ABBV - Regenxbio: Biotech To Watch With 2 Possible Accelerated Approval Pathways

2023-11-02 17:33:57 ET

Summary

• Regenxbio Inc. is making progress in its pipeline, aiming to have five gene therapies in late-stage testing or approved by 2025.
• The company's lead candidate, ABBV-RGX-314, is being developed for the treatment of wet age-related macular degeneration; collaboration with AbbVie in place.
• Two other programs, RGX-202 for Duchenne Muscular Dystrophy and RGX-121 for mucopolysaccharidosis Type II, have the potential for Accelerated Approval, which could generate significant shareholder value.
• Regenxbio had $415.4 million in cash as of June 30th 2023; enough to fund its operations for at least the next 12 months.

Regenxbio Inc. ( RGNX ) has made good progress with respect to its pipeline, especially in light of the fact that it has a strategy around being able to have five gene therapies in late-stage testing or approved by 2025. It is advancing its lead candidate ABBV-RGX-314 with AbbVie Inc. ( ABBV ) for the treatment of patients with wet age-related macular degeneration [Wet-AMD], but I believe that further value here can be unlocked with respect to two other programs in its pipeline.

These other programs are the use of RGX-202 for the treatment of patients with Duchenne Muscular Dystrophy [DMD] and RGX-121 being advanced for the treatment of patients with mucopolysaccharidosis Type II [MPS II] or Hunter Syndrome. Why do I believe that these programs have the potential to increase shareholder value? That's because both of these programs are on track to have the potential for Accelerated Approval and this will be based on possible surrogate endpoints that might allow for this. Both of these would be huge opportunities for investors to look forward to and I believe that if somehow Regenxbio gets the green light from the FDA to be able to file for such Accelerated Approvals for RGX-202 and RGX-121 respectively, then it will likely have a huge effect on generating shareholder value.

Plus, there is another data readout expected in 2024. This would be a data readout of a phase I/II study of RGX-381 to treat ocular manifestations of CLN2 disease, which is expected in 2024.

Two Programs With Potential For Accelerated FDA Approval

As I stated above, there are two programs in the pipeline that while early in terms of development, have the potential to still receive Accelerated Approval from the FDA. The first of such programs would be with respect to the advancement of RGX-202, which is a gene therapy that is being developed to treat patients with Duchenne Muscular Dystrophy [DMD]. The global Duchenne Muscular Dystrophy Drugs market is set to reach $27.4 billion by 2030 . This program is coming along quite well and the reason why I state that is because dose escalation for the ongoing phase I/II AFFINITY DUCHENNE trial is expected by the end of 2023.

Not only that, but Regenxbio just reported positive results from this study recently at the 28th Annual International Congress of the World Muscle Society back on October 3rd of 2023. This phase I/II study recruited three patients who were ages 4.4, 10.6 and 6.3 years respectively. Each one of these patients was treated with dose level 1 and it is expected that dose level 2 is next on deck. Two patients were evaluated for microdystrophin expression, which is a biomarker of muscle function with respect to these patients with DMD. When these two patients took dose level 1 of RGX-202, the biomarkers achieved were as follows:

• Patient aged 4.4 years old - microdystrophin expression level of 38.8% compared to control.
• Patient aged 10.6 years old - microdystrophin expression level of 11.1% compared to control.

While this is very early data, it does show that RGX-202 was able to have a good effect on increasing microdystrophin levels for these DMD patients. Why I believe that this biotech may have value to be unlocked because of several catalysts which are expected for this particular program. The first catalyst of which would be that data additional data is expected from the phase I/II AFFINITY DUCHENNE trial in 2024. This is going to include the release of strength and functional assessment data for both dose levels [dose level 1 and dose level 2].

A second catalyst to look forward to would be that this biotech expects to pick a pivotal dose to move on towards late-stage clinical testing with. That is, it expects to initiate a pivotal study program for RGX-202 for the treatment of patients with Duchenne Muscular Dystrophy [DMD] in 2024.

The third and final catalyst to expect from this program would be the possibility of Regenxbio being able to file for Accelerated Approval of RGX-202 for the treatment of this patient population. This is not guaranteed to happen, but quite possible based on the fact that it might be able to do so based on a surrogate endpoint, which is microdystrophin. If the FDA gives the green light to microdystrophin being allowed as a surrogate endpoint for the filing of Accelerated Approval of RGX-202 for DMD, then a regulatory application could be filed in 2024.

The next program which holds the potential for Accelerated Approval might be the use of RGX-121, which is a gene therapy being advanced for the treatment of patients with mucopolysaccharidosis Type II [MPS II] or Hunter Syndrome. In order to advance this clinical candidate Regenxbio is using a NAV AAV90 vector to specifically deliver the gene that encodes the iduronate-2-sulfatase enzyme. Why is it important for this gene to be delivered to patients with MPS II? That's because these patients lack the iduronate-2-sulfatase enzyme, which is very important in breaking down sugar molecules in the body. Without this enzyme, such sugar molecules build up on organ tissues and cause damage. The company was able to complete the enrollment of patients in the phase part of the CAMPSIITE clinical trial , which uses RGX-121 for the treatment of patients with MPS II.

Should this program go well, then it is expected that it will be able to file a Biologics Licensing Application in 2024 using the Accelerated Approval pathway. There is even a possibility that this program could be expanded further. That is because a phase I/II study of RGX-111 for the treatment of patients with MPS I has been fully enrolled. Having said that, this biotech will share updates for the MPS I program by the end of 2023.

Financials

According to the 10-Q SEC Filing , Regenxbio had cash, cash equivalents and marketable securities of $415.4 million as of June 30, 2023. It believes that this cash on hand will be enough to fund its operations for at least the next 12 months from the date of this 10-Q SEC Filing. The thing about this biotech is that it already generates some royalty revenues from the sale of Zolgensma. In the three months ending June 30th, 2023, revenues for this product were $19 million. This cash on hand doesn't include any possible funds that might be obtained from the collaboration agreement with AbbVie. That's because back in 2021, Regenxbio entered into a collaboration agreement with AbbVie , whereby it received an upfront payment of $370 million. In addition, it could receive up to $1.38 billion in additional development, regulatory and commercial milestones as well. Even if this biotech does obtain some development or commercial milestone payments with respect to ABBV-RGX-314, it likely won't be enough to fund its pipeline. Thus, I believe that by at least the 1st half of 2024, it is going to have to find a way to raise additional cash.

Risks To Business

There are several risks that investors should be aware of before investing in Regenxbio. The first risk to consider would be with respect to the data readout of RGX-381 for ocular manifestations of CLN2 disease. Data from this study is expected to be released in 2024, and there is no assurance that positive results will be achieved.

A second risk to consider would be as it relates to both of the possible accelerated approval programs I mentioned above. RGX-202 for DMD and RGX-121 for MPS II have the potential for Accelerated Approval filings. However, the risk here is that there is no guarantee that the FDA will allow Accelerated Approval filings for one or both of these indications. Even if such filings are allowed based on surrogate endpoints, there is no guarantee that the FDA will ultimately approve one or both of these gene therapy treatments.

The third risk to consider would be with respect to the advancement of ABBV-RGX-314 for the treatment of patients with wet age-related macular degeneration [Wet-AMD]. AbbVie is a partner for this program, however, if the current ongoing studies fail to impress then it's possible that the partnership could ultimately be terminated. In that instance, Regenxbio would lose out on the potential milestone payments, plus the entire cost of keeping the program going.

The fourth and final risk to consider would be with respect to the financial position that it is in. That's because it is likely going to have to raise cash, at least by early 2024. The reason why I believe this to be the case is because the 10-Q SEC filing states that it only has enough cash to fund its operations for at least the next 12 months. That gives it roughly 12 months of cash runway, and it isn't going to wait until the very end to raise additional cash.

Conclusion

Regenxbio has made great progress in being able to advance several of its gene therapy products in its pipeline. That's because it was able to bring aboard AbbVie as a partner to advance ABBV-RGX-314 for the treatment of patients with wet age-related macular degeneration. It explores the use of this gene therapy being given as a subretinal and suprachoroidal delivery option.

Again, I believe that shareholders might be able to get value out of this biotech because of what might come in 2024, which is the potential for two Accelerated Approvals. This would be with respect to the advancement of RGX-202 for DMD and then RGX-121 for the treatment of patients with MPS II. The downside is that there is no assurance that biomarkers will be allowed as surrogate endpoints by the FDA to grant Accelerated Approvals for these gene therapy candidates, but quite possible nonetheless. With several program updates expected in 2024, plus the potential for two Accelerated Approvals, I believe that investors might be able to capitalize on any potential gains made.

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