Deals, Rare Diseases

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.


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