Avalanche Biotechnologies has had one of the more drastic decreases in share price in 2015, down almost 75% since the beginning of June. The slide in stock price was initiated by the top-line phase IIa data for AVA-101 on June 16, and more recently (July 23) by the resignation of Avalanche’s (former) CEO, Dr. Thomas Chalberg. Last Friday, Avalanche’s stock price continued its downward spiral after Avalanche reported their second quarter 2015 financial results and provided an update on their AVA-101 program. Avalanche reported, “After further analyses of results from a previously reported Phase 2a trial of AVA-101 for the potential treatment of wet age-related macular degeneration (wet AMD), [we] will not initiate a phase 2b clinical trial in the second half of 2015.” Instead, Avalanche will conduct additional preclinical studies on AVA-101 and AVA-201 in order to choose the best candidate to advance in clinical development. With these recent updates to AVA-101 having a drastic effect on the direction Avalanche is headed in, I felt it would be appropriate to review the available AVA-101 data in order to help evaluate if there is anything left worth investing in at Avalanche.
AVA-101: Before, and What We Know Now
Recall in June, Avalanche announced top-line phase IIa results for AVA-101 in wet AMD. Despite Avalanche’s best efforts to spin the data as positive (succeeding on the primary endpoint of safety), this did not change the fact that AVA-101 failed to reproduce the promising efficacy (secondary endpoints) seen in a prior phase I trial (shown below). Notably, in the phase IIa trial AVA-101 demonstrated a smaller BCVA mean change from baseline, and patients required a greater number of rescue injections compared to the phase I trial.
In tandem with the top-line data release, Avalanche also announced details from the 36-month follow-up data from the AVA-101 phase I trial (shown below). Although difficult to draw robust conclusions from a data set with such a small number of patients, it appears that the improvement in vision and reduction in rescue injections demonstrated by patients receiving AVA-101 wanes over time.
Avalanche’s quarterly report (10Q) filed in conjunction with the corporate update included additional details from the failed phase IIa :
Large decrease in the mean BCVA change from baseline for control group in phase IIa (discrepancy): Avalanche believes this occurred because 3/11 patients in the control group had a greater than four-line loss in BCVA (one subject developed endophthalmitis, one subject developed acute submacular hemorrhage)
Increase in retinal thickness from baseline for AVA-101 treatment group (discrepancy): Avalanche believes that after a detailed review of the OCT images, “there was an incomplete resolution or reoccurrence of fluid in the retinas of the majority of subjects treated with AVA-101” [10Q].
Avalanche believes there was variability in the administration method for AVA-101: More specifically, Avalanche believes there were significant variations in the volume of drug administered, variation in the size of the retinal bleb, and variations in the locations of the subretinal injection.
“Overall, [Avalanche] did not observe evidence of a complete and/or durable anti-VEGF response in the majority of subjects treated with AVA-101” .
It’s clear that Avalanche is shelving AVA-101 in favor of – hopefully – demonstrating that a follow-on asset, AVA-201, will prove superior. Considering some of the issues and drawbacks seen in AAV ocular gene therapy via subretinal injection (previously discussed HERE) it’s no surprise that Avalanche is attempting to replace the subretinal injected AVA-101 with the (potentially) intravitreal injected AVA-201. Although I have previously discussed some of the nuances of AAV subretinal injection gene therapy, as a reminder, two key consequences of using this delivery route are limited localization of AAV vectors (leading to a confined area of transgene expression) and damage to the retinal layers (specifically RPE and photoreceptors).
This Begs the Questions: Is There Anything Left at Avalanche?
With AVA-101 essentially shelved, this leaves AVA-201 and AVA-311 as Avalanche’s lead product candidates. As a reminder, AVA-201 and AVA-311 (-311 partnered with Regeneron) are intravitreally injected AAV gene therapies being developed for wet AMD and X-linked juvenile retinoschisis (XLRS). Both AVA-201 and AVA-311 use novel AAV vectors for delivery, and are both still in the preclinical stages of development. Avalanche stated in their second quarter earnings release that candidate selection for AVA-201 will be complete by the end of 2015. Avalanche also says they’re advancing candidates for color blindness, AVA-322/AVA-323, with preclinical studies ongoing. Avalanche also has a research collaboration and license agreement with Regeneron with a goal of discovering novel product candidates for up to eight (including AVA-311) therapeutic targets. In addition, Avalanche has their baculovirus manufacturing system and a licensing agreement with University of California (previously discussed HERE) which is the basis of their Ocular Biofactory™ platform.
At the American Society of Gene & Cell Therapy’s 18th Annual Meeting in May 2015, Avalanche presented three posters, two of which offered a glimpse at the ‘next-generation’ AAV vectors they’re testing in preclinical models. The first poster, titled “pMNTC is a Cone-Specific Regulatory Cassette Designed to Treat Cone-Associated Disorders”, concerns the preclinical evaluation of pMNTC, a cone-specific regulatory cassette packaged in the AAV2.7m8 vector (AAV2 with the 7m8 sequence). The other, titled “Evaluating AAV Hybrid Variants for Improved Tropism after Intravitreal Gene Delivery to the Retina”, concerns the evaluation of a novel chimeric AAV2/AAV5 vector – termed AAV2.5T – with the 7m8 sequence (from the 7m8 AAV variant) inserted at 7 different positions in the loop IV region of the vector’s capsid (AAV2.5T/7m8) . Since I have previously discussed the 7m8 vector (HERE), I’ll focus primarily on the novel chimeric AAV2.5T & AAV2.5T/7m8 vectors.
A basic understanding of the AAV capsid is necessary here. Essentially, the capsid (virus outer shell) of the AAV vector consists of 3 proteins: VP1, VP2, and VP3. The AAV2.5T vector utilizes the VP1 region of AAV2 and the VP2 + VP3 regions of AAV5. In addition, AAV2.5T has a single point mutation within the Loop IV region of VP3: A581T. These novel features enable AAV2.5T to have a lower neutralizing antibody titer (in vitro) than AAV2.7m8 . The chimeric nature of AAV2.5T, in combination with the A581T point mutation, enables novel binding properties to its primary receptor: 2,3 sialic acid. The properties of AAV2.5T enable it to drive higher transgene expression in human airway epithelia than wild-type AAVs .
After the original publication in 2009 describing the development of AAV2.5T, it was determined that enhanced sialic acid-dependent endocytosis is most likely responsible for the improved properties of AAV2.5T . This was a significant discovery because it was previously believed that the primary rate-limiting step for AAV2.5T (and other AAV vectors) was viral binding to the target cell surface. This demonstrates that when developing an AAV vector, all rate-limiting steps should be considered, not just vector binding to the target cell surface. This also demonstrated the advantages of using directed evolution for developing ‘next-generation’ AAV vectors, enabling improvements across multiple facets – not just the vector’s ability to bind the target cell surface.
By these posters, it appears that Avalanche is attempting to create a novel AAV vector, AAV2.5T/7m8, that appears to possess three key improvements over wild-type AAV serotypes:
Decreased neutralizing antibody titers (enabled by AAV2.5T) that would allow for a larger patient population amenable to the vector.
Enhanced sialic acid-dependent endocytosis (enabled by AAV2.5T) – a key rate-limiting step for driving high vector transduction.
Improved vector transduction via intravitreal injection (enabled by 7m8 sequence). Although the exact mechanism responsible is unclear, it appears the insertion of the 7m8 sequence modifies the AAV’s binding to one of its other receptors: heparin sulfate proteoglycan (HSPG).
Despite that further preclinical evaluation (in non-human primates) will be required to determine the feasibility of the AAV2.5/7m8 vector, these experiments do demonstrate Avalanche’s progress in creating new and more potent vectors.
Having seen the posters introduced above, I see three primary possibilities for AVA-201. Remember, the company has revealed very little about this product candidate:
Avalanche will leverage the robust evaluation to date of AAV2.7m8 or the 7m8 variant in order to justify using these capsids for AVA-201.
Avalanche will continue to refine and evaluate AAV2.5T/7m8 in order to determine if this vector is appropriate for AVA-201 (assuming Avalanches owns or licenses the relevance IP).
Avalanche will attempt to produce yet another novel AAV variant via their Ocular BioFactory™ (directed evolution) platform in mice or non-human primates.
With candidate selection for AVA-201 to be complete by the end of the year, and Avalanche believing the preclinical development of AVA-201 could take 12-18 months, we could see AVA-201 enter the clinical in 2017. I’ll be curious to see what AAV variant this potential candidate employs.
So, Does That Make it Investable?
I believe there is exciting progress being made at Avalanche. Nevertheless, even with the stock trading near the company’s cash position ($10/share), I find it difficult to invest without knowing what candidate they chose to advance for wet AMD and what direction they are headed in. In addition, Avalanche is years away from clinical data for AVA-201 (assuming it advances at all), making Avalanche essentially a pre-clinical gene therapy company. Significant value creation (outside of a M&A/BD deal) in the next 12 months is difficult to envision. Despite this, I do believe there is value left at Avalanche specifically related to its progress in developing novel AAV vectors and their collaboration with Regeneron.
Even though Avalanche might not be the best investment at this time, it’s a story worth tracking, even if only to monitor the next wave of novel vectors.
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