Britain's Queen Victoria left an unfortunate legacy: Her
descendants, spread across numerous European royal families, all
inherited a genetic mutation that causes hemophilia. In fact, one
out of every 5,000 to 10,000 males in the world is born with the
#-ad_banner-#But hemophilia may soon be a relic of the past.
Baxter International's (NYSE:
recent acquisition of Chatham Therapeutics
has led doctors to anticipate a reworking of the genes that cause
In fact, a wide range of genetic mutations hidden in human DNA
are now being targeted by biotechnology researchers.
The notion of fixing broken genes, so-called gene therapy, has
been around since 1972 -- and once seemed like a bad idea.
Clinical trials involving the approach sometimes led to sudden
and lethal outcomes for patients.
Yet over the past decade, as researchers have developed a
better understanding of the human genome, major progress has been
made. By 2012, the first gene therapy drug, Glybera,
received regulatory approval
, and the next half decade could bring dozens more.
The company behind Glybera,
, has a series of other gene therapies undergoing clinical
testing as well. UniQure's targets include diseases such as acute
intermittent porphyria, Parkinson's disease, and Sanfilippo
Investors have delivered an underwhelming response to
UniQure's IPO in February. QURE surged to $18 in the first few
weeks of trading but has since slid nearly 30% as biotech stocks
have plunged in recent weeks.
Yet there is a lot to like about this business model: Analysts
at Leerink Swan say UniQure "currently appears maturely
positioned with the multitude of layers key to successful gene
therapy," citing its deep pipeline of drugs in clinical trials,
hefty amount of intellectual property, and looming catalysts in
the form of trial progress updates. Baxter's recent acquisition
of Chatham Therapeutics "reinforces large pharma's interest in
QURE's deeper pipeline," they say, and see shares rising to $25,
or nearly twice current levels.
UniQure isn't alone in the field of gene therapy. Other
companies to track include:
1. Celladon (Nasdaq:
|This stock also had an IPO debut just a few months ago,
and though its shares also plunged as part of the biotech
rout, they've started to rebound. The key catalyst: On
April 10, the FDA granted Celladon's Mydicar a
"breakthrough therapy designation" for its approach in
altering the action of enzymes that can
lead to heart disease
The nod from the FDA means that Celladon's clinical
trial process will now be greatly accelerated. The FDA is
keen to expedite the approval process for any drug that can
save money. Indeed, the cost of treating heart failure is a
growing burden on the health care system, especially as our
population ages. Celladon's approach could conceivably save
millions of dollars in health care costs. Thus far,
Celladon's Mydicar has shown impressive rates of efficacy
2. Bluebird Bio (Nasdaq:
|Film buffs may recall this firm's roots in the movie
"Lorenzo's Oil." In that film, a couple worked feverishly
to find a cure for their son's adrenoleukodystrophy (
). That work led to the eventual founding of Bluebird Bio,
which has a pair of ALD drugs in early-stage clinical
Bluebird is also seeking gene-based therapies for a
blood disorder known as beta thalassemia that inhibits the
production of hemoglobin. And a partnership with
is aimed at altering the behavior of chimeric antigen
Though a considerable amount of fanfare after its June
2013 IPO pushed shares above $35 in early trading, they
have since slumped to $21. In effect, its market value has
slid from more than $800 million to a recent $500 million.
And that highlights the inherent challenge with these
What is Bluebird's drug development platform worth? If
the company's approach succeeds and opens the door to the
cure for hard-to-treat genetic diseases, that market value
will be many multiples higher.
Bluebird Bio has more than $200 million in cash on hand.
That gives the company ample time to develop its drug
platforms, as annual operating expenses are less than $50
million. Companies that remain dependent on capital markets
may not be able to tap them, and highlight an extra degree
of risk for biotech investors.
3. Applied Genetics Technologies (Nasdaq:
|This is the newest kid on the block (in terms of its
longevity as a public company), with an IPO completed less
than three weeks ago. AGTC (which is a clever ticker symbol
for adenine, guanine, thymine and cytosine, the components
of DNA) targets people that are vision-impaired due to
This company isn't as far along as its peers, and it
will be several years before investors get a better sense
of whether its key drugs can pass muster in the
all-important Phase II trials, which represents a much
higher hurdle rate in terms of safety and efficacy when
compared to pre-clinical and Phase I trials.
Risks to Consider:
Gene therapy holds a great deal of promise, but has yet to
prove its efficacy on a long-term basis. If you invest in these
firms, patience will be required as they will remain pre-revenue
for quite some time.
Action to Take -->
The recent pullback in these stocks is not related to concerns
about gene therapy. It's due instead to a general distrust for
biotech stocks in recent weeks. For investors with the ability to
stomach volatility and risk, the pullback can be seen as a great
entry point. Of these companies, UniQure appears to offer the
most appealing broad-based approach to gene therapy, and its
sub-$150 million market value also makes it a relative
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