Bhavneesh Sharma

Top 20 Ranking (28.2% Avg Return) --TipRanks

Investment Rationale For MeiraGTx, Gene Therapy Company and Acquisition Candidate

I bought MeiraGTx (MGTX) stock last week. Shares are up 2x this year and have pulled back 30% from 52-week highs. I expect the upside momentum to resume considering upcoming data releases.

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(Source: Bloomberg)

The investment rationale is provided below:

  1. An attractive licensing deal with Johnson and Johnson/Janssen (JNN) adds validation to the gene therapy platform. JNJ has signed a deal for its gene therapy pipeline in inherited eye diseases, including achromatopsia (ACHM) caused by mutations in CNGB3 and CNGA3 mutations (Phase I/II trial was initiated in ACHMP-CNGA3 in Q2), and X-linked retinitis pigmentosa (XLRP). JNJ paid $100M in cash front, and the deal has the potential for an additional $340M in milestone payments for MGTX. The target market is 12K people with ACHM-CNGB3 mutation (U.S., EU5, Japan), 9600 people with ACHM-CNGA3 mutation (U.S., EU5, Japan) and 20K with XLRP due to RPGR deficiency (US, EU5, Japan). 

  2. The company’s AAV vector gene therapy program in retinal dystrophy due to RPE65 deficiency has shown better results than that shown by Spark Therapeutics (ONCE), which was acquired for $4.8 billion by Roche. MGTX has optimized its AAV-RPE65 vector resulting in a 4x increase in transfection efficiency, a 20x increase in protein expression, a 7x increase in protein expression, and a 2.5x increase in mRNA expression. 

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(from the investor presentation)

Interim efficacy data from an ongoing Phase I/II trial was released in May 2019 from 15 patients. The therapy was safe and well-tolerated. Efficacy endpoint like increase in visual acuity, mobility, and retinal sensitivity were achieved with statistical significance vs. the control. Also, no retinal thinning was seen, unlike Spark Therapeutics gene therapy. Longer-term follow-up data from this trial is expected later this year.

  1. Another differentiating factor for the company’s gene therapy program in inherited eye diseases compared to competition like Applied Genetic Technologies (AGTC) is the technology of an off/on switch (a small molecule that can be administered orally) to control gene therapy expression.

  2. The company is conducting natural history studies for inherited eye diseases in its pipeline, which is another differentiating factor from the competition. The natural history studies are being conducted at the Moorfield Eye Hospital in London, U.K.

  3. It has partnerships with leading ophthalmology academic centers throughout the world, including Massachusetts Eye and Ear (Harvard), University of Michigan’s Kellogg Eye Center, and University College of London (UCL) Institute of Ophthalmology and Moorfield Eye Hospital (London). 

  4. Apart from inherited eye diseases, the company also in-licensed a program in Sjogren’s syndrome from the National Institute of Health (NIH). This disease affects 4M people in the U.S.and is another future revenue driver.

  5. The company has its own cGMP certified, 29,000 sq. foot size manufacturing facility for its gene therapy pipeline, which is another asset.

  6. Apart from inherited eye diseases and Sjogren’s syndrome, the company has a diverse pipeline as shown in the figure given below, adding several potential revenue drivers in the future. Of note is the AAV-GAD gene therapy program in Parkinson’s disease where it has shown early proof-of-concept efficacy data (competition includes Voyager Therapeutics, Prevail Therapeutics, and Axovant).A pasted image

(AAV-GAD Phase 2 data in Parkinson’s disease, from the investor presentation)

  1. Cash reserves are adequate ($214M at Q2 end), at approx. $20M of operating cash use per quarter, and are expected as $290M after the recent offering in August. I don’t anticipate a capital raise for at least the next 12 months.

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(MeiraGtx R&D pipeline, from the investor presentation)

My timeframe for this investment is minimum of 2-3 years and I expect the company to be acquired at a premium within this timeframe.

Risks in the investment include disappointing data from its gene therapy program, unexpected side effects like immunogenicity, etc. Gene therapy is an evolving field and thus suitable for aggressive investors looking for high reward/high-risk investments.


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 advisor 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 are long MGTX. 

Bhavneesh Sharma covers biotech as one of the original contributing analysts at FATRADER. A market expert with a medical degree and MBA, he is ranked among the top 15 financial bloggers and top 100 overall financial experts (including Wall Street analysts) on TipRanks.
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