Investors in biotechnology are like two-headed beings – interested in exceptional financial returns, as well as in ground-breaking innovations that will improve the health of their loved ones.
The Nasdaq Biotech Index has grown 145% over the past 5 years, compared with 116% for the Nasdaq Composite Index and 78% for the S&P 500 over the same period .
And activity in the biotech area is still picking up. In October 2017, US biopharma giant Gilead acquired Nasdaq listed biotech company Kite Pharma for US$11.9 billion . Kite was formed in 2009 and is reported to have raised around US$800 million since 2011. Kite’s (now Gilead’s) product is a yet-to-be-approved therapy that takes a set of the patients’ own immune cells and genetically modifies them into so called chimeric antigen receptor T cells (CAR-T cells) to attack the patient’s blood cancer.
Another example of a competitive CAR-T product is Novartis’s Kymriah, which has an exceptional 83% complete remission rate treating acute lymphoblastic leukaemia – and a US$475,000 price-tag for each course of treatment .
In August 2017, investor bible Barron’s reported that “Investor sentiment in biotech is more bullish – with good reason” .
As all this investor activity confirms, investing in the right biotechnology is a sound idea. But there are many fields within biotech.
You might now be wondering “how do I get ahead of the curve and identify the next hot biotech area before others?”
– Our tip is that it is exosomes.
To understand the financial opportunity in exosomes (and Exopharm) requires some homework – and the reading starts here:
Medical treatment & healthcare cost Americans around US$10,000 per person and nationally US$3.35 trillion, in 2016. People’s medical problems can be treated by operations in hospital (around 31% of the yearly cost), visiting doctors (around 20% of the yearly cost) and prescription drugs (around 10% of the yearly cost). That makes drugs a US$340 billion per annum business in the USA alone .
But many such drugs are low profit, old-school generics – think statin tablets for reducing cholesterol levels and aspirin for pain. So what are the ground-breaking next-generation “drugs” – like Kymriah CAR-T was 5 years ago?
Many old drugs are so-called “small molecules” – chemicals with an atomic mass of around 500 daltons or less. Aspirin, for example, is 180 daltons and 21 atoms, produced at very low cost using classical chemistry techniques.
More recently, there are also “biologic” drugs – anything from an antibody or enzyme to a whole cell.
Today, the biggest selling drug in the world (US$16 billion in 2017) , topping sales charts every year since 2012, is a large biomolecule: a ‘monoclonal antibody’ named Humira. Humira (around 148,000 daltons and 20,000 atoms) is a monoclonal antibody against TNF-alpha and is prescribed for a range of autoimmune diseases including rheumatoid arthritis, psoriasis and Crohn’s disease.
Unlike small molecule drugs, biologics are manufactured by complex processes that are hard to replicate. So biologics promise investors more profit for longer.
Whole cells as regenerative medicine?
The ultimate “large” biologic is a whole cell – around 4 billion times bigger than a protein/antibody (which is itself around 1,000 times bigger than a small molecule drug).
Over the past 15 years regenerative medicine biotechnology companies have been investing in making human cells as biologics and running clinical trials of cellular therapies – i.e. seeking to use cells themselves as the next-generation high-value biologic drug to treat conditions such as heart failure, joint disease, autoimmune diseases and neurodegeneration.
Despite a concentrated effort by many companies world-wide, the number of regenerative medicine cellular therapy products approved for human sale and use has been disappointing for both patients and investors . The idea was that these cells – most often adult stem cells – would home to the site of injury and become new tissue, such as new heart muscle or new bone. But that doesn’t seem to happen . Worse, some cellular therapy has been shown to be unsafe, for example cells injected into the eye in an attempt to treat age-related macular degeneration caused vision loss in some patients .
Exosomes – nanoscopic packets of biomolecules naturally released by cells
Recently it has been discovered that most of the adult stem cells administered to the patient are quickly (within 3 days or so) cleared by immune processes and never have the chance to engraft and form new tissue . Instead, these stressed and short-lived cells secrete exosomes/extracellular vesicles for a few days – and it is the exosomes/extracellular vesicles from the cells that circulate and act like a “drug” inside the body, generating long-lasting benefits .
Exosomes are nanoscopic (around 40 to 200 nanometer in diameter) packets of biomolecules naturally released by cells – around a 30 millionth the size of a cell and around 100 times as big as an antibody. The science of exosomes has advanced dramatically since it was discovered in 2007  that exosomes package and deliver mRNAs and microRNAs as a novel mechanism of genetic and non-genetic exchange between cells.
Exosomes or extracellular vesicles are now seen as a potential new class of biologic drug and are big enough to contain and transfer many regenerative factors between cells – a small package with a big punch.
Exosomes can be collected from cells cultured in a laboratory and concentrated, in a process similar to that used to produce recombinant proteins or monoclonal antibodies.
Unlike stem cells themselves that release exosomes in the body of the patent in an uncontrolled manner, exosomes produced in a bio manufacturing facility can be processed in a highly standardised process and pass quality control tests before shipping. Exosomes should also be less expensive than cellular therapy, with pricing likely to be similar to other biologic drugs. Exosomes are also easier to transport and store than cells.
Exosomes from stem cells have been shown to have a powerful regenerative effect on many tissues, potentially revolutionising the treatment of diseases from cancer to osteoarthritis, heart disease and neurodegeneration. And thanks in part to the success of Humira and related biologic drugs, drug regulators such as the US Food and Drug Administration (FDA) have an established route for bringing biologic exosome drugs to market.
In 2016 the first academic study was published using stem cell derived vesicles to treat patients with kidney disease (Nassar et al 2016)  – so this is a very new technology area in regenerative medicine, but poised to advance rapidly.
Exopharm has a patented (patent applied for) technology to massively improve the yield and purity of exosomes – called LEAP technology.
Monoclonals – blockbuster new drugs over the past 20 years required new manufacturing technology
According to BCC Research, the global market for antibody drugs like Humira was expected to increase to $57.7 billion in 2016 (from $44.7 billion in 2011) , up from zero in 1997 – building huge value in companies such as Amgen, Genentech, Novartis and Biogen.
When the monoclonal antibody that eventually became the multi-billion dollar drug Humira was first produced in the mid-90s, its path to blockbuster status was far from obvious. We think exosomes are at a similar inflexion-point today.
Antibodies as drugs harness a natural protective mechanism which is part of our adaptive immune system and has been understood since 1890. When we are exposed to a new virus or infection (or vaccine) a specialised (antigen-specific) subset of our B-cells are generated – the so-called humoral response. If the infection recurs then these B-cells are stimulated to produce antibodies that can quickly and specifically neutralise the infection. Monoclonal antibody drugs are artificially generated using a manufacturing technology first discovered in 1975 but harnessing this natural B-cell (humoral) mechanism.
The manufacture and purification of humanised monoclonal antibodies enabled innovative pharmaceutical companies to harness the power of the natural humoral response to great effect and generate a new class of valuable drugs.
“The development and improvement of scalable manufacturing technologies were at least as important as construct design, if not more, to the ultimate commercialisation [of monoclonal antibodies],” Vertès and Dowden say .
Parallels for exosomes as the next-big-thing drugs
There are many parallels between turning monoclonal antibodies and exosomes into drugs ready for the clinic.
Whereas monoclonal antibodies specialise at recognising and neutralising a target molecule, exosomes’ role is to enable cell-to-cell communication and co-ordination. These little packets of proteins and genetic material easily slip inside the target cell and make short-term and long-lasting changes to the target cell.
Exosomes released by the body’s regenerative stem cells show powerful potential to heal damaged, diseased or simply aged tissues.
So, by harnessing exosomes as a drug we are taking a part of the body’s own machinery for maintenance and repair, and adapting and enhancing it for medical uses – akin to what happened with monoclonal antibodies 20 years ago.
We think that therapeutic exosomes could go through a similar adoption model and build huge value in companies expert in the area.
Indeed Dr Douglas Williams – ex Executive Vice President of Research & Development at Biogen Inc. – left Biogen in 2015 to establish a cancer exosome company called Codiak Biosciences. Codiak has since raised around US$100m in VC funding and is still privately owned.
Like with monoclonal antibodies, the key to using exosomes as drugs is the development and improvement of scalable manufacturing technologies. The present methods are unsuitable for large-scale pharmaceutical-grade products.
Exopharm’s discovery of a reliable and efficient way to manufacture a purified set of exosomes called ExomeresTM could prove to be a key turning point in exosomes’ journey to the clinic.
Exosomes circulate in our blood, urine, saliva and other body fluids.
Recent research shows that endogenous (from inside our bodies) exosomes can reflect the person’s healthy or diseased state. Tumour exosomes can be detected in blood  and exosomes from animals with diabetes when administered to non-diabetic mice can cause diabetes in the naïve animals .
The dawning realisation that exosomes play a central role in our health has opened many exciting possibilities for using exosomes for unmet medical needs. A small but growing handful of companies are beginning to appear in this space.
For many diseases, getting a drug therapy into the target cell is a significant hurdle – yet exosomes can do this with ease. Since it was formed in 2015, Codiak BioSciences has been exploring the possibility of exploiting exosomes as ‘Trojan-horse’ delivery vehicles . The company’s plan is to use exosomes’ homing ability to deliver an anticancer nucleic-acid therapeutic cargo into the nucleus of tumour cells.
And UK-based AIM-listed stem cell therapeutics company ReNeuron plans to exploit exosomes’ ability to easily access parts of the body other drug types struggle to reach. They are developing an exosome-based drug for glioblastoma multiforme (GBM), a difficult to treat brain cancer where patients currently have a median life expectancy of just 12-15 months .
Another promising avenue for exosomes is to use the exosomes released by adult stem cells cultured in a bio manufacturing facility to trigger cellular repair and regeneration in the body. In August 2017, Exopharm announced it would partner with Maryland-based stem cell company RoosterBio to bring into clinical practice exosome drugs derived from adult stem cells .
And a third possibility is to sample the exosomes circulating in a patient’s blood in order to diagnose illness in the body. Reading a patient’s exosome profile effectively eavesdrops on the body’s cell-to-cell communication and detects whether cells in the body are distressed or diseased . In May 2017, Switzerland-based multinational Lonza announced it would invest in Exosomics Siena, an Italian start-up company developing exosome-based early-stage cancer screening tests . Exosome Diagnostics specialises in using exosomes as a non-invasive biomarker of disease and damage. Exosomes can be used in diagnosis and monitoring of traumatic brain injury – including for long-term effects of concussion .
The share price of innovative biotechnology companies can lift sharply if they are a leader in their specialised field and the technology looks poised to take off.
This is what happened to the monoclonal antibody companies; and there are plenty of reasons why it is about to happen with exosome companies soon.
Written by Dr Ian Dixon, Founder & CEO of Exopharm (www.exopharm.com) October 10, 2017
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