GBIO - Generation Bio: Novel But Preclinical Interesting But Without Data

2023-08-07 05:24:35 ET

Summary

• Generation Bio is a global leader in non-viral DNA therapeutics, aiming to deliver lifelong genetic medicines on a disruptive scale.
• The company has three core technologies, including a high-capacity ceDNA construct and a ctLNP delivery system.
• GBIO has a systematic plan to develop therapies for liver tissue and expand into other non-hepatic tissues in the future.

Generation Bio ( GBIO ) says it is a global leader in non-viral DNA therapeutics. Their goal is to "deliver lifelong, titratable gain of function genetic medicines on a disruptive global scale."

The company has 3 core technologies, described in their 10-K as follows:

Our non-viral genetic medicine platform is comprised of three essential component technologies: our high-capacity ceDNA construct, which can accommodate large or multiple genes as well as native regulatory elements; our ctLNP delivery system, which enables highly specific delivery of ceDNA to a range of cell types; and our highly scalable capsidfree manufacturing process that uses our proprietary cell-free RES to produce ceDNA.

The company has an early stage pipeline targeting a number of rare diseases:

A core focus right now is on delivering therapy to liver tissue, however, future strategies involve the retina and other non-hepatic, harder to drug tissues.

The company has a systematic plan in developing human proof of concept data for its product candidates. In the near term, it will develop therapies for the liver, establishing itself as a leader in the non-viral DNA therapy space. This will be led by its hemophilia A program. In 2021, preclinical data from this program tanked the stock, after it was found that Factor VIII expression seen in mice models (205%) did not translate to non-human primates (2% only).

In the mid-term, GBIO will begin programs in rare diseases like phenylketonuria, or PKU, Wilson disease, and Gaucher disease by utilizing its hepatocyte-specific ctLNP system. In the longer term, the company says in its 10K that it "plans to expand its portfolio by including ETAP programs directed at the liver and by developing novel ctLNPs to support programs in each of the following cell types and tissues: tumors, retina, skeletal muscle, and CNS."

After small molecules and biologics, gene therapies are the next major modality in medicine. Gene therapies are usually delivered through a viral vector. There are a number of problems with this approach. Using the company's 10K and some research, I will list a few of these:

Single-dose administration limitation: Viral gene therapy is often administered as a single dose, which can limit its ability to provide sustained gene expression over an extended period. This limitation can be particularly problematic when treating chronic or progressive diseases that require continuous gene expression.

Pediatric patient treatment limitation: The single-dose administration also hampers the use of viral gene therapy in pediatric patients. Children with genetic diseases may require multiple administrations throughout their development, but the current approach's limitations make it challenging to achieve.

Payload capacity restriction: Viral gene therapy is restricted in the amount of genetic material it can carry, limited to approximately 4.7 kilobases (kb). This payload capacity constraint makes it unsuitable for treating certain genetic diseases that require the delivery of larger genes or gene combinations.

Manufacturing inefficiencies: The production of viral gene therapies can be complex and time-consuming, leading to manufacturing inefficiencies. This can result in higher costs and slower development timelines, making it challenging to meet the demand for these therapies.

Clinical and commercial challenges for gene editing approaches: Many gene editing approaches also use viral vectors to deliver gene editing nucleases in vivo, leading to similar challenges as viral gene therapy. These include issues related to single-dose administration, payload capacity, and manufacturing inefficiencies.

Limited half-life of mRNA therapies: mRNA therapies have a limited half-life, which means their effects may not last as long as desired. This limitation has resulted in a focus on using mRNA therapies for novel vaccines rather than broader systemic delivery applications.

Tissue biodistribution control limitations: Existing viral vectors and lipid nanoparticle (LNP) delivery systems have limited ability to control tissue biodistribution. This limitation can prevent the effective targeting of specific tissues, leaving many rare and prevalent genetic diseases beyond the reach of current viral gene therapies.

As opposed to these disadvantages of viral gene therapies, non-viral gene therapies as are being developed at GBIO have several advantages. These are potentially disruptive for the entire field of genetic medicine. Some of these advantages include the following:

Durable expression: The ceDNA construct establishes stable episomes in the nucleus of cells, enabling durable expression of the gene of interest. This longevity of expression may lead to years-long expression with each dose, reducing the treatment burden for patients.

Redosable administration: The ctLNP delivery system avoids stimulating an antibody response, allowing for redosable administration. This offers various benefits, such as individualized patient titration to achieve the desired expression level, greater opportunity to demonstrate efficacy in early clinical trials, and the potential to extend expression if it begins to wane.

Reach pediatric patients: Non-viral gene therapy's ability to redose and achieve durable expression makes it suitable for pediatric patients, whose organ growth and dividing cells may lead to rapidly waning expression in traditional single-dose therapies.

Address untreated or under-treated patients: The non-viral genetic medicine may be used to treat patients with preexisting immunity to AAV viral capsids, who cannot receive AAV gene therapy, as well as patients who did not achieve sufficient efficacy outcomes with current gene therapies.

Delivery of large genetic payloads: The platform's ceDNA has a larger payload capacity than AAV gene therapy, enabling the treatment of monogenic diseases requiring larger genes.

More potent constructs: Non-viral genetic medicine utilizes novel expression elements that exceed the capacity of AAV gene therapy, potentially improving existing genetic medicine modalities.

Native gene regulation: The large capacity of ceDNA allows the incorporation of native regulatory elements associated with the gene being replaced. This enables the replaced gene's activity to respond to the body's own signals.

Targeted, multi-cell delivery: The ctLNP delivery system can selectively target desired cell types, allowing for more specific and safer delivery to tissues beyond the liver, which were previously challenging for genetic therapies to reach.

Potential expansion to reach millions of patients: The combination of platform technologies, targeted delivery, and the multi-year durability of a single dose may allow treatment of hundreds of millions of patients with prevalent diseases.

Sustainable payer model: The cost-effective manufacturing process using RES and the potential for redosing patients may lead to predictable clinical outcomes, making it more feasible for payers to cover these genetic medicines within the current reimbursement paradigm.

In 2023, the company plans to achieve proof of concept in non-human primates for liver diseases, which includes achieving adequate Factor VIII expression without compromising on tolerability. The company also wants to develop proof of concept in extrahepatic tissues. Larger companies are noticing, and Moderna recently (March 2023) signed a ~$80mn upfront deal with GBIO for the latter's non-viral vector gene therapies.

Financials

GBIO has a market cap of $293mn and a cash balance of $314mn. Research and development (R&D) expenses were $21.8 million for the quarter, while general and administrative (G&A) expenses were $13.0 million. At that rate, they have a cash runway of 8-9 quarters.

GBIO was originally backed by Atlas Ventures. Currently, institutions own ~75% of the company while PE/VC firms own about 12%. There is hardly any retail ownership. FMR LLC is the largest holder, followed by Atlas Ventures, T Rowe Price and Moderna, with their new deal. Insider transactions are a mix of buys and sells.

Risks

Usual risks for nanocap preclinical stage companies apply. They have no data to prove any of their claims. Indeed, their POC in NHPs was a failure, to say the least. They really need to get better data next time if they want the market to take them seriously. On top of that, there's low trading volume, and the company has more cash than it is valued at in the market.

Bottomline

The non-viral gene therapy idea is novel and interesting. There's no data yet, so I will stay on the sidelines. But the science, just the theory of it, interests me, and I will keep watching.

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