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4 Gene Therapy Players Likely to Become Buyout Targets in 2019

Indrajit Bandyopadhyay

The biotech industry has had a good start in 2019. The Zacks Biomed and Genetics industry has gained 16.1%, outperforming the broader S&P 500, which is up 15.3%, so far in 2019. The rise in merger and acquisitions (M&A) activity this year is one of the major driving forces behind this rally. The biotech industry is ranked 86 among the 256 Zacks industries.

Several large-cap pharma companies are facing patent expirations of their major drugs and pricing challenges in the U.S. market. This has led to consolidation through M&A in the pharma space. In a landmark deal, Bristol-Myers has offered to acquire big biotech, Celgene, for $74 billion. The large-cap companies are looking to acquire or partner with smaller biotech companies to boost their pipeline with newer technologies. Acquisitions, which are done generally by giving a premium on current price, and partnerships, which provide funds to smaller companies to support continued development of pipeline candidates, boost the stock price of the target companies.

A few of the M&A deals so far in 2019 involve companies with promising gene therapy candidates. Gene therapy, a new wave of innovation in pharma space, enables to mitigate the adverse effects of a malfunctioning disease-causing gene. These therapies have a different approach from traditional drug therapies as the underlying cause can be treated instead of the symptoms. These therapies generally target rare indications including hemophilia, Duchenne muscular dystrophy (“DMD”) and Parkinson's disease among others, which will likely lead to higher price realization. The gene therapy segment is expected to attract a lot more attention from pharma players going forward. Better efficacy achieved by gene therapies in clinical studies and likely rise in involvement of pharma companies may lead to higher M&A activity in the gene therapy segment.

In 2018, Novartis acquired AveXis for its gene therapy candidates and Celgene acquired Juno Therapeutics to add CAR T-cell therapy for cancer. In 2019, Roche and Biogen offered to buy Spark Therapeutics ONCE and Nightstar Therapeutics NITE, respectively. Both Spark and Nightstar are developing gene therapies targeting rare indications. Pfizer collaborated with innovative gene therapy developer Vivet Therapeutics, a privately-held company. There are several companies in the biotech industry, which are developing gene therapy candidates or shifting their focus to developing similar therapies. Looking at this trend, we expect some more deals targeting gene therapy makers.

We present four companies with promising gene therapy candidates in their pipelines. These companies may become acquisition targets going forward.

uniQure N.V. QURE)

The company is a promising player in the space. It is engaged in creating a pipeline of innovative gene therapies that have been developed both internally and through its collaboration, focused on cardiovascular diseases, with Bristol Myers-Squibb.

The company’s lead candidate AMT-061, an experimental AAV5-based gene therapy incorporating the FIX-Padua variant, is being evaluated in the phase III HOPE-B pivotal study for the treatment of patients with severe and moderately severe hemophilia B. In January 2019, the company received clearance from the FDA to initiate clinical study for AMT-130 for the treatment of Huntington’s disease.

uniQure’s stock has moved up 115.4% so far this year against the industry’s decline. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Audentes Therapeutics BOLD)

It is another biotechnology company with a pipeline of innovative gene therapy products for patients living with rare diseases.  The company is currently conducting phase I/II studies for its lead product candidates, AT132,for the treatment of X-linked myotubular myopathy (“XLMTM”), and AT342 for the treatment of Crigler-Najjar syndrome.  The company currently has two additional product candidates in its pipeline, AT845 for the treatment of Pompe disease and AT307 for the treatment of the CASQ2 subtype of catecholaminergic polymorphic ventricular tachycardia (CASQ2-CPVT), which are likely to enter clinical development.

Audentes currently carries a Zacks Rank #3. Shares have gained 82.9% year to date.

REGENXBIO Inc. RGNX)

The company is a clinical-stage biotechnology company that focuses on the development, commercialization and licensing of recombinant adeno-associated virus gene therapy. The company’s most advanced candidate, RGX-314, is being evaluated in a phase I/IIa for treating wet age-related macular degeneration (“AMD”).  The company is planning to initiate a mid-stage study on the candidate for treating an additional chronic retinal condition in the second half of 2019. Apart from RGX-314, the company is also developing three other gene therapy candidates for treating certain rare neurological symptoms.

REGENXBIO currently carries a Zacks Rank #3. So far this year, shares have gained 41.3%.

Solid Biosciences Inc. SLDB)

The company’s lead product candidate is SGT-001, a microdystrophin gene therapy that is in phase I/II clinical studies, intended to restore functional dystrophin protein expression in DMD patients.

Solid Biosciences currently carries a Zacks Rank #3.

Solid Biosciences Inc. Price

 

Solid Biosciences Inc. Price | Solid Biosciences Inc. Quote

Some other companies with gene therapy candidates in their pipeline include Sarepta Therapeutics SRPT and Ophthotech OPHT, which are developing treatments for DMD and retinal disorder, respectively.

What’s Ahead?

Investors should keep an eye on this space as potential approvals and data read-outs from late-stage studies on several candidates are likely to drive the related stocks.

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Ophthotech Corporation (OPHT) : Free Stock Analysis Report
 
uniQure N.V. (QURE) : Free Stock Analysis Report
 
Spark Therapeutics, Inc. (ONCE) : Free Stock Analysis Report
 
REGENXBIO Inc. (RGNX) : Free Stock Analysis Report
 
Sarepta Therapeutics, Inc. (SRPT) : Free Stock Analysis Report
 
Nightstar Therapeutics PLC Sponsored ADR (NITE) : Free Stock Analysis Report
 
Audentes Therapeutics, Inc. (BOLD) : Free Stock Analysis Report
 
Solid Biosciences Inc. (SLDB) : Free Stock Analysis Report
 
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