Health and Healthcare

Which Gene Therapy Companies May Be Most Valuable After Spark Therapeutics Buyout

Chris Lange

Published: February 25, 2019 12:25 pm

Last Updated: January 31, 2020 12:18 am

Spark Therapeutics Inc. (NASDAQ: ONCE) shares more than doubled in Tuesday’s session as the result of its pending acquisition. However, the root of the buyout was its gene therapy, which could drive more acquisitions in the future, at least according to one analyst.

Janney Capital believes a few gene therapy-related companies in its coverage universe share characteristics worthy of a buyout. Although an M&A deal may not materialize immediately, or even in the near future, and acquisition speculation is not in Janney’s investment thesis or valuation, the firm believes the Roche/Spark news does highlight major pharmaceutical companies’ increased comfort level on gene therapy.

Acquisition examples include Bamboo Therapeutics by Pfizer in August 2016 and Avexis by Novartis in April 2018. The list for partnerships is much longer, including Bristol-Myers Squibb with uniQure on cardiovascular diseases, Pfizer with Spark and Sangamo Therapeutics on hemophilia, GlaxoSmithKline with a 19.9% equity stake in Orchard Therapeutics, Roche and 4D Molecular Therapeutics on opthamology product candidates, Johnson & Johnson with MeiraGTx on riboswitch technology, Takeda with Ambys Medicines on liver diseases, and most recently AbbVie with Voyager Therapeutics on neurodegenerative diseases.

Sarepta Therapeutics Inc. (NASDAQ: SRPT) is one of the top biotechs in Janney’s coverage universe, and it has been actively building the company’s gene therapy portfolio, beginning from neuromuscular diseases but now extending to lysosomal storage disorders and central nervous system indications. The initial data from the Limb-Girdle Muscular Dystrophy type 2E study to be announced on Wednesday morning, if positive, will represent another big step forward for Sarepta. The fact that this data will be reported separately from the quarterly financial results on the same day suggests its importance.

Shares of Sarepta were last seen up 3% at $144.09, in a 52-week trading range of $59.51 to $176.50. The stock has a consensus price target of $195.64.

uniQure N.V. (NASDAQ: QURE) was one of the first to enter gene therapy and management has extensive know-how. AMT-061 for hemophilia B, leading in both data quality and clinical development timeline in its view, could become the first gene therapy to receive FDA approval for the indication. AMT-130 is on track to become the first gene therapy program to enter the clinic for Huntington’s disease, and patient dosing in the Phase 1/2 study will occur in the second half of this year, with initial safety data to become available by year-end and a potential early read on biomarker data in the firm half of 2020.

Shares of uniQure were up 30% at $54.16, in a 52-week range of $20.29 to $59.45. The consensus price target is $58.64.

Given the uncertainties associated with pricing for gene therapy, Janney believes the Bluebird Bio Inc. (NASDAQ: BLUE) valuation will continue to be mainly driven by its R&D pipeline, with a significant portion coming from the BCMA CAR T program for multiple myeloma. The company has entered into multiple collaboration agreements and is actively developing T cell therapy for additional oncology indications.

Bluebird Bio shares were up 15% at $151.36. The 52-week range is $87.49 to $236.17, and the consensus price target is $179.83.

Nitestar Therapeutics PLC (NASDAQ: NITE) clinical programs are leading in competition. An ongoing Phase 3 study for the lead program NSR-REP1 for choroideremia will complete patient enrollment in the first half of this year and the one-year follow-up data will be available in 2020. The second program NSR-RPGR for X-linked retinitis pigmentosa is in an ongoing 45-patient, Phase 2/3 dose expansion study, and preliminary data from all patients will be reported in mid-2019.

Nitestar traded up 5% at $14.99 a share, in a 52-week range of $9.59 to $29.55 and with a consensus analyst target of $32.90.

Lastly, Janney named Selecta Biosciences Inc. (NASDAQ: SELB). This is not a typical gene therapy company but may have the answer to a key question in AAV gene therapy. Selecta is collaborating with both Spark and CureCN consortium to evaluate ImmTOR (SVP-rapamycin) in AAV gene therapy readministration. Under the terms of the agreement with CureCN, the consortium will conduct preclinical toxicology studies in 1H19 for Crigler-Najjar syndrome, and clinical entry is expected in 2H19. The proof-of-concept data from the study, if promising, should lead to strong interest from more gene therapy partners.

Shares of Selecta were last seen up 3.5% at $2.32, in a 52-week range of $1.41 to $16.54. The stock’s consensus price target is $12.00.