her team’s knowledge base was there. We felt that their manufacturing system, their expertise with actually having gone into the clinic with multiple products was something that actually could be a springboard to allow us to learn because there is an element of – you know, though we’re a big company, we have a lot to learn as well. So we felt like we were willing to make a bigger investment and actually have it be not only just in terms of products, but also learning from AGTC. And so it was something where we started narrow and then we had a big conversation at one point in time with some senior leaders from both of the companies, and decided that it would make a lot more sense to do something broad, and that Biogen was willing to invest in the right way to make sure that it made sense for AGTC, too. And once we had that conversation, we were off and running. I think we tinkered here and there, but it was literally that one conversation that got us going.
TS: And again, can you just give us a snapshot on the areas of the eye that you’ll be focusing on, the two primary diseases?
J: So the two primary diseases, one is in the clinic. It’s x-linked retinoschisis. And the other one, which is a little further behind, is x-linked retinitis pigmentosa. Those are the two orphan diseases that we’re going after. I can talk more about them if helpful. And then we’ve not disclosed the earlier stage stuff that we’re going after, which a large part of that is still focusing on the eye, but some bigger challenges that we think we’re tackling, and then there’s a non-ophthalmology component, where we’re actually going to hopefully help teach AGTC some of the disease expertise that we have.
TS: How large an opportunity do these 2 diseases, these orphan diseases present?
J: Well, I’m not going to touch on commercial because I think we all know that is a very open ended question, and I’m sure we’re going to learn a lot from Spark, assuming they get approved and start commercializing the product. So that will be really interesting to follow. But in terms of numbers, these are not ultra-rare, I would say, but these are rare disorders. And speaking just in general just in terms of the US, anywhere from 10 to 20,000 patients, a bit more a bit less per disease. And so these are small diseases. They’re small incidences, but they have high, high unmet needs. And so it’s something where we look at this and this technology can make a major impact for these patients. And that’s not always something where you look around you can find that opportunity.
TS: That’s fantastic. You mentioned earlier or sort of indicated that you may not want to work with a lot of different players. I don’t know, are you – I guess my question is are you looking to do more deals like these? And how many opportunities do you think, potential opportunities are there to create future partnerships like this one?
J: Yeah. I guess I should caveat that statement. So we certainly see ourselves as in gene therapy, wanting to be a hub, wanting to be at the center of it and working with people in many different ways. I think that’s very important to us. With regards to investments in the eye, I think we continue to see opportunities that make sense for gene therapy that the timing is right to do something. And so we are interested and open to more collaborations. I think my comment before was just in regards to what you don’t want to do is go disease by disease by disease and find a different partner for each one. It starts becoming a little inefficient, both in terms of putting those relationships in place, but also managing them. So it’s sort of a nuanced point that I’m making. But the idea is we do want to have a consortium or a network with everybody, but in terms of going after diseases, I think it’s probably more feasible and easier to work with a few different partners as opposed to a different partner for each different rare disease. That starts getting pretty complicated. But we’re very open to continuing to go after eye diseases and talk with partners about opportunities where we can help each other, and we believe through the AGTC relationship, that we’re actually going to learn quite a bit and become much more experienced and smart in the area of ophthalmology.
TS: Do you anticipate having a higher profile in the ophthalmology field overall? Do you see yourself – will you be at OIS in Vegas? I think you’ll be there. Will you be attending more of the conferences? Or have you already sort of been plugged into the clinical networks because of your earlier work in ophthalmology?
J: We’ve been plugged in a little bit. We’ve been very quietly doing a lot of work behind the scenes. I’ll be the first to admit we have some expertise here, but we have a long way to go. I would not look at us like Novartis and Allergan and Genentech and all the other ophthalmology companies. We don’t have a tremendous amount of that expertise in house. So we’re going to be very measured in our approach. And again, as I said, though I would say we aren’t the experts in these ophthalmology diseases – that an area where AGTC is helping us – we do have some or a fair amount of expertise in gene therapy that continues to grow. So we felt like we understood that well enough to make the right investment there, that this was a good place to go. You know, our belief is that we’re going to – we have a strategy for how we’d like to do this. Right now it’s through the lens, so to speak, of gene therapy. But that we’re very open to continuing to look at back of the eye disease and innovative approaches. And so we’ll see how that plays out. I think it’s hard to say right now how much more of an investment we’re going to make, other than we’re actively pursuing some other opportunities and thinking about it. But I wouldn’t be able to say – I wouldn’t say today that Biogen is telling people one of its platforms is ophthalmology. I don’t think that’s what we’re saying at all. I just think that this is more about gene therapy and rare diseases and an opportunity where we see taking a technology that we believe is going to be very important for Biogen in the future and using it in a place where it makes sense, and where we can actually bring to bear some of our expertise.
TS: Great. And just a final question. In looking out there, looking at potential partners and just looking at deals, is it competitive? There seems to be a lot of growing interest in ophthalmology, Shires obviously moving in, albeit in a different kind of technology. But –
TS: – do you see a lot of competition out there for the better companies that you’d like to work with? Or a lot of other people having the same conversations that you are with potential partners?
J: Well, that’s a good question. I think it’d be naïve to think that other people aren’t having the same conversations we are. I’m sure they are. I think we look at it as lots of people have cash today. I don’t think capital is the problem. So what we’ve started to realize, at least with the companies we want to work with, is that they do put a premium on choosing the right partner. So it doesn’t mean you necessarily get things cheaper. That’s not what I’m saying at all. You have to pay the right price for things. But that aside, I think our attitude towards partnering and the capabilities that we’re building and we’re selectively putting together that will make us a partner of choice are things that we think are going to differentiate us. So we tend to worry not so much about competition because usually what we find is, and this was the case with AGTC, we started talking, and I believe they were very open and honest that the other conversations they were having just fell by the wayside because we felt there was a really good connection, and we understood the principles that each company was bringing to the table, and how we could help each other. And more often than not, those are the relationships we like to get into. Because we think that’s most important. And we also think that a lot of these small companies, the great thing about the IPO window and what’s happening right now is they have a lot of cash, relatively speaking. And so what that means is they’re not being forced into decisions, and they can take their time to think about how they want to partner their portfolio, and if they want to. And part of that means finding the right home for that. And so for companies like us, we love that because we do think that we are a great partner, and we think that we’re extremely flexible with the types of things that we want to help companies with. So again, I assume everybody’s talking to everybody, and I assume also that the smaller guys are very smart and prudent about who they’re choosing as partners. So we’re going to continue to do things that we think make us look more attractive beyond just the cash component to try and help get the right partners for us as well.
TS: You’re right, it is a win-win. If they’ve got the capital to carry the project forward, that reduces your risk down the road if they answer a lot of the questions already.
TS: Excellent. Well, I’m a Boston guy, so I’m happy to see Biogen jumping into the fray. And thank you for joining us today, and I look forward to seeing you at OIS in Las Vegas.
J: Absolutely. My pleasure.