In the biotech universe, gene therapy ought to be a blazing star. Certainly the idea of tackling everything from rare inherited diseases such as cystic fibrosis to scourges such as cancer by slipping corrective genes into people is compelling. And breathtaking advances in technology have moved the field from fantasy to medical reality, spawning more than two dozen companies and bringing hundreds of patients into clinical trials.
So why are leading public gene-therapy companies such as Genetic Therapy, Somatix Therapy, and Viagene trading near their lows while startups postpone initial public offerings? Part of the answer, argue executives and analysts, is that investors are too ill-informed to spot the field's progress. After the failures of sepsis drugs and other biotech products, "we got unfairly tarred with the same brush," insists Tom D'Alonzo, CEO of GenVec Inc. in Rockville, Md.
Maybe. But gene therapy's financial doldrums also reflect the vast gulf between promise and product. While more than a dozen clinical trials are under way, most procedures are closer to basic research than viable treatments.
UNKNOWN PATH. Take cystic fibrosis. Researchers can insert correct copies of the flawed gene into patients' lung cells using modified pneumonia viruses and can show that cells use the gene to make a crucial protein. But huge hurdles remain before there's a cure. Lung cells may not make enough of the protein, and for only a few weeks. Worse, when scientists try to slip the gene in a second time, the body's immune system may reject it. Solving these problems will require new gene-delivery technologies. "It's kind of crazy," says James M. Wilson, head of the University of Pennsylvania's Institute for Human Gene Therapy. "We believe gene therapy will have a huge impact on medicine within 10 years, but we don't know what technology will get us there."
Companies and academic scientists are working feverishly on innovative delivery systems--everything from modified herpes viruses and fat globules to synthetic compounds designed to carry genes through the blood to specific organs. But even if one of these hits the jackpot, there's no guarantee anyone will make money from it. The most obvious use of gene therapy is "fixing" flawed DNA in inherited diseases. But except for cystic fibrosis, which strikes one in 2,500 Caucasians, these diseases are so rare that the potential market for cures is tiny.
The search for more lucrative products has led a number of companies to target diseases such as cancer and AIDS, where payoffs are huge. But so are the uncertainties, such as finding the right pieces of DNA to use. In one approach, Somatix Therapy Corp., Vical Inc., and others are delivering genes to cancer cells to make the cancer more visible--and vulnerable--to the immune system. But years of failed efforts to boost immune defenses with conventional methods make many scientists skeptical. Another tack, used in trials sponsored by Genetic Therapy Inc. (GTI) and partner Sandoz Pharma Ltd., is to slip genes into brain-tumor cells that make the tumor cells susceptible to a common drug. But critics worry about getting the gene into enough cells and don't think the approach will combat cancer elsewhere in the brain and body. "Cancer is going to be very tough," concludes Wilson.
TEAMING UP. It's no surprise, then, that investors are bearish on gene therapy. "I refuse to invest in areas that I think are 10 years from market," says Sarah Gordon-Wilde,
biotech analyst for the $1.5 billion Amerindo Investments Ltd. fund. Executives say the timetable is far shorter--Vical CEO Alain B. Schrieber hopes to have his cancer product out by 1998. Even so, they know gene therapy won't be a Wall Street darling until cures appear. "We can't just tell scientific stories anymore," says Somatix CEO David W. Carter.
One stopgap measure is to find larger partners such as Sandoz, Genentech, and Rhone-Poulenc Rorer. In the end, though--as in much of biotech--a shakeout seems inevitable: "There's no need to have 10 gene-therapy companies," says Vical's Schrieber. It's an old story. Breakthroughs create a promising new field, but only a few hardy companies have a shot at the prize. "The logic for gene therapy is so compelling, there's a tendency to think it ought to be easy," says GTI's Marc R. Schneebaum, vice-president and CFO. It isn't.