Extracellular Vesicles: Potential and Profit in the Space Between Cells

What are EVs and Exosomes?

Extracellular vesicles (EVs) are small bodies that are released by parent cells into the fluid between cells, or extracellular space. EVs include microvesicles and smaller nano-scale vesicles called exosomes. EVs perform several important cellular functions, including transferring DNA, RNA, and proteins from source cells to other cells and helping cells communicate with each other.

It used to be thought that EVs were like garbage carriers that take away unnecessary or toxic materials from cells to dump into the extracellular space, but it is now becoming clearer that their work and potential are powerful. EVs are an exciting research topic for researchers, whose breakthroughs in understanding and harnessing EVs are drawing money from the government, philanthropy, venture capital, and public market investors. Exosomes are being used to treat chronic pain, cardiovascular disease, and neurodegenerative disease, and they are being used in many cancers that are otherwise untreatable by standard-of-care drugs and chemotherapy. Exosomes are also being studied and applied in orthopedics, sexual function, hair regrowth, and cosmeceuticals, which are cosmetic products with bioactive ingredients and health benefits.

A Rapidly Growing Market

The period from 2010 to 2020 brought significant growth in the use of exosomes, and the trend is set to continue. Research firm Grandview Research expects the exosome diagnostics and therapeutics market to exceed more than USD 2.28 billion by 2030. The commercial growth of EVs in the next decade is being catalyzed by investments today by a range of investors.

Companies that have invested into exosome-related therapeutics include corporate venture capital outfits like GV (formerly Google Ventures), which has put money into EV therapeutics companies like Evox Therapeutics. That company raised $45.4 million in Series B financing in 2018 from GV and others on the strength of its plan to use EV research from a leading Swedish institution and Oxford to deliver small and large molecules to target the human brain and central nervous system. ArunA Bio, which specializes in neural EVs, raised $13 million in common stock financing

Massachusetts-based Codiak Biosciences has raised $168.5 million through Series C since its 2016 founding. Codiak has paired with Jazz Pharmaceuticals to bring engineered exosomes to market for the treatment of five cancer targets not reachable by known methods, guaranteeing Codiak at least $56 million upfront. In other joint ventures, PureTech Health PLC has linked up with Roche with an upside potential of over $1 billion if the exosome company boosts the success of the pharma giant’s next wave of drugs.

Public market investors are also showing a deeper interest and willingness to explore EV stocks. There are publicly traded companies specializing in exosomes that retail investors can access, such as Avalon GloboCare (US: AVCO), Capricor Therapeutics, Inc. (US: CAPR) and Australia’s Exopharm Limited (ASX-EX1). The rising tide of interest from venture capital to corporate partnership funding that touches retail investors will only swell further as the full potential of EVs across a range of uses becomes clear.

The Academic Research

The cutting edge of drug technology is in academic medicine, and there are strong prospects for a steady pipeline of innovations in both extracellular vesicles and exosomes coming from top institutions globally.

Dr: Joy Wolfram’s Nanomedicine and Extracellular Vesicles lab in Florida part of Mayo Clinic is exploring organotropic drug delivery which is a new way to treat disease by targeting drugs at specific organs. The laboratory of Dr. Stephen Gould at Johns Hopkins investigates how EVs work, including how they develop and are taken up by neighboring cells. The lab also looks at how EVs affect cell-to-cell communication and polarity. This research also improves understanding of how retroviruses like HIV originate, because they originate in a similar way to exosomes and microvesicles.

A Wide Array of Clinical Applications

Immune cell- and cancer cell-derived EVs have potential in clinical applications against a wide array of diseases. Immune cell-derived EVs have unique functions that have made them the focus of new immunotherapeutic strategies in recent years. They can also offer many advantages relative to whole cell-based therapies (including ease of manufacture, stability during storage & transport and reduced risks associated with transplantation). These attributes make them critical to cellular therapy advances. In addition, EVs can in certain cases cross physiological barriers that challenge whole cells (i.e. the blood brain barrier), potentially also opening up more therapeutic space.

Immune cell-derived EVs can have diagnostic value as disease-specific biomarkers, including in the evaluation of transplantation outcomes. This alone would help health systems save millions in rejection costs and misallocation of precious donated organs. Immune cell-derived EVs can also have therapeutic value. NK cell-derived EVs for example, have several characteristics in their makeup, targeting, and stability that make them promising candidates for ‘off-the-shelf’ anti-cancer treatments. Moreover, tumor-derived EVs can be used to expand and activate immune cells to show enhanced anti-tumoral functions. In conclusion, there is huge potential for EV to influence the body’s immune response to disease, and for the use of EVs as agents in immunotherapy. To learn about immune-derived EVs, take a look at this review article.

The Future

Through a combination of basic research to understand EVs and applied research to show their application potential in real-world scenarios, science will teach us the true power of extracellular vesicles. Look for clinical advances and approvals for a range of therapeutics and other products in the coming years, bringing the transformative curative potential to the public and stellar returns to investors.

And for more information on all types of innovations in extracellular vesicle and exosome science, visit the International Society for Extracellular Vesicles and its publication in the Journal of Extracellular Vesicles or follow industry leaders through blogs and social media platforms like Twitter.

-Braeden Lichti

Deciding when to invest in a biotechnology company

Often investors we meet are not sure when to invest in a biotechnology company. Companies that you might come across could be in any stage of development – ranging from discovery stage, preclinical, to phase 1, 2, or 3. While there are also Phase 4 clinical trials, we will not cover that stage. Phase 4 trials are post-approval studies once a product received market approval by the FDA.

All of these stages of development can offer different rewards and risk. We compiled a simple overview that could help you to decide when is the right time for you to invest.

Find companies that are about to enter Phase 1 or have an ongoing Phase 1 trial

The notion that investing in a preclinical company that is about to go into Phase 1 is riskier is not always correct, and there can be exciting investment opportunities that show a significant return on investment. First, find out if the company has enough capital to enter into Phase 1 or if they are looking to raise money for this trial.

This could be a good time for investors to get in to increase the value of your investment with limited risk because Phase 1 clinical trials typically involve the initial introduction of the product candidate into healthy human volunteers. In Phase 1 clinical trials, the product candidate is typically tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics. 

Phase 1 trials are usually small and can occur rather quickly. Phase 1 studies—which represented 37% of biotech IPOs through the third quarter of 2018 had an average market value of $535 million, according to the Wall Street Journal. That is up from 35% of biotech IPOs with an average market value of $471 million in 2015.

These investment opportunities could be hard to find, so it´s best to find and invest alongside investors that get access to or build biotech companies from the ground up.

Phase 2  Could be the best time to get involved

Phase 2 trials are done only if Phase 1 trials have shown that the drug is safe, but sometimes Phase 1 and Phase 2 trials are combined. Let’s consider you are looking at a company entering a Phase 2 clinical trial.

Phase 2 clinical trials are conducted in a limited patient population to gather evidence about the efficacy of the product candidate for specific, targeted indications; to determine dosage to tolerance and optimal dosage; and to identify possible adverse and safety risks. 

Often, after a public biotech company reports positive Phase 2 data, the value of the company goes up significantly. If a company is listed publicly, the stock price is likely to jump as this data will give investors the first real indication that the drug works.

According to Marc Lichtenfeld, Chief Income Strategist, The Oxford Club, “Phase 2 is often the most profitable time to be involved in a small-cap biotech stock. Many times, Phase 2 results are positive. Sometimes it’s because the drug works and other times it’s because the trial is rigged to provide positive results.

Generally, on positive Phase 2 data, a small biotech company will either seek to raise additional capital from a strong VC or look for a partner from a larger biopharma company to start Phase 3 clinical trials.

Phase 3: Big Rewards and Big Risks

Phase 3 trials are the final stage of the development journey; Phase 3 clinical trials are undertaken to evaluate clinical efficacy and to test for safety in an expanded patient population at geographically dispersed clinical trial sites. The size of Phase 3 clinical trials depends upon clinical statistical considerations for the product candidate and disease but sometimes can include several thousand patients. Phase 3 clinical trials are intended to establish the overall risk-benefit ratio of the product candidate and provide an adequate basis for product labelling. 

The FDA reviews the results from Phase 3 trials when considering a drug for approval. Like in Phase 2, a positive outcome in Phase 3 will frequently result in a massive increase in valuation. If the companies stock is publicly traded, there will be a surge in the stock price as investors anticipate FDA approval and sometimes a buyout from a larger biopharma company.

However, often, drugs fail in Phase 3 trials due to the drug not working or unexpected side effects. This results could mean a plummet in the value of your investment and almost all your investment lost.

Use extreme caution when holding a stake in a biotech company that is entering or waiting on Phase 3 data. Drugs entering Phase 3 have a 55% chance of failure. If you have held your investment since Phase 1 or Phase 2, it’s suggested to think about protecting your downside and taking some money off the table before Phase 3 data is released.

Hedge risk of failure: Focus on companies developing drugs in areas of lower risk

Try and find companies that are developing drugs for a market with significant unmet medical needs but also has a chance to show real results on the bedside. For example, its widely known that GBM (Glioblastoma), an aggressive form of brain cancer, is a ruthless disease and has no cure.

Roughly 17,000 new cases of glioblastoma are diagnosed every year, with average glioblastoma survival rates resting somewhere in the 11-to-15-month time frame. Senator John McCain died 13 months after his glioblastoma diagnosis.

Investing in a company working on a drug for a disease like GMB could be riskier because the chance of loss of life during the clinical trials is much higher.  Stick to investing in companies developing drugs for diseases where the risk of patient death is low during the drugs development life cycle.

Diversify your sources of information

Biotech companies are presenting their latest data results and enrollment at conferences around the world and also report updates at Clinicaltrials.gov. Also, monitor social media feeds from expert biotech journalist and reporters on Twitter and subscribe to platforms like Statnews, or Fierce Biotech for excellent industry news and insights.

Whether you are looking for an early-stage investment opportunity or would like to join an investment at a later stage, be sure to do your homework or team up with a group that works together to buy or build biotech opportunities.

DISCLAIMER: All insights, suggestions, and advice provided herein are for educational purposes only. Nothing contained in this article or within this web site should be interpreted as a recommendation to buy or sell any securities, nor make an offer, solicitation or recommendation of another kind. All readers should always do further research before making a final investment decision.

The author is not a United States Securities Dealer nor Broker nor US Investment Adviser.

Big pharma admits data manipulation in FDA application for multi-million-dollar gene therapy

By: Braeden Lichti

Aug. 14, 2019 The Food and Drug Administration (FDA) said data manipulation took place during the approval of Novartis’ studies of Zolgensma, the world’s most expensive drug. The medicine, costing around $2.1 million for a one-time infusion, treats children with an especially devastating, sometimes fatal form of spinal muscular atrophy (SMA). Novartis knew of the data irregularities for two months before the gene therapy’s approval by the FDA in May 2019.

But Novartis did not inform regulators until June 2019, a delay that led the FDA to issue a very rare public warning of potential civil or criminal penalties for AveXis. Novartis bought the biotech startup in early 2018 for $8.7 billion mainly due to promising data for the then-experimental Zolgensma.

Phase 1 and Phase 3 data manipulation

As explained in our previous articles, FDA approved medicines go through long, expensive and gruelling clinical trials before being approved. AveXis manipulated results in Phase 1 clinical trials as well as those from some nonclinical studies included in Novartis’ approval application. Fifteen infants with the most severe form of SMA received Zolgensma, and all remained alive and off permanent ventilation at two years, a milestone seldom achieved in untreated patients.

According to Wilson Bryan, head of the FDA’s Office of Tissues and Advanced Therapies both the Phase 1 and Phase 3 versions of Zolgensma use the same vector and therapeutic gene, giving him confidence the clinical results from Phase 1 confirm the effectiveness of the Phase 3 product.

After learning of the data manipulation, the FDA inspected AveXis’ San Diego, CA facility from 24 July-2 August, handing the company an inspection report finding failings to thoroughly review unexplained data discrepancies, incomplete laboratory records and failure to follow laboratory test procedures. The FDA intends to continue its investigations and could require AveXis submit “one or more” supplemental applications, a process that could take several months. Novartis and the FDA have assured the public that the falsified data did not affect the safety, quality or efficacy of Zolgensma and will remain on the market

Impact on future gene therapy approvals

Zolgensma is only the second gene therapy for an inherited disease to win FDA approval, marking a significant milestone for the growing field. At $2.1 million per patient, Zolgensma is also the most expensive drug ever brought to market. The FDA investigations are relevant for the whole sector as gene therapy is a promising emerging field and many active, well-funded biotech companies are working to develop much-needed therapies.

Data fiddling is more common than you think

Manipulating data to make them more meaningful is a well know problem in statistics and is known as p-hacking. The probability value or p-value measures whether the data would be at least as extreme compared to no real difference between the groups or phenomena being compared. The term p-hacking describes the conscious or subconscious manipulation of data in a way that produces a desired p-value. Researchers collect or select data or statistical analyses until nonsignificant results become significant. A p-value of 0.05 or 95% probability is often the de-facto standard to get published in academic literature. You can check out the following visualization to find out how easy it is to manipulate data.

Should you trust the data shared by companies?

Whether you are reading scientific journals or the latest article in the Wall Street Journal, always seek additional guidance when picking a biopharma investment. Connect with an experienced team of biologists, investors, and statisticians to help you to spot troubling signs earlier in your investment journey.

Our views are based on experience and for educational purposes only. We encourage inquiries, suggestions, and comments.

DISCLAIMER: All insights, suggestions, and advice provided herein are for educational purposes only. Nothing contained in this article or within this web site should be interpreted as a recommendation to buy or sell any securities, nor make an offer, solicitation or recommendation of another kind. All readers should always do further research before making a final investment decision.

The author is not a United States Securities Dealer nor Broker nor US Investment Adviser.

Five-basic biotech investing due-diligence principles

While big, unprofitable tech IPOs dominated headlines this year, it might be time for potential investors to turn their attention back to the early-stage biotech sector. Barrons magazine estimated that since 2012, early-stage biotech companies that have gone public have, on average, raised more money and performed better than biotech companies whose initial public offering came closer to when they brought their products to market. Between 2001 and 2017, only 6% of biotech companies were profitable at the time of their initial public offering, according to an analysis conducted by Jay Ritter, a finance professor at the Warrington College of Business at the University of Florida. During the same time frame, the average three-year buy-and-hold return for more than 350 biotech companies that went public was 36.3% — beating the market by 14%.

As with every investment, biotech investing is associated with inherent risks. Our five-basic due-diligence principles can help you evaluate an early-stage biotech investment and potentially uncover the rewarding investment opportunity you were searching for.

1. A pipeline of products, programs, and patents

Look for ​companies with a patented product and program pipeline consisting of more than one drug. Companies with 2 or more products in or entering clinical trials are more diversified and can cope with setbacks more easily. If one product fails, the company will have other assets in development to try and recoup any lost value. Clinical trials are organized into three phases, and the National Cancer Institute compiled a great introductory video that should be studied.

Make sure the company is past the discovery stage and is either filing an IND or is clinical ready. Don’t invest in mere science experiments!

Finally, check the patent status of the products and make sure it’s current. If the company has no signs of a patent then the product is not protected and has limited value.

2. Good Management

Experienced managers must lead the company and have a history of working in biopharma. Look for early-stage companies in which the founders are still a part of the management team, and that they have recruited diversified executives with in-depth experience in financing, successful drug development, and commercialization. Make sure that the chief medical officer has education from a credible university and an abundance of clinical experience and published work around the medical indication targeted.

3. Long-term finance commitments

It is advantageous to opt for companies that have just completed financing and have a reliable investment bank or venture partner committed to the development of the company.

Depending on the phase of the drug development, it can take years and many rounds of financing to bring a drug to market or for a company to establish a partnership with an established pharmaceutical company.

Without fresh financing or a committed strong investment group, it could be difficult for a company to continue securing capital for growth.


4. Research latest scientific breakthroughs

Be cautious of companies developing drugs and raising capital for therapeutics that are in vogue or are in an over-saturated market with competition. For example, areas such as CAR-T immunotherapy are overrun with companies racing to bring the next drug to market, so it’s best to avoid these companies. Look where the crowd is not and find companies developing next-generation products addressing high unmet medical needs. Areas such as pain management, addiction, age-related or anti-aging, gene therapy, and viral infections in which there is a high degree of incidence in the population. Positive clinical data in these areas could provide shareholders a ​faster return on their investment. We advise staying clear of companies focusing on homeopathy as its efficacy is unproven.


5. Scientific evidence in reputable journals

Always make sure that the science behind the product being developed is published in a peer-reviewed scientific journal. You can quickly find peer-reviewed journals via google scholar, a google service that indexes academic journals. Reliable measures in assessing the credibility of a scientific journal include the impact factors (i.e., citation frequency) compiled by Thompson Reuters and the SCImago Journal Rank (SJR). SCImago developed the SJR indicator from the widely known algorithm, Google PageRank™. This indicator displays the visibility of journals since 1996.

Stay away from companies that have no scientific publications. We also advise speaking to an expert with a background (e.g., Ph.D., Professor) in either biology, chemistry, or medicine to evaluate a drug and the claims by a company properly. If you don’t have anyone to consult with one of our industry specialists could be available.

Our principles are based on experience and for educational purposes only. We encourage inquiries, suggestions, and comments.

DISCLAIMER: All insights, suggestions, and advice provided herein are for educational purposes only. Nothing contained in this article or within this web site should be interpreted as a recommendation to buy or sell any securities, nor make an offer, solicitation or recommendation of another kind. All readers should always do further research before making a final investment decision. 


The author is not a United States Securities Dealer nor Broker nor US Investment Adviser. This letter and the attached related documents are never to be considered a solicitation for any purpose in any form or content.