Someone who follows me asked me recently how, as a typically risk-averse investor, I can be so interested in biotech stocks. I think it's partly a fascination with the science and partly the prospect of cracking a code, solving a previously unsolvable problem. And let's not forget: potential for exponential reward.

Today the stock that's intriguing me is Gain Therapeutics, Inc. (GANX).  The number of analysts covering the stock is up to 4, with all giving a Buy rating (3 say Strong Buy). Short interest in GANX is almost nil. After two quarters of positive earnings surprises analysts were prepared to be surprised again, which didn't happen, but on the plus side there was a positive surprise in revenues. Last quarter the earnings report had no effect on stock price and we expect similar this quarter. 

Quants rank it pretty high in both the Biotechnology sector and the Healthcare industry; GANX comes in considerably higher than some larger-cap competitors such as Relay Therapeutics (RLAY) or Schrodinger (SDGR).

That's a lot of positivity from the pros, considering that they're not hanging it on any particularly sexy news this quarter (in biotech, the spikes generally relate to INDs, trial results, partnerships, mergers etc.). What's motivating the professionals is what should be motivating to investors: great potential.

The engine of Gain Therapeutics is its proprietary computational discovery platform, SEE-Tx™ (for Site-Directed Enzyme Enhancement Therapy. As a company spokesperson explained it to me, SEE-Tx™ is a computational platform that uses the published 3D structure of enzymes and a proprietary computational technology to discover new allosteric binding sites and predict their druggability. The output from the SEE-Tx™ platform are newly discovered binding sites that for the first time, can be targeted for therapeutic benefit to correct enzyme misfolding, thus restoring function and eliminating the subsequent toxic substrate buildup that causes disease. Gain uses it to guide misfolded enzymes back into their proper shape in order to treat a range of genetic diseases. These novel small molecules it produces are called STARs (Structurally Targeted Allosteric Regulators). 

While several other genetic diseases are in its sights, the most exciting applications may be to Parkinson's disease. Gain Therapeutics offers first brain penetrant allosteric regulator with positive readouts in physiologically relevant in vitro and vivo models of Parkinson’s Disease. The STAR compounds can access the brain and spinal cord, whereas even the latest enzyme replacement and gene therapies only work on symptoms. Gain's STARs are designed to provide a functional cure. From a company summary:

"Parkinson’s Disease is a neurodegenerative disease affecting millions of people worldwide. Enzymatic protein misfolding is a characteristic of PD and many other neurodegenerative diseases. Up to 10 percent of all Parkinson’s patients have a GBA1 gene mutation, which results in the misfolding and subsequent GCase dysfunction, causing the toxic accumulation of synuclein and neuronal cell death. PD patients with GBA1 mutations have an early onset of the disease, faster progression, and non-motor symptoms."

The company has received a grant from the Michael J. Fox Foundation for Parkinson's Research.

In May, the company presented at IAPRD positive pre-clinical data from its GBA Parkinson’s Disease (PD) program. The data demonstrate the ability of lead compound GT-02287 to penetrate the brain, target and bind with the beta-glucocerebrosidase (GCase) protein, avoiding its degradation and allowing its transport to the lysosomes where the enzyme can carry out its biological function.  

The results were highlighted in a poster presentation at the XXVII World Congress on Parkinson’s Disease and Related Disorders (IAPRD) held May 1 - 4, 2022, in Prague, Czech Republic. “The data we presented at IAPRD further supports the therapeutic potential of our lead compound to alter the course of historically challenging neurodegenerative diseases,” said Eric Richman, Chief Executive Officer of Gain. “The disease modifying potential of this compound may have a profound effect for patients suffering from Parkinson’s disease.”

From the presentation, "GBA1 encodes the lysosomal enzyme glucocerebrosidase (GCase), whose deficiency has been linked to increased alphasynuclein accumulation, phosphorylation, and aggregation, as well as to mitochondrial and endoplasmic reticulum stress, common pathophysiological features in Parkinson’s disease (PD). Interestingly, different GBA1 mutations also increase the risk factor for sporadic PD. SEE-Tx™ is a fast and cost-effective solution that has allowed us to develop structurally targeted allosteric regulators (STARs) of the GCase enzyme that are orally bioavailable and brain-penetrant. Enhancement of the lysosomal GCase activity by GT-02287 protects against key pathological features of PD, including alpha-synuclein related pathology, ameliorating dopaminergic cells phenotype. Therefore, STARs therapy represents a novel pharmacological tool for the treatment of PD, warranting further development of GT-02287 towards the clinic. . Figure 1. GT-02287 decreases P129-Alpha Synuclein levels in SH-SY5Y Dopaminergic neurons after rotenone injury."

An additional and significant benefit is that the platform reduces drug discovery time from the traditional 2 to 4 years to just 4 to 6 weeks. This is undoubtedly appealing to both the disease associations with which Gain partners and to potential drug developers and pharma partners/investors. 

Dr. Manolo Bellotto, Chief Strategy Officer, commented, “We continue to focus on targeting the cause of the disease, rather than its symptoms, and the data here continue to demonstrate that enhancement of the lysosomal GCase activity by GT-02287 protects against key pathological features of PD, including alpha-synuclein related pathology, improving the phenotype of dopaminergic cells. We look forward to sharing additional findings as we continue to advance GT-02287 towards the clinic this year.”

Previously announced plans call for first-in-human trials of GBA1 for Parkinson's in Australia, possibly even later in the year. 

Up next is the August earnings release. For me, the earnings surprise was that they released it two days early, while I was writing this. Given its modest market cap, we expected to see GANX focus on assets closer to commercialization and the extension of the cash runway, and the report bears that out. We weren't expecting any big surprises (see analyst info above) and didn't get any. A nice surprise for me was how readable the "Management's Discussion and Analysis of Financial Condition and Results of Operations" (Part 1, Item 1 of the 10K) is, and I recommend it to anyone who wants to know more.