Regenxbio: Better Investment Case Than Adverum
- RGNX is developing gene therapies for various diseases, including neovascular AMD.
- Its pipeline is long, it has strong cash, and its data seems better.
- Current prices look like an opportunity.
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I recently covered REGENXBIO (NASDAQ:RGNX) briefly, as an aside to my coverage of Adverum (ADVM). Both are developing a gene therapy for eye diseases, with a critical difference - Adverum's therapy has a consistent ocular inflammation problem resulting possibly from the delivery mode of the injection (intravitreal) compared to the subretinal (and probably suprachoroidal in future) delivery mode of REGENXBIO's therapy. Studies have also shown that aflibercept IVT injection, used by ADVM, is more prone to causing ocular inflammation than IVT ranibizumab (ranibizumab is used by RGNX):
Severe ocular inflammation was more frequent following intravitreal injection with aflibercept than with ranibizumab during routine clinical use in patients with nAMD.
Another study says:
Risks that have been associated with the IVT procedure include, in order of severity, ocular pain or discomfort, intraocular inflammation, cataract (if the lens is contacted during the procedure), increased intraocular pressure (particularly if injecting a large volume), bleeding (subconjunctival or vitreous), retinal tear or detachment, and infectious endophthalmitis (a rare but serious complication)... Intraocular inflammation is a common, usually non-serious risk that has been associated with IVT.
The study goes onto cite another study comparing ocular inflammation rates between aflibercept and ranibizumab:
Comparative studies have suggested that aflibercept may actually be associated with higher rates of postinjection inflammation. A prospective, single-center, open-label study found that anterior inflammation occurred more frequently after aflibercept IVT (19%, N=10/53 patients) than ranibizumab IVT (2%, N=1/47 patients), although most cases were mild and transient, and only 1 subject (in the aflibercept group) had residual anterior inflammation beyond 7 days.
Thus, RGNX avoids both risks by not using either IVT or aflibercept. However, there are other (minor) comparative differences between aflibercept (Eylea) and ranibizumab (Lucentis) which must be taken into account. Although both are great drugs and in various studies have shown similar safety and efficacy, one difference is that Lucentis needs more administration/injections per year than Eylea.
If you think about this carefully, perhaps the sole reason Eylea is much more widely prescribed than Lucentis is this one fact - that Lucentis needs about twice the number of injections than Eylea. This gives you the basic USP of these gene therapies in a nutshell. If they are successful, this tells you that they will absolutely replace current standards of care. Bevou, with its once-a-year dosing, almost succeeded until unacceptable side effects were observed in patients.
It also tells you why that particular comparative difference between Eylea and Lucentis will not have an impact on the difference between the gene therapies of ADVM and RGNX because both are going to be one time therapies. So the battle will be over their safety profiles. Let us have a quick look at RGNX' pipeline before returning to the safety differences.
If you compare that long-tailed pipeline with Adverum's single asset pipeline, you can see one reason why RGNX has a $1.45bn valuation compared to ADVM's $364mn. The other reasons are, one, RGX-314 is running a phase 3 trial while ADVM just has a phase 2 trial ongoing. That too has been put on suspension following the recent traumatic adverse event, and the potentially differentiated safety profile which is the third reason the two stocks have such widely differing valuation.
Coming back to the comparisons, a study comparing subretinal, suprachoroidal and IVT mode of delivery says this:
Due to the immune-privileged nature of the subretinal space, the risk of an immune reaction against viral capsid antigens is minimized, an advantage of subretinal administration in patients with preexisting neutralizing antibodies. Intravitreal administration, with fewer procedure-related complications, is challenged by potential immune response and incomplete vector penetration through the internal limiting membrane...
Due to the immune-privilege nature of the subretinal space, subretinally-injected adeno-associated viruses (AAVs) may not be affected by preexisting neutralizing antibodies (NAbs) against AAV, and consequently, this route may minimize the risk of an immune reaction against viral capsid antigens.
The ocular inflammation, thus, is not an accident; it is a procedural adverse reaction that is going to occur with ADVM's therapy.
RGNX uses subretinal delivery, which is the most commonly investigated method for retinal gene therapy. While it has advantages over intravitreal delivery, it, too, comes with its own set of complications. Firstly, it is an invasive route. Second, the delivered drug spread is much less here compared to IVT, minimising efficacy:
Subretinal delivery, however, is an invasive route of administration as it causes a temporary focal retinal detachment and creation of a retinotomy, and therefore can pose higher risks for patients whose retinal cellular integrity has already been compromised. Moreover, the vitrectomy procedure, which facilitates subretinal administration, carries a high risks of inducing cataracts and a low risk of retinal detachment. Another limitation of the subretinal delivery approach is that the spread of the delivered vectors to the subretinal space is minimal, mostly limited to the area near the injection site. Therefore, subretinal delivery may result in suboptimal therapeutic benefits for diseases that benefit most from diffuse transduction of peripheral retina, such as RP.
RGX-314 has used the subretinal route for earlier trials, and has just begun using the newly-developed suprachoroidal mode of delivery using the SCS Microinjector, a targeted, in-office route of administration. This could be a game changer because SCS delivery avoids some of the drawbacks of both subretinal and IVT delivery. Unlike subretinal delivery, SCS especially using the in-office Microinjector is a much less invasive procedure, and it also offers a greater area of spread for the delivered vectors. Unlike IVT, SCS is not hindered by the internal limiting membrane, and potentially removes antibody reaction to the vector.
As for the existing subretinal mode of delivery used in the phase 2 trial in wet AMD for RGX-314, here's the gist of the adverse events profile:
This was the data as of April 2019. Again, in October 2019, there was the following update:
As of October 9, 2019, RGX-314 continues to be well-tolerated across all cohorts, with no drug-related serious adverse events (SAEs) reported. Fifteen SAEs that were not related to RGX-314, including two ocular procedure-related SAEs, were reported in 9 subjects. There have been no reports of clinically-determined immune responses, drug-related ocular inflammation, or post-surgical inflammation beyond what is expected following routine vitrectomy.
Then, in July 2020:
As of July 13, 2020, RGX-314 was generally well-tolerated across all cohorts. Eighteen serious adverse events (SAEs) were reported in 11 patients, including 17 that were not related to RGX-314. One possibly drug-related SAE of significant decrease in vision was reported in Cohort 5 at Month 11 in a patient who had retinal pigmentary changes that involved the macula. The most common nonserious adverse events in the eye were generally assessed as mild (77%). These included post-operative conjunctival hemorrhage (69% of patients), post-operative inflammation (36% of patients), eye irritation (17% of patients), eye pain (17% of patients), and post-operative visual acuity reduction (17% of patients). In 67% of patients across all cohorts, and in 83% of patients in Cohorts 3 through 5, retinal pigmentary changes were observed on imaging, the majority of which were in the peripheral inferior retina. Retinal hemorrhage was observed in 24% of patients and is an anticipated event in patients with severe wet AMD. There have been no reports of clinically determined immune responses, drug-related ocular inflammation, or post-surgical inflammation beyond what is expected following routine vitrectomy.
So we now have one drug-related SAE - significant decrease in vision at the higher dose, retinal pigmentary changes that involved the macula.
Finally, latest data as of February 2021:
As of January 22, 2021, RGX-314 continued to be generally well-tolerated across all cohorts, with 20 serious adverse events (SAEs) reported in 13 patients, including one possibly drug-related SAE of significant decrease in vision in Cohort 5. The most common non-serious adverse events in the eye were generally assessed as mild (87%). These included post-operative conjunctival hemorrhage (69% of patients), post-operative inflammation (36% of patients), eye irritation (17% of patients), eye pain (17% of patients), and post-operative visual acuity reduction (17% of patients). In 67% of patients across all cohorts, and in 83% of patients in Cohorts 3 through 5, retinal pigmentary changes were observed on imaging, the majority of which were in the peripheral inferior retina. Retinal hemorrhage was observed in 26% of patients and is an anticipated event in patients with severe wet AMD. There have been no reports of clinically-determined immune responses, drug-related ocular inflammation, or post-surgical inflammation beyond what is expected following routine vitrectomy.
So, there are 2 extra patients with 2 more SAEs here after 10 months, and the same drug-related SAE of decrease of vision we saw last year. More light about this:
A single serious adverse event considered possibly drug-related occurred. It involved a patient who entered the trial with retinal pigmentary changes and a history of 94 anti-VEGF injections over a period of 12 years. She developed additional retinal pigmentary changes involving the macula and experienced a 25-letter BCVA loss from baseline at week 50. "The patient's wet AMD was well-controlled without any need for rescue anti-VEGF treatments during the study period," Dr. Robert Avery MD said.
It appears that analysts at various earnings calls I read through over the last year did not focus on this SAE, unlike what happened with ADVM where the loss of vision SAE became a major focus for the company. So I think RGNX is on a better footing on this one, despite the consistent retinal pigmentary changes observed in imaging.
RGNX has a market cap of $1.45bn and a cash reserve of $522mn. The stock is heavily institution owned. Insiders have not been buying.
Data from their March earnings call:
REGENXBIO ended the year on December 31, 2020, with cash, cash equivalents and marketable securities totaling $522.5 million, compared to $400 million as of December 31, 2019. The increase was primarily attributable to gross proceeds of $200 million received from the monetization of our Zolgensma royalty rights, and was partially offset by net cash used in operating activities, and the purchase of property and equipment in 2020.
Revenues were $154.6 million for the year ended December 31, 2020, compared to $35.2 million in 2019. The increase was primarily attributable to Zolgensma royalty revenue, which increased by $40.8 million in 2020, as compared to 2019. The increase in revenue for the year ended December 31, 2020, also included an $80 million milestone fee, recognized as revenue in the third quarter of 2020, upon the achievement of $1 billion in cumulative net sales of Zolgensma.
Research and development expenses were $166.3 million for the year ended December 31, 2020, as compared to $124.2 million in 2019...
General and administrative expenses were $63.8 million for the year ended December 31, compared to $51.8 million in 2019.
Based on our current operating plan, we expect the balance in cash, cash equivalents and marketable securities of $522.5 million, as of December 31, 2020, as well as the $230.3 million of gross proceeds received from our follow-on public offering of common stock, completed in January 2021, to fund our operations, including the completion of our internal manufacturing capabilities, and clinical advancement of our product candidates into the second-half of 2023.
So the company is funded into 2023, and dilution risks are low especially after the January offering.
RGNX is a much more solid company than Adverum; it is also trading at a significant discount to its 52-week highs. Its next catalysts are various data readouts, the most important being phase 3 pivotal study data sometime in 2023; interim data will probably be announced earlier. Data from two suprachoroidal studies should also be available this year, one in diabetic retinopathy and the other in nAMD. These results will be very important in determining, as we discussed, the comparative safety of RGX-314 to ADVM's treatment. Given all these upsides, and the current depressed price and cash balance, RGNX presents an excellent opportunity for risk-taking investors.
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This article was written by
Dr Dutta is a retired veterinary surgeon. He has over 40 years experience in the industry. Dr Maiya is a well-known oncologist who has 30 years in the medical field, including as Medical Director of various healthcare institutions. Both doctors are also avid private investors. They are assisted by a number of finance professionals in developing this service.
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Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in RGNX over the next 72 hours. 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.
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