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2019-09-17 05:02:53

More evil gets done in the name of righteousness than any other way.”― Glen Cook, Dreams of Steel

Today we look at a small developmental or 'Tier 4' biotech stock from across the pond. The stock is down substantially from levels a year ago but does have multiple 'shots on goal' and some other favorable attributes. A full assessment is provided in the paragraphs below.

Company Overview:

ProQR Therapeutics (PRQR) is a Leiden, Netherlands-based biotechnology company that IPO’d in 2014. The company focuses on creating medicines for rare diseases with high unmet needs. Its approach is to leverage RNA therapies, which allows it to address inherited diseases caused by a genetic defect. The drugs are comprised of short pieces of synthetic RNA that enable corrections to genes, which ultimately restore protein expression that is critical for one’s body to function properly.

The company’s pipeline is comprised of numerous drug candidates in the ophthalmology space, and the company has one discovery-stage asset that is meant to take on Huntington’s disease. Also, the company has spun out two companies: Amylon Therapeutics and Wings Therapeutics. Amylon Therapeutics is developing drugs for diseases of the central nervous, and Wings Therapeutics is focused on the development of therapies for dystrophic epidermolysis bullosa. The company’s most advanced product candidate is Sepofarsen, QR-110, which is designed to treat patients with Leber congenital amaurosis 10. ProQR Therapeutics currently trades for just over $7.00 a share and the stock has a market capitalization of approximately $275 million.

Pipeline:

Source: Company Presentation

Sepofarsen:

Sepofarsen is being developed for patients with Leber congenital amaurosis, which is due to a mutation in the CEP290 gene. Leber congenital amaurosis is the most common genetic cause of childhood blindness and affects about 15,000 patients in the West. The disease usually starts in the first year of life and is characterized by a progressive loss of vision. In LCA, a process called phototransduction disrupts the light-detecting cells in the retina, due to a gene mutation. The drug is designed to work by repairing the genetic defect in the RNA, enabling normal functioning. The idea is that by providing a blueprint for protein synthesis a healthy CEP290 protein will be produced, which will lead to stopping or even reversing the disease. There are currently no approved treatments. The drug has received orphan drug designation from the FDA and EMA, fast track designation by the FDA and access to the PRIME program by the EMA.

Source: Company Presentation

The company is currently running two clinical trials, a Phase 1/2 and a Phase 2/3 called Illuminate. The Phase 1/2 is an ongoing trial in children and adults with LCA10 due to the p.Cys998X mutation in the CEP290 gene. The trial has completed enrollment and interim results have been released. Interim results showed a clean safety and tolerability profile with no adverse side effects. Furthermore, overall improvement in vision was observed in the majority of patients after 3 months of treatment. The 12-month data from the Phase 1/2 trial should be available by the end of 2019. The Illuminate trial is an ongoing international Phase 2/3, multiple-dose, double-masked, randomized, sham-controlled clinical trial of Sepofarsen in patients with Leber congenital amaurosis 10. The first patient was dosed at the beginning of Q2 of this year, and top-line data from the trial should be available by the end of 2020.

Source: Company Presentation

QR-421a:

QR-421a is being developed for people with Usher syndrome, which is a rare genetic disease that is the leading cause of combined deafness and blindness. Most commonly, individuals with Usher syndrome have moderate to severe hearing impairment from birth and experience symptoms of night blindness in their second decade of life. Administered by intravitreal injections to the eye, QR-421a works by restoring the usherin protein expression, treating the underlying cause. There are roughly 16,000 people experiencing vision loss due to a mutation in exon 13 of the USH2A gene. The FDA granted Fast Track designation for QR-421a for Usher syndrome type 2 and non-syndromic RP due to mutations in exon 13 of the USH2A gene.

Source: Company Presentation

The company is currently testing the drug in a Phase 1/2 trial called STELLAR. The trial will initially include approximately 18 adults who have vision loss due to mutations in exon 13 of the USH2A gene. The first patient was dosed back in March of this year. Interim data from the first two planned cohorts is expected in Q1 2020. Patients completing the trial can participate in an extension study if eligible.

Source: Company Presentation

QR-1123:

QR-1123 is designed to treat patients with adRP due to the P23H mutation in the rhodopsin gene. Autosomal dominant retinitis pigmentosa is a rare genetic eye disease that leads to poor vision and blindness. Currently, there is no approved treatment. The drug works by blocking the formation of the mutated toxic version of the rhodopsin protein by specifically binding to the mutated RHO mRNA, which in theory should prevent the loss of the light-detecting cells and potentially stop or reverse the vision loss associated with adRP. The company in-licensed the antisense oligonucleotide from Ionis Pharmaceuticals (NASDAQ:IONS) in October 2018.

On August 12th, it was announced that the FDA has signed off on an IND for a Phase 1/2 clinical trial of QR-1123 for the treatment of vision loss associated with autosomal-dominant retinitis pigmentosa due to a mutation in the RHO gene P23H. A proof-of-concept trial is expected to launch in 2019. Last week, the FDA designated QR-1123 for Fast Track review for this indication.

Source: Company Presentation

Analyst Commentary and Balance Sheet:

As of June 30th, 2019, the company had cash and cash equivalents of €82.4 million, compared to approximately €105.5 million as of December 31st, 2018. Research and development expenses for the second quarter were €9.5 million, compared to €5.9 million in Q2 of 2018. General and administrative expenses for the quarter were €2.8 million, compared to €2.6 million in Q2 of the prior year. Overall, the net loss for the quarter was €11.7 million, compared to €7.4 million in the prior year.

After being dormant for most of 2019, analyst activity picked up in August. Chardan Capital ($25 price target), H.C. Wainwright ($20 price target) and RBC Capital ($27 price target) have all reiterated Buy ratings last month.

Verdict:

There is a lot to like about this company. It has multiple shots on goal and Fast Track designations. It is targeting very niche areas of the population that have no approved treatments, which should make roll-out much easier and faster if/when the company’s product(s) are approved.

That said, the company is several years away from possible commercialization. I have taken a small ‘watch item’ position in PRQR as I believe it is merited. This is especially true given an approximate 60% fall from 52-week highs. This is a name we will probably look at again late in 2020 as it advances to late-stage development and probably after a capital raise.

When you start with a necessary evil, and then over time the necessity passes away, what's left?”― Matthew Scully

Bret Jensen is the Founder of and authors articles for the Biotech Forum, Busted IPO Forum, and Insiders Forum.

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Disclosure: I am/we are long PRQR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


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