Synageva rides high in the ultra-orphan disease space

Synageva BioPharma seemingly can do no wrong. Comfortably placed as an ultra-orphan disease play, the Massachusetts group has seen its shares more than triple and its market capitalisation speed past the $1bn mark since backing into a market listing by merging with Trimeris last year. It has even raised a whopping $199m from investors along the way.

This excitement could be because its lead candidate, SBC-102, is on track to begin a pivotal trial later this year or early in 2013, and is in the sought-after enzyme-replacement therapy space. Analysts estimate the drug’s potential at up to $1bn following a forecast 2015 launch; however, given that safety and efficacy data are available from only 10 patients and that there is an unknown patient population, clinical and commercial success is far from assured.

Rare

SBC-102 is a recombinant form of lysosomal acid lipase that aims to replace genetic deficiencies of the enzyme, which is essential to breaking down fatty materials such as triglycerides and cholesteryl esters.

Patients suffering from lysosomal acid lipase deficiency experience a buildup of fat, leading to liver disorders and fibrosis, and swelling of the spleen; there is an increased risk of premature death. In the early-onset form, sometimes called Wolman disease, the symptoms develop in the first year of life and babies rarely live past their first birthday.

Synageva estimates a prevalence of 1 in 40,000 in the population, making the condition roughly as common as Fabry and Pompe diseases. Patients can be identified with a blood test that detects absence of the enzyme – a helpful companion diagnostic that will quickly identify patients for what is certain to be a pricey drug.

At an interim analysis announced earlier this year, a phase I/II trial in nine adult patients found significant reduction in serum transaminases and evidence of mobilisation of lipids into the bloodstream from the liver and other tissues. The pivotal trial expected to start in a few months looks to enrol about 24 patients to confirm the early-stage findings.

Additionally, a single baby with early-onset disease has been treated with SBC-102 under compassionate use, and increases in growth rate were reported. Canaccord analysts cast doubt on how many early-onset patients can be enrolled because of the rarity and high death rate, but the company has set a target of enrolling 10 in a separate phase II/III trial.

Confidence

Using the recombinant enzyme-replacement approach similar to Fabrazyme and Replagal in Fabry disease has to lend some confidence to the Synageva strategy. Should SBC-102 continue to succeed in the clinic, investors no doubt see the potential for Synageva to become another Transkaryotic Therapies, the Replagal developer that commanded a 44% premium when Shire bought it for $1.6bn in 2005.

However, with $139m cash in the bank at June 30 and a July fundraising of $115m, Synageva appears to be capable of going a long way towards completing its planned phase II/III registration trial – or at least negotiating from a position of strength. Corporate operating expenses were $12.5m in the second quarter, a number that will accelerate with initiation of the pivotal study. The company also received about $1.4m in royalties for Fuzeon, Trimeris's legacy HIV antiviral partnered with Roche.

Promise

Disappointing efficacy or a previously unseen safety signal of course are a risk to regulatory approval and launch. The chief risk to Synageva's commercial promise lies in uncertainty about the population.

In initiating coverage of Synageva earlier in June, the Canaccord analysts wrote that specialists estimate 100 cases of later-onset disease are diagnosed in the US each year, although this could result from a lack of awareness of the condition and infrequent use of the test, which is not part of common blood panels.

The company sees the current prevalence estimates as an upper limit to the treatable population. But in any case, it views clinics specialising in non-alcoholic steatohepatitis and fatty liver disease as a source of undiagnosed patients.

On the other hand, the prevalence figures for early-onset disease could be an underestimate given the high mortality rate and physician unfamiliarity with the disease, according to the Canaccord analysts.

Thus much remains to be proven for SBC-102. However, the company has not put a foot wrong this year as investor exuberance has risen. With expectations rising so high, Synageva needs to maintain that record.

To contact the writer of this story email Jonathan Gardner in London at jonathang@epvantage.com

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