“Is Curing Patients a Sustainable Business Model?” Goldman Sachs Asks Shareholders

January 14, 2022 at 3:06 am

Big bank admits it might not be worthwhile to invest in treatments that actually cure disease

In a 2018 report to shareholders on advancements in “gene therapy” Goldman Sachs analysts asked the awkward and revealing question: “Is curing patients a sustainable business model?”

“The potential to deliver ‘one shot cures’ is one of the most attractive aspects of gene therapy, genetically-engineered cell therapy and gene editing,” analyst Salveen Richter wrote in an April 10 note to clients titled “The Genome Revolution.”

“However, such treatments offer a very different outlook with regard to recurring revenue versus chronic therapies,”

While advancements in the biotech industry add “tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow,” he adds.

Richter cited the development of high-tech hepatitis C treatments, which achieved cure rates of more than 90 percent, as an example.

The company’s sales for those treatments peaked at $12.5 billion in 2015, but are predicted to be less than $4 billion this year.

Curing hepatitis C “has gradually exhausted the available pool of treatable patients,” he wrote.

“In the case of infectious diseases such as hepatitis C, curing existing patients also decreases the number of carriers able to transmit the virus to new patients, thus the incident pool also declines,” he adds.

The report suggested three potential solutions for biotech firms:

Solution 1: Address large markets: Hemophilia is a $9-10bn worldwide market, growing at 6-7% annually.

Solution 2: Address disorders with high incidence: Spinal muscular atrophy affects the cells (neurons) in the spinal cord, impacting the ability to walk, eat, or breathe.

Solution 3: Constant innovation and portfolio expansion: There are hundreds of inherited retinal diseases (genetics forms of blindness) … Pace of innovation will also play a role as future programs can offset the declining revenue trajectory of prior assets.