Editas Medicine Inc (EDIT) 2018 Q2 法說會逐字稿

Good afternoon, and welcome to Editas Medicine's Second 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 call over to Mark Mullikin, Senior Director of Finance and Investor Relations at Editas Medicine.

Thank you, operator. Good afternoon, everyone, and welcome to our second quarter 2018 conference call. Shortly after the market closed, we issued a press release providing our financial results and corporate updates for the second quarter. A replay of today's call will be available on the Investors & 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 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. We specifically disclaim any obligation to update or revise any forward-looking statements even if our views change.

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

Thank you, Mark. Good afternoon, everybody, and thank you for joining us for our second quarter conference call. I'm joined today by our executive team, including Charlie Albright, our Chief Scientific Officer; Gerry Cox, our Chief Medical Officer; Andrew Hack, Chief Financial Officer; Vic Myer, our Chief Technology Officer; and Tim Hunt, our Senior Vice President of Corporate Affairs.

We are at a particularly exciting time for our company and for the field of medicine broadly. Our momentum is strong as we advance the first in vivo CRISPR medicine into the clinic and progress our broader pipeline of experimental ocular and engineered cell medicines.

I'd like to start by discussing our most advanced program to treat Leber Congenital Amaurosis type 10 with our experimental medicine, EDIT-101.

First, let's talk about our progress towards this important clinical trial. As we discussed before, prior to dosing the first patients in the United States, our clinical trial protocol will need to be registered at the National Institute of Health or NIH, and we expect this process will involve a review by NIH's Recombinant DNA Advisory Committee, which is also known as the RAC. Registration of human gene transfer protocols with the NIH is required in addition to the customary IND process with the FDA. Our plan has always been to conduct these filings roughly in parallel with each other, and we continue to take that approach.

In July, we filed the requisite data package with the NIH in order to be eligible for the quarterly RAC meeting, which is scheduled for late September. As many of you know, the NIH recently revised their guidelines to incorporate recommendations of the Institute of Medicine regarding their review of human gene transfer protocol. This has resulted in fewer RAC meetings and a higher bar, so to speak, for RAC review. We will learn later this month if the RAC will conduct a public review of EDIT-101 at that September meeting, and we will let you know in advance if they do.

We then expect to file our IND with the FDA in October. Although this timing is slightly later than our original plan, given the timing of the RAC, we decided that this is the best approach to having a successful IND submission and to getting our study up and running efficiently after IND allowance. And Gerry will share more details on the program with you shortly.

Second, we are very pleased to announce today that Allergan has exercised its option to develop and commercialize EDIT-101 globally as part of the strategic alliance we formed early last year. Concurrently, we have exercised our option to codevelop and share profits and losses in the United States. Allergan has a long and deep history as an ophthalmology innovator for over 50 years. They've been very close to this program since we established the alliance, and their development, manufacturing and commercial capabilities meaningfully enhance the EDIT-101 program and maximize the opportunity to bring this transformative medicine to patients. Andrew will share more details on this development later in the call.

And with that, I would like to turn the call over to our Chief Medical Officer, Gerry Cox, to provide further detail on the RAC as well as our LCA10 natural history study.

Thanks, Katrine. First, to give a bit more color on the RAC. It's a federal advisory committee that advises the NIH director on clinical trial protocols that involve human gene transfer and may benefit from further discussions. EDIT-101 falls under the purview of the NIH because it is a recombinant DNA molecule delivered via a viral vector. In the case of EDIT-101, the recombinant DNA encoding the genes with the Staph aureus Cas9 protein and the 2 guide RNAs is delivered in an AAV5 vector. The RAC has substantial experience with gene editing, having reviewed several product candidates that are currently in the clinic.

The RAC is convened at the discretion of the NIH when requested by an institutional review board or institutional biosafety committee and the investigational product meets certain novelty criteria. Our first anticipated clinical trial site at Massachusetts Eye and Ear has made such a request. Of course, as Katrine noted in her comments, not long ago, NIH revised their guidelines for the review of human gene transfer protocol, and it is possible that we will not be asked to present to the RAC. We have a deep regard for the NIH in their oversight processes and will respect whichever approach they deem most appropriate. If a RAC review is scheduled, we expect that this meeting will be open to the public and available via live webcast.

In addition to the RAC, we're advancing our natural history study for LCA10. As a reminder, this study aims to prospectively evaluate patients to inform trial design and facilitate enrollment for our inventional (sic) [interventional] trial. However, its completion is not gating to the first in-human study, and we plan to continue to evaluate patients in the natural history study as we ramp up our Phase I/II interventional trial. We now have 5 sites enrolling patients in the natural history study, including 4 in the U.S. and one in Germany. We expect to add 2 more sites in Europe by the end of the year and plan to share initial data from the study in the first half of next year.

Now to discuss our pipeline progress, I'll turn the call over to our Chief Scientific Officer, Charlie Albright.

Thanks, Gerry. As we approach the IND filing for EDIT-101, let me review some of the most recent data that support a strong submission. At the American Society of Gene and Cell Therapy or ASGCT meeting, we presented tolerability and immunogenicity data for EDIT-101 from a pilot study in nonhuman primates. In that study, we found that EDIT-101 was well tolerated over the duration of the study based on a panel of clinical tests. Furthermore, neither preexisting nor induced immunity to either AAV5 or Staph aureus Cas9 impacted productive editing in these nonhuman primates. To date, our comprehensive set of pharmacology, specificity, tolerability and immunogenicity data gives us a substantial confidence in EDIT-101 as an experimental medicine for LCA10.

Beyond EDIT-101, we are advancing our next inherited retinal disease program for Usher Syndrome type 2A patients. We presented in vitro data at the ASGCT meeting with our collaborators at Massachusetts Eye and Ear. These data show that deletion of exon 13 in the human USH2A gene successfully rescued cilia formation in cultured cochlear cells from USH2A knockout mice, which normally lack such cilia. Since both USH2A and LCA10 affect photoreceptors, the USH2A product will benefit from our EDIT-101 experience. In particular, we expect the USH2A experimental medicine will use the same AAV serotype, promoters for Cas9 and guide RNA expression, route of delivery, pharmacology models and toxicology program that we developed for EDIT-101. The USH2A program is currently in lead optimization.

Switching gears to our other major therapeutic focus on engineered cell medicines. In the second quarter, we revised our relationship with Celgene to develop engineered T cell medicines for cancer. This revision was done to more fully enable the lead program in the collaboration, which targets human papillomavirus-associated solid tumors. The collaboration is making steady progress, and we look forward to sharing more over the balance of the year.

Additionally, we continue to drive forward our program to develop a superior medicine for sickle cell disease and beta thalassemia. To durably induce high levels of fetal hemoglobin expression, our novel strategy targets the native beta-globin locus in contrast to others that are targeting the erythroid enhancer in the BCL11A gene. We presented in vitro data at ASGCT on the discovery of these novel hemoglobin F-inducing sites. We plan to present in vivo data later this year demonstrating that targeting these sites can robustly repopulate the blood system. These data will include a comparison to results from editing the BCL11A erythroid enhancer. Based on these data, we are looking -- we are working toward a medicine that will be safer and more effective than other genomic medicines currently under development for hemoglobinopathies.

In summary, we are very pleased with the progress we -- in our pipeline over the second quarter, and we look forward to a busy second half of the year.

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're building the business and to summarize our financial results that we reported today.

As Katrine mentioned earlier, we're excited to announce today that Allergan has exercised its option to develop EDIT-101 for LCA10. Concurrently, we exercised our option to a 50-50 financial and operational partnership for EDIT-101 in the United States. We're gratified that Allergan has decided to join us in developing EDIT-101 in the U.S. and that they have taken responsibility for the development of EDIT-101 outside the U.S. as well as for its commercialization globally. As a result of this decision, we have received a $15 million option exercise fee from Allergan, which will be recorded in the third quarter. We're eligible to receive another $25 million from Allergan upon acceptance of the IND application for EDIT-101. Going forward, Editas and Allergan will share all profits and losses from the development and commercialization of EDIT-101 in the U.S. In addition, Editas will receive high single-digit royalties as well as regulatory and commercial milestones for activities outside the U.S.

I'll now turn to our second quarter 2018 financials, which are summarized in the press release we issued roughly an hour ago. We remain very well capitalized with $344 million of cash, cash equivalents and marketable securities as of June 30, 2018, a decrease of $15 million from March 31, 2018. As I mentioned above, this quarter-end cash balance does not include the $15 million we received recently from Allergan.

Net cash used in operations in the second quarter was $17 million, which includes $10 million received from Celgene related to the recent expansion of our agreement with them. Capital expenditures in the quarter totaled approximately $1 million.

Moving to the income statement. We recognized $7.4 million of revenue consisting of $3.9 million related to our license agreement with Beam Therapeutics and $3.5 million related to our collaboration with Celgene. Research and development expenses of $32.7 million included $14.7 million in success and sublicense payments and $6.9 million in process and platform development expenses.

Key noncash items recorded in our income statement include $7 million of stock-based compensation, $12.5 million of success-based payments for sponsored research that were settled in equity and as well as $0.8 million of depreciation.

We remain confident in the fundamentals of our pipeline and platform, and given current trends, we believe that our cash position will provide us with at least 24 months of funding to advance our business through a series of important value inflection points.

Now let me turn the call back to Katrine for closing comments.

Thanks, Andrew. Before we close, I'd like to step back and summarize our progress in executing against both our short-term objectives and our long-term EM22 goals. First, we are on the verge of the IND filing for EDIT-101, which is poised to be the first in vivo CRISPR medicine to enter human clinical trial. Second, we've advanced additional experimental ocular and engineered cell medicines for USH2A, ocular HSV, sickle cell disease and HPV-associated solid tumors. Third, we've added important guide RNA engineering and manufacturing capabilities through the acquisition of assets from i2 Pharmaceuticals. Fourth, we continue to be active on the business development front with the expansion of our Celgene collaboration and our decision to opt in to codevelop EDIT-101 with Allergan. Fifth and finally, we're building an outstanding organization, adding industry leaders to our Board of Directors and successfully scaling our organization to over 130 employees today.

I'd like to thank you for your interest and support. And with that, let's open it up to Q&A. Operator?

(Operator Instructions) Our first question comes from Cory Kasimov with JPMorgan.

I've got 2 of them for you. I guess, first one is just bigger picture. I'm curious to get your thoughts on the recent safety controversies, I guess, in the CRISPR field and whether these publications have had kind of any impact on the progress you're making towards the clinic or your -- just your general approach with your technology. And then I have one follow-up after that.

Sure. Thanks for that question, certainly something that's garnered a lot of attention. I'd actually ask -- like to ask Vic Myer, our Chief Technology Officer, to speak to this because, as I think you and others who follow us closely know, we've spent a lot of time thinking about and working on specificity since the very founding of the company. Vic?

Yes. Thanks, Cory. We have been thinking about this topic all along, and we don't think the recent publications from the Bradley Lab are specifically problematic in our work to make CRISPR-based medicines. Presumably, it's the Bradley paper you're talking about that's gotten a lot of press. In this paper, the investigators were looking at actively dividing cells, and they saw a low level of unexpectedly large deletions, insertions and inversions around the cut site. The reason these observations are considered unexpected is the vast majority in the field looks at a very narrow window directly around the cut site. And so when you look more broadly, they saw more events. These events are likely the result of a natural cellular repair process called resection, and this is part of the homology directed repair pathway, and it's generally on actively dividing cells. And I think that's ultimately an important point. So maybe to map it on to what we are doing here at Editas, the first is this research finding likely doesn't impact LCA10 because photoreceptors are terminally differentiated. They're not dividing. This pathway is not active in these cells. Second piece is we've always embraced strategies using multiple orthogonal methods to look not only at the small insertions and deletions around the cut site but also much more broadly at larger inversions, deletions and translocations. So we've been ahead of this type of analysis for quite some time, and we've shared a lot of that data externally. And finally, for all of our programs, we developed a deep preclinical safety package looking not only at the molecular outcomes of the genome, but we also look for any phenotypic alterations in the gene -- excuse me, in the tissue or cell type of interest. And these are, of course, critical experiments to couple with any molecular analysis to reduce the risk for an experimental novel medicine.

Okay, that's very helpful. And then my second question is I wanted to go back and ask about the logistics of a potential RAC meeting. And I guess, I'm wondering, is there any -- is there a reason or any precedent for why there wouldn't be a RAC meeting in this case given the novelty of the program and that your first center has requested one? And is this potential RAC meeting and the subsequent follow-up to that the only gating factor at this stage to your IND? Or is there other work you're still wrapping up?

Sure. So I think one thing that Gerry mentioned in his comments is that the RAC sort of changed how it works about 1.5 years ago, and so they haven't had as many meetings. And that's why the precedent is perhaps a bit harder to call on this one. We're certainly, as Gerry mentioned, comfortable if they do or don't choose to review this publicly, and we'll let folks know. We do certainly appreciate that there's interest in that. And if they do review it publicly, that will be a public event. And we should know that in the next week or so, if that's going to occur or not. So stay tuned. We're staying tuned as well. Basically, in parallel, we're continuing to finalize everything towards the IND, so it -- while it's not strictly gating, there's obviously some resonance across the work in these 2 streams of work. So we are finishing reports, finishing documentation, et cetera. All of the nuts and bolts that go into finalizing a full IND is actively underway here.

And our next question comes from Matthew Harrison with Morgan Stanley.

I think 2 for me as well. The first one, if I could just follow up on Cory's question regarding the RAC. I mean, given the lack of precedent and how it's changed, do you have a view on the meaningfulness of whether or not they choose to publicly review EDIT-101 as part of a RAC meeting? And then I have a follow-up.

Yes. I think meaningfulness is -- probably a number of ways to interpret that, but I think, at the end of the day, so maybe it helps to refer back to, we submitted a data package to them. That's part of this process. So the Massachusetts Eye and Ear committees have looked at our data. They requested -- they sent a request to the RAC to review it. We then submitted a data package to the RAC. So they're receiving quite a bit of information about this program. It's not just -- it's a fairly substantial amount of data. And so if they choose not to review it, then I think it's really just them feeling like, between the institutional review board, the IBC and the FDA, all the appropriate questions will be covered, and they don't think there's a need for an additional layer to this. They may choose to go that way or they may say, hey, this is the first in vivo CRISPR gene editing medicine and a public review is a good idea. Either one, it's their judgment call to make. And if you remember, they've been around for 40-odd years. They've seen a lot of evolution in technology over those decades and I think are really consciously thinking about how they fit into the evolution in the field of medicine.

Okay, perfect. That's helpful. And then, I guess, the second question is just around to the extent that you've engaged in any pre-IND meeting with the FDA, I wonder if you could just comment broadly about whether or not you think there are broad agency concerns with CRISPR medicines or that most of the agency concerns around IND filings are product specific.

The FDA engages in public commentary themselves at various meetings that we've been at and I have just been at. And I think that they're -- they've reviewed a number of gene editing INDs to date and have allowed a number of gene editing INDs to date. Certainly what we hear from them is consistent with what they say publicly, and we haven't been surprised by anything we've heard from them. I think we're comfortable with the way our data package is coming together.

And our next question comes from Peter Lawson with SunTrust.

Katrine, just on the modest delay around the IND filings, is that delay mostly caused -- potentially for the RAC committee? Or were there any internal holdups?

Yes. It's really just looking at how all these different threads fit together. And with the potential for a RAC meeting, that also then gives us the opportunity if there is feedback from that to incorporate it. Also, as you can imagine, while Allergan has been very close to this the whole time and has been looking at every piece of data that emerges, with them opting in, of course, we're operationally bringing all these pieces together. So it really was just a bit of a logistical call more than anything. We're certainly going to continue to work to make sure that we're, as we work towards treating the first patient, in a position to do that as rapidly as possible after IND allowance.

And then just on the Celgene, Juno expansion in the collaboration, when do we -- when do you think we see the first color around that program?

So as Charlie mentioned in his comments, we expect later this year to be sharing more data from that program, so look for that later this year.

And our next question comes from Gena Wang with Barclays.

I also have 2 questions. And the first one for everyone is also asking a little bit about IND filing and the RAC. My understanding is the RAC and IND filing will be 2 independent process. Just wondering, the timing you said in October slightly after a RAC meeting, just wondering if you can share with us what you will expect to learn from the RAC meeting to help you prepare for the IND meeting.

Yes. So you're right. They are independent processes, and as we said, we always expected to run them roughly in parallel with one another. As you look at the scheduled meetings for the RAC, the late September date is the one that kind of made sense for us to file in advance of, and that's why we filed our RAC package in July. That was the deadline to be eligible for that September meeting. And if you think about what the RAC reviews, they do focus -- they look at the whole data package, but they have a particular focus on things like informed consent and biosafety and things like that. And so I think, as we looked at it, it just seemed prudent to avail ourselves of any insights that may come from that. Given just the way the dates fall with respect to one another, it was pragmatic as much as anything.

Okay. So related question is just there -- recently, there are a few IND hold -- clinical hold. Just wondering, with the -- anything you wanted to prepare, extra data sets or anything just to be extra careful with the IND preparation to avoid any potential delay on the IND filing?

I'll ask Charlie, our CSO, to speak to that.

We have been preparing a thorough package and obviously cannot comment on other people's clinical holds that we don't know anything about. But we feel confident in the data set we're assembling based on what we have been planning to do for many months and based on our interactions with regulators. And that's what we're acting upon.

Okay. One last question is for beta thalassemia and sickle cell program. I know there are also a few other companies approach -- not exactly the same approach with gene editing technology. Just wondering if you can highlight your differentiation or differentiated approach versus others.

Sure. There are several projects being pursued for beta hemoglobinopathies, and the gene editing approaches that our competitors are approaching are by targeting the erythroid enhancer that lies upstream in the BCL11A gene. And they're targeting that enhancer because the knockout of the BCL11A gene is not tolerated. We've decided to focus instead on the promoter region and the general genomic region in the beta-globin locus. And that's partly because that's where the human genetics point us, but that's also partly based on a comprehensive screen of sites within that broad locus that will allow us to upregulate fetal hemoglobin more directly. And we've started to present some of that data. We've discussed our lentiviral screen at the ASGCT meeting, and we'll discuss more of the data, including the in vivo data, at the upcoming ASH meeting in December.

(Operator Instructions) Our next question comes from Gbola Amusa with Chardan.

It's Gbola Amusa at Chardan. Just a couple questions on the update on Usher Syndrome. That was super helpful so far. Do you yet have estimates on what the therapeutic thresholds for editing there might be -- for example, might be similar to those for LCA10? And then ahead of ASH, do you have any specifics on what you might present at ESGCT in Lausanne in October? And that's it.

Sure, this...

Yes. So Charlie will tackle those.

So let me start with the Usher 2A. So we do expect to target the same level of editing because our rationale for setting therapeutic targets for LCA10 were based on studies in humans that were generalizable. And so by the same logic, we expect that improving 10% of photoreceptors will have a dramatic effect on the ability of these patients' vision. And so that's the -- that will be the target for our inherited retinal disease programs, and of course, that's one of the advantages to running multiple programs in related areas that we can take learnings from one area and apply them to others. And I highlighted some of those similarities in my talk. At ESGCT, we will -- we have -- we will be talking as well about the LCA10 program.

And our next question comes from Joseph Thome with Cowen and Company.

The first one is on the Allergan opt-in. Was there something that Allergan saw in either the preclinical data package in nonhuman primates or as you went through the submission of the NIH materials or the IND that sort of triggered more interest? Or is this simply a time line sort of decision? And then second, I know we're going to get the natural history data in the first half of 2019. But are you anticipating going into a subset of patients in the Phase I study? And can the decisions from the RAC meeting sort of guide the initial clinical patient experience?

So I'll ask Andrew to speak to how the opt-in worked in the Allergan relationship. So would you just take that one?

Sure, yes. Hey, thanks for the question. So the timing of the Allergan opt-in is driven by various events in the program. We haven't disclosed fully for this relationship what the opt-in triggers are. But it's not purely at their discretion at any point in time to opt in. They do have substantial access to the information in the program on an ongoing basis, and so they were absolutely well aware of everything that's going along with respect to the program when they made that opt-in. And I think they made, as a result, a very informed decision.

And I'll ask Gerry to speak to your natural history study question.

Sure. Thanks, Katrine. We are learning things in the natural history study that are really helping us inform the design of the Phase I/II study. And part of that includes feasibility of assessments and what ages patients may be able to perform certain assessments. And all those will factor into the design of the Phase I/II as well as thinking a bit about the risk/benefit at adults and children and how we enroll those patients.

This concludes today's Q&A session. I would now like to turn the call back over to Katrine Bosley for closing remarks.

Great. Thank you. And so with that, I'd like to thank all of you for participating in today's call and for your support as we work to bring these transformative new medicines to patients. So thanks again, and have a great evening. Bye.

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