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Going Against the Grain in Biotech Financing & More: The Contrarian Award Finalists

Xconomy Boston — 

Our profiles of the finalists for this year’s Xconomy Awards roll on today with a look at the nominees for the Contrarian award.

These finalists have been nominated for different reasons. One, for instance, may have paved the way for gene therapies to be commercially adopted in the U.S., by being the first insurer to agree to a new type of payment model. This could be exceedingly important in the years to come as more pricey therapies head to the FDA for approval. Another nominee is building a closely watched biotech in a very unusual way, and another is taking a nonprofit approach to developing gene therapies. Here’s more on the Contrarian finalists. The winner will be announced at our gala on September 5 in Boston.

(Read profiles of the finalists in the CEO, Startup, Digital Trailblazer, Innovation at the Intersection, and Big Idea categories, and the winner of our Lifetime Achievement award.)

Stephane Bancel, Moderna Therapeutics
There is a reason that Moderna Therapeutics generates more hype—and skepticism—than almost any other biotech out there. The secretive messenger RNA therapeutics developer has grown into a large organization by raising billions in venture financing and partnership dollars. It’s worth more than $7 billion. Yet Moderna still has little proof, in humans, its technology works, and it’s unclear if its commercial focus—as of now, vaccines—can produce the type of returns for investors that will truly make the endeavor a success. The company has plenty of critics.

But CEO Stephane Bancel’s nomination isn’t for Moderna’s technology, but for his unconventional way of building a biotech company. The biotech IPO window is and has been wide open for some time now. It’s very common for startup biotechs to go public after a Series A or B round, even if—like Moderna—they have little, if any, clinical data. Yet Moderna has deliberately chosen to stay private, closing a Series H round in May. As CFO Lorence Kim said to Xconomy earlier this year, Moderna has sold its investors on “breadth.” Their support has enabled the company to raise a gob-smacking amount of money. And that, Moderna says, gives it the freedom to tinker with its business strategy and survive clinical ups and downs without every move being scrutinized in the public markets. Moderna can “turn on a dime based on what we learn in the labs,” Bancel told Xconomy in January. It can also wait for the right moment to go public.

Michael Sherman, Harvard Pilgrim Health Care
For gene therapy to succeed commercially, the U.S. healthcare system has to adapt to a new way of treating patients that it hasn’t been set up to handle. How much should drugmakers be paid for a one-time, high-priced treatment when neither its effects nor its durability are guaranteed? How should those proceeds be allocated? And how do we ensure that, as more and more of these treatments come to market, the system can afford them and patients can get them? Michael Sherman, the chief medical officer of Harvard Pilgrim Health Care, has been at the forefront of this issue, and his moves to solve it and willingness to experiment with new payment models have earned him a nomination.

Speaking at a May 16 Xconomy event in Boston, Sherman warned attendees that “we need to solve for the budget impact” of gene therapies. That wasn’t empty talk. Early this year, Harvard Pilgrim became the first insurance company to endorse an outcomes-based payment scheme for a gene therapy, Luxturna, and in doing so, it’s taking a risk. The insurer is fronting the cost for Luxturna—a treatment for a genetic form of blindness that costs $425,000 per eye—and getting partial rebates or refunds from the manufacturer, Spark Therapeutics, if the treatment wears off. That could create a template going forward. “This is an important agreement not just because of Luxturna,” Sherman said on May 16, but because “it is sparking other discussions.”

Luk Vandenberghe, Massachusetts Eye and Ear
After decades of ups and downs, gene therapy’s renaissance is well underway. With one gene therapy, Luxturna, now approved in the U.S., several more are advancing through clinical testing. It’s standard fare now to see pharmaceutical companies buying in to gene therapy programs, or for gene therapy startups to attract venture dollars. What’s far less common is the plan Luk Vandenberghe, the co-director of the Grousbeck Gene Therapy Center at Massachusetts Eye and Ear, and his colleagues have hatched with Odylia Therapeutics.

Odylia is a nonprofit organization trying to take experimental gene therapies being neglected by other companies—-treatments for ultra-rare diseases—and advance them. The hope is Odylia can make these programs more enticing for companies to scoop up and drive toward commercialization. Vandenberghe and co-founders Eric Pierce and Scott Dorfman are starting with a retinitis pigmentosa gene therapy out of Mass Eye & Ear, but hope to broaden the effort well beyond the organization’s labs. “We think the concept has legs,” Vandenberghe said earlier this year.

This is the sixth article profiling the finalists of the 2018 Xconomy Awards. Read profiles of the finalists in the CEO, Startup, Digital Trailblazer, Innovation at the Intersection, and Big Idea categories, and the winner of our Lifetime Achievement award.