Chardan Capital Says to Buy Spark Therapeutics (ONCE) Peers Following SPK-RPE65 Results (AAVL) (VBLT)

Chardan Capital recommends to buy several biotech names after Spark Therapeutics (NASDAQ: ONCE) announced positive top-line results from the Phase 3 pivotal trial of its lead gene therapy product candidate, SPK-RPE65, for the treatment of RPE65-mediated inherited retinal dystrophies (IRDs) earlier Monday.

Gbola Amusa commented, Spark reported SPK-RPE65: 1) met its primary endpoint (p=0.001), showing functional vision improvement versus the placebo group, 2) met a secondary endpoint for full-field light sensitivity threshold testing (FST) (p<0.001), 3) met a secondary endpoint for the change in mobility test score (p=0.001), 4) showed a trend to benefit for visual acuity (p=0.17), and 5) showed no zerious adverse events or deleterious immune responses. Spark now intends to file a BLA with the US FDA in the hopes of making SPK-RPE65 the first gene therapy product approved in the US. We believe the results here are potentially landmark results that have a positive read-across to other gene therapy names we cover, namely uniQure N.V. (Nasdaq: QURE) (Buy, PT$40), Vascular Biogenics (Nasdaq: VBLT) (Buy, PT$25), Applied Genetic Technologies (Nasdaq: AGTC) (Buy, PT$25), and Avalanche Biotechnologies (Nasdaq: AAVL) (Buy, PT$17.50). We note that these gene therapy companies together are trading at high amounts of cash as a percent of the market cap and therefore have very little success implied in their market caps. The valuations exist despite the companies having validating investments from the likes of Regeneron (Neutral), Biogen (unrated), and Bristol-Myers Squibb (unrated). We believe this is therefore a good entry point for a vertical likely to generate excess returns for the coming 5-10 years.

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