REGENXBIO Inc. is a biotechnology company focused on developing adeno-associated virus (AAV) therapies for both common and rare diseases. Utilizing its proprietary NAV platform, REGENXBIO aims to create one-dose AAV treatments that offer lasting therapeutic effects by addressing the root causes of diseases.
AAV vectors deliver gene therapies to specific cells, optimizing efficacy and minimizing adverse immune responses. The company’s pipeline includes promising candidates such as ABBV-RGX-314 for age-related macular degeneration (AMD) and diabetic retinopathy (DR), RGX-202 for Duchenne muscular dystrophy (DMD), and RGX-121 for Hunter syndrome.
A strategic collaboration with AbbVie (ABBV) bolsters the development of ABBV-RGX-314. Despite inherent biotech risks, REGENXBIO’s intellectual property potential, total addressable market (TAM), and promising clinical trial data support a strong investment thesis.
Business Overview
REGENXBIO, founded in 2008 and headquartered in Rockville, Maryland, is a clinical-stage biotechnology company. It has developed the NAV Technology Platform, which generates one-dose AAV therapeutics with lasting therapeutic effects.
AAVs, which are viral vectors, deliver gene therapy to target cells, maximizing efficacy and minimizing unwanted side effects, such as adverse immune responses. Importantly, AAVs cannot reproduce and therefore do not cause diseases.
The NAV platform creates product candidates, and selected NAV vectors are licensed to other biotechnology firms.
The company’s pipeline includes programs targeting retinal, neuromuscular, and neurodegenerative diseases. The retinal research features ABBV-RGX-314 for wet AMD and DR.
This one-time treatment uses the NAV AAV8 vector to deliver a gene encoding a monoclonal anti-vascular endothelial growth factor (anti-VEGF) antibody fragment to retinal cells. VEGF stimulates abnormal blood vessel growth under the retina, leading to vision loss.
ABBV-RGX-314 inhibits VEGF, preventing the proliferation of these abnormal vessels. The therapy is in phases 2 and 3 trials for wet AMD, with regulatory submissions planned for late 2025 and early 2026. Research for DR is in phase 2.
In the neuromuscular program, RGX-202 is a gene therapy in phase 2 for DMD. This therapy uses an AAV8 vector to deliver a transgene that repairs DMD-related genetic alterations.
The transgene encodes a shortened but functional dystrophin protein called microdystrophin, which can restore muscle cell functionality. RGX-202 provides a one-dose treatment addressing the disease’s root cause and has the potential to halt DMD’s progression.
The neurodegenerative disease program features RGX-121, currently in a pivotal phase 1/2/3 CAMPSIITE trial. It uses the AAV9 vector to deliver a functional copy of the gene responsible for producing the lysosomal enzyme iduronate-2-sulfatase (IDS).
A deficiency in this enzyme causes Mucopolysaccharidosis Type II (MPS II), also known as Hunter syndrome. The IDS gene restores enzyme production, reducing glycosaminoglycan (GAG) accumulation and preventing cognitive decline and other neurological symptoms of MPS II.
RGX-121 has received several FDA designations, including Orphan Drug, Rare Pediatric Disease, Fast Track, and Regenerative Medicine Advanced Therapy. A Biologics License Application (BLA) for RGX-121 is planned for 2024.
Market Potential
In March 2024, REGENXBIO and AbbVie published two-year data for ABBV-RGX-314 indicated for wet AMD. The results demonstrated the gene therapy’s safety and efficacy as a subretinal injection. Data from 1,200 patients worldwide will contribute to developing a one-time treatment for wet AMD, potentially establishing ABBV-RGX-314 as the new standard of care.
AbbVie paid $370 million upfront in 2021 for the rights to this drug, with up to $1.38 billion in additional development milestones and equal profit-sharing from US distribution. AbbVie will manage commercialization outside the US and pay REGENXBIO a percentage of revenue as royalties.
RGX-202 has shown efficacy in DMD for pediatric and older patients with a reasonable safety profile. Safety considerations are critical, especially in light of recent tragic effects in similar gene therapy trials by other companies.
So far, RGX-202 has shown positive safety signals with no serious adverse events (SAEs), which is key in differentiating it from other DMD gene therapies. The trial focusing on RGX-202’s safety profile started in early 2023 and is expected to complete by late 2025.
REGENXBIO’s earnings call highlighted progression toward pivotal trials. The global market potential for ABBV-RGX-314 in the next five years is approximately $17 billion. The US anti-VEGF market is estimated at $4.5 billion annually, with 800,000 wet AMD patients receiving treatment every 4 to 16 weeks.
The US retinal disease market is forecasted to reach $11.5 billion, $4.5 billion in the EU, and $1 billion in Japan. Similarly, 20 million patients in the US, EU, and Japan suffer from DR. The global market for DMD is estimated at $7 billion, and MPS II around $1 billion. Successful development and commercialization of these drug candidates could allow REGENXBIO to tap into a significant TAM.
Valuation Analysis
REGENXBIO trades at a $693.5 million market cap, positioning it as a medium-sized pre-product biotech company. Despite the absence of product revenues for the foreseeable future, royalty revenues from Zolgensma should persist.
There is also the potential for a $200 million payment from AbbVie upon dosing the first patient in a pivotal trial for suprachoroidal delivery. This potential revenue stream underpins Seeking Alpha’s projection of $244.9 million in revenues by 2025, which would price REGENXBIO at a forward price-to-sales (P/S) ratio of 2.8, below the sector median forward P/S multiple of 3.7.
The company’s balance sheet shows $113 million in cash and equivalents, plus $225.7 million in marketable securities, totaling $338.7 million in readily accessible liquidity after a $140 million equity raise. REGENXBIO’s latest quarterly cash burn was $56.1 million, implying a yearly cash burn rate of $224.4 million and suggesting a cash runway of about 1.5 years, aligning with the company’s cash runway estimate into 2026.
REGENXBIO’s financial condition appears solid, especially after the recent capital raise. Its research programs are progressing well along their regulatory pathways, with ABBV-RGX-314, RGX-202, and RGX-121 being the most promising candidates.
The backing of AbbVie for ABBV-RGX-314, steady royalty payments from Zolgensma, and the potential $200 million milestone payment from AbbVie support REGENXBIO’s long-term viability. Its low P/S ratio relative to peers suggests undervaluation, with numerous catalysts anticipated in 2024 and 2025.
Risk Analysis
However, a significant portion of the forecasted 2025 revenues depends on the successful progress of RGX-314’s research. While current data appears favorable, the safety profile remains speculative until phase 2 and 3 trials are completed. Any significant setbacks could delay or invalidate the anticipated $200 million milestone payment, a key assumption in the strong-buy rating.
Zolgensma’s revenue stability is another assumption underpinning the cash runway estimate. If Zolgensma revenues decline significantly, REGENXBIO might need another equity offering in 2025. The company’s substantial cash burn means it is heavily reliant on smooth research progression without setbacks.
Despite these risks, REGENXBIO’s intellectual property potential and regulatory progress support a positive investment outlook.
Strong Investment Consideration
REGENXBIO presents a compelling opportunity in the biotech sector with its diverse product pipeline, steady royalty revenue stream, and potential significant milestone payouts. The company’s robust balance sheet and strategic collaborations, particularly with AbbVie, bolster its high investment rate in late-stage R&D.
While inherent risks exist, REGENXBIO’s significant IP potential, large TAM, and promising clinical trial data make it a strong consideration for investors cognizant of the biotech sector’s volatility.
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I’m Marcus Reynolds, a versatile writer known for connecting the dots between various news topics. My writing offers clear and thought-provoking insights into current events worldwide. I strive to keep you informed and engaged, making the ever-evolving world of news easier to navigate and understand.
