Biogen Collaboration With Applied Genetic Is 'Interesting,' But Morgan Stanley Will Wait For More Data

In a report published Monday, Morgan Stanley analyst Matthew Harrison maintained an Overweight rating on Biogen Inc (NASDAQ: BIIB). The company announced a collaboration with Applied Genetic Technologies Corp (NASDAQ: AGTC) for gene therapies for orphan ophthalmic diseases."In this collaboration Biogen is granted an exclusive license for AGTC's X-linked retinoschisis (XLRS) and X-linked retinitis pigmentosa (XLRP) programs and obtains the option to exclusively license discovery programs for two more ophthalmic indications and one nonophthalmic indication. These additional indications do not include AGTC's programs for achromatopsia or wet AMD," Harrison explained.While Biogen will get worldwide commercialization rights for the programs, Applied Genetics will get the option to a cost/profit sharing program, which the latter company can opt into after viewing the PhaseI/II data. The companies can also decide to co-promote each program right till the BLA filing. However, the decisions will be made only at Applied Genetics' discretion.According to the Morgan Stanley report, "The XLRS program is currently in phase I/II trials and AGTC will lead development through approval in the US. XLRP is in preclinical development and AGTC will lead development through the first in human studies. Initial XLRS clinical human data will be available by YE15 and XLRP will have its IND filed in 2H16."Biogen, on the other hand, will support the clinical development of XLRS, after the first human study, and the XLRP, following the IND filing."With this collaboration Biogen also obtains exclusive license to AGTC's proprietary technology to make AAV vectors for up to 6 additional gene therapy programs. Three of these are solely at the discretion of AGTC and will be subject to option fees and royalties," the report added.Biogen appears to be highly interested in gene therapy, given that this is the second deal that the company has entered into. The analyst expects the company to enter into additional deals, going forward.