Image Shown: An overview of Vertex Pharmaceuticals Inc’s commercialized drug portfolio and pipeline. Image Source: Vertex Pharmaceuticals Inc – Second Quarter of 2021 IR Earnings Presentation
By Callum Turcan
The world of medicine and therapeutics continues to evolve, with gene editing CRISPR technology offering the medical community an immense source of potential life-saving therapies over the years and decades to come. Our favorite way to gain exposure to this space is through Vertex Pharmaceuticals Inc (VRTX), an idea included in the Best Ideas Newsletter portfolio.
What Is CRISPR?
In short, CRISPR gene editing technology can identify a specified portion of DNA in a cell and when done properly (this is no easy task), CRISPR technology can alter that DNA, potentially replace faulty genes, and turn certain genes on and off without altering their sequence. However, this nascent technology comes with its risks.
CRISPR stands for ‘Clustered Regularly Interspaced Short Palindromic Repeats’ and is built around the Cas9 protein, with the “Cas” proteins (meaning CRISPR-associated proteins) found in bacteria. Researchers have found that by adding a guide RNA and the Cas9 protein to a cell, the guided Cas9 protein is able to identify the desired DNA sequence that the researcher aims to edit.
The gene editing process involves the Cas9 protein cutting the DNA, which introduces mutations that usually disable the gene after the cut is repaired, though this process is not necessarily as precise as researchers, patients, and the pharmaceutical industry would like. CRISPR technology can also be used to replace faulty genes, though this is much more complicated.
Other forms of the technology include CRISPRa and CRISPRi, which aim to turn certain genes on or off depending on the desired outcome. There are also currently academic efforts out there that aim to edit just one DNA letter in the DNA sequence (which a team at Harvard University are testing out). We are intrigued by this technology, though a lot of work still needs to be down before commercial opportunities arise. Vertex Pharma, though various strategic partnerships, is a leader on this front.
Vertex Pharma Expands Promising Partnership
Vertex Pharma has several partnerships with biotech firms that are working on therapeutics built with CRISPR technology. For instance, Vertex Pharma has a strategic partnership with CRISPR Therapeutics AG (CRSP) that covers the potential CTX001 therapeutic offering which is currently undergoing clinical trials. The duo entered a strategic research collaboration agreement back in 2015. CTX001 is being developed to treat transfusion-dependent beta thalassemia (‘TDT’) and severe sickle cell diseases (‘SCD’).
In April 2021, Vertex Pharma increased its economic interest in CTX001 by amending its agreement with CRISPR Therapeutics. Vertex Pharma agreed to pay CRISPR Therapeutics $0.9 billion in cash upfront along with the potential for an additional $0.2 billion in contingent payments, and Vertex Pharma will also shoulder a larger share (now 60%) of the potential drug’s future development costs. In return, Vertex Pharma is now entitled to 60% of the future profits generated from the CTX001 program should the potential therapeutic receive the necessary regulatory approvals, making this a needle-moving opportunity for Vertex Pharma.
Here is what the April 2021 press release had to say about this potential therapeutic offering:
CTX001 is an investigational, autologous, ex vivo CRISPR/Cas9 gene-edited therapy that is being evaluated for patients suffering from TDT or severe SCD, in which a patient’s hematopoietic stem cells are edited to produce high levels of fetal hemoglobin (HbF; hemoglobin F) in red blood cells. HbF is a form of the oxygen-carrying hemoglobin that is naturally present at birth, which then switches to the adult form of hemoglobin. The elevation of HbF by CTX001 has the potential to alleviate transfusion requirements for patients with TDT and reduce painful and debilitating sickle crises for patients with SCD.
Based on progress in this program to date, CTX001 has been granted Regenerative Medicine Advanced Therapy (‘RMAT’), Fast Track, Orphan Drug, and Rare Pediatric Disease designations from the U.S. Food and Drug Administration (‘FDA’) for both TDT and SCD. CTX001 has also been granted Orphan Drug Designation from the European Commission for both TDT and SCD, as well as Priority Medicines (‘PRIME’) designation from the European Medicines Agency (‘EMA’) for SCD.
Among gene-editing approaches being investigated/evaluated for TDT and SCD, CTX001 is the furthest advanced in clinical development.
Within CRISPR Therapeutics’ second-quarter 2021 earnings report, the company’s management team noted that “updated clinical data on CTX001 presented at EHA [European Hematology Association] demonstrate consistency and durability, further validating the promise of a functional cure for sickle cell disease and beta thalassemia. We expect to report clinical data from our immuno-oncology programs later this year, and to file multiple INDs [Investigational New Drug Application] for our regenerative medicine and in vivo programs in the next 18 to 24 months.” An IND is how pharmaceutical and biotech firms get approval from the US FDA to provide innovative new therapeutics to patients, usually alongside additional clinical studies.
CRISPR Therapeutics published a press release in June 2021 that covered the recent clinical trial data that the firm, along with Vertex Pharma, was showcasing at the EHA. The new data was from two clinical studies involving 22 patients including the CLIMB-111 Trial (involves 15 patients with TDT) and the CLIMB-121 Trial (involves seven patients with severe SCD), and overall, the data was quite promising. Here is what the press release had to say (lightly edited):
CLIMB-111 Trial in TDT: Updated Results
The 15 patients with TDT reported at EHA are patients who had reached at least three months of follow-up after CTX001 dosing and therefore could be assessed for initial safety and efficacy. All 15 patients showed a similar pattern of response, with rapid and sustained increases in total hemoglobin, fetal hemoglobin and transfusion independence.
All 15 patients were transfusion independent with follow-up ranging from 4 to 26 months after CTX001 infusion and had clinically meaningful improvements in total hemoglobin from 8.9 to 16.9 g/dL and fetal hemoglobin from 67.3% to 99.6% at last visit. Bone marrow allelic editing data collected from 10 patients with at least 6 months of follow-up, of which five patients had at least 12 months of follow-up and one patient had at least 24 months of follow-up, demonstrated a durable effect.
The safety data from all 15 patients were generally consistent with an autologous stem cell transplant and myeloablative conditioning. As previously reported, there were four serious adverse events (SAEs) considered related or possibly related to CTX001 reported in one patient: headache, hemophagocytic lymphohistiocytosis (HLH), acute respiratory distress syndrome and idiopathic pneumonia syndrome. All four SAEs occurred in the context of HLH and have resolved. The majority of non-serious adverse events were considered mild to moderate…
Enrollment and dosing are ongoing.
CLIMB-121 Trial in Severe SCD: Updated Results
The seven patients reported at EHA are patients who had reached at least three months of follow-up after CTX001 dosing and therefore could be assessed for initial safety and efficacy. All seven patients showed a similar pattern of response, with rapid and sustained increases in total hemoglobin and fetal hemoglobin, as well as elimination of VOCs.
All seven patients remained VOC-free with follow-up ranging from five to 22 months after CTX001 infusion and had clinically meaningful improvements in total hemoglobin from 11 to 15.9 g/dL and fetal hemoglobin levels from 39.6% to 49.6% at last visit.
Bone marrow allelic editing data collected from four patients who have at least six months of follow-up, of which two had 12 months of follow-up, demonstrated a durable effect. The safety data from all seven patients were generally consistent with an autologous stem cell transplant and myeloablative conditioning. There were no SAEs considered related to CTX001, and the majority of non-serious adverse events were considered mild to moderate… Enrollment and dosing are ongoing.
Commercial Opportunities for CTX001
Things are moving in the right direction, though the clinical trial sizes remain rather small given the complexity of these health conditions and the novel nature of CRISPR gene editing technology. Here, we would like to stress that CRISPR Therapeutics and Vertex Pharma have some work to do before receiving regulatory approval for CTX001, which would set the stage for eventually commercializing the potential therapeutic offering. CTX001 is still undergoing Phase 2 clinical trials, and there is no guarantee of success.
That said, Vertex Pharma’s management team had this to say regarding the potential commercial upside CTX001 could generate during the firm’s second quarter of 2021 earnings call (emphasis added):
“With the amendment of our collaboration agreement with CRISPR Therapeutics, Vertex now has taken global leadership for all aspects of the CTX001 program. As a result, we are in a position to leverage Vertex’s demonstrated ability to develop and secure access and reimbursement for transformative medicines.
We see tremendous potential for CTX001. We estimate that there are more than 150,000 patients in the U.S. and Europe, who have beta thalassemia, or sickle cell disease, approximately 32,000 of whom have severe disease. 25,000 are severe sickle cell disease patients, and the vast majority of these are in the U.S.
We believe that a gene editing approach which holds the potential for a one-time curative treatment will be highly valued by patients, physicians and payers.Consistent with our own internal market research, published physician surveys in the U.S. consistently indicate that they expect a quarter to a third of their sickle cell disease patients would be good candidates for a one-time curative approach using the current conditioning regimen, which is in line with the estimates of the numbers of severe patients.
And with gentler conditioning regimens in the future, we expect CTX001 to be an attractive option for a much larger proportion of the 150,000, beta thalassemia, and sickle cell disease patients. Our pre-commercial efforts are well underway.” — Stuart Arbuckle, Executive Vice President and more recently, COO of Vertex Pharma
Another CRISPR Venture
Beyond its agreement with CRISPR Therapeutics, Vertex Pharma established a new collaboration with privately-held Arbor Biotechnologies in August 2021 to build on an existing agreement that was created back in 2018. Arbor Biotech will receive an upfront cash payment from Vertex Pharma and Vertex Pharma will make an investment in Arbor Biotech through a convertible note. The new agreement could see Vertex Pharma pay up to $1.2 billion to Arbor Biotech should certain milestones get met, with the press release revealing that the agreement covered “seven potential programs,” though it was not immediately clear what the size of the upfront payment was.
Vertex Pharma also agreed to “pay tiered royalties on future net sales on any products that may result from this collaboration,” though we stress that these are still very early days. Here is what the press release had to say:
The new agreement between Arbor and Vertex builds upon the companies’ first partnership established in 2018. Under this new partnership, Vertex will receive rights to use Arbor’s technology to research and develop ex vivo engineered cell therapies towards Vertex’s goal of generating fully differentiated, insulin-producing hypoimmune islet cells for the treatment of type 1 diabetes, for next-generation approaches in sickle cell disease and beta thalassemia, and for the treatment of other diseases.
We are intrigued by this partnership and appreciate that Vertex Pharma continues to grow its exposure to the intriguing upside that CRSPIR technology offers.
Concluding Thoughts
Vertex Pharma is well-positioned to capitalize on any potential CRISPR technology breakthroughs, and we continue to like shares of VRTX as an idea in the Best Ideas Newsletter portfolio. Should the company’s experimental gene-editing therapy CTX001 get commercialized, that would provide Vertex Pharma with an incredibly powerful growth catalyst, complementing its existing portfolio of commercialized drugs that treat cystic fibrosis (‘CF’). To read more about Vertex Pharma, please check out our June 2021 article Best Idea Vertex Pharma Continues to Impress by clicking this link here.
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Callum Turcan does not own shares in any of the securities mentioned above. Johnson & Johnson (JNJ) and Health Care Select Sector SDPR Fund ETF (XLV) are both included in Valuentum’s simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio. Vertex Pharmaceuticals Inc (VRTX) is included in Valuentum’s simulated Best Ideas Newsletter portfolio. UnitedHealth Group Inc (UNH) is included in Valuentum’s simulated Dividend Growth Newsletter portfolio. Vanguard Consumer Staples ETF (VDC) is included in Valuentum’s simulated High Yield Dividend Newsletter portfolio. Some of the other companies written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.