The most promising biotechs have productive platforms and are pioneering new approaches to treating conditions difficult to address with conventional therapies. Two that fit that bill are Ionis Pharmaceuticals (IONS -1.52%) and bluebird bio (BLUE -2.73%). Which one represents the best opportunity today?
The case for Ionis
Traditional drug development over the last hundred years has focused on molecules that attack disease-causing proteins in the body. Ionis is a pioneer in an approach that targets the production of the proteins rather than the biomolecules themselves. RNA antisense technology precisely targets the sequence on an RNA molecule that is responsible for production of a particular protein and silences it, cutting off the disease by preventing it from forming or replicating successfully.
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The RNA antisense mechanism has been known for many years, but Ionis has advanced the techniques for finding and developing drugs that utilize it, along with ways to concentrate the drug in particular tissues of concern, solving one of the key roadblocks to success in the past. What makes the technology significant, and the company interesting to investors, is that it can potentially be applied to a wide variety of diseases, including some that have been considered "un-druggable" in the past. And Ionis has proved particularly adept at discovering new molecules to add to its impressive pipeline of 39 drugs in development or commercialization, including five new ones just last year.
The last few months have been big for Ionis as it made important steps to prove the viability of its platform. It won approval for Spinraza, a drug that is partnered with Biogen (BIIB -1.53%) for a rare disease called spinal muscle atrophy, and it is preparing to file for a second rare disease therapy partnered with a company it is spinning off to market drugs for blood lipid conditions. Spinraza revenue should be able to move the company into profitability on a pro forma operating basis this year.
The case for bluebird
Bluebird bio also has a platform that could eventually be used to solve what have been intractable health problems up to now. The whimsically named biotech specializes in gene therapy, which holds the potential of not only treating genetic diseases, but actually curing them in a single treatment.
The rare-disease approach that bluebird takes involves harvesting stem cells from a patient, genetically modifying them by means of a virus that inserts DNA material into the cells, and returning them to the bone marrow of the patient. The results are cells that can produce a protein that they otherwise could not have before the cells were modified genetically.
If that sounds tricky, it is. But the company is already in two phase 3 trials for a drug for beta thalassemia and sickle cell disease, and a phase 2/3 study for a therapy for a fatal brain disease called cerebral adrenoleukodystropy (CALD). We should see data readouts for beta thalassemia and the initial cohort of 15 patients in the CALD study by the end of the year. It's uncertain how these treatments would be priced, but we could be looking at several billion dollars per year for the two together some years down the road.
Rare diseases are only part of the opportunity ahead for bluebird; cancer is a big target as well, and the company is partnered with Celgene (CELG) for a CAR-T treatment. In this therapy, immune cells that are taken from patients, modified genetically to be turned into cancer assassins, and reinjected into the original host. There are competitors in this space, and bluebird's effort is only in phase 1 testing, somewhat behind the others.
The better buy
Both companies have developed proprietary platforms that could potentially address a wide range of diseases. The economic value of these therapies could be massive once they are proved out; investors now have the opportunity to buy into them in the very early stages. Either company could end up being acquired by bigger drug companies that need a new growth engine and have the cash to develop and commercialize the drugs.
But of course, the risks are large as well. No one really knows how many of the pipeline drugs of either company will actually make it to the market. That's why I would chose Ionis as the better buy. Ionis has one drug on the market, so it is at least that much closer to demonstrating the validity of its technology and therefore the value of its pipeline. It also has an efficient drug discovery process that has already generated a large and rapidly growing pipeline, and it is on the edge of profitability, while bluebird, even after a secondary offering in December, is only funded for about the next two years.
Both companies have platforms that could potentially generate massive profits and generous returns for investors. Ionis is further along, and that translates to lower risk in an industry that is otherwise not for the faint of heart anyway.
