MENLO PARK, Calif. (TheStreet) -- An important clinical trial catalyst is approaching for Avalanche Biotechnologies (AAVL) and its gene therapy platform. Results from a phase IIa study of Avalanche's AVA-101 in wet age-related macular degeneration are expected later this month or in July. The looming Avalanche data will also be another opportunity to test investors' love affair with gene therapy.

Wet age-related macular degeneration (wet AMD) is a chronic disease of the eye that is associated with the proliferation of blood vessels in the retina. Blood and fluids can leak from these new vessels, leading to thickening and bulging of the macular portion of the retina. Wet AMD causes a progressive loss of vision.

The current standard of care for wet AMD involves drugs which block VEGF, a protein that promotes the growth of blood vessels and is expressed at abnormally high levels in patients with the disease. These anti-VEGF compounds reduce retinal thickness, significantly improve vision and have a good safety profile. The two leading anti-VEGF drugs for wet AMD are Regeneron Pharmaceuticals' (REGN) - Get Report Eylea and Roche's (RHHBY) Lucentis.

Eylea and Lucentis are major medical breakthroughs for wet AMD but the drugs are not without their downside, which is the opportunity Avalanche is seeking to exploit.

The drugs need to be injected directly into the eye and must be administered chronically in order for patients to maintain any benefit. Lucentis, for example, provides best results when injected once per month.

Avalanche hopes to demonstrate that treatment with its one-time gene therapy AVA-101 can cure wet AMD, thereby eliminating the need for anti-VEGF therapy. That's the home run scenario, but not the only way for the company to win. AVA-101 might also find a place in the treatment of wet AMD if it can reduce the frequency of anti-VEGF injections required by wet AMD patients.

AVA-101 is a modified virus (adeno-associated virus, for you gene therapy nerds) injected into the eye which introduces a gene encoding for the manufacture of the protein sFlt-1. The sFlt-1 protein inhibits VEGF, so essentially, AVA-101 would work similarly to Eylea or Lucentis but without the need for regular injections since the introduced gene would produce persistent levels of sFLT-1.

The phase IIa study being conducted by Avalanche enrolled 32 patients with wet AMD. All the patients are treated with two injections of Lucentis, once at the start of the study and another four weeks later. Twenty-one patients are also injected once with the AVA-101 gene therapy, while the other 11 patients don't get AVA-101 and therefore serve as the control group. The patients are assessed monthly to determine if they require rescue injections of Lucentis. The study duration is one year.

The primary endpoint of the study is safety but Avalanche is also assessing the ability of AVA-101 to improve visual acuity, reduce retinal thickness and decrease the number of Lucentis rescue injections compared to the control arm.

Given the small number of patients enrolled, Avalanche has advised investors that the study is not designed to show a statistically significant difference between AVA-101 and the control arm on the efficacy endpoints.

A previous phase I study of AVA-101 provided an intriguing proof of concept for the gene therapy approach to treating wet AMD. Five of six wet AMD patients treated with Lucentis and either one of two different doses of AVA-101 showed an average increase in visual acuity from baseline of 8.7 and 6.3 letters, respectively on a standard eye chart. The two control patients in the phase I study showed a decrease in visual acuity of 3.5 letter relative to baseline.

The two control patients received three rescue injections of Lucentis during the study; while four of the six AVA-101 patients required no rescue injections of Lucentis. The other two patients in the AVA-101 arm required a single Lucentis rescue injection each.

Benefits in visual acuity for AVA-101 treated patients were supported by reductions in retinal thickness, according to the results from the phase I study reported by Avalanche.

These AVA-101 phase I results provide some optimism that the larger phase II study will come back with similar positive results. There is, however, a very important difference between the studies which introduces some risk. The phase II study enrolled patients with less severe wet AMD. Generally speaking, it's more difficult for anti-VEGF therapies to show improvement in visual acuity in patients with less severe disease.

My take on the pending AVA-101 phase II results: I expect to see a signal in the direction of wet AMD efficacy, maybe not statistical significance, but at least a consistent signal.

What would this signal look like? Reproducing the phase 1 data would be an absolute home run. This would mean confirming AVA-101's good safety profile and a demonstration that the gene therapy leads to a persistent increase in visual acuity, reduction in retinal thickness and less frequent rescue treatments relative to the control group.

Given the lower disease burden of wet AMD patients enrolled in the phase II study, there is a lower probability that we'll see big increases in visual acuity. I would not be surprised to see only small improvement in visual acuity and retinal thickness, or, more likely, improvements in a subset of patients i.e. those with most severe disease.

If this is how the phase II study results play out, the crucial data point for Avalanche will be to show that AVA-101 can significantly reduce the number of Lucentis rescue treatments relative to the control arm. Maintaining baseline visual acuity and retinal thickness in less severe wet AMD patients with significantly fewer rescue injections would be a very positive outcome, in my opinion. It would allow AVA-101 to be considered a boost to the current anti-VEGF treatments, reducing the patient burden and the cumulative risk of multiple intraocular injections.

What does a negative result from the AVA-101 phase II study look like? AVA-101-related adverse effects would obviously be bad news. Similarly, the inability for AVA-101 to reduce the number of Lucentis rescue injections compared to control will be a disappointment and a blow to Avalanche's program.

With that said, I think the odds of a totally negative phase II study are relatively small given the data already compiled on AVA-101.

Predicting the outcomes of clinical trials is challenging, but I lean towards optimism with Avalanche and AVA-101. I believe the data announced this month or in July will, at a minimum, demonstrate that AVA-101 can reduce the number of rescue injections relative to the control arm. The magnitude of this benefit is harder to predict, so I don't know how investors will react. If Avalanche can show that AVA-101 improves visual acuity relative to control, the market will almost certainly react well.

Fontanini is long Avalanche.

Alfredo Fontanini is an Associate Professor in Neurobiology and Behavior and runs a research lab studying taste, olfaction and emotion. He received MD and PhD degrees at the University of Brescia Medical School – Italy and did PhD and postdoctoral research at Caltech and Brandeis University. Among his interests, Fontanini follows biotech investing focused mostly on neurological and psychiatric disorders.