UPenn will spin out Jim Wilson’s gene therapy program and split it into two companies

The University of Pennsylvania board of trustees voted Wednesday to spin out its pioneering Gene Therapy Program led by prominent research scientist Jim Wilson into two new for-profit companies amid decreased investment in biotech.

Wilson will be CEO of GEMMA Biotherapeutics, a company focused on developing lower-cost gene therapy platforms for rare diseases. Wilson will be board chair at the second company, Franklin Biolabs, which will offer diagnostic testing and other services to gene therapy companies.

The transfer agreement, which is expected to take effect Oct. 1, requires both companies to keep their corporate headquarters in the Philadelphia region. Wilson will leave Penn, where he has worked for 33 years, when the transaction is completed. Penn did not disclose the value of the assets going into the new companies.

University of Pennsylvania executive Jonathan A. Epstein told board members during a brief Zoom meeting that the gene therapy program had made fundamental contributions to treatments for genetic diseases through the discovery and development of viruses used to deliver genetic fixes.

“This work has reached an inflection point where a transition into a new model within the biotech industry will provide much-needed capital and facilitate scaling of activities to advance the promise of gene therapy,” said Epstein, who is interim university executive vice president for the Penn health system and dean of the Perelman School of Medicine.

» READ MORE: How UPenn’s Jim Wilson became a big deal in gene therapy

Penn will sublease space to the new companies and license the gene therapy program’s intellectual property to them, Epstein said. Financial terms were not disclosed, and Penn declined to make anyone available to answer questions.

Investor appetite for cell and gene therapies, the cornerstones of the Philadelphia region’s biotech industry, has been lackluster recently. Penn’s Gene Therapy Program, which at its peak employed 407 people, laid off about a quarter of its workforce last year, blaming a reduction in research funding from the industry. Wilson’s lab had a particularly heavy reliance on industry support for research.

Penn said 225 gene therapy program employees in University City and at the Center for Breakthrough Medicines near King of Prussia received offers to work in similar roles for the new companies. About 25 people will lose their jobs in the transition, Penn said.

Before the recent downturn in funding, revenue for the gene therapy program was about $100 million a year, Wilson said.

For Wilson, 69, who has been involved in genetic research for 40 years, the formation of the two companies is another bid to approach his project of making life-changing genetic medicines available to the world.

“I have to finish it,” he said.

Wilson said he realized in recent years that the pharmaceutical industry was not going make many genetic treatments available to patients because the returns for treating rare diseases are too slim for institutional investors.

“I’ve concluded that we have to do it without pharma,” Wilson said.

In an earlier bid to solve that problem, he cofounded the nonprofit Institute for Life-Changing Medicines in 2021 to bring treatments for rare diseases to market, but soon realized it was not a sustainable model. It was too hard to raise money to treat diseases diagnosed in perhaps a few dozen newborns each year.

For the new effort, Wilson has lined up private investors for both companies. A single unidentified investor is backing Franklin with enough money that it will be profitable in its second year, Wilson said. A group of four investors is supporting GEMMA initially, but Wilson said he hopes to eventually secure capital from foundations and governments that will not dilute the ownership of initial investors.

He declined to say how much is being invested in the two companies.

The key to Wilson’s new effort is not focusing on individual diseases, but rather on platforms for treating multiple diseases.

“Gene therapy is a very modular approach to treating diseases,” he said. Say there’s a group of five or six diseases that are very similar, but are caused by a different gene. “If we can develop an approach for the first disease, how can we leverage that for the next disease and the next disease?”

If the strategy works as Wilson thinks it will, “that will increase the probability of success and decrease the cost that it takes to manufacture and develop those products,” he said. The idea is that the aggregate sales from a string of treatments for rare diseases is worth pursuing, he said, even if investors wouldn’t be interested in financing the individual treatments.

The immediate plan is for GEMMA to license work of other companies that was stalled during the biotech downturn of recent years. Some license agreements have already been reached. GEMMA is starting with eight platforms: six are for brain diseases; two are for heart and muscle diseases, Wilson said.

Wilson said he’s confident the effort to get those treatments to patients will succeed.

“I don’t think there’s anyone but me to carry this forward,” he said.