BiQ: Quick Update on REGENXBIO (RGNX)

REGENXBIO (RGNX) continues to sell off, possibly due to new and ongoing uncertainties surrounding its DMD program resulting from disruptions at the FDA. However, their DMD program was never my focus to begin with. DMD has become a highly competitive field, with several competitors also producing encouraging data.

My focus is on their retinal pipeline, which is partnered with AbbVie. Under the terms of the licensing agreement, AbbVie shares the development costs and leads the program. While the DMD program may be vulnerable due to its reliance on the Accelerated Approval pathway, the clinical path for the retinal program will rely on clinical outcomes, which should provide much more reliable—and hopefully approvable—datasets. The fact that AbbVie is leading clinical development provides incremental derisking.

Key milestones are still far off, however, so it may take time for the story to develop. In the meantime, members should note that management has indicated it will collect a $200 million milestone from AbbVie in 2025, which is expected to strengthen its already healthy balance sheet further. The majority of RGNX's debt is related to the royalty obligation for ZOLGENSMA, which I expect will be fully retired this year. Furthermore, once the royalty obligation is paid off, RGNX will retain all royalty income, adding further financial flexibility. RGNX currently collects a 10-20% tiered royalty on ZOLGENSMA sales, which totaled $1.2 billion in 2024.

It's difficult to predict when the market may reprice the shares, and as always, clinical development involves significant risk. However, at the current valuation, the shares appear quite attractive to me on a R/R basis.

Current Buy Targets, BiQ Scores, and Outlook can be found on the Active Portfolio page of the website.

RGNX price at time of publication: $7.09.

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