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Core trust holding Gilead gets the zinc finger

Trust favourite Gilead gears up for filgotinib RA Phase III data 1

Core trust holding Gilead gets the zinc finger

Gilead Sciences  took another major step in its strategy to dominate the burgeoning field of cell therapy for cancer yesterday, with a deal to secure exclusive access to Sangamo’s zinc finger nuclease (ZFN) gene editing technology for use in this field. The deal, in which Gilead paid Sangamo $150m up-front and committed to a further up to $3bn in milestones and royalties, follows its $12bn acquisition of Kite Pharma and the separate, $567m purchase of that company’s manufacturing partner Cell Design Labs, last year.

Gilead is one of the most important stocks for biotech sector specialist trust investors to follow and it represents a core  – usually top five – holding in most collective vehicles. Gilead is, for example, a key shareholding of all four of the US-listed, Tekla-managed trusts (with holdings of between 4-8% of NAV), Switzerland’s BB Biotech (BBB.S) (5.3%) as well as International Biotech Trust (IBT) (6.2%) and Biotech Growth (BIOG) (4.5%) in the UK.

Gilead is also one of the four largest components of the Nasdaq biotechnology index, with a weighting of 8%. Its stock price is up around 10% year to date, something that is true of only a small number of  leading US biotechs after the market wide sell-off in late January. However, at c$80/share is stock is still a third below its all-time high of $119/share reached in June 2015 – the shares having come under pressure as a result of the competitive changes in the market for HCV treatments, in which Gilead is one of the leading players.

The deal with Sangamo allows Gilead to use the ZFN platform to create both autologous (“patient-specific”) and allogeneic  (“off the shelf”) anticancer cell therapies. The real prize is presumed to be the latter, as the manufacturing logistics and costs of the current patient specific therapies, where a sample has to be sent to a central facility and the therapy made over ~20 days and returned, is a significant constraint on the development of this business. Gilead was the first company to obtain an approved for a chimeric antigen T-cell (CAR-T) therapy last year with Yescarta, although it was followed within a few months by Novartis with Kymriah. Both products are allogeneic and target CD19 and are being chased by allogeneic construct under development by Pfizer/Servier. CRISPR Therapeutics also plans to file an IND (permission to start clinical trials) for an allogeneic CD19 CAR-T in Q4 this year.

Gilead’s choice of the ZFN platform contrasts with the CRISPR technology used by most of its competitors and it is possible that one motivation was the cleaner IP landscape. Sangamo is the main holder of zinc finger protein-related patents and licenses, whereas CRISPR is more diffusely held and has a major risk of litigation.

Core trust holding Gilead gets the zinc finger

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