FDA Approval of New Gout Drug Likely, Analyst Says
Research Report

Selecta Biosciences Inc. (SELB:NASDAQ) reported response rates from the two Phase 3 studies of its SEL-212 in chronic refractory gout, and they should support approval of the immunotherapeutic by the U.S. Food and Drug Administration, reported BTIG analyst Dr. Yun Zhong in a March 21 research note.

"We continue to believe that the size of the overall market as well as the low penetration rate by currently available therapy, should provide sufficient room for new treatment options," added Zhong.

Implied 492% Upside

Potential gains for Selecta investors are significant, given the sizable gap between the company's current share price of US$1.35 and BTIG's target price on it of US$8 per share.

Selecta is a Buy.

Platform Key to Success

Zhong wrote that SEL-212's response rate "appears to be consistent" and that BTIG believes the 56% rate experienced by the high-dose U.S. group "should reflect SEL-212's true efficacy." Along with statistically significant separation from placebo in terms of efficacy, SEL-212 exhibited a good safety profile.

SEL-212 is a combination of Selecta's ImmTOR immune tolerance platform and pegadricase, a therapeutic uricase enzyme.

"The Phase 3 gout data have provided strong evidence for ImmTOR's biological activity, and we believe the platform technology is what will support Selecta's proprietary programs and the company's long-term potential," Zhong commented. ImmTOR combines nanoparticle technology with rapamycin to generate antigen-specific immune tolerance.

Commercial Outlook for SEL-212 Positive

Zhong also highlighted that the commercial opportunity for SEL-212 "remains strong." Selecta's partner Sobi will be the one to launch the drug; its strategy and pricing for this are currently unknown.

While competitors are already on the market, Horizon Therapeutics' Krystexxa, for one, and Krystexxa plus methotrexate, for another, SEL-212 should differentiate itself because of its distinct advantages.

One benefit attractive to patients is Selecta's drug only needs to be administered once a month, whereas Krystexxa requires dosing every two weeks. Both drugs are given intravenously. Further, the Krystexxa-methotrexate combination can have undesirable side effects, such as gastrointestinal upset, while SEL-212 is well tolerated.

The ongoing commercialization of Krystexxa should not hinder, but rather help, the rollout of SEL-212, Zhong purported.

He wrote, "Even at the peak U.S. sales of over US$1.5 billion to which Horizon has guided for Krystexxa, the market penetration should be modest, so there will still be a significant opportunity for SEL-212."

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Disclosures for BTIG Research, Selecta Biosciences, March 21, 2023

Analyst Certification: I, Yun Zhong, hereby certify that the views about the companies and securities discussed in this report are accurately expressed and that I have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report. 

Company–Specific Regulatory Disclosures: BTIG LLC expects to receive or intends to seek compensation for investment banking services in the next 3 months from: Selecta Biosciences (SELB)

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