#373: A Novel Gene Therapy Promises Relief For A Rare Genetic Skin Disorder, & More

Recently, the US Food and Drug Administration (FDA) approved Krysta Biotech’s (KRYS) groundbreaking advance[1] in gene therapy, Vyjuvek, to treat wounds in patients suffering from dystrophic epidermolysis bullosa (DEB), a rare and serious genetic skin disorder caused by mutations in the collagen Type VII alpha 1 chain (COL7A1) gene. As the first FDA-approved gene therapy for DEB, Vyjuvek is a significant breakthrough.

Vyjuvek uses a genetically modified HSV-1 to deliver normal copies of the COL7A1 gene to wounds, restoring the integrity of the skin with fibrils that hold skin layers together. Treated with Vyjuvek, 65% of wounds closed completely.

Vyjuvek is a breakthrough in gene therapy, especially for DEB patients who have had limited treatment options thus far. It also is a significant advance for HSV-1 which, until recently, has not been considered a meaningful gene therapy vector. Thanks to its seamless interaction with the human immune system, HSV-1 could have significant advantages[2] over other viral vectors.

Last week, Vertex Pharmaceuticals presented[3] promising results from a Phase I/II trial focused on Type 1 Diabetes (T1D): VX-880, an allogeneic stem-cell derived islet cell therapy infused into the hepatic portal vein for T1D patients with severe hypoglycemia. Importantly, the six patients produced endogenous insulin, reducing the need for exogenous insulin and showing blood glucose control with a reduction of HbA1c.

In the US today, healthcare spending approximates $4.3 trillion,[4] of which therapeutics accounts for ~15%, or $600 billion,[5] as shown below.

In our view, novel gene-editing therapies could command premium pricing by shifting healthcare expenditures from chronic disease management to one-dose therapies like VX-880. Addressing diabetes, for example, therapeutics account for 30% of total direct and indirect costs, as shown below. If emerging drugs like VX-880 were to shift costs from chronic disease management to one-dose therapies, curative therapeutics could take share from chronic treatments.

Last month, at the Cannes Lions International Festival of Creativity, Adam Sussman, President of Epic Games, and Julia Goldin, Chief Product and Marketing Officer of the LEGO Group, announced a collaboration[6] that promises[7] to port LEGO creations into Fortnite with Unreal Engine. In addition to interacting with LEGO assets in Fortnite, gamers can anticipate ancillary features like cosmetic microtransactions, themed maps, and limited-time experiences. Historically,[8] Fortnite has collaborated with many consumer-facing brands, but most of them have revolved around limited-time game modes and/or microtransactions.

Source: ARK Investment Management LLC, 2023. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security.

Earlier this year, in the wake of a $2 billion investment[9] from Sony and Kirkbi, the family that owns LEGO, Epic released[10] the Unreal Editor for Fortnite (UEFN). Based on management’s commentary, Epic’s collaboration with LEGO is likely to enable gamers with little technical expertise to build immersive offerings and interact with LEGO assets, further lowering barriers to the creation of user-generated content (UGC).

Last week, Amazon disclosed that its global fleet has hit 750,000 robots,[11] an increase of  ~44%[12] and ~620 per day over the past year, as shown below. Indeed, 2023 could be the first year that Amazon “hires” more robots than humans.

[1] U.S. Food and Drug Administration. 2023. ““FDA Approves First Topical Gene Therapy for Treatment of Wounds in Patients with Dystrophic Epidermolysis Bullosa.” https://www.fda.gov/news-events/press-announcements/fda-approves-first-topical-gene-therapy-treatment-wounds-patients-dystrophic-epidermolysis-bullosa.
[2] Epstein, A.L. 2022. “HSV-1’s contribution as a vector for gene therapy.” Nature Biotech. https://www.nature.com/articles/s41587-022-01449-1#:~:text=For%20HSV%2D1%20vectors%2C%20the,least%20once%20a%20month7.
[3] Vertex Pharmaceuticals. 2023. “Vertex Presents Positive VX-880 Results From Ongoing Phase 1/2 Study in Type 1 Diabetes at the American Diabetes Association 83rd Scientific Sessions.” https://investors.vrtx.com/news-releases/news-release-details/vertex-presents-positive-vx-880-results-ongoing-phase-12-study.
[4] American Medical Association. 2023. “Trends in health care spending.” https://www.ama-assn.org/about/research/trends-health-care-spending#:~:text=Health%20spending%20in%20the%20U.S.,trillion%20or%20%2412%2C914%20per%20capita.
[5] Office of Science and Data Policy. 2022. Assistant Secretary For Planning and Evaluation. “Trends in Prescription Drug Spending, 2016-2021.” https://aspe.hhs.gov/sites/default/files/documents/88c547c976e915fc31fe2c6903ac0bc9/sdp-trends-prescription-drug-spending.pdf.
[6] Beer, J. 2023. “Lego and Epic Games want to prove the metaverse is alive and well.” Fast Company. https://www.fastcompany.com/90913837/lego-epic-games-fortnite-unreal-metaverse-not-dead.
[7] iFireMonkey. 2023. “Fortnite x LEGO News Recap.” Twitter. https://twitter.com/iFireMonkey/status/1672372784414982145.
[8] Tsiaoussidis, A. 2023. “Every Single Fortnight Collab & Crossover in Battle Royale’s History.” Dexerto. https://www.dexerto.com/fortnite/every-fortnite-collab-crossover-battle-royale-history-1645672/.
[9] Browne, R. 2022. “Sony and the Lego family bet big on the ‘metaverse’ with $2 billion investment in Epic Games.” CNBC Tech. https://www.cnbc.com/2022/04/11/sony-and-lego-family-invest-2-billion-in-fortnite-creator-epic-games.html.
[10] Peters, J. 2023. “Epic’s Unreal Editor for Fortnite is finally launching on March 22nd.” The Verge. https://www.theverge.com/2023/3/16/23643185/epic-games-unreal-editor-fortnite-beta-creative-2-0.
[11] Quinlivan, J. 2023. “How Amazon deploys collaborative robots in its operations to benefit employees and customers.” Amazon. https://www.aboutamazon.com/news/operations/how-amazon-deploys-robots-in-its-operations-facilities.
[12] Amazon Staff. 2022. “10 years of Amazon robotics: how robots help sort packages, move product, and improve safety.” https://www.aboutamazon.com/news/operations/10-years-of-amazon-robotics-how-robots-help-sort-packages-move-product-and-improve-safety#:~:text=We%20have%20more%20than%20520%2C000,sort%20centers%20and%20air%20hubs.