The power of generative AI is beginning to be felt in the pharmaceutical and biotech sectors as companies leverage algorithms to speed research and development of novel therapies. According to industry watchers, while AI investment in the global healthcare sector was around $15 billion in 2022, it is expected to be more than $187 billion by 2030

In recent years, for example, Amazon Web Services has teamed with Pfizer, Merck, and AstraZeneca (all three held by the Fund) as well as Teva Pharmaceuticals, to found AION Labs, which aims to use AI and big data to develop new pharmaceuticals.²

As the latest example of such collaborations, Generate, an AI-driven biotech, secured a major partnership in September with Novartis (held by the Fund), potentially worth up to $1 billion. The deal, which includes a $50 million upfront payment and a $15 million equity stake in Generate for Novartis, aims to leverage Generate’s AI platform to discover and develop DNA and protein-based therapeutics.

Generate’s proprietary technology predicts the 3D structures of proteins and designs drugs to bind to specific targets, potentially accelerating drug discovery compared to traditional methods. The partnership marks Generate’s largest deal since its $1.9 billion agreement with Amgen in 2022, which was recently expanded.

While the specifics of which disease areas this collaboration will target remain undisclosed, Generate’s internal pipeline includes 17 programmes in oncology, immunology, and infectious disease. The company expects to file applications for several clinical trials starting in 2024, with additional filings planned in subsequent years.³

Pfizer Inc

Pfizer’s experimental drug, ponsegromab, showed promising results in a midstage trial for treating cancer cachexia, a life-threatening condition causing appetite and weight loss in cancer patients. Patients taking the drug experienced increased body weight, muscle mass, and improved quality of life and physical function. Ponsegromab, a monoclonal antibody, could become the first U.S.-approved treatment for cancer cachexia, which affects around 9 million people globally.

In the phase two trial involving 187 patients with non-small cell lung, pancreatic, or colorectal cancer, those who took the highest dose of ponsegromab gained 5.6% more weight than the placebo group. Pfizer reported minimal side effects, with treatment-related issues in just 7.7% of participants, lower than in the placebo group.

Pfizer plans to initiate late-stage trials in 2025. This breakthrough could significantly improve the prognosis for cancer patients suffering from cachexia, as well as open doors for future applications, including treatment for heart failure patients. Pfizer presented the findings at the European Society for Medical Oncology Congress in Barcelona.⁴

Sanofi S.A.

Sanofi and Regeneron (both held by the Fund) received U.S. Food and Drug Administration approval for their blockbuster drug Dupixent as a treatment for adults with chronic obstructive

pulmonary disease (COPD), often referred to as “smoker’s lung.” This marks a significant expansion of Dupixent’s use, with the drug already prescribed for asthma and eczema. The FDA’s decision targets patients with inadequately controlled COPD, a progressive disease that restricts airflow and is a leading global cause of death.

Sanofi, which reported $11.94 billion in Dupixent sales last year, expects the drug’s COPD approval to impact about 300,000 U.S. patients. Analysts project the drug’s revenue to exceed €21 billion by 2030, with BMO Capital Markets estimating peak sales of $2.9 billion for COPD treatment alone.

Dupixent’s approval follows strong late-stage trial results, showing a significant reduction in moderate or severe exacerbations and improved lung function compared to a placebo. The European Union approved Dupixent for COPD patients earlier this year. Sanofi anticipates a significant sales boost from the drug’s COPD launch in 2025.5

LIFE ETF: An Easy Way to Invest in Global Healthcare

Investing in ETFs can be one way to add cutting-edge healthcare to your portfolio.

Evolve Global Healthcare Enhanced Yield Fund (LIFE ETF) provides investors with exposure to twenty global blue-chip companies in the healthcare industry, with a covered call strategy that is actively managed to provide increased yield potential while helping mitigate risk. For more information about the Evolve Global Healthcare Enhanced Yield Fund or any of Evolve ETF’s lineup of exchange-traded funds, please visit our website or contact us.

Portfolio Strategy and Activity

For the month, Danaher Corporation made the largest contribution to the Fund, followed by Sanofi S.A. and Boston Scientific Corporation. The largest detractors to performance for the month were Novo Nordisk A/S, followed by AstraZeneca Plc and Regeneron Pharmaceuticals, Inc.

Sources

  1. “Can AI offer disruptive opportunities for pharma?,” Atradius, September 5, 2023; https://atradius.ca/reports/industry-trends-ai-injects-a-growth-opportunity-for-pharma-industry.html
  2. “AI injects a growth opportunity for pharmaceuticals industry,” Atradius, September 5, 2023; https://atradius.ca/documents/ai+injects+growth+opportunities+for+pharma+industry+2023.pdf
  3. Taylor, P., “AI firm Generate signs $1bn discovery deal with Novartis,” pharmaphorum, September 25, 2024; https://pharmaphorum.com/news/ai-firm-generate-signs-1bn-discovery-deal-novartis
  4. Constantino, A.K., “Pfizer says its experimental drug for deadly condition that causes appetite and weight loss in cancer patients shows positive trial results,” CNBC, September 16, 2024; https://www.cnbc.com/2024/09/14/pfizers-cancer-cachexia-drug-shows-positive-midstage-trial-results.html
  5. Roy, S., “Sanofi-Regeneron’s Dupixent wins FDA’s nod for ‘smoker’s lung,’” Reuters, September 27, 2024; https://www.reuters.com/business/healthcare-pharmaceuticals/us-fda-approves-sanofi-regenerons-dupixent-smokers-lung-2024-09-27/

Source: Getty Images Credit: demaerre

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