UK gene therapy firm Orchard plans stock offer after GSK deal

LONDON (Reuters) - Britain's Orchard Therapeutics, which has already raised more than $140 million to fund its work in gene therapy, plans another private sale of shares following its acquisition of a portfolio of GlaxoSmithKline GSK.L rare disease medicines.

Chief Executive Mark Rothera also told Reuters that an initial public offering (IPO) was an option beyond this next private financing move.

Gene therapy is a hot area for drug research - highlighted by Novartis's NOVN.S $8.7 billion acquisition of AveXis AVXS.O this week - but the rare disease products sold to Orchard are too niche for GSK as it refocuses its R&D efforts.

For tiny unlisted Orchard, however, the portfolio is transformative.

“The addition of these programs is a really big step up in terms of activity, so we are going to be looking to raise further funds through an additional private round,” Rothera said on Thursday.

“From an investor community point of view there is a huge amount of interest and willingness to support development of these medicines. I am very confident that we will be raising funds in the not too distant future.”

After that, Orchard might do a further private fund-raising “and we could also consider going public”, Rothera said.

The GSK deal, which involves Britain’s biggest drugmaker taking a 19.9 percent stake in Orchard, offers Rothera a way to leap ahead in the fast-moving gene therapy field by giving his company a medicine that is already on the market.

GSK’s Strimvelis for ADA severe combined immune deficiency (ADA-SCID), or “bubble baby” disease, was approved in Europe in 2016 and costs 594,000 euros ($735,000) per treatment - but it has been used to treat only a handful of patients since its launch.

Orchard believes it can improve on this by developing its own ADA-SCID medicine in parallel. Its product, called OTL-101, is designed to be frozen so it can be sent to patients anywhere, in contrast to Strimvelis, which can only be given at one center in Milan.

Orchard aims to file OTL-101 for U.S. regulatory approval later this year. Together with drugs in earlier-stage development, this will give the group a broad gene therapy line-up.

“Now we have one approved therapy, Strimvelis, we have three late-stage clinical programs and a further three clinical stage programs,” Rothera said.

Orchard, which was incorporated in September 2015, is focused on ex-vivo gene therapy, in which stem cells are taken from the patient and genetically corrected outside of the body before being transplanted back.

Reporting by Ben Hirschler; Editing by Susan Fenton