IPO Report: REGENXBIO Inc. (RGNX)

Francis Gaskins |

REGENXBIO Inc. (RGNX) is a leading biotechnology company focused on the development, commercialization and licensing of recombinant adeno-associated virus (AAV) gene therapy. The company is based in Rockville, MD.

Two other companies are scheduled for the week of Sept. 14. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Morgan Stanley, BofA Merrill Lynch, Piper Jaffray
Co-managers: Chardan Capital Markets

End of lockup (180 days): Tuesday, March 15, 2016
End of 10-day quiet period: Sept. 27, 2015

Analyst report estimate: for paid subscribers only

RGNX scheduled a $100 million IPO with a market capitalization of $443 million at a price range midpoint of $18 for Thursday, Sept. 17, 2015 on Nasdaq.  The price has been raised to $22.  No change in conclusion.

RGNX IPO Summary

RGNX is a leading biotechnology company focused on the development, commercialization and licensing of recombinant adeno-associated virus (AAV) gene therapy.

Approximately 70% of all AAV gene therapy clinical trials relating to new treatment Investigational New Drug applications (INDs) posted on the United States government clinical trials database from 2012 through 2014 used NAV Vectors.

RGNX IPO Valuation

Glossary

Accumulated deficit (mm)

.

.

-$39

     

Per share dilution

.

.

-$11.04

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

REGENXBIO  (RGNX)

$443

110.7

-22.1

2.6

2.6

23%

annualizing June 6 mos

       


RGNX Conclusion

Buy

Broadly adapted gene therapy delivery platform

23 product candidates

Rights to 100 patents

Price to book of 2.6

P/E of -22 indicating relatively low cash burn relative to market cap

RGNX Business

RGNX is a leading biotechnology company focused on the development, commercialization and licensing of recombinant adeno-associated virus (AAV) gene therapy.

Approximately 70% of all AAV gene therapy clinical trials relating to new treatment Investigational New Drug applications (INDs) posted on the United States government clinical trials database from 2012 through 2014 used NAV Vectors.

RGNX’s proprietary AAV gene delivery platform (RGNX’s NAV Technology Platform) consists of exclusive rights to over 100 novel AAV vectors, including AAV7, AAV8, AAV9 and AAVrh10 (NAV Vectors).

In AAV gene therapy, the viral genes are removed from the AAV, a small, non-pathogenic cold virus, creating a biological delivery vehicle called a vector.

A therapeutic gene sequence is then inserted, creating a recombinant vector.

Internally developed candidates
RGNX's most advanced internally developed candidates include programs for the treatment of two severe, rare genetic diseases:

homozygous familial hypercholesterolemia (HoFH) and Mucopolysaccharidosis Type I (MPS I).

RGNX expects these programs to enter Phase I/II clinical trials in the first half of 2016.

RGNC also has a program for wet age-related macular degeneration (wet AMD) that is in the preclinical stage and for which RGNX expects to file an Investigational New Drug application (IND) in the second half of 2016.

RGNX plans to build internal gene therapy franchises in the metabolic, neurodegenerative and retinal therapeutic areas, and develop multiple product candidates in these and other areas.

23 Product candidates
RGNX’s NAV Technology Platform is currently being applied in the development of 23 product candidates for a variety of diseases, including five internally developed product candidates and 18 partnered product candidates developed by RGNX’s NAV Technology Licensees.

RGNX believes "there are many more potential applications of our NAV Technology Platform than we currently have the resources to develop on our own."

Most of RGNX’s NAV Technology Licensees have licensed specific NAV Vectors for the indications they are pursuing.

RGNX maintains rights to all unlicensed indications as well as retaining the right to its NAV Technology Platform for unlicensed vectors in disease indications for which RGNX has granted licenses.

Proprietary NAV Technology Platform for Gene Delivery
The foundation of RGNX's NAV Technology Platform was discovered in an effort to identify next generation AAV vectors that could overcome the limitations of earlier generation AAV vectors (AAV1 through AAV6). In AAV gene therapy, the viral genes are removed from the AAV, a small, non-pathogenic cold virus, creating a biological delivery vehicle called a vector.

A therapeutic gene sequence is then inserted, creating a recombinant vector.

RGNX believes the key benefits of NAV Vectors over earlier generation AAV vectors include: higher gene expression, longer-term gene expression, broad and novel tissue selectivity, lower immune response and improved manufacturability.

RGNX believes that AAV gene therapies that incorporate the proprietary advances from its NAV Technology Platform (NAV Gene Therapy) have significantly enhanced profiles as potential therapeutics.

Broadly adapted
RGNX believes its NAV Vectors have been broadly adopted, as approximately 70% of all AAV gene therapy clinical trials relating to new treatment INDs posted on the United States’ government clinical trials database from 2012 through 2014 used RGNX's NAV Vectors.

Proof-of-concept of RGNX's NAV Technology Platform is supported by three separately reported Phase I/II third-party clinical trials using AAV8 for the treatment of hemophilia B and a Phase I clinical trial using AAV9 for the treatment of spinal muscular atrophy.

Broad pipeline
RGNX is applying its NAV Technology Platform in an effort to generate a broad pipeline of best-in-class and often first-in-class AAV gene therapy treatments.

RGNX’s NAV Technology Platform is covered by more than 100 licensed patents and patent applications worldwide. RGNX’s product candidates, which are designed for a variety of diseases, incorporate proprietary advances in AAV gene therapy that significantly enhance their profiles as potential therapeutics.

The benefits of RGNX’s NAV Technology Platform have been observed across several clinical trials and studies conducted by RGNX’s development partners and third-party investigators.

Approximately 70% of all AAV gene therapy clinical trials relating to new treatment Investigational New Drug applications (INDs) posted on the United States government clinical trials database from 2012 through 2014 used NAV Vectors.

The foundation of RGNX’s NAV Technology Platform was discovered in an effort to identify next generation AAV vectors that could overcome the limitations of earlier generation AAV vectors (AAV1 through AAV6). RGNX believes the key benefits of NAV Vectors over earlier generation AAV vectors include:

higher gene expression;

longer-term gene expression;

broad and novel tissue selectivity;

lower immune response; and

improved manufacturability.

Potentially transform the treatment paradigm
RGNX believes that gene therapies using its NAV Technology Platform (NAV Gene Therapy) have the potential to transform the treatment paradigm for patients with a wide range of severe diseases with significant unmet medical needs.

NAV Vectors have demonstrated stable expression in animals for over eight years.

Moreover, AAV8 vectors have demonstrated stable expression for over four years in a clinical trial for the treatment of hemophilia B.

In certain monogenic, recessive diseases, NAV Gene Therapy may provide clinical benefits for patients that are substantially greater than currently available therapies.

In other types of diseases, such as hemophilia, NAV Gene Therapy has the potential to replace a lifetime of continuous treatment of standard protein replacement therapy and other treatment approaches with a single treatment, which could reduce health care system costs while also improving patients’ quality of life.

RGNX believes that the potential efficiency and broad applicability of its NAV Technology Platform may allow us to develop NAV Gene Therapy treatments that are injected or infused into the bloodstream, spinal fluid or directly into the target tissue to treat a wide range of diseases.

Mission
RGNX’s mission is to transform the lives of patients suffering from severe diseases with significant unmet medical needs by developing and commercializing gene therapy products administered directly into the body, or in vivo, based on RGNX’s NAV Technology Platform.

RGNX seeks to accomplish its mission through a combination of its internal development efforts and the efforts of its third-party licensees (NAV Technology Licensees).

Intellectual property

RGNX has exclusively licensed rights relevant to its NAV Technology which includes novel recombinant AAV vectors AAV7, AAV8, AAV9, and AAVrh10, among others.

RGNX’s licensed patent portfolio includes exclusive rights to more than 100 patents and patent applications worldwide relating to composition of matter patents and/or patent applications for RGNX’s novel AAV vectors, as well as methods for their manufacture and therapeutic uses. RGNX also possesses substantial know-how and trade secrets relating to NAV Technology.

RGNX’s patent portfolio includes the following licensed patents and patent applications relating to its novel AAV vectors:

One issued U.S. patent relating to AAV7 vectors and uses thereof, currently scheduled to expire in 2026, including patent term adjustment;

One granted European patent relating to AAV7 vectors and uses thereof, currently scheduled to expire in 2022;

Five issued U.S. patents relating to AAV8 vectors and uses thereof, which are currently scheduled to expire in 2022 to 2026, including patent term adjustment;

Two pending European patent applications relating to AAV8 vectors - any European patent that issues from these pending patent applications would currently be expected to expire in 2022;

One issued U.S. patent relating to AAV9 vectors and uses thereof, currently scheduled to expire in 2026, including patent term adjustment;

One granted European patent relating to AAV9 vectors and uses thereof, currently scheduled to expire in 2024;

One pending U.S. patent application relating to AAVrh10 vectors - any U.S. patent that issues from this pending patent application is currently scheduled to expire in 2022; and

One granted European patent relating to AAVrh10 vectors is currently scheduled to expire in 2022.

RGNX’s licensed patent portfolio also includes patents and patent applications relating to the following product candidates:

A U.S. patent relating to RGX-501 that is currently scheduled to expire in 2026, including patent term adjustment; and

Two International Patent applications filed pursuant to the Patent Cooperation Treaty (PCT) and pending U.S. patent applications relating to RGX-111 and RGX-121 - any U.S. patent and European patent that issues from these pending PCT applications relating to RGX-111 and RGX-121 is currently scheduled to expire in 2034.

RGNX Competition

RGNX is aware of several companies focused on developing gene therapies in various disease indications, including Applied Genetic Technologies Corporation, Avalanche Biotechnologies, Inc., BioMarin Pharmaceutical Inc., bluebird bio, Inc., Genzyme Corporation (Genzyme), Sangamo BioSciences, Inc., Spark Therapeutics, Inc. and uniQure N.V. as well as several companies addressing other methods for modifying genes and regulating gene expression.

Additionally, RGNX has sublicensed its NAV Technology Platform for developing gene therapies in various disease indications to its NAV Technology Licensees.

Not only must RGNX compete with other companies that are focused on gene therapy products using earlier generation AAV technology and other gene therapy platforms, but any products that RGNX may commercialize will have to compete with existing therapies and new therapies that may become available in the future.

There are other organizations working to improve existing therapies or to develop new therapies for RGNX’s initially selected disease indications. Depending on how successful these efforts are, it is possible they may increase the barriers to adoption and success for RGNX’s product candidates, if approved. These efforts include the following:

HoFH.There are several companies with marketed products for the treatment of HoFH, including Aegerion (Juxtapid), Genzyme (Kynamro) and Amgen (Repatha, currently approved in the United States and Europe).

MPS I.There is one principal competitor with a marketed product for the treatment of MPS I, Sanofi (Aldurazyme).

MPS II.The principal marketed competition for MPS II is a systemic enzyme replacement therapy, Elaprase (idursulfase), which is marketed by Shire.

Wet AMD.Marketed competition for wet AMD largely consists of anti-VEGF therapies developed by Roche/Genentech (Lucentis, Avastin) and Regeneron (Eylea).

5% shareholders pre-IPO
Entities Affiliated with Allan M. Fox                    16.9%

Entities Affiliated with John Daniel Kiser             12.0%

Entities Affiliated with Venrock Partners             9.5%                                        

Brookside Capital Partners Fund, L.P.                9.2%

Dividends

No dividends are planned.

Use of proceeds

RNGX expects to receive $90 million from its IPO and use it for the following:

$15.0 million to fund external research and development expenses to advance RGNX’s lead product candidate RGX-501 for the treatment of HoFH through Phase I/II clinical trials;

$13.0 million to fund external research and development expenses to advance RGNX’s product candidate RGX-111 for the treatment of MPS I through Phase I/II clinical trials;

$10.0 million to fund external research and development expenses to advance RGNX’s product candidate RGX-314 for the treatment of wet AMD through filing of an IND in preparation for a Phase I clinical trial;

$23.0 million to fund research and development expenses of RGNX’s other internally developed product candidates and to identify and advance new programs or product candidates into preclinical studies; and

the remainder for working capital, general and administrative expenses, internal research and development expenses, manufacturing and other general corporate purposes, including in-licenses and potential acquisitions.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
RGNX REGENXBIO Inc. 20.90 -0.10 -0.48 238,191

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