Con­tin­u­ing an R&D re­vamp, Glax­o­SmithK­line hands off its rare dis­ease unit to Or­chard Ther­a­peu­tics

Glax­o­SmithK­line couldn’t find a buy­er for their gene ther­a­py unit, but they did find a tak­er.

An­drea Spezzi

GSK said this morn­ing that it has lat­eraled off the group to a ven­ture-backed start­up called Or­chard Ther­a­peu­tics, which in­cludes co-founder An­drea Spezzi in a group of ex-GSK staffers with close ties to Strimvelis, a pi­o­neer­ing gene ther­a­py that was a key part of this deal. Af­ter shop­ping the deal for months, the GSK team end­ed up vir­tu­al­ly giv­ing it away in ex­change large­ly for a chunk of eq­ui­ty — un­der­scor­ing their in­abil­i­ty to cre­ate much val­ue in the ef­fort.

The deal al­so in­cludes un­spec­i­fied roy­al­ties and mile­stones.

Em­ma Walm­s­ley made it clear back in Ju­ly that the rare dis­ease unit at Glax­o­SmithK­line was on the auc­tion block. The move was part of their plan to stream­line the pipeline, shed­ding mar­gin­al or worth­less as­sets and re­fo­cus­ing on key dis­eases while ex­pand­ing their base in on­col­o­gy R&D.

Em­ma Walm­s­ley

Or­chard will now have own­er­ship of Strimvelis, the ex vi­vo gene ther­a­py for “bub­ble boy syn­drome.” Al­so in the deal bas­ket are two late-stage clin­i­cal pro­grams for metachro­mat­ic leukody­s­tro­phy (MLD) and Wiskott Aldrich syn­drome (WAS), one clin­i­cal pro­gramme for be­ta tha­lassemia, and rights to three pre­clin­i­cal pro­grams. In ex­change, GSK is tak­ing a 19.9% stake and a board seat in the UK biotech.

Al­though Strimvelis was ap­proved in Eu­rope in 2016, GSK has strug­gled to find cus­tomers among the ex­treme­ly small group of chil­dren with what is of­fi­cial­ly called adeno­sine deam­i­nase se­vere com­bined im­mun­od­e­fi­cien­cy, even af­ter of­fer­ing a mon­ey-back guar­an­tee. Lim­it­ed pa­tient ac­cess was a short­com­ing for Strimvelis — pa­tients could on­ly be treat­ed in a sin­gle cen­ter in Mi­lan, with just 15 cas­es di­ag­nosed in Eu­rope each year.

Mark Rothera

Or­chard be­lieves their ex­per­tise in cry­op­reser­va­tion would al­low Strimvelis to over­come that bar­ri­er and be shipped across the world in a frozen state. CEO Mark Rothera told Bloomberg last month that in de­vel­oped na­tions world­wide, up to 200 ba­bies are born with the im­mun­od­e­fi­cien­cy.

Bag­ging these as­sets, es­pe­cial­ly a com­mer­cial prod­uct, is sig­nif­i­cant for Or­chard, a young biotech that has nonethe­less se­cured $140 mil­lion for its gene ther­a­pies. Fol­low­ing the an­nounce­ment of the deal, Rothera spread the word that his team is look­ing to raise more cap­i­tal through a pri­vate sale of its shares. Be­yond that, the pipeline ex­pan­sion may al­so lead to an IPO.

“The ad­di­tion of these pro­grams is a re­al­ly big step up in terms of ac­tiv­i­ty, so we are go­ing to be look­ing to raise fur­ther funds through an ad­di­tion­al pri­vate round,” Rothera told Reuters. “From an in­vestor com­mu­ni­ty point of view there is a huge amount of in­ter­est and will­ing­ness to sup­port de­vel­op­ment of these med­i­cines. I am very con­fi­dent that we will be rais­ing funds in the not too dis­tant fu­ture.”

John Lep­ore

The agree­ment marks the close of a chap­ter in GSK’s re­or­ga­ni­za­tion sto­ry, out­lined to fo­cus on res­pi­ra­to­ry and HIV/in­fec­tious dis­eases, which the UK phar­ma gi­ant al­ready has a foot in, as well as on­col­o­gy and im­muno-in­flam­ma­tion — ar­eas new R&D chief Hal Bar­ron is now ex­plor­ing.

“Since we an­nounced our in­tent to re­view these med­i­cines, our goal has been to iden­ti­fy the right own­er who can build on what we’ve al­ready achieved, and can ad­vance these im­por­tant med­i­cines for pa­tients, al­low­ing GSK to fo­cus on build­ing its broad­er cell and gene ther­a­py plat­form ca­pa­bil­i­ties,” said John Lep­ore, GSK’s se­nior vice pres­i­dent, R&D pipeline, in a state­ment.

And they think Or­chard is the right part­ner. The duo will share some re­spon­si­bil­i­ties dur­ing the tran­si­tion pe­ri­od, which lasts un­til the end of 2018.


With ad­di­tion­al re­port­ing by John Car­roll.

5AM Ven­tures: Fu­el­ing the Next Gen­er­a­tion of In­no­va­tors

By RBC Capital Markets
With Andy Schwab, Co-Founder and Managing Partner at 5AM Ventures

Key Points

Prescription Digital Therapeutics, cell therapy technologies, and in silico medicines will be a vital part of future treatment modalities.
Unlocking the potential of the microbiome could be the missing link to better disease diagnosis.
Growing links between academia, industry, and venture capital are spinning out more innovative biotech companies.
Biotech is now seen by investors as a growth space as well as a safe haven, fuelling the recent IPO boom.

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Hal Barron, GSK R&D chief (GSK via YouTube)

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