Traditional Approaches for Company Valuation Are Flawed for Valuing In Vivo Gene Therapy Companies

摘要

The era of gene therapy has begun. In recent years, potentially breakthrough datasets and rapidly expanding company pipelines have begun to overshadow the unfulfilled promise characteristic of the gene therapy sector in decades prior. One barometer for progress in the space can be seen in stock markets, where NASDAQ-listed in vivo gene therapy companies we follow have increased from 4 companies with $1.9 billion in market capitalization on January 31, 2014, to 24 companies with $30.5 billion in market capitalization on October 31, 2018. For many in the financial community, a tangible signal for the emergence of the broader gene therapy space is the recent notable mergers and acquisitions activity, a signal that previously heralded the arrival of blockbuster biotechnologies like monoclonal antibodies. Notably, Novartis' $8.7 billion acquisition of in vivo adeno-associated virus 9–based gene therapy player, AveXis, earlier this year has focused many on looking for new investment opportunities in the space, thereby increasing interest in the valuation of gene therapy companies. This perspective discusses the theoretical underpinnings of company valuation and explains why traditional approaches have limitations when valuing in vivo gene therapy companies, which produce single treatments that may achieve durable or curative benefits. We use the AveXis case study to illustrate certain points on the valuation of breakthrough innovation that we think have broader applicability throughout the in vivo gene therapy space. This publication is the first in a three-part series. Future discussions in this series on in vivo gene therapy companies will explore real-world approaches and considerations that have already proven successful in mitigating the limitations of traditional valuation approaches as well as those that may soon emerge.