Syncona sets its sights on a gene therapy turnaround

It has been a tough year for gene therapy companies, and the latest player to accept reality is Applied Genetic Technologies Corporation, which today succumbed to a lowball bid from the investment company Syncona.

It is clear to see why AGTC, running short of cash and with a flatlining share price, felt compelled to accept the offer. Syncona, meanwhile, has clearly seen a cheap way back into the eye disease gene therapy arena, which has provided a rich seam for the group in the past.

Syncona’s other portfolio companies in this field, Nightstar and Gyroscope, were acquired by Biogen and Novartis respectively (Novartis eyes up another gene therapy, December 22, 2021). However, Nightstar turned out to be an expensive dud, and wariness of gene therapies will have only grown alongside fears about these projects' regulatory and commercial prospects.

And Syncona has shown it is not always adept at picking winners. One of its investments is Freeline, which is looking like an also-ran in haemophilia B and Fabry disease.

Buyout or bankruptcy

During a conference call today to discuss the deal, AGTC execs defended their decision to accept Syncona’s bid of $0.34 per share, or $23.5m in total.

AGTC only has enough cash to last until the end of 2022, and has already tried cutting costs and a $10m fundraising. The next step would have been bankruptcy, the group’s chief executive, Sue Washer, said.

She also dangled the prospect of a non-tradeable CVR of up to $0.73 per share, which would bump the total deal price up by $50m. The companies have not disclosed the milestones that will need to be hit for this to pay out. 

Syncona will create a new portfolio company to carry out the acquisition, but declined to comment on its exact plans. The UK group was attracted by AGTC’s lead project, AGTC-501, which it says could be the best-in-class therapy for X-linked retinitis pigmentosa (XLRP). There are currently no therapies for the disease, which is most commonly caused by mutations in the RPGR gene and leads to blindness.

However, investors were not convinced by phase 1/2 data released in May, and AGTC is not alone in the disorder: Meiragtx and its partner Johnson & Johnson recently reported phase 1/2 data with their candidate, botaretigene sparoparvovec (AAV-RPGR), which is now in the phase 3 Lumeos trial. 4D Molecular Therapeutics also has an XLRP candidate, 4D-125, in phase 1/2.

A phase 2/3 study of AGTC-501, known as Vista, is yet to start recruiting according to clinicaltrials.gov. AGTC previously said it hoped to provide interim data in the first half of 2023.

Eyes down

Gene therapies for eye diseases have had more downs than ups. Nightstar crashed out in XLRP and choroideremia, while Adverum has limped on with ixoberogene soroparvovec (ADVM-022) in wet AMD, despite previously seeing a toxicity signal in diabetic macular oedema.

Still, even outside of eye disease, gene therapy groups have not fared well, as illustrated by the table below.

Indeed, the only big gene therapy winner on the stock markets of late has been Voyager Therapeutics, and that is mainly down to big pharma’s interest in its capsids, rather than any of its own projects.

Sio Gene Therapies has already thrown in the towel, and it looks like AGTC came close. Others could soon be making difficult decisions of their own.