Sector

Targeting companies developing novel oral therapies to replace injectables

A number of innovative biotechnology companies have advanced small-molecule oral therapy as an alternative to traditionally injectable drugs, says Fidelity's Eirene Kontopoulos.

  • Recent advancement in small molecule oral therapy as a replacement for administering drugs through a needle has led to investment opportunities among companies at the forefront of this emerging trend, according to Fidelity Portfolio Manager Eirene Kontopoulos.
  • "This welcome alternative to traditionally injectable medication has been driven by improved drug-discovery methods in chemistry and computational and structural biology, as well as a better understanding of the biology of immunologic diseases," says Kontopoulos, who manages Fidelity Advisor® Biotechnology Fund and holds a doctorate in neuroscience from Harvard Medical School.
  • Kontopoulos believes that successfully investing in biotechnology requires a competitive edge on the science behind the drugs, the likelihood of clinical success, and the size of the total addressable market. In helming the fund since 2018, she favors companies that can develop what she considers to be the most innovative therapies.
  • She notes that oral therapy offers a welcome alternative for trypanophobic patients—those who fear needles—and has the advantage of convenience for patients who can administer drugs at home instead of making the trip to a clinic.
  • Moreover, many countries lack the medical infrastructure to support infusion therapy, making oral treatment the only game in town for those locales. "It's a game changer in certain markets, for sure," says Kontopoulos.
  • In June, pharmaceutical giant Eli Lilly announced plans to acquire DICE Therapeutics, then a fund holding, for its oral therapy that inhibits IL-17, a proinflammatory cytokine that has been the focus of intensive research because of its crucial role in the pathogenesis of psoriasis, Crohn's disease, and other conditions. The deal closed in August.
  • In October 2022, DICE used phase 1 results showing a 43.7% reduction in psoriasis area and severity to claim that its lead small-molecule therapy, DC-806, has best-in-class potential. Kontopoulos established a stake in DICE, believing DC-806 could successfully compete with the two leading injectable therapies for psoriasis, Lilly's Taltz® and Novartis's Cosentyx®.
  • After Lilly made its offer, DICE's stock vaulted sharply higher, and Kontopoulos liquidated the fund's position shortly thereafter to lock in a gain and to capitalize on other opportunities with what she considered a strong risk-reward profile.
  • In September 2022, pharmaceutical firm Bristol-Myers Squibb received approval for its oral TYK2 inhibitor, according to Kontopoulos, but the tolerability profile relegates dosing to psoriasis and does not allow for testing in other areas, including Crohn's disease, which requires higher dosing. The fund did not own Bristol-Myers as of December 31, but it's one of a handful of companies, including holdings Viking Therapeutics and Structure Therapeutics, trying to develop oral therapies that Kontopoulos has been monitoring.
  • "Several companies are testing oral alternatives to injectables because they recognize the potential benefit of doing so, but the efficacy has to be similar," she says. "This area is a potential strong source of growth for many companies."
  • For specific fund information such as standard performance and holdings, please go to the "Funds Managed" link on this page.
 
 

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