Startup IPO Bodes Well for World-Changing Biotech Industry
BY Issie Lapowsky
UniQure, maker of the Western World's first approved gene therapy, had a successful IPO. Now, it needs a business model.
Imagine what life would be like if the world's chronic diseases were reversible with a simple medical treatment. Thanks to developments in gene therapy, that day might not be so far away. And on Wednesday, in a major milestone for this burgeoning and potentially world-changing industry, the Dutch startup UniQure, developer of the Western world's first approved gene therapy, raised $82 million in its initial public offering, Reuters reports.
It's further proof of the public markets' unrelenting interest in biotech startups--the health care industry produced the highest number of IPOs in 2013. UniQure's entrance to the public market is also a major show of faith in the nascent field of gene therapy, which has been growing steadily in recent years.
Gene therapy is, in essence, a type of biotechnology that replaces mutated genes with healthy ones, reversing the effects of disease or damage. UniQure, for example, has developed a drug called Glybera, which is essentially a virus that reverses the effects of LPLD, a disease that prevents people from breaking down fats and can cause increased risk of pancreatitis. These days, thanks to advances in virus technology, new gene therapy startups are popping up at a rapid clip. Dimension Therapeutics, for example, is working on a therapy for hemophilia, and a company called Spark Therapeutics is working on reversing the effects of genetic blindness.
But while the technology may be ready (or getting close) and investors are clearly showing interest, UniQure's case highlights a major hurdle these gene therapy startups will face in the coming years, and that is the perennial problem of pricing a true innovation. Gene therapy has the potential to save lives, but the pool of people who suffer from the orphan diseases, or conditions that pharmaceutical companies have historically ignored, is relatively small. In order for companies like UniQure to make money on these novel drugs, they'll have to be priced at an exorbitant premium, which few if any patients could ever pay. According to Reuters, for instance, UniQure CEO Jorn Aldag once estimated that Glybera could sell for around 250,000 euros a year for five years, the equivalent of $1.6 million overall.
It's a life-changing field in search of a marketable business model. As Barrie Carter, former president of the American Society of Gene and Cell Therapy recently told Xconomy, "Everyone in the Society realizes we have to start thinking about [pricing]. It's coming to the fore now. We've been successful in driving the technology, and now we need to drive thought on how we pay for all this."