GENE THERAPY: REGAL PROFITS FROM CURING “THE ROYAL DISEASE”?

A Cure for Hemophilia? BioMarin Attempts to Stop the Bleeding with a Single Shot

By Matthew Rojas, Biotech Analyst 

A Little Bit of History:

Most people recall learning about hemophilia from the history books. Specifically, Queen Victoria of England, who ruled from 1837-1901, was a suspected carrier of the hemophilia B trait that causes the infamous, potentially fatal bleeding disorder. Since then, hemophilia has commonly been referred to as a “royal disease” due to its prevalence in various royal families throughout England, Germany, Russia, and Spain during the 19th and 20th centuries.

The Current Situation:

In the United States, there are approximately 20,000 people with hemophilia, and an estimated more than 400,000 individuals have the disorder worldwide. In addition to hemophilia B, there is also hemophilia A. The difference between the two conditions lies in which clotting protein is defective or missing — for hemophilia B it is factor IX and for hemophilia A, factor VIII. Nevertheless, the symptoms of both variations of hemophilia are the same and range in severity from excessive bleeding only after an injury to frequent, spontaneous bleeding.

Presently, people with hemophilia A or B need infusions of the respective clotting protein two to three times per week. Not to mention, the weekly injections do not stop all bleeding episodes. Going to the doctor this frequently is extremely time-consuming, making it inconvenient for most individuals. Hence, many people with hemophilia fail to receive adequate treatment for their condition, which puts them at great risk. There is a pressing need for a more efficient way to treat individuals with hemophilia — this is where BioMarin comes to the rescue.

Gene Therapy:

BioMarin is a California-based biotechnology company that focuses on rare diseases driven by genetic causes. Currently, they have something revolutionary in their clinical pipeline for patients suffering from hemophilia A: valoctocogene roxaparvovec or valrox. Unlike traditional methods for treating hemophilia, valrox does not require repeated injections to temporarily mitigate symptoms; valrox uses gene therapy and only requires a single infusion to cure hemophilia A patients. Yes, you read that right — cure. Gene therapy is a complicated process that works by inserting genetic material, via a carrier or vector, into cells so that they can make a protein — in this case, factor VIII. For valrox, the vector is AAV5; a concern arose because people with AAV5 antibodies are ineligible to receive valrox. However, BioMarin estimates that 80% of people with hemophilia A do not have AAV5 immunity, so this should not be a problem. 

A cure almost seems too good to be true, but the data are clear. In BioMarin’s Phase III clinical trial, seven out of 16 hemophilia A patients exhibited required levels of factor VIII. The company submitted this data along with three years of Phase I/II data for FDA approval. The application is currently under priority review, and a decision is expected on August 21, 2020. Therefore, now is the perfect time to invest in BioMarin because its current stock price does not reflect the potential revenue from valrox in the near future.

The Power of the First Mover:

According to Hank Fuchs, president, Global Research and Development at BioMarin, “Valoctocogene roxaparvovec has the potential to be the first gene therapy to be approved in any type of hemophilia”. In the gene therapy space, it is critical to be a first mover because once patients are treated, they are taken off the market. After all, people only need a single shot.

Some of BioMarin’s competitors include Pfizer and Sangamo Therapeutics’ SB-525 and Spark Therapeutics’ SPK-8011, both gene therapies for hemophilia A. However, SB-525 is still in the process of Phase III clinical trials, and Spark ran into trouble when one patient ended up in the hospital due to an immune reaction related to SPK-8011. On the other hand, valrox is safe, has already completed its clinical trials, and is currently under priority review by the FDA. Thus, BioMarin is on track to be the first mover.

To further ensure its dominance in the hemophilia A gene therapy space, BioMarin increased the number of doses its gene therapy facility could produce from 4,000 to 10,000. To put that increase in perspective, the company can now treat all of the hemophilia A patients in the United States in two years. If established as the first mover, BioMarin has sufficient capacity to quickly dose hemophilia A patients before other gene therapies are approved to go to market.

Cost-Effectiveness:

As stated above, the current treatments for hemophilia A are weekly, expensive injections of prophylactic FVIII. Patients are dependent on these injections for their entire lives, costing an estimated $700,000 to $750,000 per year. Also, many hemophilia patients have greater costs due to frequent hospital visits, procedures, various tests, etc.

One study analyzes the possible cost-effectiveness of valrox compared to traditional prophylactic FVIII injections. The results are astounding — the average patient cost of valrox is an estimated $16.7 million, whereas the average patient cost of the prophylactic FVIII injections is an estimated $23.5 million. Therefore, valrox provides a reduction in costs of $6.8 million per patient, on average. Because valrox is cheaper and more effective, it is likely to become the dominant way that hemophilia A patients are treated.

Stock and Financials: 

Unlike many biotechnology companies, BioMarin’s stock (BMRN) has come out on top at the tail-end of the COVID-19 pandemic. Before the crisis, the company was trading at around $97.00, and now the share price has increased by about 10% to $106.00. This increase in share price is promising because if BioMarin can perform well in times of economic-downturn, imagine what they can do in times of economic health. The reason for this continued growth is likely because BioMarin has steady revenue streams from a diversified portfolio of products for rare diseases; in 2019 alone, the company generated nearly $1.7 billion in revenue from its product lines, a 13% increase compared to 2018. With the likely approval of valrox in late August, I expect that the stock price will increase even further. 

Furthermore, BioMarin has solid financials across all of its first-quarter 2020 statements. As of its most recent balance sheet, BioMarin has a current ratio slightly above 1, indicating that it can cover its short-term debt obligations. Additionally, the company generated over $100 million in revenues in the first quarter, a 25% increase from the fourth quarter of 2019. Lastly, BioMarin ended the most recent quarter with an increase of about $40 million in cash, which shows that it can generate liquidity even in times of crisis. BioMarin’s financials are stronger than ever, allowing it to continually achieve success.

In Summary:

Hundreds of thousands of hemophilia patients around the world have an unmet need: a permanent treatment for their disorder. BioMarin meets that need. With the use of revolutionary gene therapy, BioMarin has developed valrox, a single infusion that will cure hemophilia A patients once and for all. Not only is valrox more effective than the leading treatments for hemophilia A, but it is also much cheaper, saving patients and payers millions of dollars. With BioMarin scheduled to be the first-mover in the hemophilia A gene therapy space, now is the critical time to invest before valrox stops the bleeding.