The Delta variant driving up COVID-19 infections in the U.S. is certainly going to cast a pall over earnings, but biotechs saw a boost in the second quarter with some new gene-editing results that reinvigorated interest in companies developing the technology.
Intellia and partner Regeneron proved for the first time that genes can successfully be edited in a human, besting the standard of care in an early-stage trial for the rare disease transthyretin (ATTR) amyloidosis.
The results “reinvigorated momentum” for gene editing stocks, according to a Q2 earnings preview from SVB Leerink. Intellia and its gene-editing peers saw their shares climb after the data drop, but questions quickly turned to the technology's promise in other, more lucrative indications.
Intellia had an active second quarter otherwise, forming a new CAR-T therapy company with Blackstone and Cellex. On the company’s earnings call, slated for Aug. 5, SVB Leerink will be watching for an update on the timeline for a phase 1 start for NTLA-5001 in acute myeloid leukemia.
The somewhat related (and yet completely different) technology of gene therapy also had a moment in the sun during the quarter—and that sun was maybe a bit too bright.
Adverum’s shares plunged in April when the biotech reported that a patient went blind in the eye treated with its gene therapy ADVM-022 during a phase 2 trial in diabetic macular edema.
SVB Leerink downgraded the company’s shares in the aftermath and the therapy’s future is still unclear.
“The greatest challenge now is convincing investigators and regulators that they've got a handle on exactly what is causing the inflammation in which patients and how to respond to it in a structured way,” said SVB Leerink analyst Mani Foroohar, M.D., in an interview.
Adverum will have to “structure a prophylactic regimen that can be applied across a very large population of patients, which is a much greater challenge than an ad hoc approach in a small single-arm study,” he said.
Meanwhile, bluebird bio finally got clinical trials for its sickle cell gene therapy called LentiGlobin back on track after the FDA lifted a clinical hold in June. The phase 1/2 and phase 3 trials were paused back in February after two treated patients developed blood cancer.
The company also had to halt the rollout of the gene therapy Zynteglo in the EU and U.K. for transfusion-dependent beta-thalassemia (TDT) while they figured out what happened in the other studies. The treatment uses the same viral vector as the unapproved LentiGlobin.
SVB Leerink is watching bluebird’s next moves closely as the company moves towards filing Zynteglo, also known as beti-cel, in the U.S. Bluebird has said the TDT application will be submitted mid-year, while sickle cell will be delivered in 2022.
Foroohar sees a wider challenge for gene therapy companies coming as treatments move closer to regulatory filings.
“As gene therapies have matured into a commercial, more broadly available market from an early development marketplace, the importance of consistent manufacturing and product quality has continued to increase,” he said.
Only a handful of gene therapies have reached the market, including Novartis’ Zolgensma, and many tackle very rare and difficult diseases. Zolgensma is for spinal muscular atrophy, a devastating genetic disease in children that destroys motor neurons that control speaking, walking, breathing and swallowing.
Many companies want to move gene therapies into more common diseases, but adverse events—as seen with bluebird and Adverum—could hold them back.
“As we enter more prevalent diseases…the bar for safety and implicitly the bar for manufacturing quality, purity and process increasingly becomes at least as important—possibly more important—than clinical data per se,” Foroohar said.
These manufacturing challenges are going to become the core challenge for gene therapy companies in the coming years, “which is not easy when your product is a synthetic virus,” he added. Clinical data, and the patient experience is of course important, but Foroohar sees this data taking a “backseat” with regulatory decisions revolving around safety and manufacturing issues.
Another company to watch as earnings reports come in is the RNAi specialist Dicerna Pharmaceuticals, which could drop some top-line data from a pivotal study of nedosiran in patients with primary hyperoxaluria, called PHYOX2, during the Aug. 12 earnings call. Top-line results from a study of patients with alpha-1 antitrypsin deficiency-associated liver disease are also due.
If all goes well with the data, Dicerna could file nedosiran for approval in the fourth quarter. The company also has treatment for alcohol use disorder ready to enter the clinic, which SVB Leerink is eyeing.
Room for more vaccines
And then there’s COVID, which is surging again, thanks to the widespread Delta variant. Analysts say this uncertainty, which has already caused the market to dip in recent weeks, will spur some companies to be a bit more reserved in their expectations for the second half of the year.
Pfizer and Moderna are of course reaping the benefits of their COVID-19 vaccines, with every earnings report adding billions to the tally they began when emergency authorization was granted for each shot in December.
But what about smaller biotechs struggling to catch up? Investors will be watching the also-rans closely during Q2 earnings reports, tapping their wristwatches for an answer from executives on exactly when they might get an FDA authorization themselves.
One company certain to have these questions hurled at them is Novavax, which has missed milestone after milestone in its quest to get a COVID-19 jab cleared. The shot proved 90% effective in protecting against COVID-19—including against the variants—in a trial meant to support a U.S. submission.
Investors will want to know all about Novavax’s marketing, manufacturing and commercialization strategy during the company’s Aug. 5 earnings call.
Should Novavax’s candidate ultimately make it past FDA review, pricing of the vaccine will become the make-or-break factor. While the shot has proven efficacy to rival Pfizer and Moderna, the two companies have stuck a flag in the sand for mRNA as the path out of the pandemic. Analysts expect mRNA to continue to dominate the market.
Another top competitor is Sanofi, which will report earnings on July 29. The company threw down the gauntlet Tuesday with the news that the EU had begun a rolling review of a vaccine candidate it's developing with GlaxoSmithKline.