BrainTrust #6: Personalized Medicine in 2024: Navigating 2 IPOs, 1 Bankruptcy, and the Resulting Road Ahead

The start of 2024 offers a microcosm of the journey of personalized medicine. Two exciting IPOs: Metagenomi (MGX) and Alto Neuroscience (ANRO) showcase innovations like genome editing and precision neurology, offset by the bankruptcy of former highflyer: Invitae (formerly NVTA). Studying their stories demonstrates the great potential but also uncovers the grave complexities and challenges this sector faces. In this article, we explore personalized medicine—the promise, the current state, and the catalysts for the road ahead.

Personalized Medicine in a Nutshell and It’s Coming of Age

Imagine stepping into a system designed for you. Every treatment and decision is crafted around your genetics, lifestyle, and environment. This isn't a far-off dream; it's the early reality of a shift with the potential to transform disease management.???

• Treatments are optimized for the individual based on genetic profiles, boosting effectiveness and minimizing side effects. The historic example is in breast cancer, where trastuzumab (Herceptin) dramatically improved survival rates for patients with HER2+ genetic mutations. Studies have shown survival benefits of 30%+ for these patients.
• Side effects can be minimized, reducing the risk of morbidity and mortality. Warfarin, a blood thinner used since the 1950s, is being explored to leverage DNA information to optimize dosage, minimizing bleeding and clotting risks, offering a safer and more tolerable experience.
• Proactive health through early screening allows individuals to detect potential health issues before they become serious, enabling them to take preventive measures and reduce the likelihood of developing diseases. For example, positive BRCA1/2 mutations, which are associated with a high risk of breast and ovarian cancers, can lead to prophylactic surgeries, chemoprevention, and lifestyle changes.

There are several key capabilities that are increasingly being met, suggesting we are on the precipice of starting to deliver on this vision:

• Meaningful Data Access of -omics, driven by the dramatic decrease in costs of genetic sequencing? (from billions with the human genome project in 1990 to soon <$100 even for long read sequencing) and the proteome, makes this information reach the threshold of being integrated into the standard of care.

Big Data & AI helping to make meaningful sense of data: Coupled with - omics, additional patient data from wearables to integrated medical records allows AI algorithms to triage and prioritize patterns and trends. Numerous examples are being discussed, such as machine learning models predicting bipolar disorder episodes through speech analysis ( Mindstrong , Ellipsis Health ) or cardiac rhythms captured from wearables ( 苹果 , Fitbit (now part of Google) , iRhythm Technologies, Inc. ).?

• Regulatory clarity: The FDA has been proactive on artificial intelligence (AI), leading to the approval of 692 AI-powered devices as of October 2023. While radiology continues to spearhead the adoption of AI (79% of AI-powered medical devices in 2023), other areas like cardiovascular (9%) and neurology (5%) are starting to see an upward trend. Notably, generative AI and large language models have not received any approval yet.??

The potential of personalized medicine is undeniably exciting. However, successful and widespread adoption hinges on overcoming several key hurdles.

• Limited Genetic Understanding: research has disproportionately focused on clinical trials and populations of European descent, limiting its applicability to other ethnicities.?
• Data Integration Complexity: sheer volume of genomic and patient data in? different systems and formats is a formidable challenge.?
• Access and Affordability Barriers: ?payers will allocate resources for complex diagnostics when they demonstrate potential for improving outcomes and cost-effectiveness over the short to medium term, typically concentrating on severe or chronically managed patients.
• Workforce Preparedness Gap: long-term adoption necessitates strengthening genetics competency in healthcare training.

Current State of Affairs (2024)

So far in 2024, a fascinating picture is being painted with an increased number of FDA-approved personalized therapies for a number of diseases, with more on the way:?

• Oncology: Targeted therapies like PARP inhibitors (e.g., for ovarian cancer) and CAR-T cell therapies (e.g., for leukemia and lymphomas) are showing promise, but cost and scalability remain barriers.
• Autoimmune Diseases: Genetic testing is helping predict responses to medications, potentially reducing unnecessary treatments and side effects.
• Neurodegenerative Disorders: Personalized prevention strategies based on genetic risk factors (e.g., ApoE4 for Alzheimer's) are emerging.

Mental Health: Efforts are underway to identify genetic markers for better antidepressant selection.

While early victories show potential, these abilities to address the hurdles remain an area to actively watch.

Key Efforts to Address Hurdles:

• Expanding Genetic Understanding via NIH's All of Us Research Program: Aims to collect data from a million diverse participants for a more comprehensive disease risk assessment.
• Reducing Data Integration Complexity via AI-powered Data Analysis Tools: These tools are helping to interpret complex data at the point of care (e.g., Geisinger MyCode project).
• Broadening Access and Affordability via Insurance Coverage Expansion: Next-generation sequencing (NGS) panels for identifying actionable mutations in cancer are gaining coverage, and discussions for broader applications are ongoing.
• Addressing Workforce Preparedness via Educational Initiatives: Universities are incorporating personalized medicine training into various medical specialties.

2024 Hope on the Horizon

The IPOs of Metagenomi (MGX) and Alto Neuroscience (ANRO) represent advancements in personalized medicine, validating its potential and attracting needed resources.?

Metagenomi: Genome editing holds immense potential for personalized medicine. Techniques like CRISPR-Cas9 could one day allow precise modifications to individual DNA, correcting genetic defects at their source, tackling diseases like cystic fibrosis or sickle cell anemia at the source.? MGX’s February 2024 IPO raised $93.75 million at? a $560+ million valuation, funding their preclinical pipeline, focusing on genetic medicines for metabolic disease, hemophilia, cardiovascular disease, central nervous system diseases, and immuno-oncology.?

Alto Neuroscience:? Focus on individual differences presents a shift to personalized neurology by accounting for factors like genes, environment, and lifestyle. ? Recognizing that the brain is incredibly complex, making personalized medicine in neurology is particularly challenging. Their January 2024 IPO secured $128.64 million at a $410+ million valuation.? It's important to note that additional challenges remain, such as a limited understanding of disease mechanisms and a lack of biomarkers for individual responses. Addressing these hurdles will be crucial for broader implementation. Their capital will be used to advance their clinical and preclinical pipeline, focusing on personalized neurological therapies for Alzheimer's disease, Parkinson's disease, and other neurodegenerative conditions. This could offer hope for slowing progression, improving quality of life, and potentially even finding cures.

Invitae's Fall: Learning from a Leader's Demise

Ironically, 2024 also witnessed the final demise of former personalized medicine pioneer, Invitae, a reminder of the challenges in navigating and trailblazing life science markets. Its Chapter 11 bankruptcy filing in February came after an ascent that started over a decade ago and appeared to be filled with promise.

From Formation to IPO: ?Founded in 2012, Invitae aimed to democratize genetic testing with affordable direct-to-consumer (DTC) options. Their strategy, coupled with automation and aggressive marketing, fueled early growth. The 2015 IPO was successful, propelling the company to over $1 billion in valuation on $50 million in revenue.

Expansion: ?The IPO marked a shift. Invitae embarked on acquisitions, including:

• YouScript (2020, $79.3 million): A clinical decision support platform integrating genetic test results with electronic medical records.
• Genelex (2019, $130 million): A pharmacogenetic testing firm.
• Diploid (2016, undisclosed price): An AI software company for diagnosing genetic disorders.

Downturn and Decline: ?Compounding their woes, demand for elective genetic testing declined alongside a tightening market for growth stocks. Key factors in Invitae's fall included:

• Debt-Fueled Growth: Rapid expansion and acquisitions fueled market share but burdened the company with debt and integration challenges, hindering adaptation to changing market dynamics.
• Shifting Market: Invitae's focus on DTC testing, initially successful, left them vulnerable to market fluctuations as demand declined.
• Regulatory Scrutiny: Concerns about test accuracy, particularly those from Genelex, eroded consumer trust and attracted regulatory oversight.
• DTC Reliance: Overreliance on lower-margin, volatile DTC testing left them unprepared for market shifts compared to potentially more stable clinical testing.

Data Disparity: A Missed Opportunity? ? The recent bankruptcy of Invitae, a company with significant genetic data assets, raises a crucial question: Why did a company with seemingly valuable data fail? The answer lies in the nature and market context of that data.

deCODE genetics : A Model of Valuable Data:? Take deCODE genetics, an Icelandic company pioneering the collection and analysis of comprehensive genetic data from a meticulously tracked Icelandic population. This rich dataset, coupled with deep clinical annotations, proved critical for 安进 , a pharmaceutical R&D company, leading to their $415 million acquisition of deCODE in 2012.

Disparity: Quality, Context, and Market Alignment? While both Invitae and deCODE possessed valuable genetic data, the nature and market context differed significantly. deCODE's large, well-curated dataset with detailed clinical information made it highly desirable for Amgen's drug development efforts. In contrast, Invitae's data, primarily focused on direct-to-consumer testing, faced challenges due to privacy concerns and the need for further validation for clinical use. This disparity highlights the critical importance of data quality, context, and alignment with potential buyers' needs.

Lessons Learned: Charting a Sustainable Course

Beyond Acquisition-Driven Growth: Invitae's story underscores the need for sustainable business models. Over-reliance on acquisitions while expanding their offerings, created significant debt and integration challenges. Organic growth alongside strategic partnerships might offer a more stable long-term approach.

Market Readiness Matters: Invitae's experience raises questions about market readiness with their comprehensive services, including advanced pharmacogenomic testing potentially ahead of the curve for widespread adoption. Perhaps they could have been more integrated through clinical partnerships and being used as companion diagnostics or as secondary endpoints in clinical trials, making them more embedded into various processes, resulting in possibly more validation and stickiness.???

Building Trust, Navigating Ethics, and ensuring data quality and context: In the realm of genetic testing, trust is built through a combination of factors. Transparency, robust data validation, and following regulations are non-negotiable. Additionally, success hinges on understanding both the individual patient's circumstances and the detail captured within the data itself.?

Market Trends: Cautious Optimism and Selective Investment

Personalized medicine and the biotech IPO market in 2024 started with a positive buzz, favoring companies with more mature, late-stage assets. This shift, evident in IPOs like CG Oncology , ArriVent Biopharma , and Kyverna Therapeutics , signifies a preference for proven technologies and a cautious optimism within the industry. Investors are now more discerning, seeking clear data and concrete results before committing to early-stage ventures.? This could change as interest rates drop.

Conclusion: A Future Filled with Potential, but Paved with Challenges

Thus far, 2024 has provided a valuable glimpse into the dynamic world of personalized medicine. While challenges exist, the opening of the IPO window and ongoing research showcase a field with potential. As we move forward, navigating this path requires careful consideration of both these opportunities and the pitfalls, learning from companies like Invitae. Sustainable business models, market readiness assessments, and a focus on late-stage development will be crucial for companies to deliver the potential of personalized medicine and revolutionize the practice of healthcare.?

As we observe the ever-changing landscape of healthcare, this reflects Netra Health, LLC ( Puneet Gupta and Manan Atit 's ) current understanding of the topic. We believe in fostering ongoing dialogue and welcome insights to refine our perspective in light of emerging developments.? Visit us at www.netrahealth.com to learn more about Netra’s mission to drive innovation by guiding and connecting startup companies with investors, advisors, and experts who share our passion for transformative impact.

Sources:

Journal Articles:

Benjamens, S., Dhunnoo, P., & Meskó, B. (2020). The state of artificial intelligence-based FDA-approved medical devices and algorithms: an online database. npj Digital Medicine, 3(118). https://doi.org/10.1038/s41746-020-00324-0

Industry Reports:

Canaccord Genuity. (2024). The Growth Investor’s Guide to AI in 2024 and Beyond. January 2024.

ARK Invest. (2024). Big Ideas 2024.

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BioSpace. "2024 Brings Surprising Early Surge of Biotech IPOs." https://www.biospace.com/article/2024-brings-surprising-early-surge-of-biotech-ipos-/ (Accessed in 2024)

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Wikipedia. "Invitae." https://en.wikipedia.org/wiki/Invitae (Invitae's IPO year was 2015)

Barron's. "Biotech Stocks and IPOs: CG Oncology and More." https://www.barrons.com/articles/biotech-stocks-ipo-cg-oncology-fcbd3683 (Accessed in 2024)

Reuters. "Invitae Gets Court Approval for Five-Month Bankruptcy Sale." https://www.reuters.com/business/healthcare-pharmaceuticals/invitae-gets-court-approval-five-month-bankruptcy-sale-2024-02-15/ (Accessed in 2024)

Bloomberg. "Biotech IPOs Jump More Than 20% As Momentum Builds for Listings." https://www.bloomberg.com/news/articles/2024-02-07/biotech-ipos-jump-more-than-20-as-momentum-builds-for-listings (Accessed in 2024)

BioPharmaTrend. "A Look at Five Promising Biotech IPOs in 2024." https://www.biopharmatrend.com/post/746-a-look-at-five-promising-biotech-ipos-in-2024/ (Accessed in 2024)

The Medical Futurist. "The Current State of FDA-Approved AI-Based Medical Devices." https://medicalfuturist.com/the-current-state-of-fda-approved-ai-based-medical-devices/ (Access to the most current information on FDA-approved AI-based medical devices)

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