Here is a look at two recent movers in the biotech sector with an analysis of what is moving each and where we expect the two companies to go next.
Dimension Therapeutics, Inc. (NASDAQ:DMTX) was one of the biotechnology market’s biggest movers last week. The company announced Friday that it is set to be acquired by another biotechnology company, REGENXBIO Inc. (NASDAQ:RGNX), for a price that represents a substantial premium on its then-open-market share price. Specifically, the latter will pay $3.41 a share for Dimension and – during the session on Friday – markets traded up on Dimension to the tune of 150% towards a close price of $3.05 a share. For those not familiar with Dimension, the company is a development stage biotechnology stock that is working to get its lead candidate, a drug called DTX301, approved in a target indication of OTC deficiency. OTC deficiency is an inherited disorder that causes ammonia to accumulate in the blood. OTC is an enzyme that plays a role in the breaking down of ammonia, which forms when certain proteins are broken down in the body. In patients with OTC deficiency, the ammonia doesn’t get broken down and so it builds up to dangerous levels. The nervous system is unable to handle high levels of ammonia and, once toxic levels are reached, symptoms can be incredibly tough to handle. DTX301 is an intravenous administration drug that basically works as an alternative to the body producing its own OTC. It is designed to deliver stable and long-term amounts of OTC, which then break down the ammonia and – by proxy – treat the disease.
That’s the hope, at least. Early data suggested that the hypothesis is sound and it is on this data (essentially) that REGENXBIO has based its decision to take over the company. The drug is currently in a phase 1/2 trial designed to assess safety and efficacy and the trial will wrap up towards the end of this year, with top line slated for the fourth quarter 2017. It’s at that point that we will get an idea of whether REGENXBIO has made the correct decision or not.
Chances are we will see this biotech stock continue to appreciate steadily into the closing of the buyout, since there still exists a small premium on current share price in terms of the discrepancy between open market rates and the price that REGENXBIO is paying for Dimension.
Another big mover at the end of last week was Spark Therapeutics, Inc. (NASDAQ:ONCE). The company announced that the FDA has set a date for an advisory committee meeting at which panel members will discuss its Biologics License Application (BLA) for voretigene neparvovec. The panel in question is The Cellular, Tissue, and Gene Therapies Advisory Committee (CTGTAC), and the meeting is in place to allow said panel to discuss and make recommendations on the safety and effectiveness of voretigene neparvovec , when used for the treatment of patients with vision loss due to what’s called confirmed biallelic RPE65 mutation-associated retinal dystrophy. RPE65 is a retinal pigment protein (it’s an enzyme) that’s necessary for the regeneration of the pigment in the rods and cones in our eyes. Mutations in this pigment mean that this regeneration doesn’t happen effectively and, without it, individuals can go blind over time. It is a rare disease, but it is one for which no effective treatments exist right now and so patients with the condition don’t really have any options post-diagnosis. The idea behind voretigene neparvovec is that it is a gene therapy, which targets the underlying mutation. Basically, the drug seeks to replace the mutated gene with an effective and normal form, which then goes on to produce the retinal pigment, the lack of which is the cause of the disease in this instance.
An advisory panel meeting only offers insight into the potential outcome of a registration application, but the FDA will generally go with the formed opinion and this makes it a major event for a biotechnology company, especially one at the smaller end of the biotech market. If the panel votes in favor of recommending approval, Spark is going to quickly gain strength. We will likely see the company appreciate steadily into the advisory panel meeting, which is set at January 12, 2018.