BIOTECH · @_B_I_O_T_E_C_H_
3rd Aug 2016 from TwitLonger
$ONCE - LR $QURE Discontinuation of $SHPG's BAX 335 Program Positive for QURE
• Bottom Line: SHPG (OP) announced on their 2Q16 earnings call
today that they are discontinuing dev't of clinical stage hemophilia B gene
therapy program BAX-335 and are focusing on advancing a different
preclinical program instead given the inconsistent results seen to date.
This is incrementally positive for QURE, since competition in hemophilia
B has formed a major overhang on the stock. While several other gene
therapy programs are currently in clinical dev't (e.g. ONCE, DMTX,
SGMO), and ONCE's has generated highly impressive clinical data to
date we believe that it is unlikely that one single gene therapy product will
be used to treat all hemophilia B due to the product-specific limitations
(e.g. neutralizing antibodies). We remain positively biased on QURE's
stock given that it is trading below cash and QURE's current market cap
reflects little to no value for AMT-060 or its gene therapy platform. In
addition, QURE's GMP-grade commercial scale manufacturing capability
represents in our view a strategic asset that could be attractive to
competitors. Next updates from QURE's high dose cohort of the AMT-060
trial are expected by YE16. Maintaining OP rating.
• SHPG shifts focus of hemophilia B gene therapy program back
to preclinical development. SHPG mgmt. noted on the 2Q16 earnings
call this morning that following a review of BXLT heritage programs
they decided to terminate their hemophilia B Phase I/II gene therapy
program BAX 335. Recall, BAX 335 is an AAV8-based product using
the hyperactive FIX-Padua variant (similar to ONCE). Clinical data
has been presented previously, but we noted concern regarding the
inconsistent FIX activity levels and duration (see our deep dive HERE:)
which has now been highlighted by SHPG mgmt. BXLT previously noted
potential initiation of Phase III trials with BAX 335 near-term. SHPG
mgmt. stressed that they remain focused on gene therapy for hemophilia
(and other indications) and will focus their efforts on a next generation
preclinical program.
• SHPG BAX 335 discontinuation removes near-term competitor
for QURE's hemophilia B gene therapy program, AMT-060. The
hemophilia B gene therapy landscape is perceived as "crowded" by
investors with multiple players comporting in the space, some (e.g.
ONCE) with highly impressive data, which has created a major overhang
on QURE. However, in our view it's unlikely that one single gene therapy
product will be used to treat all hemophilia B patients. This is due to
the fact that high levels of pre-existing neutralizing antibodies exist in
the population directed against specific AAV capsids that render these
ineffective. For example 40% of HB patients have neutralizing antibodies
directed against AAV8 or AAV8-derived capsids such as being developed
by SHPG/BXLT and ONCE respectively, which would need an alternative
gene therapy product. In contrast, neutralizing antibodies against AAV5
capsid (e.g. QURE, BMRN) has only been seen in 5% of hemophilia
patients and QURE had zero screening failures in any trial to date.
• We remain positively biased on QURE. While results generated by
competitor ONCE in hemophilia B are very impressive, we think it seems
premature to write off QURE completely as the stock seems to indicate,
now trading with a market cap of $183M, below its cash balance of ~
$207M. QURE has generated positive proof-of-concept clinical data with
AAV5 in hemophilia B (last updated at World Federation of Hemophilia
(WFH) World Congress, LINK) showing sustained FIX expression.
Results from a higher dose-cohort by YE16 could provide addl. validation
for QURE in hemophilia, while other clinical and preclinical programs
focused on CNS and CV disease (partnered with BMY ) ongoing. BMY
currently who owns 10% of QURE's shares and has the option to buy
10% more. In addition, QURE currently owns the largest gene therapydedicated
GMP-grade manufacturing facility in the world, which should
represent a strategic asset for potential future partners or acquirers