The key takeaways are that the company has six quarters at its current burn rate before the enterprise value would become positive and it has 18 quarters until it would run out of cash.   The burn rate will likely increase as they advance their product candidates but it is clear they have substantial time to advance their pipeline before they have the possibility of running into financial difficulties.  

Pipeline

ADVM-022  

This is a gene therapy candidate for treating wet age related macular degeneration (wAMD).  The company plans to initiate IND studies by the end of this month.

There are 1.2 million Americans who suffer from wAMD and the number is expected to double by 2050 as the population ages.

Currently, wAMD is treated with frequent injections of anti-VEGF protein into the eye. This creates a burden for both patients and physicians, and limits access for those who are not able to comply with frequent office visits to receive injections.

ADVM-043

This is a gene therapy candidate for treating alpha-1 antitrypsin (A1AT) deficiency.  The company plans to enroll patients for a Phase 1/2 trial in Q4 2017 .

A1AT deficiency is a rare genetic disorder that causes defective production of A1AT that may result in serious respiratory disease in adults and/or liver disease at any age. The current standard of care for patients with A1AT deficiency involves chronic replacement of A1AT protein through a weekly intravenous infusion to address their lung disease. Prevalence of A1AT deficiency is estimated at 1 in 5,000 to 1 in 3,500 people with European ancestry, leading to approximately 100,000 A1AT deficiency patients in US alone

ADVM-053

This is a gene therapy candidate for treating hereditary angioedema (HAE).  The company plans to initiate IND studies by the end of this month.

HAE is a life threatening genetic condition with approximately 10,000 patients diagnosed across major markets.  It intermittently causes painful attacks that require infusions every three or four days to prevent.    

Regeneron Partnership

AVA-311 is one of three gene therapy candidates being researched in partnership with Regeneron through 2020.  This partnership was renewed in February 2017.

Editas Partnership

ADVM is collaborating with Editas Medicines to explore the delivery of up to five genome editing medicines for the treatment of inherited retinal diseases. This partnership was announced in August of 2016.

The key takeaways from the pipeline are that all of their drugs are very early in their development and that Regeneron and Editas thought enough of their technology to partner with them or renew their partnership within the last twelve months.  

Company History

April 22, 2014 - $55 million raised from Venrock, Deerfield, Adage, etc

May 5, 2014 – Partnered with Regeneron to develop novel gene therapy drugs for the treatment of ophthalmologic diseases

July 31, 2014 – IPOed by selling 6 mm shares at $17 / share

January 8, 2015 – Sold 2 mm shares at $59 / share in a secondary offering

June 15, 2015 – Announced disappointing results for its lead drug candidate but spun the results as positive to the street.  Stock dropped from $38.88 to $17.05

July 23, 2015 -  The CEO resigned, likely due to a loss of credibility.

August 13, 2015 – The company reported earnings and announced it would not initiate additional trials of its lead drug.  The stock dropped from $13.83 to $10.01.

November 20, 2015 – Names Paul Cleveland as CEO

February 1, 2016 – Announces a stock for stock merger with Annapurna Therapeutics.  Existing shareholders own 62.5% of newco.

May 12, 2016 – Closes deal to acquire Annapurna

August 9, 2016 – Announced a collaboration with Editas Medicine to explore genome editing medicines to treat up to five inherited retinal diseases.

October 14, 2016 -  Amber Salzman has been promoted from President to CEO.  Paul Cleveland moves from CEO to Executive Chairman of the board

February 2017 – Regeneron extends the term of their research collaboration by three years to May 1, 2020.

The key takeaway from the company history is that their first drug failed to perform as expected and the CEO attempted to mislead investors.  He was fired shortly thereafter and the company abandoned trying to advance it.  The triple blow of a failed drug, an attempt to mislead investors by the old CEO, and their pipeline being so far from being approved is what has led to the stock trading at 55% of its net cash.

Summary

I don't believe that anyone is currently able to predict the value of their pipeline.  That said the market is extremely pessimistic at the moment and I believe that ADVM is a strong risk/reward trade given the potential for a new story to be formed over the next six quarters prior to it having a positive enterprise value.