Although collectively the large-cap biotech companies have failed to move the valuation needle this year, those innovative mid-cap public companies engaged in areas of research such as immuno-oncology, cell and gene therapies and CNS diseases have bucked the general trend. That is illustrated by the year-to-date performance of the BioWorld Drug Developers index, which has soared in value by more than 22%, well ahead of the Dow Jones Industrial Average, which has increased 15% in the same period. (See BioWorld Drug Developers Index, below.)

According to the Cowen and Co. biotechnology analyst team, the "mid-caps continue to be the most favored sector as investors continue to see much innovation and pipeline productivity."

The comment is certainly appropriate for many of the members of the index. Cambridge, Mass.-based Blueprint Medicines Corp., which is focused on genomically defined cancers, rare diseases and cancer immunotherapy, for example, has seen its share value (NASDAQ:BPMC) soar 86% this year. In its second-quarter financial results, the company said the EMA had validated its marketing authorization application for avapritinib for the treatment of adult patients with platelet-derived growth factor receptor (PDGFR) alpha D842V mutant gastrointestinal stromal tumors (GIST), regardless of prior therapy, and fourth-line GIST. The compound is an investigational, selective KIT and PDGFRA inhibitor and has been granted orphan medicinal product designation for the treatment of GIST by the European Commission.

In June, a new drug application was submitted to the FDA for avapritinib for the treatment of adult patients with PDGFRA exon 18 mutant GISTs, regardless of prior therapy, and fourth-line GIST.

"Avapritinib is specifically designed to inhibit the disease drivers of GIST, including mutant kinases associated with treatment resistance, representing a promising therapeutic approach," noted Andy Boral, Blueprint's chief medical officer.

The company has strong cash reserves to drive its clinical programs, reporting that at the end of June its cash, cash equivalents and investments were $667.3 million following the receipt of net proceeds of approximately $327.4 million from a follow-on public offering that closed in April.

Gene therapy

Helping boost the value of the index is Bluebird Bio Inc., with its shares (NASDAQ:BLUE) up 33% year-to-date. Working in a "hot" technology area, the company's lentiglobin cell and gene therapy for beta-thalassemia received a positive vote in Europe, which paves the way for a formal European Commission approval. The treatment, which comprises autologous CD34 cells transduced with a lentiviral vector, lentiglobin 3305, expressing a working copy of the beta-globin gene, to be marketed as Zynteglo, could become the first gene therapy to gain approval for treating a rare blood disease. It is specifically indicated for patients 12 and older with transfusion-dependent beta-thalassemia who do not have a β0/β0 genotype, for whom hematopoietic stem cell (HSC) transplantation is appropriate but a human leukocyte antigen-matched related HSC donor is not available.

Also working in the space is Brisbane, Calif.-based Sangamo Therapeutics Inc., whose shares (NASDAQ:SGMO) jumped 12% in July. The genomic medicine company and partner Pfizer Inc. recently reported updated results from the phase I/II Alta study evaluating SB-525 gene therapy for severe hemophilia A. The data showed that the therapy was generally well-tolerated and demonstrated a dose-dependent increase in factor VIII (FVIII) activity levels. The first two patients treated at the 3e13-vg/kg dose rapidly achieved normal levels of FVIII activity as measured using a chromogenic assay, with no reported bleeding events, and the response continues to be durable for as long as 24 weeks.

Data from 10 patients treated with SB-525 were presented at the XXVII Congress of the International Society on Thrombosis and Haemostasis, in Melbourne, Australia.

Based on the accumulating results from the study, the FDA has granted a regenerative medicine advanced therapy designation for SB-525 gene therapy to treat severe hemophilia A.

Sangamo signed a global collaboration and license agreement with Pfizer in 2017 for developing and commercializing SB-525, one of Sangamo's four lead candidates, and collected a $70 million up-front payment. (See BioWorld, May 12, 2017.)

An adeno-associated virus-based genetic medicines company, San Francisco-based Audentes Therapeutics Inc., has also benefited from the excitement surrounding gene therapy, with its shares (NASDAQ:BOLD) up a healthy 82% so far this year. The company is focused on developing and commercializing products for serious rare neuromuscular diseases.

In May, it reported new positive data from Aspiro, the phase I/II trial of AT-132 for the treatment of X-linked myotubular myopathy, a serious, life-threatening, rare neuromuscular disease that is characterized by extreme muscle weakness, respiratory failure and early death, at the Meeting of the American Society of Gene and Cell Therapy.

In April, Audentes said it will work with the Nationwide Children's Hospital to develop new vectorized antisense therapies for Duchenne muscular dystrophy (DMD) and myotonic dystrophy type 1 (DM1). The agreement expands the company's portfolio with two preclinical programs: AT-702, an exon 2-skipping candidate for DMD expected to enter the clinic later this year, and AT-466, an RNA knockdown and exon-skipping candidate for the treatment of DM1. It also widens its technological approach beyond gene replacement, the core technology behind its X-linked myotubular myopathy and Pompe disease programs, and into new areas that may allow it to address a broader array of patients with rare neuromuscular diseases. (See BioWorld, April 9, 2019.)

Neurodegenerative diseases

Denali Therapeutics Inc., of South San Francisco, is developing a broad portfolio of product candidates for neurodegenerative diseases, an area that has received renewed investor interest during the past 12 months. The company's shares (NASDAQ:DNLI) are trading up more than 3% so far this year.

Big pharma companies are also taking notice, with Sanofi SA's Genzyme Corp. agreeing to pay Denali $125 million in November last year to start development of multiple small-molecule inhibitors of receptor-interacting serine/threonine-protein kinase 1, a signaling protein that regulates inflammation and cell death in a variety of diseases. The candidates could potentially benefit people with Alzheimer's disease, amyotrophic lateral sclerosis and multiple sclerosis. (See BioWorld, Nov. 7, 2018.)

More recently, in June, the FDA granted orphan drug designation and rare pediatric disease designation for its DNL-310 program, under development for patients with mucopolysaccharidosis (Hunter syndrome).

DNL-310 is a recombinant form of the iduronate 2-sulfatase enzyme engineered to cross the blood-brain barrier. A phase I/II study of the product targeting Hunter syndrome is planned for 2020.