Rocket Pharmaceuticals To Gain Nasdaq Listing via Inotek Merger

Equities Research |

Inotek Pharmaceuticals (Nasdaq: ITEK) shareholders got a reprieve last week as Rocket Pharmaceuticals announced a reverse merger into the battered remains of Inotek. It was the first bit of positive news to emerge from Inotek in the wake of a second successive poor clinical result from its lead candidate to treat glaucoma. Inotek shareholders will own about 19% of the new entity, with current Rocket Pharma shareholders owning about 81% of the combined company, subject to adjustment depending on Inotek's net cash level at closing. The combined company will be known as Rocket Pharmaceuticals. No word on the new ticket yet, though RCKT and ROKT appear to be available...

Rocket Pharma has a pipeline of gene therapy programs to treat rare diseases with complex and challenging treatment options, such as bone marrow and organ transplants. The new company will be led by CEO Gaurav Shah, MD. In a transcript of the conference call about the merger that was filed yesterday with the SEC, Dr. Shah said that he's "a medical oncologist/hematologist trained at Brigham Women’s Hospital and Memorial-Sloan Kettering cancer center, before transitioning to industry drug development initially at ImClone/Eli Lilly and then at Novartis. Most recently, at Novartis, I served as a Global Program Head in the Cell and Gene Therapies Unit and helped spearhead development efforts for CART-19 for patients with leukemia and lymphoma. This was one of the first times in the US that cell and gene therapies were brought from an academic to an industry setting, in support of a pivotal registration trial."

The company has five distinct clinical programs, with a focus on lentiviral-based programs to treat bone marrow disorders caused by gene mutations. Lentiviruses can deliver large amounts of genetic information into the DNA of host cells and can integrate into both dividing and nondividing cells. These programs aim to enable transduction (transfer of genetic material) of patients’ stem cells by means of 3rd-generation, self-inactivating lentiviral vectors to optimize the potential for gene-correction and stem cell engraftment such that the functional deficits of each disorder are corrected, with sufficient quantities of healthy protein manufactured by patients’ own hematopoietic cells.



Lead programs include Fanconi Anemia (FA), Leukocyte Adhesion Deficiency-1 (LAD-1) and Pyruvate Kinase Deficiency (PKD). Current treatment options available for patients with these diseases are limited and include allogeneic bone marrow transplant procedures, which are often complicated by graft versus host disease and a lack of available donors. Longer term, Rocket is also developing a lentiviral-based gene therapy for infantile malignant osteopetrosis, an inherited bone disorder.

Additionally, Rocket is advancing an AAV-based program for an undisclosed rare pediatric disease with a significant estimated patient population size (15,000+ prevalence in the US/EU). AAV are adeno-associated viruses - common, naturally occurring viruses that have been shown to be well-tolerated and effective as gene therapy delivery vehicles. Dr. Shah said on the call that "it is a monogenic pediatric disease with early mortality. Organ transplant, when available, is costly and toxic. We estimate this disease is up to twice as common as Fabry disease and that prevalence is likely at least 15,000 patients in developed markets. We believe this is our biggest commercial opportunity and the first gene therapy being developed for this disease."

Dr. Shah said further, "We believe 2018 will be a transformative year for Rocket... We believe the first stage of growth for Rocket will come from these initial gene therapy trials where we believe we have a high probability of success. Including Fanconi Anemia, which is already in the clinic, we expect up to four programs to be in the clinic in 2018, with one or more clinical proof of concept data readouts in 2018."

We think this was the best possible outcome for the remaining Inotek shareholders, and we look forward to seeing how Dr. Shah and his team can execute into next year. This is not a short term trade by any means, but we certainly like where the new Rocket Pharmaceuticals will sit on the risk-reward spectrum.

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Companies

Symbol Name Price Change % Volume
ITEK Inotek Pharmaceuticals Corporation 2.30 0.08 3.60 561,078 Trade

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