How is the US Food and Drug Administration fast-tracking genetic medicines?

Key Points

  • The US Food and Drug Administration (FDA) unveiled plans to create an Operation Warp Speed (OWS) program for genetic medicine, which strives to quicken clinical trials, increase staffing and communication, and ultimately approve relevant drugs at a faster rate.
  • We believe that genetic medicine programs should benefit from the program.
  • We believe the favorable regulatory environment created from Operation Warp Speed could accelerate investment in this industry and increase both drug approvals and revenue potential over time versus current estimates.

The genetic technology revolution has begun, with genetic medicines poised to become the dominant driver of health-care innovation over the next two decades. Regulators around the world are sharing in the mounting enthusiasm for these breakthroughs as they seek to hasten drug approvals. Much like the successful Operation Warp Speed (OWS) program that expedited Covid-vaccine development, the FDA has unveiled plans to create an OWS program for genetic medicine. This new iteration strives to quicken clinical trials, increase staffing and communication, and ultimately approve relevant drugs at a faster rate.

Genetic medicines are fast becoming a reality and seek to attack diseases at their source—the DNA or RNA—to provide longer-lasting and more effective outcomes. In some cases, diseases could even be cured. These landscape-changing developments stand in stark contrast to most present-day medicines, which largely treat disease by providing symptom management alone.

Muscular Dystrophy as a Case Study

While genetic therapies can treat a number of ailments, current studies largely target rare diseases. For example, a genetic medicine company focused on muscular dystrophy—a disease with a sizeable unmet medical need and no effective treatments—has developed a gene therapy that adds DNA to a patient’s cells, allowing them to form a protein called micro-dystrophin that helps slow or halt the progression of the disease.  

Recently, a panel of experts assembled by the FDA agreed that the drug was safe and effective enough to recommend approval. We expect formal FDA approval to be announced in the next couple of months, ultimately generating significant company revenue. The drug and many others now have clearer and faster paths to market under OWS, giving hope to patients and families. We think this recent bold stance by the FDA, coupled with robust innovation pipelines, should be a powerful catalyst for value appreciation over the next several years.

A Growing Investible Universe

Recent breakthroughs in genetic medicines are not limited to muscular dystrophy; they are also being developed for other rare diseases such as cardio-myopathies, hemophilia, Huntington’s diseases, amyotrophic lateral sclerosis and many different cancers. We believe these programs should benefit from OWS. The genetic-medicine investible universe also continues to grow quickly owing to increased public and private investment, with expected revenues rising from $9 billion today to $72 billion by 2030, according to internal Newton estimates.

In our view, the favorable regulatory environment from Operation Warp Speed could quicken investment in this industry and increase both drug approvals and revenue potential over time versus current estimates, creating attractive opportunities for investors.

Authors

Matthew Jenkin

Matthew Jenkin

Research analyst, portfolio manager

Stefanie Rintoul

Stefanie Rintoul

Senior research analyst, Equity Research team

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Any reference to a specific security, country or sector should not be construed as a recommendation to buy or sell this security, country or sector. Please note that strategy holdings and positioning are subject to change without notice. For additional Important Information, click on the link below.

Important information

This is a financial promotion. Issued by Newton Investment Management Limited, The Bank of New York Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Newton Investment Management Limited is authorized and regulated by the Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN and is a subsidiary of The Bank of New York Mellon Corporation. 'Newton' and/or 'Newton Investment Management' brand refers to Newton Investment Management Limited. Newton is registered in England No. 01371973. VAT registration number GB: 577 7181 95. Newton is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940. Newton's investment business is described in Form ADV, Part 1 and 2, which can be obtained from the SEC.gov website or obtained upon request. Material in this publication is for general information only. The opinions expressed in this document are those of Newton and should not be construed as investment advice or recommendations for any purchase or sale of any specific security or commodity. Certain information contained herein is based on outside sources believed to be reliable, but its accuracy is not guaranteed. You should consult your advisor to determine whether any particular investment strategy is appropriate. This material is for institutional investors only.

Personnel of certain of our BNY Mellon affiliates may act as: (i) registered representatives of BNY Mellon Securities Corporation (in its capacity as a registered broker-dealer) to offer securities, (ii) officers of the Bank of New York Mellon (a New York chartered bank) to offer bank-maintained collective investment funds, and (iii) Associated Persons of BNY Mellon Securities Corporation (in its capacity as a registered investment adviser) to offer separately managed accounts managed by BNY Mellon Investment Management firms, including Newton and (iv) representatives of Newton Americas, a Division of BNY Mellon Securities Corporation, U.S. Distributor of Newton Investment Management Limited.

Unless you are notified to the contrary, the products and services mentioned are not insured by the FDIC (or by any governmental entity) and are not guaranteed by or obligations of The Bank of New York or any of its affiliates. The Bank of New York assumes no responsibility for the accuracy or completeness of the above data and disclaims all expressed or implied warranties in connection therewith. © 2020 The Bank of New York Company, Inc. All rights reserved.

Explore topics