Gene therapy a key technology that saves lives

Transcription

1 Investment Banking Financial Products Gene therapy a key technology that saves lives Vontobel Gene Therapy Performance Index June 2018

2 Contents 15 Gene therapy a key technology that saves lives 19 Gene therapy in figures 25 Expert opinion Link Link 29 Why choose Bellevue Asset Management as index sponsor? 34 Index concept: Vontobel Gene Therapy Performance Index Link Link Link

3 Gene therapy a key technology that saves lives Is a decades-old dream now coming true? 3

4 Milestones in gene therapy 2017 the breakthrough year Beginnings The first approved gene therapy is carried out on four-year-old Ashanti DeSilva. Gene therapy 2.0 In 2012, two scientists present "genome editing" for the targeted alteration of specific genes. Breakthrough year Two new CAR T-cell therapies (Kymriah & Yescarta) are approved in the US to treat cancer Setback In autumn 1999, the US Food and Drug Administration (FDA) temporarily halts all clinical trials in gene therapy after an unsuccessful treatment leads to the death of a patient. Success A newly synthesized gene is successfully implanted in a child suffering from a skin disease called epidermolysis bullosa. Source: derinews magazine, June

5 Gene therapy A cure, not a treatment What does gene therapy entail? 2. SOLUTION APPROACHES Ground-breaking medical discoveries in recent decades have led to new treatment methods such as Glybera, CAR T-cell therapies and "genome editing". SOLUTION APPROACHES HEALING POTENTIAL 3. HEALING POTENTIAL Gene therapy research is currently focused on cancer and HIV, but the latest developments could open up entirely new healing potential. 1. INITIAL PROBLEM Human beings need proteins to control metabolic processes and build tissue. Defective production of these proteins can cause serious diseases. INITIAL PROBLEM Defective proteins GENE THERAPY OBSTACLES 4. OBSTACLES Besides the biological challenges facing researchers, cost is also an issue as one-time treatments are still very expensive. "Gene therapy is about introducing a normal gene into a patient's cells to replace an abnormal or bad gene." 1 Sources: derinews magazine, June 2018; 1: deutschlandfunkkultur.de, online, June

6 "The big domain with the greatest effort is cancer treatment." Dr Christian Lach, Senior Portfolio Manager, Healthcare Funds and Mandates, Bellevue Asset Management Source: expert interview in derinews magazine, June/July

7 Two types of gene therapy CAR T-cell method and "genome editing" Gene therapy success stories Human cell 1 CAR T-cell method: helping the immune system to help itself Focus on treating cancer cells White blood cells mutated to identify and attack the tumour Not just repairing a genetic defect but "kick-starting the body" Additional potential areas of application: blood diseases, hereditary muscular dystrophy, neurological diseases (e.g. Parkinson's) INFOGRAPHIC CAR T-cell method Gene therapy 2.0: "genome editing" Targeted alteration of specific genes: precise, fast and comparatively inexpensive Not a conventional form of gene therapy: defective genes are cut out or repaired A new step in the evolution of conventional gene therapy INFOGRAPHIC Gene therapy 2.0 Source: derinews magazine, June : Note that the cell nucleus, containing the cell's genetic material and chromosomes, is clearly visible. 7

8 A new kind of cancer immunotherapy with genetically modified T-cells Basic principles of how the chimeric antigen receptor (CAR) T-cell method works 5 3 ADMINISTERING THE CELLS The patient is treated with the cells. 1 TAKING BLOOD A doctor removes white blood cells from cancer patients. MUTATING THE CELLS The cells are mutated to identify and eliminate cancer cells. They are then propagated. 2 TRANSPORTING THE CELLS The cells are taken to a lab. 4 RETURNING THE CELLS The mutated cells are returned to the patient. Source: businessinsider.com, 11 June 2018 Illustration: Vontobel 8

9 Gene therapy 2.0, or "genome editing" The CRISPR/Cas system 1 2 FIND CRISPR/Cas9 uses an integrated guide RNA to locate its target: the sequence in the gene to be transcribed. CUT The editing enzyme (Cas9 protein) cuts the DNA double helix precisely at the target sequence. Both elements Cas9 and the guide RNA are produced synthetically and then introduced into a cell. Cas9 The main agent is the CRISPR/Cas9 system (CRISPR = clustered regularly interspaced short palindromic repeats). 3 REPAIR The cells' own repair systems now put the cut DNA strand back together. Depending on how this happens, individual DNA building-blocks can be removed or modified. It is also possible to integrate new, short DNA sequences. REMOVE MODIFY INTEGRATE Source: Bellevue Asset Management with reference to transgen.de, 8 June 2018 Illustration: Vontobel 9

10 Gene therapy in figures Global marketplace 10

11 World map of regenerative medicine companies 854+ regenerative medicine companies worldwide (including gene and cell therapy) 234 Europe & Israel (34%) 122 Asia (14%) 460 North America (54%) 15 South America (2%) 1 Africa 22 Oceania 1 (3%) Source: alliancerm.org, June 2018; 1: Australia, New Zealand, Marshall Islands 11

12 Regenerative medicine in figures Global regenerative medicine market size 1 In EUR billions Capital raised by regenerative medicine companies 2 (in USD millions) 140 CAGR 33% 130 Total Gene and genetically manipulated cell therapy 120 Cell therapy Tissue technology '000 7'000 7' ' CAGR 15% '000 4'000 4'200 4'500 4' '000 2'000 1'000 1'766 1' Sources: 1: Roland Berger Focus Regenerative Medicine, June 2018; 2: Worldwide; total amount represents industry-wide figures; some companies operate in more than one technology group. Data do not include mergers and acquisitions, Statista dossier, Cell and gene therapy 12

13 Gene therapy in figures Number of approved trials and projected global market Number of approved clinical trials in gene therapy worldwide between 1989 and Projected global gene therapy market in USD millions 2 14' '000 CAGR 22% 12' '000 8'000 6'000 CAGR 18% 8' '000 3' '000 0 CAGR 19% Sources: 1: Vector Boston Children's Hospital, June 2018; 2: Statista dossier, Cell and gene therapy CAGR: compound annual growth rate 13

14 Expert opinion Dr Christian Lach "The great hope is of course that cancers currently regarded as incurable can be cured." 14

15 Dr Christian Lach Senior Portfolio Manager Healthcare, Bellevue Asset Management Dr Christian Lach, biochemist, PhD Since October 2014 Bellevue Asset Management BB Adamant Team Senior Portfolio Manager Healthcare Funds & Mandates Adamant Biomedical Investments Senior Portfolio Manager Biotechnology Bellevue Asset Management BB BIOTECH AG, member of the management team Background Business administration University of St. Gallen (PhD) Biochemistry ETH Zurich (Master's degree) 15

16 Expert opinion on gene therapy Dr Christian Lach Medical potential Challenges Fields of development FIGHTING THE CAUSE INSTEAD OF TREATING THE SYMPTOMS FUNDING ETHICS THERAPIES COUNTRIES FUNDING Revolutionary character: not just treating symptoms but dealing with the causes of diseases Full cures for the most severely ill people with genetic defects possible Two promising gene therapies (CAT T-cell method and gene therapy 2.0) Scaling problem: good gene therapies can cost more than CHF 1 million per patient Solution approach: new payment models (e.g. annuities) Ethics: "designer babies" and "the right tools in the wrong hands" Solution approach: know-how not yet available, bans and regulation, no social and ethical consensus Diseases in focus: cancers, infectious diseases, neurological diseases, monogenetic hereditary diseases, blood diseases Countries: Europe and the US still leading the way Funding: making gene therapies accessible to a broader market Source: derinews magazine, June

17 Why choose Bellevue Asset Management as index sponsor? Dependable expertise for more than 20 years healthcare investment pioneer 17

18 Bellevue Asset Management Dedicated to active asset management Facts and figures: Bellevue Asset Management 1 Healthcare investment pioneer BB Adamant: Dependable expertise for more than 20 years 2 "The best of two worlds" Bellevue Asset Management's investment philosophy Founded Boston 1 employee Zurich 11 staff 1 Singapore 1 employee CHF 12 billion Total client assets 100 staff CHF 5.4 billion Assets under management in healthcare strategies CHF 1.5 billion 1 BB Adamant client assets 3,000 companies Global research Good track record BB Adamant launched in 2007 Sources: 1: Bellevue Asset Management, data as at 31 December 2017 Please note: 2: BB Adamant 18

19 Bellevue Asset Management BB Adamant Impressive profile and outperformance Adamant Global Healthcare Index profile 1 Outperformance versus market in USD 2 Long term track record The index was developed and launched in April Goal global healthcare market The index aims to track trends on the globalizing healthcare market. Research The BB Adamant Healthcare team evaluates around 600 of the 3,000 listed healthcare stocks worldwide on the basis of eight criteria (four quantitative and four qualitative). Indexed performance Outperformance Over 220 percentage points 0 Apr.07 Apr.09 Apr.11 Apr.13 Apr.15 Apr.17 Mid-cap stocks Greater emphasis is placed on up-and-coming stocks. As a result, mid caps have historically made up 60-80% of the index. Performance The extremely successful strategy outperforms its benchmark. PERFORMANCE IN % (in USD) Adamant Global Healthcare TR MSCI World Health Care NTR MSCI World NTR Year to date 17.31% 2.36% 2.13% 1 month 1.29% 1.00% -0.27% 1 year 27.39% 5.86% 11.91% 3 years 37.65% 8.93% 26.15% 5 years % 69.55% 63.42% 30/04/ /06/ % % 68.90% Sources: 1: Bellevue Asset Management, online; 2: Bloomberg, 19 June 2018; 3: Since inception of the Adamant Global Healthcare TR Index; historical data do not provide any indication of future developments. Please note: Compared with the MSCI World Heath Care Index, pharmaceutical stocks are clearly underweighted. 19

20 Vontobel Gene Therapy Performance Index A rules-based index for efficient investing in current and future gene therapy companies 20

21 Vontobel Gene Therapy Performance Index Diversified, rules-based and transparent Index Guidelines Investing efficiently in gene therapy companies Human cell The gene therapy industry is still at a relatively early stage of development, which could make a dynamic investment concept all the more important. The dynamic Vontobel Gene Therapy Performance Index ensures that the theme is replicated in a diversified, transparent and rules-based manner at all times. Bellevue Asset Management AG a healthcare investment pioneer acts as index sponsor. It is an active manager with a good track record stretching back more than 20 years. The index contains both established and innovative companies. The established companies already have positive operating cash flow and thus offer stability (value stocks). The innovative companies still have negative operating cash flow (growth stocks). The gene therapy theme certificate could represent an efficient means of investing in the theme of current and future gene therapy. The index comprises up to 16 gene and cell therapy companies. Sources: Vontobel, 1: Bellevue Asset Management AG, June

22 Index concept Vontobel Gene Therapy Performance Index Index Guidelines Half-yearly review of index composition with subsequent rebalancing UNIVERSE FILTER UNIVERSE Index sponsor s equity research universe in the fields of gene and cell therapy LIQUIDITY FILTER Market capitalization USD 500 million Average daily trading volume USD 2 million (over past three months, including selection date) ATION ESTABLISHED POSITIVE operating cash flow INNOVATIVE NEGATIVE operating cash flow HALF-YEARLY ADJUSTMENTS QUALITATIVE CRITERIA QUANTITATIVE CRITERIA INDEX Management assessment Operational risks PEG valuation Sales growth over at least 3 years P/E ratio P/S Product pipeline Country risks Price/sales ratio EBITDA margin E1 E2 E3 E4 E5 E6 E7 E8 Management assessment Operational risks Price/sales ratio (t+4) Product progress P/S T+4 Product pipeline Country risks Price/cash flow ratio Cash reach I1 I2 I3 I4 I5 I6 I7 I8 1 After deduction of country-specific withholding taxes Source: Vontobel Index Guidelines; illustration: Vontobel 22

23 Indicative initial composition Vontobel Gene Therapy Performance Index COMPANY SECTOR CURRENCY COUNTRY WEIGHTING BioMarin Pharmaceutical Inc Established Biotechnology USD US Celgene Corp Established Biotechnology USD US Gilead Sciences Inc Established Biotechnology USD US Illumina Inc Established Biotechnology USD US Lonza Group Ltd Established Biotechnology CHF Switzerland Novartis AG Established Pharmaceuticals CHF Switzerland Shire PLC Established Pharmaceuticals GBp US Thermo Fisher Scientific Inc Established Medical devices USD US Abeona Therapeutics Inc Innovative Pharmaceuticals USD US Adaptimmune Therapeutics plc Innovative Biotechnology USD UK Bluebird Bio Inc Innovative Biotechnology USD US Cellectis SA Innovative Biotechnology EUR France Intellia Therapeutics Inc Innovative Biotechnology USD US Spark Therapeutics Inc Innovative Biotechnology USD US Ultragenyx Pharmaceutical Inc Innovative Biotechnology USD US uniqure NV Innovative Biotechnology USD Netherlands Sources: Solactive & Bloomberg, 20 June

24 Indicative initial composition Vontobel Gene Therapy Performance Index Abeona Therapeutics Inc Adaptimmune Therapeutics plc BioMarin Pharmaceutical Inc Bluebird Bio Inc INNOVATIVE INNOVATIVE ESTABLISHED INNOVATIVE Abeona Therapeutics Inc. is a leading clinical-stage biopharmaceutical company. It develops novel gene therapies for rare and life-threatening diseases. Adaptimmune Therapeutics plc is a clinical-stage biopharmaceutical company. It develops novel products for cancer immunotherapy based on a proprietary T-cell receptor platform that helps to identify cancer targets. Adaptimmune Therapeutics serves customers all over the world. BioMarin Pharmaceutical Inc. develops and markets therapeutic enzyme products. It has its own enzyme technology for developing products to combat lysosomal storage disorders and for treating severe burns. BioMarin Pharmaceutical offers analytical and diagnostic products and services in the field of carbohydrate biology via subsidiaries. Bluebird Bio, Inc. offers biotechnology products and services. These include gene therapies for severe genetic diseases such as cerebral adrenoleukodystrophy in children, neurodegenerative diseases and beta thalassemia. Bluebird Bio operates in the United States. WEBSITE WEBSITE WEBSITE WEBSITE Sources: Bloomberg, 5 June 2018, company websites 24

25 Indicative initial composition Vontobel Gene Therapy Performance Index Celgene Corp Cellectis SA Gilead Sciences Inc Illumina Inc ESTABLISHED INNOVATIVE ESTABLISHED ESTABLISHED Celgene Corporation is a global biopharmaceutical company. It focuses on discovering, developing and marketing therapies to treat cancer and immune-mediated inflammatory conditions. Cellectis SA is a biopharmaceutical company that focuses on immunotherapies based on geneedited CAR T-cells (UCARTs). The company's mission is to develop a new generation of T-cell-based cancer therapies. Gilead Sciences, Inc. is a researchbased biopharmaceutical company that discovers, develops and markets therapies aimed at advancing the treatment of patients with lifethreatening diseases. Its focus is on HIV, AIDS, liver diseases and severe cardiovascular and respiratory diseases. Illumina, Inc. develops, produces and markets integrated systems for largescale analysis of genetic variation and biological function. It offers a comprehensive range of products and services for sequencing, genotyping and gene expression for genomic research centres, pharmaceutical companies, academic institutions and biotechnology firms. WEBSITE WEBSITE WEBSITE WEBSITE Sources: Bloomberg, 5 June 2018, company websites 25

26 Indicative initial composition Vontobel Gene Therapy Performance Index Intellia Therapeutics Inc Lonza Group Ltd Novartis AG Shire PLC INNOVATIVE ESTABLISHED ESTABLISHED ESTABLISHED Intellia Therapeutics, Inc. is a biotechnology company. It focuses on research into and clinical development of gene therapies for patients with genetic diseases. Lonza Group Ltd produces specialized organic chemicals, biocides, active ingredients and biotechnology products. It offers customer-specific chemical production and fermentation processing and manufactures products for the life science, pharmaceutical, food and agricultural industries. Lonza has production sites in Europe, the US and China. Novartis AG manufactures pharmaceutical and consumer healthcare products. It produces drugs for cardiovascular, respiratory and infectious diseases, oncology, neuroscience, transplantation, dermatology, gastrointestinal and urinary tract diseases and arthritis, together with vaccines and diagnostic, ophthalmology and animal health products. SHIRE PLC is a global biotechnology group focused on people with rare diseases and other special disorders. It develops products in the key therapeutic areas of haematology, immunology, neuroscience, ophthalmics, lysosomal storage disorders, gastrointestinal, endocrine and hereditary angioedema as well as oncology. WEBSITE WEBSITE WEBSITE WEBSITE Sources: Bloomberg, 5 June 2018, company websites 26

27 Indicative initial composition Vontobel Gene Therapy Performance Index Spark Therapeutics Inc Thermo Fisher Scientific Inc Ultragenyx Pharmaceutical Inc uniqure NV INNOVATIVE ESTABLISHED INNOVATIVE INNOVATIVE Spark Therapeutics, Inc. focuses on developing gene therapy products. It offers therapy products to change patients' lives and reinvent the treatment of crippling diseases. Thermo Fisher Scientific, Inc. manufactures scientific instruments, consumables and chemicals. It offers analysis and laboratory equipment, software, services, consumables, reagents, chemicals and peripherals for pharmaceutical and biotechnology companies, hospitals, clinical diagnostic labs, universities, research institutes and public authorities. Ultragenyx Pharmaceutical Inc. provides biotechnology services. It develops therapeutics and sialic acid for treating metabolic, body myopathy, glucuronidase and rare genetic diseases. Ultragenyx Pharmaceutical conducts its business in the United States. uniqure N.V. delivers gene therapy with single treatments for curative results. It develops a modular platform to bring new disease modifying therapies to patients with severe genetic diseases and offers ongoing clinical programmes in haemophilia B and pre-clinical proofof-concept in Huntington's disease. WEBSITE WEBSITE WEBSITE WEBSITE Sources: Bloomberg, 5 June 2018, company websites 27

28 Initial categories and index weightings Vontobel Gene Therapy Performance Index Weightings by country Weightings by sector 12.50% 18.75% 68.75% 75.00% US UK France Switzerland Netherlands Biotechnology Pharmaceuticals Medical devices Sources: Vontobel; Bloomberg, June

29 Product details Index Guidelines Vontobel Gene Therapy Performance Index Index currency USD PRODUCT DETAILS In subscription until 4pm CET on 13/07/2018 SSPA product type Tracker Certificate (1300) Underlying Vontobel Gene Therapy Performance Index Initial fixing / payment date 13/07/2018 / 20/07/2018 Term Management fee Index sponsor Index calculation agent Issuer Open end 1.20% p.a. Bellevue Asset Management AG, Zurich Bank Vontobel AG, Zurich Vontobel Financial Products Ltd., DIFC Dubai (is not subject to any prudential supervision and has no rating) Guarantor Vontobel Holding AG, Zurich (Moody s A3) Currency CHF USD EUR ISIN / symbol CH / ZGENCV CH / ZGENUV CH / ZGENEV Issue price CHF USD EUR Spot reference price (index level) USD USD USD Details page Term sheet Details page Term sheet Details page Term sheet Term sheets with the legally binding information and other details can be downloaded at any time from All information is indicative and subject to change. Please note: The Vontobel Gene Therapy Performance Index is an index provided and calculated by Bank Vontobel AG, Zurich. The index sponsor is Bellevue Asset Management Asset Management AG, Zurich. 29

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