Voyager Does A Reboot After First Generation Failures (NASDAQ:VYGR)

Voyager Therapeutics (NASDAQ:VYGR) has done the seemingly impossible thing once again. After Sanofi, AbbVie and Neurocrine signed off of major deals, the company went into recovery mode, fired key management, inducted fresh faces, started a new tech platform called TRACER, and immediately managed to rope in not one but two big pharma deals. In October there was Pfizer; in March we had Novartis. The stock has doubled since I covered it in January. All this after years of clinical holds, unassuming data, and now an unproved, preclinical platform.

This market makes no sense. Punish the ones that bore you, lavish gifts on the ones that confuse you. Keeping big money confused is the key to wealth. Otherwise, what’s there in a preclinical platform of an ever-failing company?

Let’s quickly recap Voyager’s history from my earlier coverage. Voyager was a gene therapy developer with a program targeting Parkinson’s Disease. Parkinson’s Disease patients need dopamine, and Voyager’s AADC-VY converts levodopa to dopamine. Way back in 2016, and then again in 2018, this asset provided interesting phase 2 data which showed significant increase in on-time in PD patients. However, the project went nowhere. The company roped in Sanofi, AbbVie and finally Neurocrine. But the FDA put a clinical hold on the program after MRI irregularities emerged in some patients – and Neurocrine, too, quit in February 2021. That was where it was last year.

In October 2021, the company announced major changes in their management. Long-time CEO Andre Turenne was replaced by Michael Higgins, chairman of the board of directors, as interim CEO, Omar Khwaja, M.D., Ph.D., R&D head, who left “his dual positions as global head of neuroscience translational medicine and global head of rare diseases” at Roche to join Voyager, was also replaced by Glenn Pierce, M.D., Ph.D., board director.

Michael Higgins is the Entrepreneur-in-residence at Polaris Capital, while Glenn Pierce is the Entrepreneur-in-residence at Thirdrock Ventures. Thirdrock Ventures seems to be holding 16% of VYGR stock as of the previous quarter. I couldn’t find similar data for Polaris, but Mr.Higgins has been on VYGR BoD for years, so I am guessing they too have a substantial stake somewhere. This is, therefore, basically a hedge fund takeover of the company, reshuffling of the management and focusing on a new technology. No wonder a couple of big pharma players got interested; they must have been influenced by these two major funds taking an active interest in the company. Upfront payments, however, are small for either deal. For Pfizer it is $30mn, while for Novartis it is $54mn. That is pocket change for these companies, but money enough to keep Voyager afloat while between them the funds and big pharma figure out what to do with it. It is an added blessing that the stock shot up 200% after the Novartis deal.

Now, coming to the platform itself, here’s what I have. It is called the RNA-driven TRACER (Tropism Redirection of AAV by Cell-type-specific Expression of RNA) AAV screening technology to expand discovery of novel capsids with broad tissue tropism in CNS, cardiac, and skeletal tissues. The press release description is this:

​​Voyager’s TRACERTM capsid discovery platform is a broadly applicable, RNA-based functional screening platform that allows for rapid in vivo evolution of AAV9- and AAV5-derived capsids with enhanced tropisms and cell- and tissue-specific transduction properties in multiple species, including non-human primates (NHPs). Initial data from the first of many libraries screened in NHPs demonstrated the proprietary capsid variants effectively penetrated the blood-brain barrier and achieved widespread biodistribution and transduction of multiple regions of the brain. Separate results have demonstrated the ability of certain capsids to transduce cardiac muscle and to de-target the dorsal root ganglia. Voyager is proceeding with additional capsid campaigns derived from AAV9, AAV5, and other capsid serotypes to identify novel AAV vectors optimized for specific therapeutic applications.

I have no comment on all this, except to say that the less-invasive nature of the therapy is very interesting, which has been possible because the molecule can cross the blood-brain barrier easily. However, this is discovery stage, and only big pharma will have enough money to bet on discovery stage claims. This will take at least 2 years, probably more, to get an IND, and another 4-5 years to get near approval. Retail investors cannot bet on such long term promises.

To quickly add some data, after the Pfizer deal, here’s what Voyager said:

“This transaction highlights the potential of our TRACER platform to identify novel AAV capsids that target desired cells and tissues with greater specificity at lower doses and with fewer off-target risks than conventional AAV serotypes,” said Michael Higgins, interim CEO of Voyager.

“We believe that our TRACER platform has the ability to produce not only enhanced blood-brain-barrier penetrant capsids, but also novel capsids with enhanced tropisms across a diversity of tissues and cell types, offering promise to unlock the fullest potential of gene therapies for a wide array of diseases with unmet medical need.”

Here’s some more illuminating commentary from Endpts:

At ASCGT last week, Voyager presented monkey data from a new vector, showing that it can cross the blood-brain barrier and reach neurons when administered by IV. That’s a potentially significant advance over their Parkinson’s therapy, which some outside experts believed saw safety issues because it had to be injected directly into the brain. (Voyager has consistently refused to describe the issues in any detail).

Financials

VYGR has a market cap of $345mn and a cash reserve of $132.5 million. This does not include the $54 million upfront payment Voyager is entitled to receive from Novartis as part of their agreement. The company expects this cash to last to 2024.

Bottom Line

VYGR went up 2x on the Novartis deal, and such a deal could not have been anticipated by anyone. However, VYGR has a history of making major deals and then wasting them away. True, there’s a new management in town, but they, like their new platform, are yet to prove themselves here in the clinic, despite the promise we saw in the primate data. So I will remain firmly on the sidelines.