Biotech stock Neurogene collapsed Tuesday — reversing a recent sprint — after a patient experienced a serious side effect in the company's Rett syndrome study.
The company is testing a gene therapy for female patients with Rett syndrome. Though the low-dose version of the drug "demonstrated a favorable safety profile" in the first four patients, a patient in the high-dose group experienced a serious adverse event.
William Blair analyst Sami Corwin says the side effect appears to be activation of the complement immune system and liver toxicity. These are known side effects of gene therapies delivered with an adeno-associated viral vector (a benign virus used to deliver genetic material), like Neurogene's, and can be managed with specific drugs.
The event didn't impact the nervous system and doesn't appear related to the injection technique or Neurogene's platform, Corwin said in a report.
"Importantly, we do not see the event as impacting the continued development of the low dose," she said.
But in morning trades, Neurogene shares crashed 44.1% to 40. That wiped out a 43.3% gain on Nov. 4 after the company announced a $200 million private placement.
Biotech Stock: Improvements On Two Scales
Rett syndrome is a rare genetic disease that can cause developmental regression, repetitive movements and challenges with walking. Patients can also experience other cognitive problems.
In the low-dose group, all four patients demonstrated consistent gains in hand function, gross motor function and communication, Leerink Partners analyst Mani Foroohar said in a report. All patients achieved a two-point improvement on a seven-point scale measuring current symptoms vs. their baselines.
Foroohar kept his outperform rating on the biotech stock.
On another scale, which only measures current symptoms, just one patient showed improvement, William Blair's Corwin said.
But "all patients acquired new complex and/or relearned lost skills in one or more core clinical subdomains (hand function, communication and gross motor function) and all experienced improvements in sleep, constipation and/or (difficulty swallowing) post-treatment," she said.
The company noted it's difficult to show improvements on the latter scale. Doing so requires large jumps in skills that don't always translate to an improvement in score.
Corwin rates Neurogene stock an outperform.
"While we see the treatment-related (serious adverse event) in the high-dose (group) as unfortunate, we think the event is overshadowing the impressive (effectiveness)," she said.
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