UPDATE: Half of Adverum pipeline 'snaps out of existence' as adverse events force pivot to more common eye disease

And just like that, half of Adverum Biotechnologies' pipeline is gone.

The biotech announced after market Thursday that it would abandon a key eye disease indication and shift focus to another, but analysts aren't sure how the company will overcome the adverse events that sent them in the new, slimmed-down direction. 

Adverum will no longer advance the gene therapy ADVM-022 in diabetic macular edema (DME) because of a dose-limiting toxicity, meaning the dose can not be escalated due to side effects. The biotech is forging ahead in wet age-related macular degeneration (wet AMD) but analysts have low expectations for the program.

In April, Adverum disclosed that a DME patient who received a high dose of the therapy had experienced low intraocular pressure, which can cause decreased vision. The company has now disclosed that, despite close monitoring and aggressive treatment, other recipients of the high dose have suffered rapid, clinically relevant drops in intraocular pressure. The cases did not respond to steroids and required additional treatment. 

Three of the five patients required surgery to correct the pressure issue, according to RBC Capital Markets analysts. 

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The cases persuaded Adverum to stop development in DME, but the same high dose concerns have yet to be seen in wet AMD patients. The cause of the toxicity is unknown but, as DME patients often have multiple comorbidities not seen in wet AMD, Adverum sees reasons to continue development in the latter indication. 

Analysts at SVB Leerink are downbeat on Adverum’s prospects in wet AMD, which is a common cause of vision loss. The firm said the shift means that half of Adverum's pipeline "snaps out of existence."

“With no mechanistic explanation for the toxicity, and a multi-year delay in development, we struggle to see any viable path forward for ADVM-022 in wAMD, an indication with very low tolerance for safety events and numerous highly effective therapies," the analysts wrote. "It is hard to believe, in our view, that the AMD program will be completely free of intraocular safety events. We also expect physicians to be highly cautious about using ADVM-022 even if it is approved for wet AMD."

California-based Adverum is tweaking its clinical development plans in wet AMD in response to the situation. Rather than move ADVM-022 into a pivotal trial, Adverum plans to start a new mid-phase trial that will test the gene therapy at lower doses and with alternative prophylactic regimens. 

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Adverum is aiming to start the trial next year. Before then, the biotech needs to complete the data analysis to develop a protocol and get the feedback of investigators and regulators on its plans in wet AMD.

The company, which has no other clinical-phase assets, has limited options if ADVM-022 stumbles in wet AMD. 

“With Adverum shares appropriately trading below cash value to reflect the negative value of ADVM-022, we note that a reverse merger strategy to bring in assets with greater rationale for clinical development is a frequent outcome for companies in this situation,” the analysts wrote.

Shares of Adverum were down 16% to $2.52 in pre-market trading Friday morning. 

Adverum's pivot clears the way for Regeneron to continue dominating the DME market with Eylea, Leerink said. If Adverum's candidate makes it through the trial process and regulatory review, Leerink predicts a launch in 2028 that will barely be a blip on Eylea's radar. Regeneron's therapy is forecast to rake in $5.9 billion in the U.S. alone this year and next, rising to $9.8 billion globally in 2023, according to Leerink. 

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The decision also underscores the challenges of developing medicines for retinal injection. 

"The eye is obviously a very sensitive tissue site, and a host of other medicines that were apparently developed with good intentions (abicipar, Beovu, sunitinib, etc.) have failed or had limitations," the firm said in a note. 

Abicipar, developed by Allergan, was denied FDA approval in June 2020, denting new parent AbbVie which paid $63 billion for the aesthetics-focused drugmaker.

Novartis' Beovu has also faced challenges, with the Swiss drugmaker trimming its development pipeline for the approved therapy after vision-threatening side effects emerged. 

RBC said the FDA will demand "pristine safety" for approval in wet AMD given the history of troubling side effects seen with Allergan and Novartis' therapies, and because patients are already well managed in this indication. 

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Adverum is also facing a rival in Roche's bispecific antibody faricimab, which is poised for an FDA filing this year. The company posted results matching Eylea in DME and wet AMD, but patients were able to wait longer between treatments. This could provide patients with a more convenient option, chipping away at Regeneron's market. 

Editor's note: This story was updated at 11:30 a.m. ET on July 23, 2021, to include additional analyst commentary.