The Next Big Thing...

... is gene therapy, according to London-based boutique investment bank Mulier Capital, which is raising a $500 million Ingeneous Fund to invest in late-stage, listed gene-therapy companies.

Are they mad?, you ask. Gene therapy? That area steeped in controversy, which elicits visceral public reaction like no other? That dirty word that promised the world, yet delivered nothing more than disappointments, SCID kids, and the tragic, overexposed story of Jesse Gelsinger?

Yes, that’s the one. Now granted, these days, gene-based medicine encompasses all kinds of DNA-based drugs, not just traditional integrative gene therapy; the Mulier group also include the ultra-hot yet earlier-stage gene silencing approach, RNA interference, in their definition. Still, they reckon, it’s all about to happen. “Gene-based medicine is now 8.5 months’ pregnant,” declares Mulier’s founder and CEO Pieter Mulier, previously head of sales at Nomura.

So in order to be in the right place at the birth of this next big thing, the Fund will pool a series of “significant” stakes (up to 28%) in what Mulier describes as the best third of gene-technology companies, thereby spreading risk across about ten Phase III programs and over 30 Phase I or II programs, in earlier clinical phases. Investors will have access to the expertise of the Fund’s advisory board, which includes George Poste (needs no introduction), James Rothman, Chief Scientific Advisor at GE Healthcare, and Max Talbott, a Big Pharma veteran who is now SVP worldwide commercial development and gene-therapy firm Introgen. Given the size of the stakes it plans to buy, Ingeneous will in theory have the negotiating power to achieve the right valuation when (and if) Big Pharma does come bursting in.

Now, there’s no doubt that significant progress has been made in gene-based medicine. Having solved many of the technological problems hampering the field (most notably around delivery vectors) and learnt from its mistakes, the field now boasts about 30 Phase III programs (including Introgen’s delayed p53 tumor suppressor therapy Advexin), over 200 in Phase II, and a somewhat more comfortable FDA. This year has seen gene therapy IPOs—like Holland’s Amsterdam Molecular Therapeutics, which went out at the top of its range in June—and Big Pharma deals, like Oxford BioMedica’s March tie-up with Sanofi-Aventis for Phase III renal cancer immunotherapy TroVax.

But the inherent complexity of gene-based medicine—delivery system, drug, target, breadth of effect, duration of action—and still unanswered commercial questions (can these kinds of therapy make money? Are they practical to administer?) mean not everyone’s calling this the next monoclonal antibody revolution. As we’ll discuss in a forthcoming feature in START-UP, plenty of Big Pharma are still steering well clear; others like Johnson & Johnson are dipping cautious toes in via corporate VC. They, and similarly tentative VCs, are anxious not to miss out completely just incase gene therapy does take off.

It’s this tantalizing ‘what if’ that Mulier is trying to exploit in pulling in its investors, a mix of institutions and high net worths that Mulier says have already made $300 million worth of ‘soft’ commitments. If the first gene-based medicine is approved in 2008, as optimists expect, then perhaps the sector’s value will explode. But if anything goes wrong—even just one SAE, for instance, as in the case of Targeted Genetics’ AAV-delivered inflammatory arthritis candidate, which the Recombinant DNA Advisory Committee is still pondering over)—then there’s a serious risk that investors will be left high and dry.

So gene therapy’s still a gamble. But IN VIVO Blog agrees with Mulier in believing the odds look better than ever before.