A few years back, Organovo Holdings (NASDAQ:ONVO) was seen as the solution to organ transplant waiting lists. The argument went that Organovo, which creates 3D liver tissue samples for drug toxicology studies from a bioprinter device, would simply print organs on demand -- eventually.
Reality has turned out to be a little more complicated. The company is decades away from growing human organs and is currently struggling to monetize its technical capabilities. In fact, Organovo Holdings has yet to generate $1 million in revenue in a single quarter. Simply put, we don't understand human biology well enough to print organs -- and we won't for a long time. Functional tissue samples are still challenging.
But there's more than one way to make transplant waiting lists a thing of the past. United Therapeutics Corporation (NASDAQ:UTHR) thinks there's a better way -- and the National Institutes of Health will soon remove barriers for the required research to take place.
United Therapeutics is a biotech company that develops drugs for rare and life-threatening diseases. That sounds a little vague, but the company currently has four approved therapies for pulmonary arterial hypertension, or PAH (a type of high blood pressure that affects the heart and lungs), and one drug for treating pediatric neuroblastoma (a cancer of adrenal glands on the kidneys). Last year, the five drugs generated $1.5 billion in revenue, and the company reported $699 million in operating profits. Those metrics rose 14% and 30%, respectively, from 2014.
As with many biotech companies, the company's growth depends on its pipeline, which focuses on a few major efforts:
- Developing new and expanded applications for currently approved products.
- Working with Medtronic to develop an implantable device that could treat and reduce burdens for patients with PAH. After a recent regulatory delay, both companies expect the U.S. Food and Drug Administration to take action on the device in 2016.
- Working with DEKA to develop a semi-disposable pump that would make self-administration of PAH drugs easier for patients. FDA approval is expected in 2018.
- Developing viable organs for transplantation.
Whereas Organovo Holdings grows tissues layer by complex layer within a bioprinter, United Therapeutics is investigating the potential to use a different vessel to grow complete organs: pigs.
A different approach
It sounds like science fiction, but for decades researchers have been interested in the potential to use organs from other animals in human transplant procedures. The process is called xenotransplantation. Of course, the biggest problem is organ rejection: Human immune systems recognize these organs as foreign materials and work to degrade them over time. But if researchers could genetically engineer pigs with human genes, then it might be possible to eliminate the immune responses that have long plagued xenotransplantation -- and that's exactly what United Therapeutics and its partners are trying to figure out.
The company invested $50 million in a J. Craig Venter company called Lung Biotechnology, which is engineering pig embryos with human genes. The pig embryos are then inserted into pigs from Revivicor (a company owned by United Therapeutics), born, grown, and harvested for organs. To date, Revivicor has supplied researchers with humanized kidneys and hearts. The kidneys kept a baboon alive for a record four months, while a heart was attached to a baboon heart and kept it fully functional for two and a half years. It only failed when researchers stopped administering immune-blocking drugs.
As impressive as these advancements may be, they also show how far the field has to go before organ transplant waiting lists are rendered obsolete. Multiple immune responses are triggered from xenotransplantation, each of which needs to be addressed through genetic engineering. In early 2015 Revivicor had engineered less than 10 genes in pigs. But by the end of the year, eGenesis -- another company eyeing pigs for xenotransplantation and founded by the infamous engineered-biology scientist George Church -- announced it had successfully modified 62 genes in pig embryos using CRISPR tools. Progress happens at light speed in this field.
Overnight advances in gene editing have had other effects. The NIH recently announced it will lift a moratorium on providing federal funding for research involving humanized animal embryos, which many expect to result in an explosion of research. That could also lessen the R&D expense burden on United Therapeutics, which has self-funded its xenotransplantation research so far. Federal funding could be available as soon as early 2017, providing a potential catalyst for investors.
While fully functional humanized organs grown in pigs remain a distant reality, United Therapeutics and Revivicor don't need them to monetize their research. For instance, humanized organs could be implanted and attached to organs within a patient that aren't operating at full efficiency to boost their function. These "bridge" organs could extend the amount of time a patient can wait for an organ transplant. Clinical trials would still be required, but given the new stance of the NIH, that may not be as absurd as once thought.
What does it mean for investors?
Hopefully investors recognize the daunting challenges standing in the way of growing human organs, whether from bioprinters or in genetically engineered pigs. The first businesses to successfully commercialize their research will do so in ways that have yet to be identified or are rarely discussed, such as xenotransplantation or "bridge" organs. Investors also need to consider the likelihood that the company poised to make the biggest impact hasn't even been founded yet. This field is still very young.
Either way, if investors want to invest in the company that has the most potential to tap into the future of organ transplants, then highly profitable and fast-growing United Therapeutics is a significantly better option than Organovo Holdings.
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