Avidity Biosciences, Inc. (NASDAQ:RNA) is a great speculative biotech play to look into. The reason why I believe it’s important to take a look at this particular biotech is because it is exploring the use of oligonucleotides put together with monoclonal antibodies to treat patients with rare muscle disorders. This includes the advancement of several phase 1/2 studies dealing with diseases like: Myotonic Dystrophy Type 1 [DM1], facioscapulohumeral muscular dystrophy [FSHD] and Duchenne Muscular Dystrophy [DMD].
Avidity Biosciences is using its very own developed Antibody Oligonucleotide Conjugates [AOCs] platform in order to treat these muscle disorders. However, it is making some stride in advancing the use of this AOC platform against two other indications, which are skeletal muscle and cardiology diseases. It expects to release results from the phase 1/2 MARINA study using AOC 1001 for the treatment of patients with myotonic dystrophy type 1 at the American Academy of Neurology [AAN] Annual Meeting on April 27, 2023. This is another program in the company’s pipeline, which if successful will be a good thing. That’s because the Global Myotonic Dystrophy Drug Market is projected to reach US $743.1 million by 2031.
In addition, Avidity is targeting the DMD market as well, which is another large market opportunity. It is expected that the global Duchenne Muscular Dystrophy market could reach $2.1 billion by 2031. However, it is only specifically starting with DMD patients amenable to exon 44 skipping.
Use of AOC 1044 For The Treatment Of Patients With Duchenne Muscular Dystrophy
The first program to go over involves the use of AOC 1044, which is being developed for the treatment of patients with Duchenne Muscular Dystrophy. Duchenne Muscular Dystrophy [DMD] is a rare inherited disorder where progressive muscle weakness happens, typically in younger boys. It is quite possible that females may also be affected by this disease, but it is typically found in young boys. There are several symptoms that these patients experience, which are as follows:
- Problem being able to run
- Unable to get up
- Constantly falling down
- Big calves
- Learning issues
- Waddling gait (hips dropping as you sway back and forth walking).
There is no cure for this disease, but typically treatment options can help with some of these symptoms. Corticosteroids were always used beforehand, but there many treatments available for this DMD patient population from Sarepta Therapeutics, Inc. (SRPT). There are about less than 200,000 cases of DMD in the United States each year, but it still is a large market opportunity for many biotechs to go after. It is said that the global Duchenne Muscular Dystrophy market is to reach $2.1 billion by 2031. If it can prove its tech to work for one specific patient population of DMD, then I believe it will improve its odds towards targeting others in the same space.
A major thing to note is that the DMD market being targeted by Avidity Biosciences primarily deals with the type that is amenable to exon 44 skipping [DMD44]. Having said that, it initiated a phase 1/2 study known as EXPLORE44. One major item to point out with respect to this early-stage stage study is that it is a historic first, in that it is the first antibody oligonucleotide conjugate [AOC] to enter the clinic with respect to the DMD programs it expects to have. This early-stage phase 1/2 study was initiated back on October 12, 2022. The initiation of this trial is a good thing, but again it’s very important to point out that AOC 1044 is only going to be used to target DMD amenable to exon 44 skipping.
In order to understand the targeting of this type of gene, it is important to understand what treatment with AOC 1044 does. When given to a patient it deletes a sequence (skips over the frame) so that only the BMD frame is read by the cell. Thus, it makes it where the faulty proteins are not produced. That’s why, as the name implies, this type of genetic modification is known as exon skipping. In the case of this type of DMD, DMD44, the gene being targeted only lies with this type of DMD. That’s why I must point out right away that this is only going to allow Avidity Biosciences to target a specific DMD patient population.
However, this doesn’t mean that this will be the final endpoint production for Avidity in terms of targeting patients with DMD. That’s because should this drug prove to work well in this ongoing phase 1/2 study, then it is quite possible to advance its other DMD drugs it is developing with the use of its AOC drug technology platform. In other words, it has the potential to expand upon the DMD market that it is going after with additional DMD drugs in its pipeline. If the exon skipping works for AOC 1044, then it is highly likely that it should work for many others as well. As far as a catalyst goes with respect to this EXPLORE44 phase 1/2 study, it is expected that results from healthy volunteers will be released in the 2nd half of 2023.
Financials
According to the 10-K SEC Filing, Avidity Biosciences had $610.7 million as of December 31, 2022. The reason for the cash on hand is because of the $223.8 million in net proceeds it generated from a follow-on financing. That is where it sold a total of 12,000,000 shares of its common stock at a public offering price of $17.25 per share. In addition, it granted the underwriters a 30-day option to purchase up to an additional 1,800,000 shares of its common stock as well. It also raised a total of $22.3 million through an “At-the-market” program as well.
Avidity Biosciences, Inc. is likely going to raise cash for sure this year in 2023. Why do I make that claim? That’s because it states that it believes it has enough cash on hand to fund its operations for at least 12 months from the date of the 10-K SEC filing, which was filed on February 28, 2023. That tells me that by at least mid-2023 it is going to look for a way to raise additional cash.
Conclusion
Avidity Biosciences, Inc. is a great speculative biotech play to look into. As I stated above, it has two key catalysts in 2023 to look forward to. The first catalyst of which, would be the release of results from the phase 1/2 MARINA study using AOC 1001 for the treatment of patients with myotonic dystrophy type 1 at the American Academy of Neurology [AAN] Annual Meeting on April 27, 2023.
A second key catalyst for 2023 would be the release of results from the phase 1/2 study known as EXPLORE44, which is using AOC 1044 for the treatment of patients with DMD amenable to exon 44 skipping. Results from this phase 1/2 study are going to be released in the 2nd half of 2023. Again, should results from this DMD study turn out to establish proof of concept, then it could use its technology to advance additional DMD clinical candidates.
While a huge opportunity remains with respect to this biotech, there are a few risks that investors/traders should be aware of. The biggest risk would be with respect to the two upcoming data readouts for Myotonic Dystrophy Type 1 [DM1] and DMD. With respect to DM1 final results are going to be released for this indication on April 27, 2023. Avidity did release some positive preliminary data for it beforehand, however, there is no guarantee that the next set of results are going to be good. With respect to the DMD program, this is another risk to watch out for. There is no guarantee that results from this study will live up to expectations. Should either of these studies fail to deliver promising results, then I expect a huge drop in the stock price.
A final risk to consider would be with respect to Avidity Biosciences, Inc.’s financials. That’s because, as I stated above, it believes it only has enough cash to fund its operations for 12 months from the date of its 10-K SEC Filing, which was failed on February 28, 2023. This means that it is going to have to raise additional cash in the coming months. I believe should positive results be released from either one of the two data readouts expected in 2023, then it will likely raise cash immediately. With its proprietary AOC technology, plus two key data readouts expected in 2023, these are the reasons why I believe Avidity Biosciences, Inc. is a good speculative biotech play to look into.
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