November is classically the month where immunotherapy takes center stage, especially at the annual conference of the Society for Immunotherapy of Cancer (SITC, endearingly pronounced sitsie). Immunotherapy is a very active domain and given the recent activity in the field and the emergence of many novel targets, it should come as no surprise that some new targets are losing their luster. The bad news from IDO inhibitors together with poor activity with STING agonists, CSF1R antagonists and some cytokines, have deflated the field dramatically. It turns out that beating a standard chemotherapy-PD1 combination is not as easy as once was expected.
This article was guest-authored by Ward Capoen from V-Bio Ventures.
After this string of let-downs, is oncology still the hottest area in biotech? Are investments in the space still going strong? The answer seems to be a resounding yes. A recent paper in Nature Drug Discovery prompted the investment bank UBS to analyze the competitive landscape in oncology. UBS found that, out of the 4700 investigational drugs currently in the clinic worldwide, about 500 drugs will get approved in the coming 10 years (based on historical probabilities of success). A full 40% of these are cancer drugs, which is of course great news for cancer patients: of the 15 indications represented, 11 are oncology-based, with an estimated 47 new drugs just for breast cancer and 45 drugs for lung cancer alone over the next 10 years.
Competition is heating up
Although this high number of oncology drugs will benefit patients, the sheer number of new drugs has the downside that it will make it increasingly tougher for companies and investors to turn a profit. New oncology drugs will have a hard time making money in such a crowded environment and the life cycle of a drug will be significantly shorter than before, likely making patent expiration dates much less relevant than before.
Despite the above early stage investing in oncology is still strong. Biotech expert Linda Pullan, of Pullan Consulting, analyzed data on 5000 Venture Capital financing rounds from 2015 to 2018. She found that 25% of these rounds were focused on oncology, with 25% of those being specifically for immuno-oncology, representing a huge proportion of total investments.
In-house work at V-Bio Ventures focused on the recent investing behavior of top VC funds. For VCs with more than 5 Seed or Series A investments in life science companies in the period 2016-2018 - a proxy for the top VC funds currently most active in life sciences - the concentration of oncology investments is even more striking than in Pullan’s findings. Of 211 newly formed biotech companies, 40% were active in oncology, with 56% of these in immune-oncology. This shows that most of the recent ‘smart money’ investments are still heavily biased towards (immuno)oncology.
The landscape is constantly changing
What does this overwhelming trend towards oncology actually mean for the outlook of different cancer drugs? The answer to that seems to depend on each specific indication: tumor indications that are quite large, and can be divided into subsets, will naturally fare better than small, homogenous cancer populations. Lung cancer can be grouped by stage, driver mutation and line of treatment, so individual drugs addressing very specific mutations or mechanisms of resistance may find niches that are large enough to be commercially viable.
However, UBS found that for drugs approved for small indications, like acute lymphoblastic leukemia or multiple myeloma, there are only about 500 to 1000 patients per year, per drug. Even with astronomical pricing, these numbers would still not present a viable scenario for sustainable drug development.
It will be interesting to see how the drug development and investment landscape evolves over time beyond the oncology field. Looking at V-Bio Ventures’ top VC dataset, it is interesting to note that drugs for the central nervous system (CNS) are having a renaissance moment, with already 14% of the early stage investments being in this area. Five years ago, nobody would have thought that CNS would become a significant playground of small biotechs again, so there is hope that indications other than oncology will start to make a comeback.