Seeking Alpha

Roche Could Leapfrog Biogen And Novartis In SMA Market

About: Roche Holding AG (RHHBY), Includes: BIIB, NVS
by: Christiana Friedman
Christiana Friedman
Long only, event-driven, biotech, healthcare

Roche is moving into spinal muscular atrophy SMA with risdiplam, which could gain FDA approval by May.

Risdiplam is a once daily oral medication that alters pre-mRNA-splicing, and since it’s taken orally, it is the only SMA drug that treats the whole body systemically.

There is evidence that SMA is actually a systemic disease that affects the heart as well as the central nervous system.

If so, risdiplam may have a significant advantage over the other two other than route of administration.

Price will also play a big factor.

A new entrant into the spinal muscular atrophy [SMA] space could alter the one-on-one battle between Biogen’s (BIIB) Spinraza and Novartis’s (NVS) Zolgensma. Roche (OTCQX:RHHBY) has come into the field armed with FDA priority review status for its drug risdiplam. Thanks to the FDA nod on that designation, the drug could be approved by May of next year, or even earlier.

Risdiplam is an entirely different class of medicine to treat the fgenetic condition with several key distinctions that set it apart from the other two. First, unlike Spinraza or Zolgensma which are administered itrathecally, meaning by spinal injection, risdiplam is taken orally once a day. Spinraza is a shot given once every 4 months following loading doses, and Zolgensma is a spinal shot given only once.

The other big difference is that risdiplam doesn’t act on genes directly. Spinraza, which as an antisense oligonucleotide [ASO], superimposes itself on top of genetic code directly to change how the code is spliced. Zolgensma replaces genetic code entirely, permanently, with a viral vector armed with replacement genes. Risdiplam is different because it does not interact with code directly, but rather changes the way it is spliced after it is already transcribed into pre-mRNA.

There are advantages to an oral medication other than not having to go through the hassle and danger of spinal injections. The fact that risdiplam can be taken orally means that it is also a systemic treatment, not localized to the spinal cord. This could end up being critical long term because there is evidence that SMA has systemic affects over time that go beyond motor neurons. According to this 2018 study published in the Journal of Medicinal Chemistry that helped lead to the discovery of risdiplam, data suggest that SMA affects other tissues and cell types. A key line in the study: “SMA is increasingly described as a disease affecting tissues and cell types beyond the motor neuron. This then strongly suggests that an effective treatment may require body-wide correction of SMN protein levels to achieve a complete reversal or amelioration of the disease state.”

Suspicion that SMA also affects the cardiovascular system has been around since 2009 when a study from Nationwide Children’s Hospital was published. The data are incomplete and only preclinical, but did show that SMA mice had deformed hearts that were corrected by restoring SMN protein levels. SMA patients can’t produce enough full length SMN protein.

Further, this 2016 SMA study from Cell and Molecular Life Sciences found that, “…other cell types…even outside the CNS, such as Schwann cells, muscle cells or heart, can be key components in the disease initiation and/or progression, as well as in the emergence of clinical symptoms.” If this is correct, then Spinraza and Zolgensma may be missing an important component of SMA treatment, especially in the most serious and fatal type I, which accounts for about 60% of all SMA cases.

This is conjecture, but I make it nonetheless because SMA type I patients had a life expectancy of less than 2 years until Spinraza became available. Meaning, we have little to no data on SMA type 1 affects on the body over a long period of time. If SMA does affect other cells outside the central nervous system, then those symptoms would probably be most acute in type I patients who can make the least amount of native SMN protein of all types. When and how could these other symptoms manifest? Possibly as heart problems later in life. Assuming Spinraza and/or Zolgensma help these children live into adulthood, we should eventually find out if this is the case. The question of why we don’t see these symptoms obviously in milder types of SMA with a longer life expectancy, the answer may be in the relatively higher SMN levels in these types that prevent other symptoms.

What about the actual data on risdiplam so far? It’s not exactly apples to apples comparing Phase III data with a smaller Phase II trial of a different drug, but for what it’s worth, the data for risdiplam so far seem more impressive than Spinraza. FDA approval for Spinraza was based on data from a 121-patient trial in type I that showed a 40% response rate in terms of motor milestones. This compared to a 0% rate in untreated infants. Still, by this metric 60% of patients achieved no motor milestones. This compares to Part I of Roche’s FIREFISH trial on 21 infants that showed 82% of high-dose patients achieving a CHOP-INTEND score of 40 or higher. CHOP-INTEND tests 16 different motor functions from head to toe. According to the European Medicines Agency (slide 7), the baseline score for SMA type 1 is 20 out of 64.

What looks particularly important for risdiplam is Roche’s Jewelfish Phase 2 study on 180 patients previously treated with Spinraza or Zolgensma. If this study can show that risdiplam provides clinical benefit to those who don’t respond to Spinraza or Zolgensma, and risiplam ends up cheaper than Zolgensma, then risdiplam could become the market leader both for price and efficacy.

Spinraza and Zolgensma are both extremely expensive, by some measure the most expensive in the world. Zolgensma’s price is $2.1M for one treatment, and Spinraza is higher than this after 5 years of treatment. Risdiplam as a daily therapy will almost certainly be cheaper initially. The question is, will risdiplam be cheaper than $2.1 million over the course of a lifetime? If so, it would be the cheapest of the three medications for SMA over the long term, with potentially the greatest efficacy, if pivotal trials can replicate the success of earlier trials. This is always the ultimate question for new drugs, but so far it looks promising.

ChartData by YCharts

The peak sales number circulating for risdiplam is $2.5 to $3B, which would put it into Roche’s top 5 best sellers. An approval in May by the FDA may be just what Roche needs to break out of its 5-year trading range, which is on the verge of being broken to the upside now. Roche’s previous sideways churn lasted from 2006 to 2012, so by the stock’s history we are in the general timeframe for another uptrending move. Fundamentals need to back up such a move of course, and risdiplam could be that catalyst.

Disclosure: I am/we are long RHHBY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.