AVROBIO (AVRO 19.00, 0.00) priced
an upsized 5.25 mln share offering (increased from 4.40 mln) at $19.00, which
was above the expected pricing range of $16.00 to $18.00. Then this morning it opened at $29.25.
AVROBIO is a Massachusetts-based Phase II clinical stage gene therapy company, which focuses on the development of ex vivo lentiviral-based gene therapies for treatment of lysosomal storage diseases with a single dose.
The company's gene therapy uses hematopoietic stem cells, which are extracted from the patient and modified with lentiviral vectors to insert a functional version of a defective gene in the target disease. The company believes its method of transforming cells sourced from patients will open the door to new treatments for a range of diseases in an outpatient setting.
The company is currently focused on rare genetic diseases known as lysosomal storage diseases. Lysosomes are cell organelles that are involved in many types of cell function including cell signaling and cell waste degradation. In a lysosomal storage disease, a defective gene reduces production of a necessary enzyme that normally allows the lysosome to process waste. Without this enzyme the waste builds up and the cell can’t function properly and the symptoms of the disease occur. These symptoms vary widely depending on the 50+ types of these diseases. These diseases are currently managed with enzyme replacement therapies. The company estimates that $4.00 bln was spent worldwide in 2017 to manage the diseases.
The company's product pipeline contains four lentiviral-based gene therapies. AVR-RD-01 is aimed at treatment of Fabry disease, AVR-RD-02 is aimed at the treatment of Gaucher disease, AVR-RD-03 is aimed at treatment of Pompe disease, and AVR-RD-04 is being developed for the treatment of cystinosis.
These treatments are at various stages of development. AVR-RD-01 is under evaluation in an investigator-sponsored Phase I clinical trial and company-sponsored Phase II trial to assess safety, toxicity, and primary efficacy. The company plans Phase I/II clinical trials for AVR-RD-02 and AVR-RD-04 with dosing expected to begin in 2019. AVR-RD-03 is currently in the Advance Preclinical Program stage.
The company's strategy is predicated on the rapid advancement of gene therapies and the development of first-line gene therapies for lysosomal storage diseases. The company hopes to commercialize its gene therapies and industrialize the lentiviral-based gene therapy approach.
The company plans to use $13.40 mln for funding of expenses to advance its lead product candidate—AVR-RD-01—into Phase II clinical trials and to support the current investigator-sponsored Phase I clinical trial. The company has earmarked $12.90 mln to fund expenses to advance AVR-RD-02 into Phase I/II clinical trials while $3.20 mln has been earmarked for expenses associated with advancing AVR-RD-03 into preclinical development. AVROBIO plans to spend $5.40 mln to advance AVR-RD-04, while $28.00 mln will be spent to fund expenses related to external and internal manufacturing and process development activities. The company plans to spend $32.60 mln to fund R&D activities, while the remaining funds will be used for general and administrative expenses.
AVROBIO has no history of revenue generation. In 2017, the company spent $15.19 mln on R&D, which was up 470.5% from $2.66 mln spent in 2016. Working capital declined to $3.68 mln in 2017 from $4.49 mln in 2016.
The company estimates that existing cash and proceeds from the offering will be sufficient to fund operations into 2020. AVROBIO does not plan to pay a dividend in the foreseeable future.
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