In a March 31 research note, Roth Capital Partners LLC research analyst Zegbeh Jallah, Ph.D. reported that Applied Genetic Technologies Corp. (AGTC:NASDAQ), a clinical-stage biotechnology company engaged in developing gene therapy products for inherited orphan ophthalmology diseases, has co-developed gene therapy that restores sensitivity in blind Retinitis Pigmentosa (RP) patients. Jallah advised that RP is an inherited retinal disease caused by degenerating photoreceptors.
The analyst stated that AGTC's collaborative partner Bionic Sight recently announced that "its Phase 1/2 study of BS01 showed that 4/4 patients with Retinitis Pigmentosa (RP) can now detect light, and 2/4 can detect motion."
Jallah added that the results represent a remarkable accomplishment as the patient subjects selected for the trial were all nearly or completely blind.
AGTC owns a 15% equity stake in Bionic Sight and its role in the BS01 study was to supply expertise in the areas of vector design, manufacturing and preclinical optimizations. Roth Capital Partners believes that the successful outcomes demonstrate AGTC's capabilities in gene delivery and presents positive future financial upside.
The report explained that "BS01 is an optogenetic AAV gene therapy that is being developed for severe or advanced RP patients...that when activated by light, BS01 increases cellular activity and sends signals to the brain to restore visual function, using a retinal decoding algorithms."
The report indicated that the Phase 1/2 trial is a dose escalation study of BS01 in patients diagnosed with advanced RP with near to complete vision loss. Initial results from the study reportedly "showed impressive dose-response improvements in light and motion sensitivity in treated patients." As the patient pool size in the trial was rather small at N=4, Bionic Sight now plans to continue dose escalation in the current group and enroll 16 additional patients.
Roth Capital Partners claimed that "the dose-response was remarkable in our opinion as the lowest dose induced a 20-fold increase in light sensitivity and the higher dose (3x lowest) induced a 100-fold increase in sensitivity."
The analyst commented that in addition to its 15% equity position in Bionic Sight, AGTC also holds an option exercisable for a limited time only to acquire a majority equity interest in Bionic Sight's assets in the collaboration, or the rights to the commercial product. Analyst Jallah noted, "We view this as particularly attractive since AGTC's pivotal XLRP study will exclude RP patients with lower baseline sensitivity, which BS01 could capture, expanding the addressable market."
The analyst stated that Roth Capital Partners has a "Buy" rating for Applied Genetic Technologies with a 12-month price target price of $35/share. The firm stated that it arrived at that valuation by assigning a 65% probability of success for AGTC-501 (XLRP) and a 50% probability of success for AGTC-401/402 (Achromatopsia) which along with $3 per share in cash held on the company's contribute $25 and $7 per share, respectively to the calculated share price. Applied Genetic's shares closed for trading at $5.23 on April 1, 2021.
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