(Source of data: Bloomberg.com)
Homology Medicines (FIXX) is a gene editing company that has a novel AAV-HSCs technology which was licensed from the City of Hope Med Center. The company has a proprietary suite of 15 AAV-HSCs.
The company’s gene editing and gene therapy technologies are different from more common nuclease-based approaches. The company uses homology repair mechanism for gene therapy/gene editing without using exogenous nucleases. Other gene editing companies using nucleases use the non-homologous repair pathway. The key advantage that they are selling over nuclease based gene editing approaches is high specificity and safety by avoiding off target effects and highly efficient in vivo gene correction. They think nuclease based approaches are mainly good for gene knockout. It has its own CGMP 25,000 sq foot manufacturing facility which is expected to start manufacturing in H1, 2019.
NHEJ is more common repair mechanism after gene knockout or deletion but more prone to errors.
Homologous recombination steps:
In other gene therapy methods, the transferred DNA does not integrate into host DNA.
The entire gene can be transferred using their HR gene editing approach, thus enabling targeting of monogenic diseases. The target market is current estimated number of monogenic diseases= 3600. The initial targets are liver, CNS, bone marrow, and the eye since AAV-HSCs preferentially target these organs.
It is summarized in the figure shown below:
Phenylketonuria, PKU: It results due to deficiency of the enzyme, PAH, phenylalanine hydroxylase. Phenylalanine, Phe is not converted to tyrosine, so it builds up in the brain, leading toi impaired brain development, intellectual disability, seizures, etc.
Current available treatments:
- Restrictive diet: difficult to adhere to, not very effective. 88% adults and 79% adolescents are non compliant with diet restriction.
- Kuvan: synthetic version of BH4, a cofactor that is required for PAH activity, not very effective with diet. Global annual sales= $434M.
- Palynziq (Biomarin), enzyme therapy, phenylalanine ammonia lyase. Risk of anaphylaxis. Not shown in clinical trials to provide cognitive benefit.
The biomarker for measuring treatment effectiveness is blood Phe levels.
HMI-102: It is the homologous gene therapy for adult PKU.
Preclinical data for HMI-102 in mice: the target organ is liver.
As single intravenous injection of HMI-102 into these deficient mice resulted in reductions of serum Phe to levels that are within the range for normal mice. The reduction in serum Phe levels persisted for 48 weeks in treated mice on a normal protein diet. HMI-02 has FDA Orphan drug and Fast track designations for treating adult PKU.
A clinical phase 1/ 2 study is ongoing. The first patient was dosed in April. The first cohort is enrolling patients 18-55 years old. Data is expected in 2019.
HIMI-102 approach is gene therapy in adult PKU.
It uses gene editing (correction) in pediatric PKU (gene therapy is appropriate for slow dividing cells while gene editing is more appropriate for fast dividing cells). It is ongoing IND enabling studies.
(HMI-103 preclinical data)
Both HMI-102 and 103 aim to restore the PAH level. Just 10% of normal PAH level is enough to restore normal serum Phe levels.
The patents were obtained from the City of Hope and extend till 2031.
- American Gene Technologies is also developing a gene therapy for PKU, and has Orphan drug designation. It is using a lentiviral vector. In preclinical stage.
- Moderna Therapeutics is targeting PKU using mRNA therapeutics, in preclinical stage.
- Report of successful correction of PKU gene abnormalities by CRISPR/Cas9: https://www.ncbi.nlm.nih.gov/pubmed/27786189
- Report of correction of PKU gene abnormality using in vivo CRISPR/Cas base editing in mice: https://www.ncbi.nlm.nih.gov/pubmed/30297904
It is a gene therapy targeting metachromatic leukodystrophy, MLD. MLD is a lysosomal storage disease which results due to a mutation in ARSA gene or arylsulfatase A. Stem cell transplantation is used for its treatment but has limitations like chronic use of immunosuppression. Just 10-15% of normal enzyme activity could be curative.
A single iv dose of HMI-202 crossed the blood-brain-barrier in a mouse model. Increased human ARSA enzyme activity was seen to levels well-above the therapeutic threshold when compared to average adult human enzyme activity. Human ARSA enzyme activity levels between 10 to 375% of normal were observed and well-tolerated in a dose responsive manner after IV administration
Status: IND-enabling studies being initiated.
Potential competition: Orchard Therapeutics/Shire. Orchard Therapeutics is also developing a gene therapy against MD which is in registrational trial stage.
Examples include Leber congenital amaurosis and choroideremia. The company has collaborated with Novartis for this therapeutic area and is eligible for up to $530M in milestone payments from Novartis plus royalty payments on sales..
Preclinical data: Expression of GFP transgene was seen in all layers of retina till day 28 after subretinal injection in a minipig model.
Other planned indications:
Hemoglobinopathies: Sickle cell disease and beta-thalassemia, no preclinical data available yet. Sickle cell program was earlier licensed by Novartis who discontinued the collaboration later.
Other planned CNS diseases:
- Friedrich’s ataxia: It results due to mutations in a gene called frataxin, or FXN
- A subset of Gaucher’s disease that results in Parkinsonism: It results due to a defect in the gene for glucocerebrosidase
No preclinical data available for these two planned indications.
Patents were obtained from Caltech and extend till 2034.
Cash reserves were $188M at the end of Q1 2019 including the proceeds from the recent equity offering. Operating cash burn was $42.5M in in 2018. The cash reserves are enough till Q4, 2021 per the management. There is no long term debt.
Arch Ventures Fund bought 2% stake while 5AM Ventures reported 16.4% stake in the last equity offering this year. Arch Ventures has been known to invest early in disruptive companies like Alnylam, Juno Therapeutics, Grail, Bluebird Bio, etc. BB Biotech also opened a new position in the company’s stock in Q1.
Target addressable market opportunity:
U.S. prevalence= 15K, plus 300 new cases/year. At approx. $1M/patient, potential cumulative revenue opportunity= $15B, plus additional $300M/year.
EU prevalence= 25K. Potential revenue opportunity at $0.5M/year= $12.5B.
Compared to the large revenue opportunity in PKU where the company has a competitive advantage, the current market cap is only $973M.
The stock is consolidating after falling due to the recent equity offering. I expect it to move upwards as we get closer to the phase I/II data release for HMI-102 in adult PKU. However, it is possible that the stock could see a newer low if we see a sharp correction in the overall market. Key support level is $17.50-$18 if it falls further.
Rating Homology Medicines common stock Buy with 2-3 year timeframe.
My strategy will be to take a pilot long position (1/4th of the planned 2% capital allocation) at this level and then add further based on the stock price movement. If the stock falls further to $17.50-$18 support, I will add further to my long position.
Risks in the investment:
The company’s gene therapy and gene editing platform is in early stage. While the preclinical data has been promising, the data shown in preclinical studies may not be replicated in clinical studies. The efficacy may be lower in clinical studies and unexpected side effects may be seen. The company is also likely to require significant capital raise before any product candidate reaches the commercial stage.
Disclaimer: This article represents my own opinion and is not a substitute for professional investment advice. It does not represent a solicitation to buy or sell any security. Investors should do their own research and consult their financial adviser before making any investment. Investing in equities, especially biotech stocks has the risk of significant losses and may not be suitable for all investors. While the sources of information and data in this article have been checked, their accuracy cannot be completely guaranteed.
I/we have no position in FIXX but may buy a long position within next 72 hours.