Rocket Pharmaceuticals: Promising Gene Therapy Play With Discounted Entry Point

Andrii Yalanskyi

Investment Overview

2 Ex Vivo Gene Therapies Close To Approval - But Real Value May Lie In In Vivo Program

Rocket Pharmaceuticals (NASDAQ:RCKT) achieved its Nasdaq listing via a reverse merger pinch failing oculus illness focused biotech Inotek backmost successful 2017.

The woody was completed and Rocket banal began to waste and acquisition successful early 2018, astatine ~$19 per share. Fast guardant 5 years and nan Cranbury, New Jersey,-based cistron therapy specialist's shares are presently weighted astatine $19.6.

If that makes it sound arsenic though Rocket banal has been treading h2o for each of those years, it's worthy noting that it concisely traded >$60 toward nan extremity of 2021.

Rocket's objective shape pipeline includes 3 ex vivo lentiviral vector ("LVV") programs targeting 3 different uncommon familial diseases, defined arsenic follows successful nan company's 2021 10K submission.

Fanconi Anemia (“FA”), a familial defect successful the bony marrow that reduces accumulation of humor cells aliases promotes nan accumulation of faulty humor cells, Leukocyte Adhesion Deficiency-I (“LAD-I”), a familial upset that causes nan immune strategy to malfunction, and Pyruvate Kinase Deficiency (“PKD”), a uncommon reddish humor compartment autosomal recessive upset that results successful chronic non-spherocytic hemolytic anemia.

Both LV RP-L102 - indicated for FA - and RP-L201 - indicated for LAD-I - person shown beardown capable information successful precocious stage, pivotal studies for Rocket to person decided to make a Biologics Licence Application ('BLA") to nan FDA for support to commercialise each therapy.

As awesome arsenic these achievements are - immoderate online investigation indicates addressable markets for FA and LAD-I could beryllium worthy ~$800m, and >$10bn by nan extremity of nan decade (although specified estimates often beryllium overblown), it's Rocket's successful vivo programme targeting Danon Disease ("DD") that seems to beryllium astir responsible for nan important swings successful nan company's valuation.

Whilst respective ex vivo cistron therapy programs person made it to marketplace - from CAR-T therapies for illustration Bristol-Myers Squibb's (BMY) Abecma aliases Gilead Sciences (GILD) Yescarta, to uncommon illness assets specified arsenic Novartis' (NVS) Zolgensma, aliases Orchard Therapeutics (ORTX) Libmeldy - approved successful nan EU only and thought to be nan world's astir costly supplier - successful vivo therapies are a agelong measurement behind.

When Intellia Therapeutics (NTLA) demonstrated successful June 2021 that its lead in vivo campaigner NTLA-2001 had reduced TTR Serum levels successful six patients pinch nan illness Transthyretin (ATTR) Amyloidosis utilizing an intravenous injection, its stock value much than doubled overnight arsenic nan marketplace celebrated nan impervious of conception for an in vivo therapy. Intellia was concisely weighted astatine >$10bn marketplace cap, though coming its valuation has slipped <$4bn.

Something akin seems to person happened pinch Rocket. Back successful December 2020, nan institution released information from an unfastened explanation (no placebo arm), Phase 1 study of its campaigner RP-A501 - an adeno-associated viral vector (AAV)-based cistron therapy campaigner expressing LAMP2B - successful patients pinch Danon Disease.

In its press release Rocket describes DD as:

a uncommon X-linked inherited upset caused by familial mutations successful nan LAMP2 cistron resulting successful accumulation of autophagosomes and glycogen, peculiarly successful cardiac musculus and different tissues, which yet leads to terrible and often fatal cardiomyopathy.

It is estimated to person a prevalence of 15,000 to 30,000 patients successful nan U.S. and nan European Union. The illness is often fatal successful antheral patients successful nan 2nd aliases 3rd decade of life owed to quickly progressive bosom failure.

The property merchandise goes connected to opportunity that:

Preliminary information from patients successful nan debased dose RP-A501 cohort showed that nan cistron therapy was mostly good tolerated and provided early grounds of objective benefit.

Specifically, Cardiac LAMP2B macromolecule look by immunohistochemical staining was greater than 50% of normal LAMP2B successful 2 patients pinch follow-up information of up to 1 year, and 2 of 3 debased dose patients showed "high levels of cardiac LAMP2B look on pinch objective biomarker improvements."

Rocket's stock value leapt from $32, to $60 overnight - a summation of 87.5% and had reached a worth of $64 by early February 2020. Unfortunately, however, successful May 2021 nan FDA placed a objective clasp connected nan study owing to Rocket's reporting that 1 diligent successful nan Phase 1 study receiving nan higher dose of RP-A501 had to beryllium treated pinch Alexion Pharmaceuticals' Soliris aft experiencing an adverse curen effect.

The FDA's determination came arsenic a astonishment to Rocket, who were astir to statesman treating a caller cohort of patients erstwhile nan agency requested that it put caller consequence mitigation measures successful place, including enrolling younger patients pinch little precocious disease, and to "refine and enhance" its wide study information measures.

Although nan objective clasp was lifted successful August 2021, nan market's enthusiasm for viral vector cistron therapies had been further impacted by a objective clasp imposed connected a study being tally by bluebird bio (BLUE) successful patients pinch cerebral adrenoleukodystrophy ("CALD") - this ex vivo supplier is now approved for commercialized use. When Rocket revealed it would nary longer see a precocious dose cohort successful its Phase 1 study successful November 2021, its stock value continued to suffer worth and had fallen >$10 by May past year.

Rocket Brings FDA Back On Side, Plan Pivotal Study of RP-A501

This month, Rocket reported that RP-A501 had received a Regenerative Medicine Advanced Therapy ("RMAT") nickname from nan FDA based connected nan Phase 1 study results, which led Rocket's laminitis and CEO Gaurav Shah, M.D. to comment:

We look guardant to nan FDA’s added guidance and support connected nan astir businesslike improvement and support pathway for RP-A501, including connected our anticipated Phase 2 pivotal proceedings pinch nan opportunity for accelerated approval. RP-A501 is nan first cardiac cistron therapy to person RMAT nickname from nan FDA.

We stay connected way to initiate our Phase 2 proceedings successful nan 2nd 4th and are thankful to nan FDA for their continued collaboration

Rocket's property merchandise additionally reveals that nan institution will be:

pursuing a azygous arm, open-label proceedings pinch a biomarker-based composite endpoint and a earthy history comparator.

Phase 2 RP-A501 study overview (JPM Healthcare convention presentation)

As we tin spot supra (from a descent presented astatine January's JPMorgan Healthcare conference) Rocket plans to usage nan aforesaid debased dose arsenic it did successful nan Phase 1 study, and will nutrient supplier merchandise from its 100,000 quadrate ft manufacturing installation successful Cranbury.

Despite nan evident advancement being made, however, Rocket's stock value still trades astatine a immense discount of astir 70% to its precocious 2021 highs - contempt nan truth nan institution will soon beryllium conducting a perchance pivotal Phase study of an in vivo cistron therapy, pinch an accelerated support changeable successful play.

That whitethorn beryllium owed to analysts' and scientists' belief that nan little dose whitethorn not beryllium capable to execute nan required levels of efficacy, moreover successful spite of immoderate encouraging objective data, aliases it could beryllium to do pinch ongoing concerns astir safety. It could moreover beryllium to do pinch nan market's penchant for CRISPR cistron editing approaches that usage non-viral transportation exertion specified arsenic lipid nanoparticles ("LNPs").

Nevertheless, to nan champion of my knowledge astatine least, location are very fewer - if immoderate - rival cistron therapy companies pinch an in-vivo cistron therapy astatine specified an precocious shape of development.

Danon illness whitethorn beryllium a mini marketplace opportunity - Rocket estimates a prevalence of 15k - 30k individuals, pinch an yearly incidence of 800 - 1,200 individuals, but fixed nan precocious prices of cistron therapies, if we see a script wherever RP-A501 costs $1m for a people of therapy, and treats 1k patients per annum, aliases wherever RP-A501 costs $2m, and is utilized to dainty 500 patients - we could beryllium looking astatine a blockbuster (>$1bn per annum) gross opportunity.

Highlights To Look Out For In 2023

Rocket - 2023 milestones to look retired for (JPM Healthcare convention presentation)

As we tin spot supra Rocket appears to person respective perchance worth enhancing catalysts upcoming successful 2023. The initiation of nan pivotal Phase 2 successful Q223 is nan astir important.

Although Rocket remains successful talks pinch nan FDA complete study magnitude and nonstop endpoints, nan accelerated support action gives Rocket nan chance to push for an support arsenic soon arsenic information becomes available, and fixed nan institution already has 36-month information information from nan Phase 1 study (no further adverse information events person occurred either astatine nan precocious dose aliases debased dose) and caused its first operation pinch 12 period data, it's imaginable that Rocket could person nan information it needs by mid-to-late 2024.

Rocket expects to person its LAD-I filing complete successful 1H23. Its pivotal study of RP-L201 showed that 9/9 patients "sustained unchangeable CD18 look (median: 56%) pinch nary therapy-related superior adverse events," pinch a important simplification successful infirmary visits and 100% wide endurance aft 2 years.

The therapy has RMAT designation, arsenic good arsenic Orphan Drug nickname and Rare Pediatric Disease Designation, Fast Track position and moreover eligibility for a Priority Review Voucher ("PRV"), which tin beryllium utilized by Rocket to velocity up a merchandise support process, aliases traded to different pharma - existent marketplace worth of a PRV is adjacent to $100m. Theoretically astatine least, RP-L201 could beryllium approved earlier nan extremity of 2023.

The filing of nan RP-L102 BLA will travel a small later successful nan year, but again nan information appears to beryllium persuasive, pinch a bully information floor plan - only 1 diligent of 10 experiencing a Grade 2 aliases supra adverse guidance - and 5 "experiencing MMC guidance ranging from 51% to 94% astatine 18 to 24 months station RP-L102 administration."

FA and LAD-I are akin marketplace opportunities, guidance believes, pinch a diligent organization of 5.5k - 7k patients, vs. 4k-8k successful LAD-I. Either will do good to make triple-digit-figure revenues successful its early years aft support (if approved), but successful mentation astatine least, either could apical >$500m per annum if their curen effect is demonstrated successful a real-world setting.

Rocket Pharmaceuticals pipeline (JMP Healthcare Conference presentation)

Finally, arsenic we tin spot above, Rocket is pursuing respective different opportunities wrong some nan hematology and cardiovascular fields, pinch 1 already successful nan session - RPL301 successful Pyruvate Kinase Deficiency. Based connected improvements successful hemoglobin demonstrated successful 2 patients successful a Phase 1 study, guidance hopes to move this plus into a pivotal Phase 2 study earlier nan extremity of nan year.

It's unclear astatine this shape whether nan BAG-3 and PKP2 opportunities are in-vivo aliases ex-vivo, but nan illness targets - dilated cardiomyopathy and arrhythmic cardiomyopathy - represents overmuch larger diligent populations, and should Rocket validate its attack pinch a mates of FDA approvals successful nan adjacent twelvemonth aliases two, nan worth of these 2 projects will only increase.

Conclusion - An Overlooked Gene Therapy Contender With Potential To Deliver On 3 Fronts Commercially In Near Term

The FDA has now approved complete 25 cistron therapies, and though immoderate are niche medicines and each are ex-vivo, it's adjacent to opportunity that immoderate of nan concerns astir cistron therapies being unsafe, ineffective, aliases lacking durability are slow being overcome.

That's not to opportunity Rocket Pharmaceuticals is simply a riskless finance - location are galore areas successful which nan institution could underperform. The copy ex-vivo therapies RP-L102 and RP-L201, though seemingly connected way for approval, whitethorn not beryllium favored by physicians and could extremity up being utilized only very sparingly, restricting their gross earning imaginable to a fewer cardinal dollars per annum.

There's nary guarantee that Rocket and nan FDA will moreover beryllium capable to work together connected due protocols for a pivotal study of RP-A501, and moreover if it does investors will beryllium waiting a twelvemonth astatine slightest for afloat data, that whitethorn extremity up showing nan debased dose is ineffective aliases that moreover nan debased dose represents a information risk.

Rocket is reasonably good funded, reporting a rate position of >$400m successful its JPM Healthcare presentation, but nett nonaccomplishment to Q322 successful 2022 was >$155m, truthful nan request for caller backing is imminent. Although Rocket will want to raise astatine a higher price, if it suffers immoderate setbacks successful nan session and nan stock value dips again it could extremity up importantly diluting investors to unafraid caller funding, creating a downwardly spiraling stock price.

These consequence aside, however, I would complaint Rocket arsenic 1 of nan much absorbing opportunities successful nan cistron therapy space. Unlike nan CRISPR cistron editing companies i.e. Crispr Therapeutics (CRSP), Intellia and Beam Therapeutics (BEAM) Rocket's marketplace headdress is not inflated by immoderate hype, pinch nan institution preferring to prosecute an older exertion and intends of administration. That should not needfully count against Rocket nevertheless - Bluebird Bio uses a viral vector attack and has 2 FDA approved products, pinch a 3rd perchance group for support this year.

Unlike Bluebird, Rocket's financial position is reasonably beardown by biotech standards (while still a flimsy origin for concern), but astir important is nan early of RP-A501. Rocket has managed to beforehand this therapy astir to nan rolling support stage, and location are still nary therapies approved to dainty Danon Disease. As such, it's arguably unusual to spot that its stock value has yet to recapture its precocious 2021 highs.

If Rocket were to recapture only 60% of that erstwhile high, its stock value would beryllium worthy much than double today's price, and that ought to beryllium an intriguing proposition for prospective investors, fixed nan milestones nan institution tin execute successful 2023.

I'm somewhat amazed that Rocket has nary large pharma partners - that's a imaginable reddish emblem successful itself - but if a heavy pocketed partner were to beryllium secured, it would only adhd to Rocket's momentum, and raise nan imaginable of a buyout astatine a important premium to today's stock price, and inject caller costs to create nan Wave 2 assets targeting larger diligent populations.

If Rocket has 2 assets connected nan marketplace this clip adjacent twelvemonth past it's difficult to spot really nan company's stock value could autumn successful nan intervening period, and that seems a apt outcome. If 1 of those approved assets were to beryllium RP-A501 it would not only beryllium a historical infinitesimal successful nan history of cistron therapy, it ought to beryllium a importantly stock value accretive outcome.