With Orchard’s IPO, GSK’s Old Gene Therapy Biz Gets a Wall Street Test

With Orchard’s IPO, GSK’s Old Gene Therapy Biz Gets a Wall Street Test

GlaxoSmithKline’s former gene therapy portfolio is headed to Wall Street—in the hands of Orchard Therapeutics.

The London, Boston, and San Francisco, CA, company has filed for an IPO, aiming to back both a group of in-house gene therapies and others it acquired from GSK in April—among them Strimvelis, which is one of the few approved gene therapies in the world. The company has set a preliminary $172.5 million IPO target, which would be among the larger hauls for a life science IPO this year. But that figure could change once Orchard sets its terms.

Unlike conventional medicines, gene therapies are meant to provide a durable effect, if not a cure, with a single treatment. After years of ups and downs, gene therapies have recently gotten scientific validation across several diseases. Although questions remain about how long the effects of gene therapies will last, whether safety problems will emerge, or whether the therapies can be successful commercially, three products have been approved in Europe and the U.S., and more are likely on the way. Regulators in Europe, for instance, are currently reviewing a gene therapy for beta-thalassemia from Bluebird Bio (NASDAQ: BLUE) and could make a decision by early 2019. Additionally, encouraging data continue to emerge for disease like hemophilia, Duchenne muscular dystrophy, spinal muscular atrophy, and more. Several gene therapy developers are now publicly traded.

There are two main types of gene therapy: an in vivo process, in which a therapeutic gene is introduced into the patient’s body; and an ex vivo variety, in which patients’ stem cells are harvested, equipped with a healthy version of a gene, and then infused back into the body. Orchard, like Bluebird and Avrobio, focuses on the latter approach, and has been developing gene therapies for rare immune and metabolic diseases.

Orchard bolstered that portfolio with the GSK deal, through which the British pharma giant took a stake in Orchard and sold to the company Strimvelis and experimental programs for metachromatic leukodystrophy (MLD), Wiskott Aldrich syndrome (WAS), and beta-thalassemia.

GSK jettisoned its gene therapy programs to Orchard as part of an R&D shakeup, but Strimvelis had already been tough to sell. In its prospectus, Orchard said Strimvelis, approved in Europe in 2016 for adenosine deaminase severe combined immunodeficiency (ADA-SCID), has been used on only a “limited number of patients” and its revenue won’t be enough to make the company profitable. Orchard, in fact, is developing its own ACA-SCID gene therapy, OTL-101, and hopes to file for FDA approval of the treatment in 2020. The company lost roughly $139 million in 2017.

Orchard’s filing shows it scooped up GSK’s gene therapy assets for a pittance. Orchard paid GSK about $13 million up front and sold GSK about 15.56 million shares, which makes the pharma company Orchard’s second-largest shareholder, with a 17.9 percent stake (F-Prime holds 29.3 percent of Orchard). Orchard could pay GSK another roughly $118 million, but only if the gene therapies it acquired hit certain development and sales targets.

Strimvelis and OTL-101 aside, Orchard’s most advanced programs are two former GSK programs, one for MLD (OTL-200), a rare neurometabolic disorder, and the other for WAS (OTL-103), an inherited immune disease. Both are in late-stage testing.

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