February 1st 2021
Generics and late-stage clinical failures have led major Big Pharma to leave CNS practice. Prozac™, Zoloft™, Paxil™ in depression have dragged Pfizer, Lilly, GSK down from CNS. They were followed by Amgen, BMS, AZ… who dramatically shrink their CNS Business Units. In the late 90’s the state of development of science made the chance of success of new CNS drug extremely challenging. Showing solid improvement over Generics and continuing to target broad indications have dramatically decreased the chance to reach the market. Nonetheless, it looks that VC are (again) changing the game by investing massively in neurosciences. In the latest 3-4 years, CNS has soared as the second most important Series A therapeutic franchise investment after oncology. It’s massive and it’s consistent over the years. What happened and what is the new paradigm followed by the funds?
First it shall be pointed out that unmet medical needs remain hot in quite all CNS indications. For a well-established market than Epilepsy for instance with 25 new products approved in the latest 20 years, the relapse rate of therapeutics remains 33%... the very same figure than in the early 80’s where only 4 products were marketed! In order to break this wall of resistance, totally new approaches that could embrace disease’ specificity, genesis, etiology and co-morbidities will play as a prerequisite. Major outcomes have also been raised on disease understanding and segmentation, epileptogenesis preclinical models have also strongly improved. The environment to match new chemical entities to sub-disease indications is there to pave the way for a new Medico-Regulatory routes and commercial cases. In this connection, Dravet or Lennox-Gastaut syndromes are rare pediatric and life-threatening form of epilepsy and have been the focus of numerous VC backed companies and big pharmas including Takeda or Lundbeck.
Typically, the high risk/ high return therapeutic franchises bring skepticism toward ventures and industrials. This is particularly true for Stroke or Alzheimer’s diseases owing to numerous late-stage failure programs (AZ, Lilly, Biogen, Novartis, Roche…). Major outcomes have been brough in some markets like Relapsing/ Remitting Multiple Sclerosis with the approval of disease modifying treatments (alemtuzumab/ Sanofi Genzyme, natalizumab/ Biogen and ocrelizumab/ Genentech-Roche). Nonetheless, there is still no disease altering therapies for neurodegenerative diseases and drug benefits for depression or epilepsy are partial with a high relapse/ non respondent rate. Thus, the first drug potentially disease modifying in neurodegenerative illness will be immediately a blockbuster. In this connection major players have decided to keep a foot in this franchise, investigating monogenic diseases or orphan/terribly debilitating indications such Huntington’s disease (Roche…), Spinal Muscular Atrophy (Biogen…) or Duchenne Muscular Dystrophy (Pfizer…). By segmenting broad spectrum indications, targeting orphan diseases in other words offering precision medicines in the CNS scope, a new continent is emerging. This will allow them to keep a strong engagement toward Neurologists and patients advocacy groups before broadening the indications scope with transformative therapies.
WHERE TO INVEST?
As of today, there are more than 600 CNS diseases that will touch a growing number of patients (nearly 100 million in the US only). CNS remains the #1 franchise for disabilities and #3 for cause of death. Ageing of population will increase consistently the prevalence of neurodegenerative diseases and CNS complications from other primary illness will soar (Diabetic Neuropathy, stroke…). Looking to current CNS market, Pain is the most massive segment (74B USD, CAGR 3,8%) followed by Mental Health (55B USD, CAGR <5%) and Neurodegenerative diseases (41 B SD, 7,5% CAGR). Looking to the Medical and Pharmacoeconomic landscape, conditions that dramatically depreciate survival outcomes, autonomy, generate unacceptable/ unmanageable level of pain or more generally that target diseases not stabilized by current therapies or with no therapeutic alternative are the most desirable target of investments.
Source: Edouard Caram
If one factor-in the prevalence for those conditions, commercial attractiveness shall arise for diseases with the lowest unmet medical need. Looking to Depression, Bipolar Disorder, Rhumatoid Arthritis or Osteoarthritis, the prevalence is peaking so high that addressing a clear segment of those markets will translate to substantial revenues. In a pathophysiology perspective, Neuroinflammation is playing a central role underlying major CNS illness. This includes Multiple Sclerosis, Alzheimer, Epilepsy seizures, Huntington’s disease but also cognitive functions such depression or schizophrenia. Proinflammatory cytokines such as IL-23, IL-6, IL-1β, IFNγ, TNF, and GM-CSF have been massively investigated.
Neuroinflammation is also the core focus of Tranquis Therapeutics (SR One, Remiges Venture) who raised 30 MM USD in July 2020 to bring candidates into the clinic. By targeting Myeloid Immune cell dysfunction, a core mechanism leading to neurodegenerative diseases, Tranquis is prioritizing first niche diseases (ALS, Frontotemporal dementia) before opening up to broader indications (Parkinson’s, Alzheimer’s diseases). Another hot target investigated by Synendos who closed a 20MM CHF Series A in November 20 (Sunstone, Kurma) is the endocannabinoid receptors in order to modulate inflammatory pathways involved in Anxiety, stress and mood disorders. CB2 Receptors is a key target that is involved in multiple CNS pathophysiology paths. Strange as it may seem, Cannabinoid analogs in the market or under development do not have an interesting Kd over CB2R, paving the way to identify and develop key candidates to specifically reproduce the action of endogenous cannabinoids. Focusing on the Innate CNS system and more particularly on microglia is the core science of Vigil Neuro who raised 50 MM USD (Northpond, Alexandria) in December 20. By targeting TREM2 receptors on the surface of microglia, the DAP12/SYC phosphorylation cascade is inhibited. Microglia stays in its homeostatic phase and can’t change phenotype to “diseases associated microglia” such as microgliopathy and neurodegenerative diseases. Still in December 20, Sofinnova Partners and Polaris co-leaded the 54MMCHF spin out from Roche: Noema. Repositioning key CNS assets into niche indications is their investment thesis. The lead product mGluR2/3 is already ready to start Phase IIb to two new indications. Drug repositioning and spin off is a major footprint at Sofinnova Partners who historically made exceptional exits with Roche’ spinoff Actelion or J&J’s Movetis. By repositioning old drug to new indications, strengthening the IP profile and using previous tox/safety package, the assets could directly jump into Phase II and anticipate an exist in less than 3 years after Series A (instead of 5-10). Ditto for Arena Pharmaceuticals who , in October 2020, spun off for 56 MM USD Longboard Pharmaceuticals (HBM, Cormorant, Farrallon). This San. Diego based biotech is developing transformative medicines in CNS by developing CB2 agonists and 5-HT2c “superagonist” (refractory epilepsy, ALS, Neuroinflammatory disorders). Earlier this year, F-Prime has leaded a 110 MM USD Series A in Atalanta Therapeutics co-founded by the Nobel Prize laureate Craig Mello. They are tackling neurodegenerative disease through a siRNA platform. By silencing key genes expression they clam to target the source of Huntington’s disease as well as Parkinson’s and Alzheimer’s.
Looking to industrial acquisitions, the recent months have been extremely active in CNS. Last September (2020), Rocheacquired Inflazome (Novartis Venture, Forbion, Fountain) for 380 MM EUR upfront, 5 years after the Series A to get control of NLPR3 inhibitors that control neuroinflammation in Parkinson’s disease. More recently (December 20) Novartis acquired the Psychiatric Disorder company Cadent Therapeutics (Atlas, Cowen Healthcare) for 770 MM USD which is 12 times the money raised. The transformative gene therapy Prevail (Parkinson’s disease, Neuronopathic Gaucher’s disease, Frontotemporal Dementia…) were acquired by Novartis in December 20 for up to 770 MM USD two years after the Series A leaded by Orbimed. And the list is growing weeks after weeks showing the fierce interest of CNS assets.
Source: adjusted/ adapted and consolidated by Edouard Caram from publicly available sales figures
Transformative assets conjugated with burning Medical Unmet Need and creative Medico-Regulatory paths have catalyzed the “resurrection” of CNS. This solid trend is already translated with products in late clinical development stage and will soon address a growing number of patients with no/ limited therapeutic alternatives. Academic research and VCs have played a critical role in this spectacular “come back”. One major visible expression of it is the emergence of new totally focus CNS funds with a dedicated investor team. LSP Dementia is claiming to be the first neurodegenerative diseases fund with already 50 MM EUR raised (targeting 150 MM EUR). SV Health Investors has created the 250 MM GBP Dementia Discovery Fund focusing on age-related Dementia. Noetic in Toronto is launching in early 2021 there second dedicated fund on Psychedelic medicines. FBRI from F/Prime is focusing on investment in brain disorders and Alzheimer’s disease and have already be part of two major rounds (110 MM USD in Series A of Atalanta in early 21, 217 MM USD in Series A Denali therapeutics). Micro funds also contribute to this socio-financial reality such as Whatif from Texas focusing on mental health. It looks that the COVID pandemic has dramatically increased the prevalence of mental disorders and US only mental health investments have soared to 1,37 B USD for the first nine months of 2020 (>80%). As a matter of fact, there is no comparison of having such a dedicated investment ecosystem for one medical practice. In combination with novel biomarkers, neurotech solutions, digital health programs, pre-diseases diagnosis, Medtech precision devices, the pluri-disciplinary management of CNS is now already a reality.
Edouard Caram