U.S. Biotech/Pharma Sector Daily Observations Letter: Feb. 7, 2018

by: Bhavneesh Sharma

The broad market and biotech sector could retest this week's lows.

We discuss some ongoing developments in treatments for Sanfilippo's syndrome, an orphan disease (including gene therapy, ABEO, RGNX, SGMO).

We also discuss some ongoing developments in treatments for Pompe's disease in light of today's Amicus Therapeutics' data including gene therapies (BOLD).

More insights are provided.

Market and sector outlook:

The broad U.S. market (SPY) and the biotech sector (IBB) continued the rebound from yesterday but the downward reversal before today's close strengthens our view from yesterday that we may see another downward move to retest or even break recent lows. The 10-year yield climbed today, so the concern is not gone yet. VIX again spiked before close though was down more than 7 percent today (closed within daily Bollinger bands).

SPX RSI= 37.48 (lower today) | IBB RSI= 43.62 (almost the same as yesterday)

Up on >5x volume (excluding penny stocks):

Theravance Biopharma (TBPH): 14.6% (signed agreement with J&J for its pan-JAK inhibitor for inflammatory bowel disease)

Albireo Pharma (ALBO): 3.7% (no clear news)

Upward reversal alert: Vistagen (VTGN), Azurx Biopharma (AZRX)

Downward reversal alert: N/A

Day's events' outlook:

Noted Biomarin's (BMRN) early phase I/II clinical data for enzyme replacement therapy, ERT (NAGLU enzyme) in the treatment of mucopolysaccharidosis IIIB (IIIA type is more common). All 3 treated patients showed a reduction in the liver size and no deterioration in cognitive function. The therapy has Orphan drug designation and is targeting this ultra-orphan condition with only 1000-2000 known patients in the developed world. The therapy is given by interventricular route and the results are impressive considering that previous attempts at intrathecal administration of ERT for MPS IIIA have been unsuccessful (Europe based company SOBI is developing an ERT for MPS IIIA which is in late stage trials and has FDA Fast track designation). Biomarin already markets ERT for MPS types I, IVa and VI.

While we are discussing MPS (Sanfilippo syndrome), don't forget Abeona Therapeutics (ABEO) which dosed the first patient in a gene therapy trial for MPS IIIA recently and announced initial encouraging clinical data for its gene therapy in MPS IIIb today (the stock was up 14%). The phase I/II study showed a significant reduction in heparan sulfate activity in the CSF as well as normalization in NAGLU enzyme activity. RegenexBio (RGNX) is planning to target MPS I and II using its AAV gene therapy. Zinc finger gene editing therapy Sangamo Therapeutics (SGMO) plans to target MPS 1 and 2 (prevalence about 1000 and 500 patients respectively in the U.S.). Biomarin has some competition ahead for its ERT in MPS.

Amicus Therapeutics' (FOLD) additional phase I/II data in Pompe's disease (affects 1 in 40K births) is encouraging but time will tell if this ERT will stand the test of time for the not-so-far challenge from gene therapy. Audentes Therapeutics (BOLD) is developing a gene therapy in Pompe's disease. Yesterday, Audentes Therapeutics announced that it has selected AAV8 vector for its Pompe's gene therapy program and plans to start phase I/II clinical study in Q4, 2018. Animals studies from Duke University showed a significant benefit of gene therapy compared to ERT (like no glycogen deposition and higher function on some respiratory parameters). Privately owned AvrBio is also targeting Pompe's disease using its gene therapy (also targeting Fabry's disease, which is one of the key programs for Amicus).

Bitcoin (BTCUSD) continued the rebound today but the rebound looks corrective. $10K could offer resistance.

Is the plunge protection team for real?

Moon's bulge?

More tomorrow.

Disclaimer: This post is for educational purpose only and is not investment advice. I/we may have a position in the securities mentioned in this post.

Disclosure: I am/we are long SEE THE POST. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.