Editas Medicine Inc (EDIT) 2018 Q1 法說會逐字稿

Good afternoon, and welcome to the Editas Medicine's First Quarter 2018 Conference Call. (Operator Instructions) Please be advised that this call is being recorded at Editas' request. I would now like to turn the conference over to Editas team. Please go ahead.

Good afternoon. This is Mark Mullikin, Senior Director of Finance and Investor Relations at Editas Medicine. Welcome to our first quarter 2018 conference call. We issued a press release earlier this afternoon reviewing our first quarter 2018 results and company updates, which will be covered on this call. A replay of today's call will be available on the Investors and Media section of our website approximately 2 hours after its completion. After our prepared remarks, we will open the call for Q&A.

As a reminder, 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 annual report on Form 10-K, 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.

Now I will turn the call over to our Chief Executive Officer, Katrine Bosley.

Thanks, Mark. Good afternoon, everyone, and thank you for joining us for our first quarter 2018 corporate update call. I'm joined today by several members of our executive team, including Charlie Albright, our Chief Scientific Officer; Vic Myer, our Chief Technology Officer; Gerry Cox, our Chief Medical Officer; Andrew Hack, our Chief Financial Officer; and Tim Hunt, our Senior Vice President of Corporate Affairs.

We've had a strong start to the year and we're excited to update you on our progress. First, Charlie will start with an update on how we're advancing our pipeline across multiple programs, each of which is aimed at creating a transformative medicine. Then Andrew will discuss how we're working to build a sustainable and valued business, including an expansion of our oncology collaboration with Celgene, and we'll review our financial results for the quarter. Lastly, I'll wrap up talking about how we're working to strengthen the organization.

With that, let me turn the call over to our Chief Scientific Officer, Charlie Albright, to discuss our pipeline advances.

Thanks, Katrine. It has indeed been a projected start to the year for our pipeline, both in ocular and engineered cell medicines. Starting with our portfolio of ocular medicines, EDIT-101, our candidate medicine to treat LCA10 continues to track towards a mid-2018 IND filing. We continue to build the translational package that is required to advance EDIT-101. In particular, we have further expanded our pharmacology, specificity and immunogenicity studies.

With respect to pharmacology, we presented additional data earlier this week at the Annual Meeting of the Association for Research in Vision and Ophthalmology. In these studies, you showed in transient mice that EDIT-101 caused predictive therapeutic levels of editing at doses that were safe and well tolerated in ocular gene therapy trials from other sponsors. These results support our belief that we will be able to deliver therapeutic amounts of our gene-editing machine within a safe and tolerable manner in humans.

We also presented data at ARVO regarding specificity. These studies showed the lack of off-target editing by EDIT-101 using multiple biased and unbiased methods. While we're on the topic of specificity, I'd like to briefly comment on the recent retraction by the journal, Nature Methods, by manuscript regarding CRISPR specificity. In that publication from a year ago, the authors claimed widespread off-target editing from CRISPR-Cas9 in mice.

Since specificity is a fundamental piece of developing safe and effective medicines, we conducted our own analysis of the authors' controversial claims. We are pleased that our results were published by Nature Methods concurrently with the retraction of the original publication. In our study, we showed that the original experiment lacked adequate controls to conclude that the purported off targets were caused by CRISPR-Cas9 and instead, the results were likely explained by natural genetic variation.

Furthermore, we have continued to advance our studies on Cas9 immunogenicity. In our last call, we discussed our research collaboration agreement with the FDA on this topic. In that work, we found a low prevalence, particularly 10% or less of preexisting antibodies at Cas9 in a sample of 200 human donors. In a couple of weeks at the Annual Meeting of the American Society of Gene and Cell Therapy, or ASGCT, we will present tolerability and immunogenicity data for EDIT-101 from a pilot study in nonhuman primates. In this study, we administered either EDIT-101 or a nonhuman primate surrogate molecule using the procedure that we plan to use in the Phase I/II study. In these NHP studies, we found that EDIT-101 was well tolerated in the duration of the study based on a panel of clinical tests. Importantly, neither the presence of preexisting nor induced immunity to either AAV5 or Staph aureus Cas9, and nonhuman primates impact its productive editing.

Taken together, our comprehensive set of pharmacology, specificity, tolerability and immunogenicity data give us substantial confidence on EDIT-101 for LCA10 patients.

Moving on to our next program in inherited retinal diseases, we're developing a gene-editing approach to treat Usher Syndrome type 2A. A single base pair deletion in exon 13 or the USH2A gene is the most common cause of this disease. We and our collaborators at Massachusetts Eye and Ear will present in vitro data at ASGCT, showing that the human USH2A protein lacking exon 13 partially restores cilia formation in cultured cochlear cells from USH2A knock-down mice.

These data provided in vitro proof of biology for our approach to develop a transformative medicine for these patients. Using these data and our learnings from EDIT-101, we expect to accelerate the discovery in an experimental medicine for USH2A.

In addition to our momentum in developing medicines for inherited retinal diseases, I'm encouraged by the early data for our first infectious disease target. Recurrent Herpes Simplex Virus type 1 is the leading cause of infectious blindness. And we presented in vivo proof of concept data earlier this week for our CRISPR-based approach at the ARVO meeting. In the gold-standard rabbit model for ocular HSV, we reduced viral load by up to 75% and corneal lesions by up to 91%. We are encouraged by these results and continue to optimize an experimental medicine for these patients.

Our other therapeutic focus is in engineered cell medicines. Following its acquisition of our partner, Juno Therapeutics, we are excited to collaborate with Celgene on next-generation engineered T cell medicines for cancer. The lead experimental medicine in this collaboration targets solid tumors in cervical, plus head and neck cancers, associated with human papillomavirus, or HPV.

According to the Centers for Disease Control and Prevention, there are over 40,000 newly diagnosed cases each year of HPV-associated cancers in the United States. Celgene plans to conduct IND-enabling studies this year of an engineered T cell medicine carrying its optimized engineered T cell receptor, or eTCR, targeting HPV as well as the disruption of the endogenous T cell receptor using our gene-editing platform.

More broadly, we believe this lead programs are a model for a range of engineered T cell receptor programs designed to treat solid tumors, which traditional CAR T therapies have been unable to address.

We're also working diligently to discover a superior engineered cell medicine for sickle cell disease and beta thalassemia. The contrast to others that are targeting the BCL11A erythroid enhancer to increase fetal hemoglobin, we were integrating novel genomics sites to durably induce high levels of hemoglobin expression. We will present results from in vitro studies at ASGCT.

In these studies, we conducted a comprehensive screen of a region in the beta globin locus and identified multiple sites that increased fetal hemoglobin. Based on these findings, we've identified potently molecules that up regulate fetal hemoglobin in human mobilized peripheral blood stem cells.

All in all, I believe we're making a good progress on our pipeline programs that aim to translate the exciting science of CRISPR gene editing into transformative medicines. And with that, I will turn the call over to our Chief Financial Officer, Andrew Hack, to discuss progress in building the business and to review our financial results.

Thanks, Charlie. It's my pleasure to update you on how we've building the business over the past quarter and to summarize the financial results we reported earlier today.

As Charlie discussed, Celgene is advancing an exciting candidate medicine for HPV-associated solid tumors, which carries a critical disruption of the endogenous T cell receptor using our gene-editing platform. We established our alliance with Juno roughly 3 years ago. And together, we've developed what we believe is the industry's leading ability to edit and characterize next-generation engineered T cell medicines for cancer.

Since acquiring Juno, Celgene has engaged quickly with us and has taken an active role in advancing this program and a broader partnership overall. As a result of our progress together, we and Celgene have decided to expand our agreement in the engineered T cell receptor arena, and we have received an additional $10 million from Celgene in a combination of new upfront and milestone payments for this program. This amendment to our 2015 agreement has the potential to also result in approximately $230 million in additional milestone payments and a new stream of tiered royalty payments in addition to the milestone of royalty streams related to our existing 3 programs with Celgene. We are truly excited about the direction and speed of this program, and we look forward to being able to share more progress on these candidate medicines over the balance of the year.

Turning to our first quarter 2018 financials, we have summarized our results in the press release issued an hour ago, and full details will be available in our Form 10-Q to be filed shortly.

We remain very well-capitalized with $359 million of cash, cash equivalents and marketable securities as of March 31, 2018, an increase of $30 million from December 31, 2017. Net cash used in operations in the quarter was $22 million and capital expenditures totaled $1 million. Net cash provided by financing activities of $53 million includes $48.5 million in net proceeds from the issuance in January of 1.4 million shares through at the aftermarket facility.

Moving to the income statement. We recognized $3.9 million of revenue, consisting of $2.9 million related to our alliance with Allergan and $1 million related to our collaboration with Celgene. We anticipate that the adoption of new revenue recognition policies, based on the ASC 606 standards, will make our reported revenues significantly lumpier going forward. The adoption of this new accounting standard has affected our technical accounting approach to recognizing revenue from both our Juno and Allergan alliances. But it should be noted that it has no impact on the actual cash revenues we received. In addition, we will continue to report how revenue would have been recognized under the previous standard in order to provide visibility into the impact of this shift.

Despite these changes in technical accounting, the specific impact of our adoption of this new revenue recognition standard this quarter happened to be negligible. We anticipate that in future quarters, there may be more substantial shifts in our reported numbers.

Moving down the income statement. Research and development expenses of $21.3 million include a nonrecurring in-process research and development charge of $3.9 million associated with the i2 Pharmaceuticals' asset acquisition. Key noncash items recorded in our income statement includes $6.5 million of stock-based compensation, $1.9 million of the in-process research and development charge for i2 and $0.8 million of depreciation.

We are excited about the value drivers that lie ahead of us for our pipeline and platform, and believe that our current cash position will provide us with at least 24 months of fund to advance our business.

And so with that, I'll hand it back to Katrine.

Thank you, Andrew. We kicked off this year by setting out our EM22 5-year goals. The pillar of these goals is to build the best-in-class organization and we've made significant headway in the first quarter with key additions to our Board of Directors and the completion of our first acquisition.

We took important steps in further shaping our board with the appointments of Jessica Hopfield and Jim Mullen. Importantly, Jim has joined us as Chairman of our Board of Directors. He is a seasoned biotech executive having been CEO of both Biogen and Patheon. His experience in ushering transformative medicines from early research to commercialization and building exceptional companies will be invaluable as we build the preeminent genomic medicines company.

The first quarter also saw us complete our first acquisitions when we brought onboard the assets and the talented team from i2 Pharmaceuticals. The acquisition both furthers our goal to build the best-in-class organization and meaningfully advances our goal to develop transformative medicines for patients.

As always, we thank all of you for your interest and support. And with that we will open it up to question-and-answer period.

Operator?

(Operator Instructions) Our first question comes in the line of Cory Kasimov with JPMorgan.

I guess, first one I have for you is I'm wondering if there's any more detail you can provide on the expanded Celgene collaboration, may be in terms of what it relates to. Is it another target? Is it more technology for an existing target? And can you provide a little more detail there? And then the second question I had was regarding your beta-thalassemia sickle cell program. How far from the clinic do you think this is? And what do you consider an ideal level of upregulated fetal hemoglobin?

Sure. So I'll ask Andrew to speak to the Celgene collaboration question first.

Yes, Cory, thanks for the question. We're not going to go into a lot of detail about the intricacies of the program. But what I can say is that the program's gone extremely well and we wanted to be sure that it was fully enabled and fully resourced. And we're really excited to be able to expand our collaboration to do that with Celgene. We think these are important products and they can move quickly. And we wanted to be able to make sure that they and we had all the right elements in our agreement to make that a reality.

And with regard to the beta-thalassemia question, I'll ask Charlie to talk about the biology. With regard to the timing, we haven't yet disclosed what our intended IND timing is on that. We'll do that in due course. Charlie, do you want to talk a little bit about the biology?

We're really excited about our program to address the beta hemoglobin (inaudible) and feel like we're on the path to a differentiated medicine. We are basing our targets on the human biology, of which there's a lot to tell us what -- how much up-regulation you need to be, but I wouldn't want to disclose the details of our program and our criteria.

And our next question comes from the line of Gena Wang with Barclays.

This is actually Xiaobin dialing in for Gena. Maybe a couple for me. One is regarding your, like, ASGCT report. You mentioned that in the presence of preexisting immunity to AAV or Cas9, you don't seem -- it doesn't seem to impact the genetic efficiency. Do you think this is eye specific? What's your view regarding the organs outside the eyes? And the second question is about the IP situation in Europe. I think, is there any update on there?

Sure. This is Katrine. I'll touch on the IP question and then I'll ask Charlie to talk about the immunogenicity data at ASGCT. Intellectual property, as you know, we have a very broad-based, multifaceted portfolio. The most recent specific steps in Europe were that there was for some of the earliest issued patents, they've been working their way through the normal European procedure, which includes the opportunity for third parties to oppose them. And then there's the hearing process, then there's an appeal process. So earlier this year was the -- there was a hearing and an outcome that has now been appealed by the Broad Institute. It's sort of -- the European process as we all know is quite different from the U.S. process. And so all parties who have patents are going to go through that same process of oppositions, and it will take some time before that all plays out. As a reminder, our portfolio is quite multidimensional, and we really do have a great deal of companies in the portfolio as a whole. It doesn't rest on any one turn of the card, so to speak. Charlie, do you want to talk a little bit about the immunogenicity work?

Sure. We're really encouraged by the things we're finding on the immunogenicity front. And as we mentioned, we find a low prevalence, for example, of preexisting antibodies to Cas9 in humans. And it's part of translating this medicine into people, we're obviously looking at what happens in nonhuman primates and other species. And so as we said, we don't see an effect of either preexisting or induced immunity on the editing by Cas9 in the eye. So it would be premature to speculate one might or might not see in other tissues. But choosing the eye -- part of the reason we went after the eye was because we felt like that would be a good compartment in terms of limited expression to the rest of the body, and that's all part of our strategic choice on programs.

Our next question comes from the line of Matthew Harrison with Morgan Stanley.

This is Vikram on for Matthew. So we had a question about the EDIT-101 preclinical data to be presented at ASGCT. So could you give us some specifics as to what's going to be presented? And also if you could let us know if the packaged data that's going to be presented, if that is the entire preclinical data package? That would be helpful.

So I'll ask Charlie to talk a little bit more about this. Of course, the data itself will have to be presented at the meeting. I'm sure you probably have seen abstract and such but of course the data itself will have to be at the meeting. And any preclinical package for any IND, of course, includes more elements than beyond what will be presented at this particular meeting. But we are presenting quite a fulsome set of data, not just here, but we've presented a lot at other meetings as well because we do want to help people understand the work that we've done and how that pharmacology knits together into the story of the drug. Do you want to talk a little bit more about what we're presenting there?

Sure. And we are going to present additional data on tolerability and immunogenicity on the platform talk. And so we're really encouraged by that and we can't give the details of that due to the embargo by the meeting. But suffice it to say, we're encouraged by the data. And as Katrine said, it's not the entire data package for the program, and there's much data that lies behind all of this. This is just beyond the scope of any oral presentation.

Our next question comes from the line of Phil Nadeau with Cowen and Company.

This actually Marc on for Phil. Can you talk to that last question, a little bit of a follow-up. Can you talk about the relative titers that you -- of the antibodies against Cas9 that you were seeing in the nonhuman primate studies versus what you've been able to observe in humans? And then, are you still expecting public RAC meeting to ultimately occur? And should we expect that may be at the June meeting?

So I'll touch on the question of the RAC. We do anticipate RAC being part of this process. I think we said that all along and continue to expect that to be the case. The RAC runs roughly in parallel with an IND process. They are not explicitly connected to one another, but both gates have to be passed, if you will, before you can initiate trials in humans. And when a specific RAC date has been set, we'll -- that will -- that's a public process and we'll certainly make sure folks are aware if a date has been set. With regard to the titers of antibodies, I'll ask Charlie to speak to that. I just want to maybe remind all of us that we're talking about very low levels. So with that, Charlie?

Yes, exactly. And so, again, I don't want to go into all the details because they are going to be presented at the ASGCT and it wouldn't be appropriate to disclose the details here. Suffice to say, we are encouraged by them. The prevalence of preexisting antibodies is very low, much lower than was in one publication, less than 10%. And the titers that we're seeing are not that high either. So we're encouraged by those, we're equally encouraged by the fact that in nonhuman primates studies, they don't seem to make any difference even if they do have preexisting immunity.

(Operator Instructions) Our next question comes from the line of Peter Lawson with SunTrust.

Just a question really around the data ASGCT. And kind of how that points to your -- or adds to your approaching sickle cell and beta cell? And how we should be thinking about that post the ASGCT?

I definitely think everybody should be going to ASGCT. Yes, obviously, we have -- it's an important meeting for us and that's why we have a lot of data coming out there. With regards to our sickle cell and beta cell approach, we have talked a little bit about this in the past and certainly, we have shared a fair amount of data at prior meetings about the work we've been doing in this area. I think there are certain aspects we haven't yet disclosed with regards to what we can say today and in advance of the ASGCT meeting. We are working to essentially take a novel editing approach as compared to what others are in the field are doing, not just for the sake of novelty, but because we hope to be able to deliver a superior product profile. So that's our goal, that's what we're working towards. Stay tuned and we will share the data at the meeting. This is an evolving story as you can probably imagine.

And then just on the -- back to the RAC committee question, do you have all the data needed for a RAC committee? Or are you kind of still in the process of gathering that data?

The RAC is a bit of a different process from the IND itself, and the IND is in many respects, the more comprehensive data set. But the data that one pulls together for an IND is essentially that also feeds the RAC process. So while the process is somewhat different and it's a slightly different cut of the data, it's not inherently different. So as one thinks that look -- we often get the question of what's the critical path to IND, totally understandable question. And so the critical path for the IND for us is sort of a boring answer because it's what is for any other medicine, completing preclinical talk, completing making the clinical trial material, those tend to -- for most new drug candidates, those tend to kind of run in parallel as being critical path and that's the case for us, too. So we're finishing work. We haven't filed the IND yet. But the work that we do to support the IND really does also support the RAC process.

Got you. And just finally on the TIDES 2018. Is there anything coming out there? I guess all the attention should really be at ASGCT.

Yes. I'm actually going to ask Vic Myer, our Chief Technology Officer, to speak to that.

Yes. So we're going to be talking about our work that we do with our site in Boulder around covalent-coupled dual guide RNAs and our expertise in RNA synthesis, chemistry and analytics.

And I'm showing no further questions. And I'd like to turn the conference back over to Editas Medicine for closing remarks.

Great. So with that we thank all of you for participating in the call today and for your support as we work to bring transformative medicines to patients.

Thanks again and have a great evening. Bye.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.