Over 6,000 diseases are caused by abnormal genes, and innovation such as gene sequencing has unleashed a torrent of research into gene therapies designed to fix these abnormalities. The potential to provide functional cures to disease with one-and-done gene therapies is immense, so investors ought to be paying close attention to the companies that could benefit. Read on to find out if gene therapy company Regenxbio (NASDAQ:RGNX) is a good fit for your portfolio.
What it's doing
It's one thing to determine which gene to fix and how to fix it; it's another thing altogether to figure out how to safely deliver the genetic fix where it's needed in a way that provides long-lasting results.
To transport gene therapies to their destination, companies use inactivated viral vectors; however, not all viral vectors are equal. They can be tough to manufacture, and because many patients have antibodies to them already, they may not achieve durable responses.
Regenxbio's patents give it ownership of over 100 vectors from the adeno-associated virus (AAV) it believes work better than other, competing AAV viral vectors.
Although AAV isn't associated with illnesses, it's estimated up to 60% of adults have antibodies to it, and as a result, viral vectors that aren't engineered to minimize immune system responses might not work as well as Regenxbio's.
The company is using its viral vectors to develop its own pipeline, and it's also licensing rights to its vectors to other drugmakers.
The most advanced gene therapies in its internal pipeline target wet age-related macular degeneration (wet AMD), a common cause of vision loss in the elderly, and homozygous familial hypercholesterolemia (HoFH), a genetic disorder associated with cardiovascular disease.
The opportunity in wet AMD is particularly intriguing for investors. About 600,000 Americans and roughly 2 million people worldwide have wet AMD, and that number is expected to increase as aging baby boomers live longer. Today, wet-AMD treatment usually involves the use of Novartis' (NYSE:NVS) or Regeneron Pharmaceuticals' (NASDAQ:REGN) anti-vascular endothelial growth factor (VEGF) therapies -- Lucentis and Eylea, respectively.
The VEGF protein helps form new blood vessels. However, in wet-AMD patients, abnormal blood vessels form in the eye, which can cause a buildup of fluid and scarring, resulting in vision loss. Therefore, Lucentis and Eylea's ability to crimp VEGF activity can significantly improve vision.
Although both of these drugs are effective, patients have to receive between four and 12 eye injections per year -- that's a burdensome dosing schedule.
Regenxbio's RGX-314 hopes to tackle wet AMD in a one-and-done injection. Using the company's AAV8 vector, it encodes a gene that expresses a protein that inhibits VEGF activity. The company has enrolled 18 patients in a phase 1 study to prove out the approach, and results from that trial are expected later this year. If the data's good, RGX-314 could present a significant commercial opportunity, because Lucentis and Eylea are multibillion-dollar-per-year medications.
The company's second internal gene therapy, RGX-501, is under development for homozygous familial hypercholesterolemia, a disease that's characterized by an abnormality in the LDL-receptor gene that prevents the body from breaking down bad cholesterol in the liver.
Absent these receptors, HoFH patients are at greater risk of cardiovascular disease caused by the buildup of cholesterol in their arteries, leading to premature death. There's no cure for HoFH, and even with the use of cholesterol-lowering medications, including statins, a patient's average life expectancy is in the early 30s.
RGX-501 uses Regenxbio's AAV8 vector to deliver a functioning LDL-receptor gene into a patients' liver cells, restoring their ability to break down LDL and thus reducing the risk of plaque buildup. The company has enrolled a handful of patients in a phase 1 study, and results from that study are also expected in 2018.
In terms of outside licensing deals, the most advanced gene therapy using Regenxbio's vectors is Novartis' AVXS-101, a treatment for spinal muscular atrophy (SMA), a genetic disease diagnosed in infancy.
In SMA, the body can't effectively produce SMN, a protein vital to the survival of motor neurons. Over time, the inability to create SMN results in the loss of motor neurons, immobility, and an inability to breathe without a ventilator. Roughly 9 in 10 infants type 1 SMA die or require permanent ventilator support by the time they're 2 years old.
To improve outcomes for these patients, AVXS-101 is using Regenxbio's AAV9 vector to deliver a functioning copy of the missing or mutated SMN gene. So far, this approach appears to work. In trials, 100% of the 15 patients dosed with AVXS-101 were alive and ventilator-independent at the two-year mark.
Phase 3 trials of AVXS-101 are underway, and given that Novartis swooped in and acquired AVXS-101's creator, AveXis, for $8.7 billion earlier this year, it expects it to be a top seller. Novartis hopes to submit the drug for approval by the end of this year; if AVXS-101 gets an OK by the Food and Drug Administration, Regenxbio could benefit handsomely.
The acquisition of AveXis resulted in an $80 million milestone payment to Regenxbio in Q1 and an additional $100 million payment in June. If AVXS-101 wins an OK, Regenxbio will receive sales royalties in the mid single to low double digits, which could add up to hundreds of millions of dollars annually. For perspective, Biogen's (NASDAQ:BIIB) Spinraza became the only FDA-approved treatment for SMA in late 2016, and its sales are already tracking at an annualized pace of over $1.2 billion, even though only 40% of patients see an improvement on it.
Is Regenxbio stock a buy?
Historically, less than 10% of drugs that enter clinical trials ever make it through the FDA's gauntlet to approval, so the odds are stacked against Regenxbio's success.
Nevertheless, the potential opportunity in wet AMD and HoFH is big, and if Novartis gets a green light for AVXS-101, Regenxbio could begin collecting royalties as soon as next year.
The company's balance sheet isn't very concerning, either. It finished the first quarter with $236 million in cash and no debt, and that doesn't include the $100 million payment it received on June 11 from Novartis.
The wet-AMD and HoFH data releases later this year could cause shares to pop or drop, and similarly, shares could move significantly, depending on AVXS-101 progress. There's stiff odds working against Regenxbio, but I think that adding some shares to risk-tolerant portfolios could make sense.