Key points
- The US Food and Drug Administration (FDA) unveiled plans to create an Operation Warp Speed (OWS) programme for genetic medicine, which strives to quicken clinical trials, increase staffing and communication, and ultimately approve relevant drugs at a faster rate.
- We believe that genetic medicine programmes should benefit from the programme.
- We believe the favourable regulatory environment created from Operation Warp Speed could accelerate investment in this industry and increase both drug approvals and revenue potential over time versus current estimates.
The genetic technology revolution has begun, with genetic medicines poised to become the dominant driver of health-care innovation over the next two decades. Regulators around the world are sharing in the mounting enthusiasm for these breakthroughs as they seek to hasten drug approvals. Much like the successful Operation Warp Speed (OWS) programme that expedited Covid-vaccine development, the FDA has unveiled plans to create an OWS programme for genetic medicine. This new iteration strives to quicken clinical trials, increase staffing and communication, and ultimately approve relevant drugs at a faster rate.
Genetic medicines are fast becoming a reality and seek to attack diseases at their source—the DNA or RNA—to provide longer-lasting and more effective outcomes. In some cases, diseases could even be cured. These landscape-changing developments stand in stark contrast to most present-day medicines, which largely treat disease by providing symptom management alone.
Muscular dystrophy as a case study
While genetic therapies can treat a number of ailments, current studies largely target rare diseases. For example, a genetic medicine company focused on muscular dystrophy—a disease with a sizeable unmet medical need and no effective treatments—has developed a gene therapy that adds DNA to a patient’s cells, allowing them to form a protein called micro-dystrophin that helps slow or halt the progression of the disease.
Recently, a panel of experts assembled by the FDA agreed that the drug was safe and effective enough to recommend approval. We expect formal FDA approval to be announced in the next couple of months, ultimately generating significant company revenue. The drug and many others now have clearer and faster paths to market under OWS, giving hope to patients and their families. We think this recent bold stance by the FDA, coupled with robust innovation pipelines, should be a powerful catalyst for value appreciation over the next several years.
A growing investible universe
Recent breakthroughs in genetic medicines are not limited to muscular dystrophy; they are also being developed for other rare diseases such as cardio-myopathies, haemophilia, Huntington’s diseases, amyotrophic lateral sclerosis and many different cancers. We believe these programmes should benefit from OWS. The genetic-medicine investible universe also continues to grow quickly owing to increased public and private investment, with expected revenues rising from $9 billion today to $72 billion by 2030, according to internal Newton estimates.
In our view, the favourable regulatory environment from Operation Warp Speed could quicken investment in this industry and increase both drug approvals and revenue potential over time versus current estimates, creating attractive opportunities for investors.
Authors
Matthew Jenkin
Research analyst, portfolio manager
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