CAMBRIDGE, Mass. — After a rocky start as a public company, Rubius Therapeutics is hoping to enter 2020 on a smoother path, as the biotech prepares to soon release the first clinical data from its new drug platform.
In July, the Cambridge-based company went public with a lofty market value above $1.5 billion despite lacking revenue or any product candidates in human testing.
Instead, Rubius excited investors with an ambitious vision to build a pipeline of medicines from red blood cells, an approach it said could hold advantages over current options like enzyme replacement therapies and apply to rare diseases, cancer and auto-immune disorders.
A first glimpse at how that promise might be realized is due before year's end, when the company presents the first clinical results from a Phase 1 study of its lead candidate in a rare metabolic disease called phenylketonuria. In the meantime, however, a Wall Street debate over what the company's worth has intensified.
Madhu Kumar, a biotech analyst at Baird, is skeptical, pointing to the lack of compelling preclinical evidence and stiff market competition from gene therapy that could outflank the company's lead drug. Last month, the analyst recommended investors sell Rubius stock until shares trade at $4, less than half its current stock price.
"There's a big chasm between what they're saying they can do, and what they've shown they can do in terms of either preclinical data or clinical execution to this point," Kumar said in an interview.
The broader market has soured on Rubius too, placing greater importance on the company's first clinical readout. Shares have sunk 65% in the 15 months since its initial public offering. Going public so early left Rubius without clinical data to show investors for more than a year, a span of time that's also seen investor enthusiasm wane for cell and gene therapy companies as well as the broader biotech sector.
"We never said this would be a quick win," company CEO Pablo Cagnoni said in a recent interview with BioPharma Dive. "It is going to take time."
Instead, Cagnoni, who joined Rubius last June, emphasized a longer-term view, one shared by the company's key investors. Even as the market has pulled back, the company's largest institutional investors — venture backer Flagship Pioneering, Fidelity and the Scottish investment firm Baillie Gifford — have all maintained or increased their holdings. Combined, those three own just over 60% of Rubius.
Like other platform companies, Rubius has pitched a vision that its technology, proven once, could be applied across a wide range of diseases. Red cell therapeutics, which are created by genetically engineering donor stem cells, could be less vulnerable to the kind of immune responses that are of concern in cell and gene therapy. That's Rubius' theory, at least, as in-human data have yet to back up those claims.
And the biotech has already encountered bumps in the drug development road.
In August, Rubius disclosed problems with its contract manufacturer that led the company to limit the first Phase 1 data for lead drug RTX-134 in phenylketonuria, or PKU, to include just four patients instead of the previously planned five to 10.
Cagnoni declined to get into specifics beyond describing it as human error by the contractor.
"You don't throw your partner under the bus," Cagnoni said. "There were mistakes, we discussed it with them, we think we have a handle on them."
Rubius doesn't plan to rely on outside manufacturing for much longer, however. A priority is getting a 135,000-square-foot Rhode Island facility up and running by the second half of 2020. That plan has led Rubius to expand its headcount, which has swelled from about 80 employees to 220 over the past year and a half.
"The soonest we control our own manufacturing the better," he said, adding the Rhode Island plant will manufacture both the red cell therapeutics and the viral vectors used to modify the donor stem cells.
The upcoming Phase 1 readout will also give a first look at the durability of Rubius' drug in humans. Cagnoni said at a recent investor conference he'd be happy with durability that surpasses one month, significantly less than the typical red blood cell's 120-day lifespan — one selling point of building a medicine around red blood cells.
Yet the PKU readout could wind up becoming irrelevant if competitors like the gene therapies being developed by BioMarin Pharmaceutical and Homology Medicines advance, Baird's Kumar said.
"Over the course of the Homology Phase 1/2 or the BioMarin Phase 1/2 for their AAV gene therapy, if they can show normalization of phenylalanine after a single administration of a gene therapy, game over," he said.
Homology expects to disclose initial clinical data for its PKU gene therapy by the end of 2019, according to the company's latest presentation. And BioMarin last month submitted a clinical trial application to U.K. regulators for its gene therapy, dubbed BMN 307.
Outside of PKU, Rubius' preclinical pipeline focuses on oncology and auto-immune diseases. The biotech plans to enter multiple drugs into the clinic in 2020, including one cancer therapy in early 2020.
"The problem that they face is they are running into the freight train that is immuno-oncology fatigue," Kumar said, noting that most cancer-focused companies need to go beyond single-arm Phase 1/2 trials to prove out their drugs.
It'll be a long road to market for all of these therapies, and Cagnoni said it is likely Rubius will bring on partners at some point. He emphasized his desire to keep control of development and find the right timing to negotiate from a position of strength.
This July, Kris Elverum joined Rubius from Turnstone Biologics as the company's senior vice president of business development and strategy. Cagnoni said Elverum has relaunched licensing and partnership talks with industry players.
"It's easy to get in and get attracted to the money and the resources," he said. "And then you have to deal with that partner for a long time. Selecting that partner and putting in the right structure is critical."
