Dive Brief:

• A clinical trial participant who received a high dose of an experimental gene therapy for diabetic macular edema suffered a serious side effect, causing the treatment’s developer, Adverum Biotechnologies, to immediately unmask the Phase 2 study.

• Adverum said the trial volunteer had vision loss, inflammation and a decrease in eye pressure about 7.5 months after treatment with the gene therapy, known as ADVM-022. The company has notified regulators of the event, and aims to determine whether the gene therapy is to blame. Adverum said it’s also looking into which other patients may be at risk of a similar side effect.

• The worrisome finding sent Adverum shares down roughly 60% as the fate of the program is now unclear. Adverum and rival RegenXBio are both developing similar treatments for forms of diabetic vision loss and age-related macular degeneration, a longtime, elusive target for gene therapy. But plans for a Phase 3 study of ADVM-022 in AMD are “now up in the air,” according to RBC Capital Markets analyst Luca Issi.

Dive Insight:

Just when gene therapy had shaken off two safety scares — cancer cases in trials run by Bluebird Bio and UniQure eventually found unrelated to treatment — a new one has emerged.

To be clear, the finding of a combination of hypotony, panuveitis and vision loss — essentially, signs of deflation and severe inflammation in a patient’s eye — hasn’t yet been conclusively linked to Adverum’s gene therapy. Bluebird and UniQure, for instance, each found that cancers developed by two patients in their respective studies were likely the result of other factors, such as underlying conditions.

Still, UniQure and Bluebird were able to clear their treatments because they could analyze biopsied cancerous cells and see if the gene therapy was the cause of the problem. Surgically removing eye tissue could cause more damage. So by comparison, “it will be more challenging to definitively exonerate” Adverum’s gene therapy, wrote Issi from RBC, in a Thursday note to clients.

Adverum is one of two biotechs either in or approaching late-stage testing of a gene therapy in AMD, which is typically treated with periodic eye injections of drugs like Eylea and Avastin. Its program and Regenxbio’s rival RGNX-314 are also both being evaluated in forms of vision loss associated with diabetes, for which injectable medicines are also prescribed. The gene therapies are meant to be just as effective, but last much longer, freeing people of the need for chronic injections to maintain their vision.

Both developers are facing an uphill battle. The treatment landscape for these diseases is changing with the introduction of drugs and regimens requiring less frequent injections. Existing treatments are also very effective and safe, making the bar for a gene therapy to clear exceedingly high.

Last year, for instance, the Food and Drug Administration rejected abicipar, a medicine developed by Molecular Partners and Allergan and now owned by AbbVie, because of higher rates of inflammation than are seen with other drugs.

What’s more, gene therapy for AMD has been tried before, to no avail. In fact, Adverum was formed through a 2016 reverse merger between Annapurna Therapeutics and Avalanche Biotechnologies, the latter of which saw its stock crumble after an AMD gene therapy produced disappointing results.

But even under its new name and strategy, the biotech continued to pursue AMD. Both Adverum and Regenxbio are counting on improvements in gene therapy delivery technology to produce better outcomes.

Regenxbio has begun the first of two pivotal trials for RGX-314 in AMD, and also has a mid-stage study underway in diabetic retinopathy. Now, though, it’s unclear whether Adverum’s program will keep pace. Since the current Phase 2 trial in DME was unblinded, Adverum will likely need to run a new one, according to Issi.

The side effect could also lead to more regulatory scrutiny in AMD and cause “meaningful delays in study initiation and enrollment,” wrote SVB Leerink analyst Mani Foroohar.

Adverum planned to start two Phase 3 studies in the fourth quarter.

The company’s shares plummeted from $10.16 to $4.12 apiece early Thursday.