BETTER BUY? VOYAGER THERAPEUTICS (VYGR) VS. MEIRAGTx HOLDINGS PLC (MGTX)

In recent years Gene Therapy has emerged as one of the hottest new biotech investments. The ability to eradicate disease by actually fixing a faulty genetic code is the nexus between science fiction and science fact. Some of these leading edge companies will become household names, while others will simply fade away. How to choose a winner?

Biotech Strategist Lee Rivers compares two leading names to see which should gain favor with savvy investors….

Voyager Therapeutics

Business Model

Voyager Therapeutics is a clinical-stage adeno-associated virus gene therapy company that focuses on life-changing treatments for patients suffering from severe diseases of the central nervous system that are both fatal and debilitating.  The company’s market cap is around $600 million. Its pipeline includes VY-AADC01, which is a treatment being produced and marketed in a partnership with Neurocrine for Parkinson’s disease in phase I(b) clinical trials. Voyager also has pre-clinical programs that include VY-SOD101 for a monogeneans form of amyotrophic lateral sclerosis (ALS), in which nerve cells break down to decrease muscle functions, VY-FXN01 for Friedreich ataxia, VY-HTT01 for Huntington’s disease, and VY-SMN101 for neuromuscular disease. 

In early 2019, Voyager Therapeutics made an exclusive, global strategic collaboration and option agreement with AbbVie to develop and commercialize vectorized antibodies. These antibodies target pathological species of alpha-synuclein in order to potentially treat Parkinson’s disease and other diseases, known as synucleinopathies, like Lewy Body Dementia, that are the result of abnormal accumulations of incorrectly folded alpha-synuclein proteins. The delivery of sufficient quantities of antibodies across the blood-brain barrier has been the most significant limitation of many therapies for neurodegenerative diseases. Typically, this requires frequent systemic injections with large amounts of antibodies, but Voyager’s blood-brain barrier penetrant AAV capsids intend to circumvent this limitation. If successful, the genes that encode the production of these therapeutic antibodies would be potentially delivered in a one-time intravenous administration, ultimately resulting in higher levels of therapeutic antibodies in the brain than the current systemic administration of the antibodies.

Through the agreement with AbbVie, Voyager received an upfront $65 million cash payment and has the potential to earn $245 million in preclinical and phase I option payments. The firm then may receive an additional $728 million in potential development and regulatory milestone payments as well as royalties on future global commercial net sales of each approved alpha-synuclein vectorized antibody that is produced through the collaboration. Furthermore, Voyager has a similar strategic licensing collaboration for four of its gene-therapy collaborations with Neurocrine Biosciences for up to $165 million upfront and up to $1.7 billion in potential milestone payments. These collaborations help to inject capital in Voyager so that it may continue its clinical trials for the programs it is licensing.

Financials

Voyager Therapeutics ended the first quarter of 2020 with $250 million in cash and cash equivalents, which will cover expenses until mid-2022. The company has a current ratio of 3.76 and net working capital of $199.9 million, showing that it is comfortably able to cover short-term liabilities. Voyager also maintains a debt-to-asset ratio of 0.75 and debt-to-equity of 3.04.  The company experienced a net loss of $1.21 per share in 2019 compared to $2.75 per share in 2018, despite nearly doubling research and development expenses. This was the result of an increase in collaboration revenues from $7.6 million in 2018 to $104 million in 2019. The firm currently generates and expects to continue to generate in the near future, the majority of its revenue through its collaboration agreements with AbbVie, Neurocrine, and other strategic partnerships they may enter. Successful development efforts will also potentially generate revenues.

MeiraGTx Holdings PLC

MeiraGTx Holdings PLC is a holding company for MeiraGTx Limited, a clinical-stage gene therapy company that focuses on novel gene therapies for inherited and acquired disorders. It has a market cap of about $500 million. Its pipeline consists of AAV-CNGB3, AAV-CNGA3, AAV-RPE65, AAV-RPGR, AAV-AQP2, and AAV-UPF1. MeiraGTx is vertically integrated, thus it is able to license, acquire, and develop its technologies for a wide range of product candidates and potential usages. The company initially focused on treatments of the eye, salivary gland, and central nervous system, but intend to expand their focus to patients suffering from a wider range of diseases.

A significant difference between MeiraGTx and Voyager is MeiraGTx’s ownership and operation of a flexible, scalable viral vector manufacturing facility. The company also plans to establish a second manufacturing facility and a plasmid production facility. Using its extensive understanding of disease models, along with its comprehensive development platform, MeiraGTx expects to have efficient clinical development. It also is in the process of developing a potentially transformative technology that would allow for the ability to turn on and off the expression of gene therapies.

AAV-GAD is a gene therapy for Parkinson’s Disease that has shown effectiveness at improving symptoms in its Phase II trials. The patients in both Phase I and Phase II studies exemplified significant improvements in abnormal thalamic metabolism, which is a key node in the circuitry of movement. This improvement was not present in untreated hemispheres or patients in the placebo group. Furthermore, the company also is in the development stages of its preclinical pipeline of gene therapies that target other neurodegenerative diseases, such as AAV-UPF1 for motor neuron death in ALS, and an Alzheimer’s disease program. Alzheimer’s disease has become increasingly common and costly, with many treatments only having a temporary effect on symptoms. AAV-delivered gene therapies, however, are expected to potentially have a durable, long-lasting effect.

MeiraGTx also has made a partnership with Janssen Research, a subsidiary of Johnson & Johnson, to jointly develop AAV-RPGR. AAV-RPGR is a gene therapy product for the treatment of X-linked retinitis pigmentosa (XLRP), which is an inherited retinal disease. XLRP is considered to be one of the most severe forms of retinitis pigmentosa, causing juvenile-onset and progressing to legal blindness in adulthood. The gene therapy is currently under the fast-track designation and has been granted priority medicine (PRIME) and advanced therapy medicinal product (ATMP) designations. PRIME designations increase interactions, optimize development plans, and accelerate innovative treatments where there is currently an unfulfilled medical need.

Financials

MeiraGTx has $211 million in cash and cash equivalents at the end of the first quarter of 2020, which is expected to fund operating expenses and capital expenditures into 2022. The company also has a current ratio of 5.83, net working capital of $208 million, and a debt-to-asset ratio of 0.39. Furthermore, the firm’s debt-to-equity ratio is 0.65. In 2018, the company had no collaboration revenues, creating a net loss of $82.9 million to fund operations and research. In 2019, the company had $13.3 million in collaboration revenue, decreasing its net loss to $54.7 million. Over the same period, research and development efforts increased substantially but the costs were offset by research funding and research and development tax credits, decreasing total research and development expenses $8 million year over year. MeiraGTx will continue to receive research funding as well as milestone payments and potential royalties from Janssen Research.

And the Winner Is….

Between Voyager and MeiraGTx, it is apparent that MeiraGTx is the better investment. Its vertical integration provides it an advantage over Voyager since it can develop, manufacture, and license gene therapies for its own pipeline. This can ultimately lead to economies of scale, particularly given the company’s understanding of diseases, efficient development platform, and the future additional manufacturing facility or viral vectors as well as the plasmid production facility. Additionally, it has more net working capital and a significantly better debt-to-equity ratio. Consequently, MeiraGTx appears to be in a superior position and a better overall investment.