The companies will co-develop an experimental Regenxbio gene therapy called RGX-314 in three eye diseases, including wet age-related macular degeneration, or wet AMD. Up to 2 million people in the U.S., Europe and Japan have wet AMD, a condition that causes vision loss.
RBC Capital Markets analyst Luca Issi says the deal signals Big Pharma’s continued interest in the gene therapy space. He also noted AbbVie is the right commercial partner given its presence in the eye-disease space.
“On the less positive side, we are more mixed on the economics of the deal, and we think that transferring ex-U.S. manufacturing to AbbVie is not without risk,” he said in a report. He raised his price target on RGNX stock by 5 to 55, but kept his sector perform rating.
In afternoon trading on today’s stock market, RGNX stock soared 26% near 41.70.
RGNX Stock Rockets On AbbVie Deal
Regenxbio is studying its gene therapy in wet AMD using two different delivery methods. One of these methods — called a suprachoroidal injection — could be very compelling, Issa said. This type of injection can limit where the drug goes in the eye.
Further, Regenxbio is also testing its gene therapy in diabetic retinopathy.
Under the collaboration, Regenxbio will finish ongoing studies of the gene therapy. Then, the companies will share development costs on additional testing. AbbVie will lead development and commercialization globally. Regenxbio will help commercialize RGX-314 in the U.S.
Regenxbio will receive an upfront payment of $370 million. AbbVie will pay up to $1.38 billion for milestones. The companies will split profits equally in the U.S. and Regenxbio will receive tiered royalties on sales outside the U.S. AbbVie will lead manufacturing efforts outside the U.S.
The transaction is expected to close at the end of 2021.
SVB Leerink analyst Marc Goodman kept his market perform rating on RGNX stock, but raised his price target to 44 from 40.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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