Why Has Spark Therapeutics Inc (NASDAQ:ONCE) Gained 15% on Such Limited Trial Data?

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Development stage biotech Spark Therapeutics Inc (NASDAQ:ONCE) just offered up some insight into the status of its ongoing phase I/II trial, and the company has gained more than 15% on the release. The trial is small and early stage, so the scope of market response seems excessive. Having said this, the indication the company is targeting with its candidate is currently an unmet need, and a big name backer shores up its capital requirements going forward if it carries through to the later stages of development. So, with this in mind, does the data warrant the upside, or is it just market over-enthusiasm? Further, what can we expect going forward? Let’s take a look.

As ever, let’s have a quick look at the science behind the drug in question before we get into the trial.

Its called, SPK-9001, and it’s a hemophilia B target. Hemophilia B is a hereditary blood disorder that comes about as a result of a patient not having enough of a protein called factor IX. Factor IX is responsible for blood clotting, so if a patient doesn’t have enough, their blood won’t clot efficiently, and this causes obvious issues when it comes to bruising, cuts healing etc.

SPK-9001 is a gene therapy treatment, which means its mechanism of action is probably a little too complex to go into in too much detail here. Essentially, however, the drug is a capsid (which just means a casing) that contains a variant of the gene that codes for the factor IX protein). When delivered, the gene gets to work to produce a functional variant of the protein in question. Preclinical studies showed that the drug does work to induce factor IX production, but the company, and in turn markets, were concerned as to whether enough of the protein could be produced as a result of the one-time administration – that is, enough to consistently have an impact on clotting.

So that’s what the drug does – did the data support this latter mentioned point? Based on the market response alone, it’s safe to say it does. Let’s look into it in a little more detail, however. It is limited to three patients, and the data released measured their individual responses to a one-time administration of SPK-9001 at a dose level of 5 x 1011 vg/kg. In the three patients, factor IX levels rose to 30% f normal at seven weeks, 28% of normal at eighteen weeks and 16% of normal at three weeks, post administration, respectively. At first glance, this doesn’t look great. When considered against how much factor IX is required to have a markedly improved impact on clotting – 12% of normal levels – however, it looks pretty good.

The obvious issue here is that the data only reports on three patients. We are set to get more data come mid June, and this should expand on the three patient limit, but as things stand, three is all we have. No drug would get approval on three patients, and especially given such wide variance of response between all three (16% and 30% is wide enough to question translation of efficacy to a wider population).

So why have markets bought into Spark to the tune of a 15% gain in its market capitalization? Well, Spark is partnered with Pfizer Inc. (NYSE:PFE) on its hemophilia trials, and the latter has committed to funding development if the former can prove efficacy in a  small scope trial. This trial looks to have done that, and as such, has essentially cemented funding from Pfizer for a continuation of the development program. The exact level of funding remains unclear, but it should carry through to a pivotal at the very least, so long as the expanded data set (the one set for release come June) mimics the results seen in the first three addressed patients.

So let’s answer our initial question. On the three announced patients, a 15% gain looks like an overbuy. With the data’s implications for an extended trial and a Pfizer led funding, however, it seems reasonable. Markets are buying into the collaboration, not this small size data sample. The key thing to watch is the June 11 full release. We want to see a reinforcing of the efficacy data on a slightly expanded basis as an indication that Pfizer and Spark will continue on their hemophilia path hand in hand.

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