Gene therapy’s 2017 scorecard – No alarms and no surprises (please)

Readers of this blog know I have high hopes for gene therapy, a field with a checkered history but disruptive potential that may finally be ready for primetime. After two years of dramatic progress 2017 is shaping up to be a year of incremental progress, focusing more on establishing and validating results seen to date.

Progress to date

To date, exciting data emerged from several gene therapy programs. These can be divided into four therapeutic areas: Liver (hemophilia), ophthalmology (RPE65- related retinal diseases), neurology (SMA, Sanfilippo A) and hematology (Beta thalassemia, ADA-SCID).

1) Liver Biomarin (BMRN) and Spark (ONCE) generated impressive proof of concept in Hemophilia A and B, respectively. Neither data set was flawless (immune reaction, excessive experssion of therapeutic protein etc.) but the two studies clearly demonstrate durable expression of a therapeutic protein in the liver, a dramatic clinical benefit (bleeding reduction) and no alarming safety issues.

2) Ophthalmology Spark is leading the way with what could become the first ever FDA-approved gene therapy. P3 data for Spark’s RPE65 program (Luxturna or voretigene neparvovec) were reported in 2015 and recently got published. They demonstrated a clear and dramatic improvement in night blindness and visual field. The company filed for approval in May and a decision is expected by January 2018. Beyond the therapeutic impact on patients, this trial proves that with local (subretinal) administration in the eye, gene therapy can deliver a meaningful and durable effect.

3) Neurology – Clinical validation is not as strong as in liver and ophthalmology but preliminary signs with programs from Avexis (AVXS) and Abeona (ABEO) are simply too good to dismiss. Avexis is developing AVXS-101 for SMA1 and Abeona is developing ABO-102 for Sanfilippo A, two genetic devastating disorders. Both companies give their respective AAV9-based products by intravenous injection based on the hope that AAV9’s can cross the blood-brain barrier and reach the CNS.

AVXS-101’s data (which I wrote about last year) are limited but very impressive from a clinical standpoint with an apparent dramatic effect on mortality and disability compared to historic controls. The primary weakness in Avexis’s data is the lack of a biomarker to prove the therapeutic protein is expressed in the target tissue. Abeona’s data (which I discussed here) is more preliminary but it demonstrated a clear reduction in disease biomarkers (Heparan sulfate, HS) in the CSF, which reflects exposure in the brain. Follow up is too limited to draw any conclusions about clinical benefit but there were some encouraging hints of efficacy in terms of cognition and behavior.

To me, the two data sets complement each other, suggesting that AAV9 can get into the brain and express meaningful amounts of therapeutic proteins.

4) Hematology – Bluebird Bio (BLUE) is a bit of an outsider because its technology involves a process more similar to stem-cell transplant (reprogramming cells ex vivo) using an integrating virus (lentivirus) whereas most other gene therapies are based on administering AAVs (adeno-associated viruses) locally or systemically. In that sense, CAR-T and TCRs can also be regarded as gene therapy products.

Bluebird’s platform proved very effective in beta thalassemia where its lead program, Lentiglobin, was able to generate significant levels of hemoglobin and decrease dependence on blood transfusions. Unfortunately, the company could not replicate these data in sickle-cell disease (SCD), a related blood disorder.

An investor perspective

Despite the tremendous progress the industry has made with gene therapy, it should still be regarded as a high risk field given its infancy. It is important to note that all these positive data sets include a small number of patients (tens at best) and limited follow up (in some cases less than a year) so a lot of things can still go wrong.

The primary challenges (and risks) are:

  • Demonstrating a favorable long term safety profile
  • Demonstrating the effect is long-lasting (at least several years)
  • Expanding to additional indications in the four tissue types (liver, eye, CNS, blood)
  • Expanding to new therapeutic areas (muscle, lungs, heart etc.)

This is why I prefer the “basket” approach of having a diversified portfolio of as many gene therapy stocks as possible. There are simply too many unknowns and too much complexity around key factors such as viral vectors, transgene design, indication and route of administration that make it very hard to identify the winners.

2H/2017 catalysts

For the remainder of 2017, investors shouldn’t expect major breakthroughs but hopefully gradual progress, one patient at a time, one month at a time.

Below is a partial list of catalysts for 2H/2017:

Spark Therapeutics is expected to present initial results for its hemophilia A program (wholly owned). Data will surely be compared with BMN-270’s data, especially FVIII expression and immune response. An update for the hemophilia B program will focus on durability and Pfizer’s registration plans. Toward the end of the year, the FDA may convene an advisory committee on Luxturna for RPE65-related retinal diseases. Approval is expected shortly after.

Biomarin is expected to present an update from BMN-270’s hemophilia A study. Investors will focus on durability but also on safety profile in patients who achieved higher than normal FVIII levels. The company expects to launch a multi-site P3 (current data are from a single site in the UK) that will enroll ~100 patients. Primary endpoint has not been disclosed but will probably include bleeding rates and safety measures.

Bluebird is expected to present initial data with an optimized protocol (“process 2”)  of Lentiglobin in SCD patients at ASH (December 2017).  Although investor attention shifted to the company’s multiple myeloma CAR program, there is still a lot of focus on the SCD study given the significant commercial opportunity.

Avexis is expected to provide an update from its P1, potentially on its next quarterly call this month. Focus will obviously be on durability of the clinical effect (motor and other developmental endpoints such a weight and feeding parameters). Later in the year, the company expects to get regulatory clarity from the FDA, which may allow filing based on P1 data.

The company also expects to enroll SMA2 patients (less severe form of the disease). Because SMA patients are older (most SMA1 patients die in infancy), AVXS-101 will be given intrathecally in this trial in order to minimize the required doses of drug. This illustrates the production challenges the industry is still facing.

Abeona will present updated results for ABO-102 in Sanfilippo A. Data are expected to include at least 6 patients (3 from the high and 3 from the low dose arms). It will be interesting to see the extent of HS reduction with the high dose at 6 months to understand whether the effect is real and whether there is a dose-dependent response. Cognitive and behavioral tests may also provide some efficacy signals. Importantly, the company is expanding the trial to an additional site which will make the P1 package more reliable (Avexis is getting a lot of criticism for having data from a single site).

If results with ABO-102 are compelling enough, Abeona should be in a position to start a pivotal trial in 2018. It also expects to put another gene therapy in the clinic, ABO-101, which targets Sanfilippo B.

REGENXBIO (RGNX) is expected to present preliminary data for its wet-AMD program, RGX-314 (AAV8), which started enrolling patients two months ago. By definition, the data set will be very preliminary and probably include a handful of patients with limited follow up. Avalanche, which merged with Adverum, tried a similar approach (subretinal injection, targeting VEGF) with a different vector (AAV2) but failed (despite some interesting signals in visual acuity and post-treatment Lucentis usage). Adverum is also developing a next-generation program that will be administered intra-vitreally, which is much simpler and less invasive than subretinal administration.

REGENXBIO is also expected to report initial results from its HoFH program, RGX-501 (AAV8). An efficacy signal in this indication should be apparent based on change in LDL-C levels.

Dimension Therapeutics (DMTX) – After axing its hemophilia B program, investors focus on the company’s OTC deficiency program. In contrast to the hemophilia B product that used AAVrh10, Dimension is using the more validated (for liver delivery) AAV8 capsid for the OTC program. The trial started in January 2017 so there should be enough follow up to see an efficacy signal. I like the program given the lack of competition and because it is targeting the liver. In addition, since the missing protein is an enzyme, even low quantities (AAV8 is considered less efficient than the new engineered vectors some are using) can have a meaningful clinical impact.

AGTC (AGTC) is expected to report clinical data for three ophthalmic programs for rare retinal diseases: XLRS (in collaboration with Biogen [BIIB]), CNGA3 achromatopsia and CNGB3 achromatopsia.

In the XLRS study, the drug is administered intravitreally   in contrast to other ophthalmic gene therapy programs where administration is subretinal. This adds another layer of risk although intravitreal administration is less invasive and safer. AGTC expects to present data for 12 patients. The achromatopsia programs are earlier in development and the company reported some issues with one of the trials following inter-patient variability which the company blames on differences in surgical techniques.

Adverum (ADVM) expects to start P1 for its A1AT program (ADVM-043) in Q4 2017. ADVM-043 is also based on the AAVrh10 but Adverum plans to inject it directly to the lungs. The company also has a preclinical program (ADVM-053) for the lucrative HAE market (Shire’s Cinryze, Firazyr, Kalbitor are expected to generate >$1.5B in 2017). ADVM-053 is expected to enter the clinic towards the end of 2018. Despite its immature pipeline, I plan to hold Adverum into 2018 given its differentiated pipeline, its solid cash position and negative enterprise value (expected to end 2017 with $165M, higher than current market cap of $110M). On the manufacturing front, Adverum has internal production capabilities using an insect based system (baculovirus/Sf9) which has the potential to generate large quantities of vectors compared to standard production systems (HEK293, adherent or in suspension).

Audentes (BOLD) has two programs that are expected to enter P1 this year: AT132 (AAV8) for XLMTM (a rare muscle disease) and AT342 (AAV8) for Crigler-Najjar Syndrome (a rare metabolic disease). Among the muscle wasting diseases XLMTM represents a smaller opportunity compared to DMD, but one potential advantage XLMTM has is the fact that the missing gene is an enzyme, so even marginal expression levels may be translated to a clinical benefit. Given its early stage, company’s valuation ($570M) is relatively high.

Voyager (VYGR) is expected to report data for its Parkinson’s Disease program, VY-AADC01. VY-AADC01 is injected directly to the brain, making administration more complicated. Voyager recently started P1 evaluating an optimized administration method to allow better exposure in the brain.

Portfolio updates

I am initiating a position in Sunesis (SNSS), which recently started a P1b for its next-generation Btk inhibitor (SNS-062). I wasn’t aware of the program and just recently learned about it from a colleague (thank you, M.). SNS-062 will have to compete with Imbruvica (a $4B+ franchise) and other late-stage Btk inhibitors from AstraZeneca (AZN), Gilead (GILD) and Beigene (BGNE), which are all covalent irreversible Btk inhibitors. SNS-062 has a different mode of inhibition that may render it more active against the C481S mutation, which is less sensitive to covalent Btk inhibitors. ArQule (ARQL) and Redx Pharma are two other small biotechs with reversible Btk inhibitors. SNS-062 is slightly more de-risked because it was already evaluated in healthy volunteers with favorable safety and exposure data.

Biotech portfolio – July 30th, 2017

biotech portfolio - July 30, 2017

biotech etfs - 30-7-2017

109 thoughts on “Gene therapy’s 2017 scorecard – No alarms and no surprises (please)

  1. Ohad
    DMTX will receive 0.1573 shares of RGNX to yield. So your position will increase from 800 RGNX shares to 1432′
    What is the best strategy in such cases if you own both companies
    – do nothing and increase your RGNX holdings
    – sell DMXT and buy later RGNX, if the price drops
    – sell part of DMXT to reduce the overall exposure to a single company

    The focus of the acquisition is OTC and GSD – two rare disease, both based on RGNX AV8 vector. They will complement the RGNX programs in MPS I and II.
    I guess RGNX may drop hemophilia A program, since it’s a different vector.

    So how are you going to handle these acquisition.


  2. boooooom $DMTX
    thanx again….its Hammer Time
    Dinner on me when u get to Orlando Fl.!!
    I sold half…. not sure what to do with the rest?
    Keep…does it convert to buyout price?

    help!! lol



  3. Two catalyst to look for in RGNX at years end Wet AMD and OTCD. If + signal on both and no safety issues this is a 50 dolllar stock.


  4. Ohad
    are you familiar and do you have an opinion on ARWR (Arrowhead)
    Their Motto is : Target the gene – silence the disaese (RNAi)


  5. Regenxbio

    With the acquisiton of DMTX it seems they want to create a big platform.

    Compared to ONCE, AVXS the valuation of Regenxbio is still low considered the enterprise value .The current valuation could be still a nice entry point with many catalysts end 2017 / 2018.

    Regarding the license agreements with BOLD, AVXS, VYGR etc. i still have a problem at assessing their value. RGNX did not disclose the royalties and fees, did they?. So how can i invest if i dont know those terms?

    Whats actually your favourite stock due to valutation of the big gene therapy players?

    Thanks for answering


  6. Alex (EXEL) – Yep.

    Luigi (AGTC) – Yes I am concerned about intravitreal administration because I am not aware of any strong clinical validation there (previous attempts have been unsuccessful so far). AGTC are using a novel AAV2 capsid in which three tyrosine residues were replaced so hopefully they’ll get better transduction. To me, one reason to hold AGTC is their broad pipeline and deep manufacturing/technology knowhow.

    Alex (EXEL) – Yes events are deaths (1ry endpoint is overall survival). HR of 0.76 represents a 24% increase in risk of death, probably a ~2.5 month difference at the medians. If the trial is stopped for efficacy they will probably announce topline numbers, if the trial proceeds as planned the company remains blinded to the data.

    andre (RGNX/DMTX) – I plan on selling my DMTX position before the deal is finalized, my RGNX position is already quite significant. Not sure what they are going to do with the DMTX HemA program, it’s licensed to Bayer so it cannot simply scrap it.

    Joe – Thanks!

    Robert goulet (DMTX) – Nice to see that your aggressive accumulation paid off (I still think it’s better to limit exposure for a given stock). I plan to sell and allocate $ to other Gtx stocks, perhaps some of the smaller ones (AGTC,ADVM etc.)

    Garry Xo (DMTX) – Thanks.

    Jaime Allen (RGNX) – There is also the HoFH study that should havea straighforward readout. Not sure about what data we’ll see from the AMD study, trickier to demonstrate poc there without a large data set and long follow up.

    rodolfo (ARWR) – Yes I am following them, don’t have a strong opinion there, very cheap but investors are still traumatized by the HepB story.

    Karlos (RGNX) – Agree, and the acquisition is a smart move in that direction, 1 cliinical program and two advanced preclinical programs at a very attractive price. The main difference between RGNX and ONCE/AVXS is the lack of a clear wholly-owned value driver. If this changes I agree upside is very big but burden of proof is on them. I agree regarding valuing their partnered pipeline, royalty are typically mid to high single digits so they may become significant but it is not clear to me after some of the key patents expire (especially the AAV8 and AAV9 initial patents).

    I don’t havea favorite GT stock, prefer the basket approach.



  7. Hey Ohad

    Was able to add to my DMTX position at around $1.30, and come out of this with a 45% gain. Thanks!

    Any other GT cos you are keeping an eye on? I am invested in all of your picks except AVXS. I am also looking at SELB. Are you planning on increasing your ONCE position (it has;t appreciated as much as the other GT cos)?

    You have not mentioned NASH in awhile, and wonder if you think this is an area where there might be opportunities? How much overlap is there between what Cos like ESPR are doing and pure NASH plays, given the importance of decreasing inflammation to reduce cardiovascular risk (new research out today in New England Journal of Medicine – and The Guardian Article “Anti-inflammatory drugs may lower heart attack risk, study finds” – points to that). I am invested in three NASH cos: VKTX, GLMD (Which just added an ex-Tobira board member), and GEMP.
    And what about diabetes? any companies in that space worth monitoring?

    Thanks for sharing your thoughts



  8. That was my plan….funds are now going into an ADVM starter…also adding Fate starter, AGLE starter, more LPTX more BLCM

    I have too much $agtc


  9. Dan – Basically I am trying to track all publicly traded GT companies. There is a lot of very cool stuff happening with new technologies but unfortunately it’s mostly private companies.
    ONCE – that’s an interesting question, they haven’t gone up much despite the de-risking events in RPE65 /HemA and good execution. IMO they need another program investors can ascribe value to but the choroideremia program doesn’t look good and their the rest of their pipeline is too early.

    Regarding metabolism programs, I am not following the field closely so don’t have a strong opinion there. Don’t think LDL-C lowering agents like bempedoic acid and NASH agents are direct competitors.

    Robert Goulet (DMTX) – It’s an all-stock transaction so actual price may be affected by RGNX’s share price.

    Dan – Actually it’s been a while… why?



  10. Ohad
    congratulation for KITE. You must be quite happy in Pontifax today.
    KITE is one of the most successful story I can recall.

    Now I hope you can start discussing CAR-T, right?
    Let start with a simple question – is CAT-T in essence a gene therapy?


  11. andre (KITE) – Yep, a pretty happy day. For a VC, it’s that one day in the year where there are more good news than bad news….
    Good point about discussing publicly traded CAR companies, let’s see…
    Technically CAR-T is a gene therapy because you use a viral vector to transduce human cells and make them express a transgenic protein. Personally I don’t view CAR-T as a classic gene therapy but that’s a matter of definitions I guess.



  12. Ohad
    what makes Pontifax investment in KITE remarkable is that there is no other biotech dedicated fund invested in KITE (except BB Biotech at about 1% level and they sold some shares last Q). Baker Bros, Perceptive, RA Cap, ECOR1, PaloAlto, Deerfield, Orbimed, Casdin, Great Point, BVF … all they missed one of the most exciting story in biotech!

    Following your approach in gene therapy, I had a small basket of CAR-T companies – BLCM, CLLS, JUNO, KITE, BLUE. Big day for all of them today. BLCM and JUNO were my biggest losers but KITE and BLUE made up for the losses. So it confirms that the basket approach works well.


  13. Hi Ohad
    TIVO was Approved in the European Union , doesn’t it put pressure on EXEL?
    if the hcc trail will fail, would u get into EXEL again?



  14. andre – Thanks. It’s important to note that Pontifax was one of the founders of Kite which was a private company at the time. VCs like Pontifax often do a lot of company creation, while many of the funds you mention simply don’t invest in early stage private companies, let alone establish companies from scratch.

    Agree that a basket approach make sense also for CAR-T stocks.

    ruhu (KURA) – Thanks. I plan on holding my position there, so far the preliminary data in HRAS+ SCCHN seems to hold up.

    Alex (AVEO/EXEL) – Tivo is not competing directly with cabo because they latter is pursued as 1st line treatment. In order to become a meaningful competitor, AVEO needs to show its drug beats Sutent. Hard to speculate about EXEL’s price reaction following HCC data.

    SNSS – Probably but that’s already baked in IMO.

    Shark (IMGN/JAZZ) – Fantastic deal for IMGN, cash rich and it is retaining some co-promotion rights.Well done!

    Kirak – Not aware of a gene therapy ETF, would be happy to invest in one…



  15. andre – Yes I am following them but no idea regarding their plans. They have an interesting pipeline, I like the xerostomia program very much and in ophthalmology they claim to have a superior product than ONCE’s RPE65. Smart people.



  16. RNAi did pop up recently with various companies (e.g. AMGN !)
    What’s your general take about the prospects of this rechnology ?



  17. rodolfo (RNAi) – I am cautiously optimistic although RNAi’s commercial success has been “around the corner” for the last decade or so. A lot depends on ALNY’s patisiran data next month.Could be a big winner for them. MDCO’s PCSK9 data still look good, not sure about marketing propspects but niceto see the effect after a 1year of follow up. I also like ALNY’s hemophilia program , totally not dependent on FVIII/IX so could be relevant for patients with inhibitors and compete with Roche’s emicizumab.

    Alex (CLLS) – Sorry, but still prefer not to comment.



  18. Hello Ohad !!! Kudos to you on your recent stock picking …..very nicely done ! Do you have an opinion on Zymeworks ? ZYME THANKS in Advance !


  19. hi Ohad

    good to see you can write more again 🙂

    Ohad, regarding FMI, what do you think is there potential from here?

    What is your current opinion on ARRY?



  20. Hi Ohad

    I would be also very interested to discuss CAR-T companies. You mentioned a basked approach would make sense here as well. What are your top 5 picks in the area and what do you think about the Loncar Cancer Immunotherapy ETF (CNCR).

    Thanks, Marc


  21. Chris (BIS) – Yes I plan to keep my position as a hedge as I think the industry , especially large cap biotechs are going to face a lot of pressure from biosimilars and payors and their pipelines are not robust enough to sustain growth in the coming years. For me it’s long smid caps short large caps.

    Bouschka (ZYME) – Thanks. Cool platform and a decent partners list but a little bit too early for me.

    Christian (FMI) – Hard to say… on the one hand there are more targeted therapies reaching the market with a companion Dx (TRk, RET, IDH2, FGFR) but this is not the flood I had hoped for. I plan to keep my position.

    ARRY – Still on the sidelines as they still haven’t found a growth driver beyond enco+bini in BRAF melanoma.

    Marc Willems (CNCR) – I prefer to wait several months before publicly commenting on CART stocks. I really the CNCR approach. I think Brad should start a new ETF for gene therapies, which makes even more sense because most players are small public companies focused exclusively on GT.



  22. Any thoughts on NEOS? Market cap looks affordable and huge opportunity – unsure of their tech….

    “Neos Therapeutics Inc is a pharmaceutical company, engaged in the development, manufacture, and commercialization of products for the treatment of attention deficit hyperactivity disorder using its drug delivery technologies.”


  23. Hello Again Ohad ! Thank you for your quick response on ZYME. Do you have an opinion on Nightstar Therpeutics ? They have just filed for a 86M IPO.


  24. zmye too early Ohad?….what’s earlier than $advm? lol

    Hey sir, will u ever be able to comment on $lptx?? I pontifax considered a founder? or just investor? Thanks


  25. Tim (CEMP) – Haven’t been following them lately. In general I am very interested in antibiotics but couldn’t find really innovative stuff from public companies. A lot of innovation taking place in private co’s, fortunately for all of us.

    Paul (NEOS) – Sorry don’t know them well.

    Richard Baker (MGNX) – Hard to be optimistic about bispecific T cell engagers these days…

    Bouschka (NITE) – Will be happy to add them to my portfolio. Intriguing data in choroideremia and a growing pipeline in ophthalmology.

    Alex (CLDX) – No plans to add them for now.

    robert goulet (ADVM) – Agree but they have a negative EV , a differentiated pipeline and a strong baculovirus production system.

    Still can’t comment on LPTX.

    Robert Goulet (ATRA) – Haven’t looked at them in a while, will check.



  26. Hi,

    Have you looked at FCSC at all?
    Seems their drug FCX-007 fo RDEB very similar to ABEO’s EB-101.

    FCSC has data coming out this month and is 1/7th the mcap of abeo.


  27. Hi,

    Have you looked at FCSC at all?
    Seems their drug FCX-007 for RDEB very similar to ABEO’s EB-101.

    FCSC has data coming out this month and is 1/7th the mcap of abeo.


  28. Thanks for the reply on CEMP! One more Q for you. I see MNKD has some potential label change coming up with FDA in September. Any thoughts on this and their recent movement in shareprice??
    Thank you!


  29. Re: MGNX

    Ohad, why the negative take on bi-specifics? MGNX ESMO abstract on flotetuzumab in AML/MDS targeting CD123 seemed quite encouraging with activity in 4/8 AML/MDS patients (including 2 CRi, 1 morphologic leukemia free state, and 1 patient with bone marrow blast reduction >50%).


  30. Ohad,

    In December of 2015, you wrote this about CTMX:

    “CytomX and Wave don’t even have a drug in clinical testing but the two companies have market caps of $690M and $288M, respectively. Both companies are almost a year from P1 (best case scenario assuming no toxicology issues emerge) which means they might have meaningful clinical data in patients only towards the end of 2017. With such valuations, two years may be a long time to wait.”

    What are your thoughts now on CTMX?


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