Editas Medicine Inc (EDIT) 2016 Q1 法說會逐字稿

Good afternoon. Welcome to Editas Medicine's first-quarter 2016 conference call.

(Operator Instructions)

Please be advised that this call is being recorded at Editas' request. I would now like to turn the call over to the Editas team. Please proceed.

Various remarks that we make during this call about the Company's future expectations, plans, and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the risk factors section of our most recent quarterly report on Form 10-Q, which is on file with the SEC.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to today.

Good morning. This is Mark Mullikin, Senior Director of Finance and Investor Relations at Editas. Welcome to our first-quarter 2016 conference call. We filed our Form 10-Q on Friday afternoon and after the markets closed, and we issued a press release reviewing the topics to be covered on this conference call earlier this morning, which can be found on our website, at www.editasmedicine.com.

Finally, a replay of today's call will be available later this morning on the investors and media section of our website. After our prepared remarks, we will open up the call for Q&A.

Now, let me turn over the call to our CEO, Katrine Bosley.

Thank you, Mark. And good morning, everybody, and thanks for being with us for our first quarterly update call as a publicly traded company. I'm also joined today by our Chief Financial Officer, Andrew Hack, as well as Sandra Glucksmann, our Chief Operating Officer, and Vic Myer, our Chief Technology Officer, who will be available for the Q&A portion of this call.

As we do in many areas, we're going to break a little bit of new ground here and depart from the usual format for quarterly calls. In our prepared remarks we will focus primarily on what we're doing to advance the science, to build the Company, and to bring important new medicines to patients.

As most of you know, Editas is pioneering the development of a broad class of CRISPR-based genomic medicines. We believe we're at an inflection point for genomic medicines and CRISPR is positioned to unlock the potential of the advances that have been made in human genetics over the past 20 years. This enables us to work towards creating genome-editing medicines that treat genetic diseases directly at their root cause, in the DNA.

To achieve this we need to do three things -- first, advance our pipeline and expand our platform; second, build our business for the long term; and, third, develop an outstanding organization. I'd like to comment briefly on each of these.

First, advancing our pipeline and expanding our platform. Our platform and product pipeline strategies are deeply interconnected. We have a diversified pipeline supported by broad-based progress of the underlying platform and we continue to invest in both.

In the first part of this year, we've made important progress in both areas, including data we shared recently at the annual meetings of the American Society for Gene and Cell Therapy, or ASGCT, and at the Association for Research In Vision and Ophthalmology, also known as ARVO. We reported data from our LCA10 program at both ARVO and ASGCT. Our LCA10 program is to treat a genetic form of blindness.

These data demonstrated in vitro the CRISPR-mediated genome editing of cells from LCA10 patients resulted in correction of the most common gene mutation in this disease. Importantly, these data also demonstrated that we're able to identify and characterize LCA gene editing candidates with little or no detectable off-target activity. We remain on track to initiate IND-enabling studies for this program later this year.

We're also pleased to highlight the first public presentation of preclinical data from our Duchenne muscular dystrophy program. This was at the ASGCT meeting earlier this month. We believe Duchenne muscular dystrophy is an area where our CRISPR-based approach is uniquely suited to address a range of gene mutations that are the underlying cause of this devastating disease.

We screened nearly 900 combinations of guide RNA/Cas9 construct pairs, and each pair was designed to potentially delete dystrophin exon 51. We screened these pairs to empirically determine which ones would be able to successfully delete dystrophin exon 51.

We also demonstrated that these candidates are active in vitro in patient-derived myoblast cells. Top candidates from this screen will then be evaluated in animal models of [DND]. And we, of course, look forward to sharing further data with you from this program as it advances.

In addition, we presented important results at ASGCT from our work with blood cells, both hematopoietic stem cells and T cells. Our data, using gene-edited human bone marrow and cord blood stem cells, showed consistent, long-term engraftment and repopulation of the blood system in animals by cells that had been edited using Cas9. This is an important accomplishment in our efforts to discover treatments for a range of non-malignant blood diseases.

In our collaboration with Juno Therapeutics we're editing T cells to develop next-generation chimeric antigen receptor T cells for patients with cancer. And our data at ASGCT also demonstrated successful deletion of PV1 expression in over 90% of human T cells that we edited.

We also demonstrated efficient combination of gene editing and chimeric antigen receptor transduction. We believe both of these data sets represent meaningful progress for these program and they showcase the expanding breadth and steady progress of our genome editing capabilities in blood cells.

Second, I'd like to touch on how we're building the business for the long term. As Andrew will describe in more detail, we have secured a very strong financial foundation for the Company. This gives us the resources to both drive our programs forward and support future opportunities as they arise.

While we continue to be disciplined in our approach to business development, with a clear focus on alliances that either broaden the range of potential medicines we can develop or that accelerate or reduce risks in our existing programs. Our collaboration with Juno embodies this approach. And we were also pleased to announce recently that we achieved a $2.5 million milestone based on our technical progress in that collaboration.

In addition, we are excited to announce this morning a new relationship with the Cystic Fibrosis Foundation. While significant progress has been made in the treatment of cystic fibrosis over the recent years, a great deal of work does remain, and we're hopeful that our genome editing approach will one day create new therapies that can address the genetic mutations that cause this disease. We believe that the support of the Cystic Fibrosis Foundation will be instrumental in helping us reach that goal.

Third and finally, we are committed to building an outstanding organization. We are here to develop unprecedented mechanisms and we're working to build an exceptional organization to do that.

Since the beginning of this year, we've significantly expanded our senior leadership at Editas with the addition of Tim Hunt as Senior Vice President of Corporate Affairs, Haiyan Jiang as Vice President of Pre-Clinical Science, and Pam Stetkiewicz as Vice President of Program Alliance Management. Each of these individuals is a seasoned leader in their respective field.

In addition, John Mendlein has joined our Board of Directors, bringing exceptional experience in Company building to Editas. We are working to build a significant biopharmaceutical company, one that is resilient through the inevitable challenges associated with drug discovery, development and commercialization. Our team and our culture are fundamental to our ability to create value and achieve those goals and to ensure our medicines reach the patients who need them.

With that I'd like to turn it over to Andrew for a look at our financial position in the year ahead.

Great, thanks, Katrine. As we mentioned at the start of the call, we're going to try to keep this call focused on the most significant areas of progress on the ways we're building the Company. Therefore, while we're happy to answer any questions you have about the numbers, I won't be walking through all the financial details provided in the 10-Q and in our press release this morning.

With the successful completion of our initial public offering in early February, the Company continues to maintain a strong financial position, which allows us the flexibility to advance both our platform, as well as a wide array of therapeutic programs. In the first quarter of 2016, our net cash used in operations was approximately $10 million, and as of March 31, 2016, we had approximately $229 million of cash and cash equivalents.

We believe our cash and cash equivalents as of March 31, 2016, combined with the anticipated research support and payments from Juno and CFFT, gives us at least a 24-month runway to advance our programs. In addition, we believe this financial profile provides us with the flexibility to enter into strategic partnerships selectively, based on their ability to either enable new programs or because they significantly improve the speed or probability that our programs are able to benefit patients.

Looking beyond corporate alliances, we'll also continue to pursue innovative collaboration structures that we think have the ability to advance our particular programs, such as our recent agreement with the Cystic Fibrosis Foundation. Through the Cystic Fibrosis Foundation Therapeutics we've secured up to $5 million over the next three years to fund research and development of genome-editing medicines aimed at correcting the underlying genetic mutations in patients suffering from cystic fibrosis. In addition to financial support we believe access to the Cystic Fibrosis Foundation's resources has the potential to significantly advance our work on behalf of people with this disease.

So, with that let me summarize. The first quarter of 2016 was strong from a financial perspective, and you should continue to expect us to be very active advancing the business. We sincerely appreciate the support that the public market has provided us as we develop important new genomic medicines. As we move you through the year we anticipate we'll continue to make steady progress on our pipeline, and we look forward to keeping you up to date on these advance, as well as our progress building Editas as a company.

And with that we'll open it up to Q&A. Operator?

(Operator Instructions)

Our first question comes from the line of Cory Kasimov of JPMorgan. Your line is now open.

Good morning, guys. Thanks for taking my questions. I have a couple of them for you.

First of all, at ASGCT there was a really interesting talk by Dr. Liu from Harvard about the evolution of CRISPR technology in his lab. Can you just remind us of the structure of the agreements you have with your various co-founders and whether you have access to or first dibs on the developments that are happening in the space as it evolves pretty quickly?

Thank you, Cory, and thanks for calling in this morning. David Liu's work is definitely very exciting and we were thrilled when we first heard of it. All of our licenses -- and this is common across all of academia -- is you license what intellectual property exists at the time of the license. So, they don't reach forward. Academic institutions aren't comfortable with those sorts of arrangements typically.

Our licenses are for the time when we signed them. But, of course, David is a fantastic advisor to us on an ongoing basis as one of our founders, as well. So, we do stay close to him as well as the other institutions.

Okay. And then there's obviously a lot going on in the gene editing field in terms of what's happening in the cystic fibrosis space. And Vertex has its collaboration with CRISPR Therapeutics. I assume, and it may be just too early to say, but is there anything unique about the approach that Editas is bringing to the field at this point? Or do we still have to wait and see on that front?

It is an early program. Definitely we're very excited to be working with the CF Foundation because of the expertise they bring to the table. What I can say is that, as we've done with all of our other programs, we will share data from that program as it becomes more mature, as the data evolves. So, you will see that over time.

I think it's probably premature to compare and contrast to other people's approaches, which I don't think they've shared any data on their approach. But we will certainly be sharing data from ours as we go along.

Okay. And then one final housekeeping question, the $3 million in legal expenses in the first quarter in SG&A, is that a good run rate to think about going forward or is there going to be some lumpiness to this as the trials proceed?

You should expect that the legal spend will be lumpy quarter to quarter. So, I hesitate to forecast whether or not that's the right run rate to use on a forward basis.

Okay, makes sense. Thanks for taking the questions.

Our next question comes from Matthew Harrison of Morgan Stanley. Your line is now open.

Great. Thanks. I have a few, as well. Just a question on the CF Foundation. So you've done a deal with Juno, you've done a deal with the CF Foundation. How should we think about what you're going to pursue in VD?

Should we think about some of these smaller deals as opposed to the platform deals that you've seen other companies do as being the way you're going to approach that? Or is it just going to be a mix?

Let me make a couple comments and then I'll ask Andrew to add his perspective to expand on it. One of the common themes I think you see across the CF relationship and the Juno relationship is, in each case, we're working in collaboration with the party that's deeply expert in their particular field. And that's something that I think any alliance will benefit from.

Over the long term, business development is an important way to build the business, as well. And I think that in the first couple years of this Company we've been fortunate that there's been significant interest from the equity markets such that we've been able to really deeply develop the platform architecture and move some of our own programs forward before needing to take significant capital from business development sources.

But over time I think you'll see that that will become a little bit more balanced. It's really more a question of at what point in our life does it makes sense to do wider ranging deals.

The key features of what we're focused on in business development is relationships that really allow us to address therapeutic areas or potential medicines more broadly than we're able to on our own. So, partnering with leaders in their field of expertise, where we're able to now go to places and develop the medicines for patients that we weren't able to do otherwise, is an important priority.

Additionally, we're interested in forming important alliances with companies that help us either move our programs faster or improve the probability that those programs may get to be medicines for patients. And so, again, a real focus on product and partners who provide unique insights and abilities that allow us to do things that we aren't doing or to do things better.

And then, lastly, I would say you should expect us over time to be active both as a buyer and a seller, so to speak, in business development. So, there may be additional technologies that we'll bring in over time, additional intellectual property. You may see us enter into additional focused alliances or broader-based alliances. But we expect to be very active on business development and we look forward to the year ahead.

And then on the burn, just ex the legal spend, can you talk about the burn rate and -- just to flip Cory's question around -- if that's a good burn rate to think about or should we think about that as increasing as you go through the year?

We continue to grow the organization, so spend will grow with the organizational growth.

Perfect. Thanks very much.

Thank you. Our next question comes from Mike King of JMP Securities. Your line is now open.

Thanks for taking the questions and congrats on your progress. I just wondered, have you guys started to think about certain rules of how CRISPR's actually working in your hands? What I mean by that is, are you starting to establish a set of operating principles from, let's say, the first time you create a construct and you measure its editing efficiency in vitro and moving that into in vivo to what you might think would actually happen in a human setting?

Good morning, Mike. Let me make a couple comments and then I'll actually ask Vic Myer, our Chief Technology Officer, to expand on that. As we've built the platform, one of the things that has been very much on our minds is to make it scalable, high throughput, and to capture data and knowledge and learnings from everything we work on to really get to the point that you're asking about, which is -- are the rules of the road of how to make these molecules and optimize them and advance them. That's certainly a philosophy that we have in terms of building the platform and the way we are doing it that shows up in a lot of the technical details of what we're doing. Vic, if you'd like to maybe speak a little bit more to the substance of Mike's question, please.

Yes, thanks, Katrine, and thanks for the question. As we reported at ASGCT, we are scaling our platform approach to be able to collect large amounts of data. And in that experiment we went after over 900 guide RNA pairs for Duchenne muscular dystrophy. As we scale in that space -- and this isn't the only approach that we're using, in a high throughput manner -- we are, of course, warehousing and collecting that data and we're actively analyzing it to help inform us as we move forward with new therapeutic areas.

Okay. Thanks for that. And this is also derivative of some of the earlier questions which has to do with the advancements in the field. As you guys think about what the ultimate approvable product is going to be, how do you think about some of the advancements either in actually guide strands, PAM sequences, some of the novel enzymes like CPF1 and others that are sure to emerge? Or can you say at this point right now that a Cas9 construct is the one that will be first to market, but others may ensue after that?

Actually what I might do is remind you of the context of how we built our platform. We have these four parts of the platform -- nucleus engineering, delivery, control and specificity, and directed editing. Some of the variants that you just mentioned -- the CPF1, engineered PAM variants, et cetera -- those would essentially be part of that nucleus engineering domain of the platform. Critical.

We have a lot of work going on in-house, as well, to create, as part of our platform work, new variants that can do different jobs at the molecular level. And then those essentially interlock with the other dimensions of the platform because the technologies that we're developing and working on in directed editing can then be applied with any of the different nucleuses we might work with.

Delivery, same thing. Part of how we think about it is how do you make new variants that we create or that emerge fit with the products that we make on delivery.

Control and specificity, similarly, you think about -- we've talked before about guide seek, and obviously starting to share a lot more data about guide seek in the LCA10 posters that we showed the other week. That's for all programs, that's part of what we do. And that would be the case whether we're using wild type pyogenes Cas9 or [RES] Cas9 or an engineered variant or some other nucleus. Inherent in the platform strategy and how we've constructed it is it's able to quite easily receive and integrate new variants as they may arise.

Okay. Appreciate that. And then, finally, with regard to the relationship with Juno or any future CAR or TCR developers, do you know if there's any theoretical capacity limitation, especially in the T cell space? I'm just wondering, because of the ability of CRISPR to multiplex, I just wonder if there's some -- do we know of any theoretical limits of a T cell to endure, to be able to handle multiple editing steps? Thank you.

I think that is something that we will be working with our collaboration to understand with Juno. As we've done with the program there, we've shown some data at ASGCT, and it's great have a partner who also wants to communicate data to the marketplace.

They're a great partner to work with because the biology is really behind the question you just asked, which is what changes do you need to get to the therapeutic outcome. That's one of the important things that they bring to the table, is that deep biology knowledge.

At the end of the day, of course, the number of changes will depend on what you're trying to achieve in a given cell. The great thing about what we're doing with CRISPR is that we can ask and answer that question empirically. And that's part of what we're doing in the collaboration with Juno. We have different specific programs in that collaboration and obviously working with them to decide what changes to the cell we think will achieve the product profile that we want to achieve with them.

Thanks for taking the questions.

Thank you. Our next question comes from Christina Ghenoiu of Cowen. Your line is now open.

Good morning. Thank you for taking my questions. The first one is on the LCA10 program. I was wondering if you can comment, what are still some of the gating factors for this program -- getting CRISPR into enough cells or cutting efficiency level of protein production? That would be helpful. Thank you.

In terms of the preclinical work that lays ahead for us, it is the typical kinds of preclinical safety assessments, the manufacturing at GMP level and all the QA/QC that goes along with it. It is those sorts of endeavors that are between us and an IND, as you would expect for any program on this kind of a time line.

The time line for the program is still, to get into the clinic, is still early in 2017?

As we said before, our goal is to initiate IND-enabling studies later this year and we aim to then advance to the clinic next year.

And have you had the opportunity to start thinking about that clinical development program? Are you identifying patients? And do you have to come up with a new end point like Spark did for this program?

We haven't finalized what the first clinical trial protocol will look like, although we've been talking with key opinion leaders for well over a year now, and we're expanding and deepening those relationships. And part of that, as with any rare disease, beginning to also, as you say, identify patients but understand the natural history of the disease is critical. All of that is part and parcel of how any rare disease would be developed, and that's the case here, as well.

As we move towards the clinic, we'll work with our KOLs to finely tune what that clinical work will look like and then, of course, interaction with the regulatory authorities are important to that, as well.

Thank you. For the cystic fibrosis program, are there some of the mutations more amenable to CRISPR technology? Can you comment on some of that?

I'll comment briefly and then I'll also ask Sandra Glucksmann, our Chief Operating Officer, to comment briefly. There are different approaches depending on which mutations you want to address. Some editing approaches are easier and some are more challenging. We haven't disclosed the specific approaches that we're taking, so we'll show data over time on that front.

But I'll ask Sandra to comment on this, as well, because she's close to the program. Sandra?

Yes. Thank you. Good morning. Thanks for the question. I think Katrine basically covered, there are 1,800 different kind of mutations. Some are more rare and some are more common.

The goal of this program, the ultimate goal, is to be able to treat as many patients as possible. So we will, in order to advance the technology, start with some of the types of mutations that are more tractable, and in that way evaluate various delivery modalities and in a parallel fashion also work on mutations that are more difficult to repair.

That's helpful. Thank you.

Thank you. Our next question comes from Roy Buchanan of Janney Montgomery. Your line is now open.

Hi. Thanks for taking the questions. I want to look down the road a little bit, so please bear with me. I was just wondering, regarding future trial plans, if you could speak about how you argue for a genome editing approach in DMD when there might be trials enrolling using standard gene therapy with micro or minidystrophins.

And a related question, if terlipressin is on the market, I assume you think there should be no issues taking it and doing genome editing at the same time. But please correct me if I'm wrong. But if the studies for terlipressin are ongoing, how do you foresee these trials impacting the ability to enroll a genome editing study? Thanks.

Sure, and thank you for your questions. The DMD program is early. So, I think while one always needs to think from the outset what that full development path is going to look like, it's premature to speculate specifically on what the trials might be.

That said, with any program we work on, we think about the context of what other treatments are available for those patients. And we need to think about how to design trials in that context. So, if there are other drugs approved and patients are taking those drugs, we'll have to take that into account.

But overall why do we think a genome editing approach is potentially an exciting and hopefully efficacious approach to DMD, the genetics of this disease are pretty well understood. You always want your hypothesis to start from the human biology. We do think that this could have great potential to help these patients, and that's the number one reason that any program is in our portfolio.

Okay. That's helpful. I just wonder if patients might be more comfortable with this, quote-unquote, standard genome gene therapy versus gene editing, and if you have any arguments against that approach. Because I know that microdystrophin eliminates 70% of the protein or so, where you guys are only eliminating 1%, if that's a compelling counter argument to maybe the fact that you're editing the genome.

I think for any genomic-based approach, be it gene augmentation or gene editing, you have to demonstrate that you have compelling data that would make it appropriate to go into clinical work. I just want to make sure that we're clear, that this is an early program. We're very excited about it, but we need to show the right kinds of preclinical efficacy and safety in order to advance it. And we definitely look forward to showing those data as they emerge.

Fair enough. Thank you.

(Operator Instructions)

And at this time I'm showing there are no further participants in the queue. I would like to turn the call over to management for any closing remarks.

Well, thanks to everybody for participating in the call today. We really appreciate your engagement and we love getting questions about the science and the pipeline. That's why we're here, is to turn that science into medicines. We look forward to updating you again soon and we are excited about the progress we've made and what we can accomplish for patients over the years ahead. So, thank you very much.

Ladies and gentlemen, thank you for your participation on today's conference. This concludes your program. You may now disconnect. Everyone have a great day.