The recent deal activity in the CAR-T space has pushed valuations to breathtaking heights and already generated strong returns for early investors. At the same time, these valuations come with seemingly giddy optimism that CAR-T approaches will prove capable of conquering all cancer. With the limited data seen to-date, a little caution is due.
Let’s take a deeper look at the two hottest stars in the space. Juno, founded in 2013 with an eye-popping $120MM Series A has continued to add to its coffers. Similarly, Kite, which was founded in 2009 completed one of the hottest IPOs of 2014. The initial indications these companies are targeting with their CD19-directed CAR-Ts, NHL and ALL, have an annual US incidence of ~70,000 and ~6,000. Now, thinking about the target population for a CAR-T approach, the refractory aggressive B cell lymphomas and the refractory ALL patients, gets us to an addressable population of ~7,000. Assuming an aggressive price of $200,000/patient, that translates to a market opportunity of ~$1.4B. Consider then the combined market cap of these two companies at ~$7.5B, which compares favorably with that of Onyx when it was acquired by Amgen in 2013. The difference of course was that Onyx had marketed products and real profits. What does this imply about the value of these companies?
As for moving into earlier lines of therapy, how will CAR-T approaches fit in with novel targeted agents, bispecific technologies, and immunotherapy agents? Given the relative simplicity of using these agents, and the encouraging initial combination data for immunotherapy, it seems unlikely that CAR-T will be the first or even second-line treatment of choice. This is likely even more likely to be the case for the real big opportunities such as solid tumors which have been challenging to target with cellular based approaches.
To-date, the focus on rare, last-line patients has reflected the scientific and technical challenges of delivering these therapies. These patients tend to be at major centers that can handle the issues with such demanding therapies. However, in order to be a commercial success, CAR-T will need to move to larger, more disperse patient groups. Here, the logistical hurdles should not be overlooked. As the Dendreon example so painfully showed, most practices are not equipped to handle a highly labor intensive and financially risky therapy. Further, the COGS of producing custom CAR-T solutions for each patient are not favorable.
In order to meet the outsized expectations, CAR-T developers will need to thinking critically about 1) portfolio strategy (both technology and indication), 2) clinical trial design, and 3) logistics and treatment delivery. As a first step, it will be critical for CAR-T companies to identify partners to allow for more a more off-the-shelf approach, essentially turning this into an engineering issue.
Second, thinking critically about where a CAR-T approach could be accepted will ensure that these technologies have a chance at commercial success. Areas with established small molecule or emerging immunotherapy approaches could be challenging. This speaks to trial strategy and the potential for combination or adaptive designs.
Finally, most CAR-T developers are not Novartis, and likely cannot justify the burden of owning the entire supply chain.
Like others, I am hopeful that CAR-T will provide benefit for many patients, but much work remains to justify the valuations placed on the field’s emerging players.
Vivek Mittal, Ph.D. is a Partner at Health Advances
Opinions expressed here are solely those of the authors and do not reflect the views of Health Advances LLC, its management, or affiliates