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Topline Summary
Korro Bio (NASDAQ:KRRO) is a biotech company focused on development of treatment approaches based on editing RNA, the transcribed code that leads the cell to make proteins. Their hope is to use this technology to treat genetic conditions, most notably a disease called alpha-1 antitrypsin deficiency (abbreviated AATD). While they have an interesting platform, they have yet to enter clinic, with a guided submission for first-in-human studies in later 2024. Given this lead time before we see meaningful in-human results, I feel that a $400 million market cap is not quite justified.
Pipeline Overview
KRRO currently has no candidates in clinical trials, but their most advanced program, KRRO-110, is designed to address AADT through editing the defective gene encoding alpha-1 antitrypsin. This is one of the more common genetic liver conditions affecting children, impacting between 2000 and 5000 births in Caucasians. According to the Alpha-1 Foundation, there are around 100,000 adults living with this disease, and it eventually leads to complications like COPD and liver cirrhosis.
Currently, the only licensed treatment option for severe disease is augmentation therapy, which is essentially supplementing with donated alpha-1 antitrypsin. However, this requires weekly infusions, and they come with risk of side effects that can impact on quality of life. Moreover, augmentation therapy is not uniformly available in different countries, driving a need for alternative treatment approaches.
Their tech platform takes advantage of a protein family called ADARs, which are capable of editing double-stranded RNA, and using oligonucleotides to guide these ADARs, specific gene abnormalities can be corrected at the level of protein expression, essentially allowing for non-permanent modification of certain targets.
In preclinical work, KRRO’s tech has been shown to achieve high levels of editing of various gene products, including SERPINA1, the aforementioned gene encoding alpha-1 antitrypsin. They’ve shown that these models of AADT can be corrected using this approach, with minimal impact on unaffected genes.
At this time, KRRO’s guidance is that they will submit a filing for beginning human studies in the second half of 2024.
Financial Overview
As of their most recent quarterly filing (from the entity Frequency Therapeutics, which is the parent company), KRRO held $42.5 million in current assets, including $41.7 million in cash and equivalents. Their loss from operations was $12.7 million, which was a net loss of $11.6 million after interest income.
Not reflected in this filing is the closing of a reverse merger and financing that brought in another $117 million, easily taking their cash runway into 2026.
Strengths and Risks
Strength – Capitalizing on renewed enthusiasm and hype for gene editing
KRRO is operating in a sector of biotech that has a lot of optimism at this time, and I think this goes a long way toward explaining their over-$400 million market capitalization. Now that we’re seeing more approvals for the likes of anemia and sickle cell disease, there is a lot of market enthusiasm for these candidate therapies.
Strength – Unmet needs drive unusual timeline acceleration
AADT is one of the low-hanging fruits, from a technical perspective, in that the gene mutation that leads to the most common form of the disease is a single, predictable substitution. This makes it pretty simple to tackle, and it’s a disease whose only current available treatment option is “augmentation therapy,” essentially supplementing patients with alpha-1 antitrypsin from donors. This helps to slow the damage to the lungs.
So there is a need to develop a therapy that can correct the gene itself, which would hopefully reduce the risk of certain reactions that can occur with augmentation therapy. It’s possible that a small clinical trial could be sufficient to propel KRRO to a first approval much faster than what we see in, say, oncology. Augmentation therapies are backed by studies of tens of patients, for example.
Risk – It’s very, very early days for the pipeline
It cannot be overstated just how early the tech is, though. We’re not in human trials, and it bears mentioning that the RNA editing platform proposed by KRRO is not something that we’ve seen find success in gene therapy to date. Moreover, because it acts on RNA, it would not a permanent fix, although with hope the editing could lead to normalization of alpha-1 antitrypsin levels without the need for augmentation therapy.
From this point, there are so many things that can still go wrong, from safety to efficacy, to the overall relevance of the treatment approach in the first place. What if their drug cannot rescue better than augmentation therapy? What if there is an unusual safety concern? These and other questions cast a pall on the entire investment thesis until we have seen human data.
Bottom-Line Summary
At a market cap approaching half a billion USD, with not an iota of human data to date, I cannot really see how it is justifiable to make an investment in KRRO at this time. Certainly any gene editing company with promise is worth watching, but we’re talking a long time before we see results from studies that haven’t even been filed to begin yet, let alone initiated…let alone fully recruited. This is not quite evident in their filings or presentations, but it is a likely reality of their situation, which weighs pretty heavily on my optimism for the investment thesis for this company.
It’s possible that the approval timeline could be shortened by a lot due to the unmet need for treatments of AADT. But I’m not sure I see that needle moving in 2024. Therefore, in my opinion it would be better to watch the situation and see how it continues to develop, which is what I intend to do as the company provides more updates.
