Editas Medicine Inc (EDIT) 2018 Q3 法說會逐字稿

Good afternoon, and welcome to Editas Medicine's Third Quarter 2018 Conference Call. (Operator Instructions). Please be advised 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 third quarter 2018 conference call. Shortly after the market closed, we issued a press release providing our financial results and corporate updates for the third quarter. 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 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, everyone, and thank you for joining us for our third 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, our Chief Financial Officer; and Tim Hunt, our Senior Vice President of Corporate Affairs.

We have 3 strategic priorities that we're driving forward at Editas: first, bringing transformative medicines to patients; second, building a sustainable and valued business; and third, developing an outstanding organization. We advanced on all 3 of these over the past few months, but we made outstanding progress on the first, bringing transformative medicines to patients.

I am very pleased to report today that we filed the IND for EDIT-101 in late October. EDIT-101 is our product candidate to treat LCA10 disease. The filing is now in its 30-day review period with the FDA, and we will, of course, update you when we have clarity on the path forward. I would like to thank our incredibly dedicated employees for their commitment and hard work as well as our partner, Allergan, for their support in this momentous achievement.

It's an important step for any company, but in this case, it's also a significant transition for the field. EDIT-101 is poised to be the first in vivo, CRISPR medicine administered to people anywhere in the world. This is the first product candidate to emerge from our platform, and it's just the beginning as we continue to work to fulfill the promise and potential of the field.

We've developed a comprehensive data package supporting EDIT-101. Last month, we presented preclinical safety and pharmacology data at the European Society of Gene and Cell Therapy, or ESGCT, meeting. These data demonstrated several important attributes of EDIT-101: First, it has a rapid onset of editing on the order of a few weeks to few months both in nonhuman primates and mice. Second, it's well tolerated in nonhuman primates at AAV doses that are predicted to be therapeutically relevant in people.

Third, it's a highly targeted and specific medicine with editing restricted to photoreceptors and no detectable off-target activities. And fourth, neither pre-existing nor induced immunity to either AAV5 or Staph aureus Cas9 impacted productive editing with EDIT-101. This compelling dataset underpins the decision by Allergan, our partner, to exercise their option to develop and commercialize EDIT-101 globally. And our confidence in this program led us to exercise our option to codevelop and share equally in the profits and losses from EDIT-101 in the United States.

We continue to work hard to put the pieces in place to dose patients following the clearance of the IND. We are pleased that the National Institute of Health determined that a Recombinant DNA Advisory Committee meeting was not necessary and our Phase I/II protocol is now registered with the NIH. Once the IND is cleared, we will then need to get approval of the protocol from the institutional review boards and the institutional biosafety committees at our clinical trial sites and the sites can then begin to just screen patients into the site.

The Phase I/II trial of EDIT-101 will be an open-label dose escalation study with primary endpoints designed to assess safety and tolerability and secondary endpoints measuring efficacy. We expect to enroll 10 to 20 patients starting with a low but potentially efficacious dose in adults with severe vision loss. We will then progress to higher dose levels in adults with a broader range of vision loss, and then following a review of safety data by an independent data monitoring committee, pediatric patients with a broad range of vision loss will be included.

Because the dose-response curve is expected to be fairly sharp based on our preclinical data, we anticipate testing only a few dose levels. Patients will be followed for 1 year in the primary analysis period though we do expect to also take to conduct interim analyses at earlier time points. This is a truly exciting moment for us, and we look forward to embarking on our next chapter as a clinical stage company.

Turning now then to our expanding work in engineered cell medicines. We look forward to our oral presentation next month at the American Society of Hematology meeting on our program to address sickle cell disease and beta thalassemia. Our goal is to make a differentiated therapy for patients with these diseases. And such differentiation can be based on improved efficacy and/or improved safety.

In our approach, we added sites within the globin locus that increase fetal hemoglobin expressions directly. In contrast, other companies are editing an enhancer element of the BCL11A gene that indirectly increases fetal hemoglobin. At ASH, we will show preclinical data comparing the ability of these 2 editing approaches to repopulate the blood system, and in particular, we will show that cells edited at the globin locus repopulated all lineages of the blood system, including, importantly, the red blood cell precursors. In contrast, cells edited at the BCL11A enhancer had reduced levels of red blood cell precursors and lower editing in those precursor cells that survived. If these preclinical results translate to humans, our editing approach for hemoglobinopathies may yield a medicine that is both safer and more effective than other gene-editing medicines in development.

We are also steadily advancing our work on engineered T cell medicines. At the ESGCT meeting, we showed our work to develop allogeneic, engineered T cell medicines using our proprietary Cpf1 system. We achieved the highly efficient triple knockout of key gene targets needed to make allogeneic cell medicines and accomplish this with no detectable off-target activity. This builds on our earlier work with Cas9 where we also demonstrated this ability. So all in all, it was a very productive quarter for Editas.

With that, I will turn the call over to our Chief Financial Officer, Andrew Hack, to discuss progress in building business and to review our financial results.

Thanks, Katrine. It's my pleasure to update you on key developments in the business and to summarize the financial results that we're reporting today.

The third quarter of 2018 was our first reporting period operating with Allergan under our co-development and profit sharing arrangement for EDIT-101 in the U.S. In the 3 months since we each exercised our respective options, we have formalized a wide range of joint teams and activities, culminating with the submission of EDIT-101's IND. Allergan continues to be an excellent partner for EDIT-101, and we very much look forward to executing our U.S. development strategy with them over the years ahead.

As you know, in addition to a substantial investment in R&D, Editas has made a noteworthy investment in what we believe strongly is the broadest and deepest portfolio of intellectual property covering the field of CRISPR medicines. We were gratified, although not surprised, when the U.S. Court of Appeals for the Federal Circuit affirmed the U.S. Patent and Trademark Office decision that ended the interference concerning foundational patents exclusively licensed to Editas.

In our view, this is a highly favorable decision. We believe access to these foundational patents is essential to anyone seeking to commercialize CRISPR/Cas9 gene editing medicines. Moreover, we believe this ruling validates our strategic investment in intellectual property, which now includes over 70 issued patents for CRISPR/Cas9 and CRISPR/Cpf1 and continues to expand on a regular basis.

Now turning to our financial position and results for the third quarter. We remain very well capitalized with $337 million of cash, cash equivalents and marketable securities as of September 30, 2018, a decrease of $7 million from June 30, 2018. This change includes the $15 million option exercise fee received from Allergan for the EDIT-101 program. Net used -- net cash used in operations in the third quarter was $8 million, and capital expenditures were approximately $1 million.

Moving to the income statement. We recognized $14.5 million of revenue, primarily consisting of $13.8 million related to our strategic alliance with Allergan and $700,000 related to our collaboration with Celgene. Research and development expenses of $17.4 million includes $2.3 million of sublicense expense and $3.8 million of process and platform development expenses, net of $1.1 million of reimbursement related to the Allergan profit-sharing agreement. Key noncash items recorded in our income statement include $6.7 million of stock-based compensation and $800,000 of depreciation.

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

With that, I'll hand it back to Katrine for closing comments.

Thanks, Andrew. Before we wrap up the call, I would like to welcome the newest member of our senior leadership team here at Editas. Rick Morgan recently joined us as the Senior Vice President of Immunogenetics. He joins us from bluebird bio, where his team developed the company's lead oncology CAR T cell therapy for the treatment of multiple myeloma. Rick will be instrumental as we continue to advance our engineered cell medicines for cancer, autoimmune and blood disorders.

It has been an intense and exciting journey to get to this point as a company. Pioneering a new technology like CRISPR with such broad-based potential to impact human health is a rare opportunity. It's a privilege to be forging this path and to see aspirations and hopes turning to assays and data and now an IND. Last week, we had a guest come speak with our whole company, the parent of a child with LCA10. He told us about his daughter and their family, about what their world is like, how she is learning and growing. They truly brought home the possibilities in front of us and how the lives of patients and their families may be changed by the work we do. We look forward to continuing to forge this path for many years ahead.

With that, we thank you for your interest and support, and we'd like to open it up to questions and answers. Operator?

(Operator Instructions) And our first question comes from Whitney Ijem from Guggenheim.

First one is just on LCA10. Can you talk about the cadence of dosing in the patients in terms of how long you have to wait in between patients and whether or not you can parallel-dose at any point during that study? And then similarly, just on kinetics of response, preclinically or from anywhere else, do you guys have a thought on how quickly you might see a response in these patients sort of as we try to think about when we could see data?

Sure. So let me ask Gerry to speak to the question of the trial design, then I'll ask Charlie to talk about what we've seen preclinically. So Gerry, would you like to start?

Sure. So we'll be doing a combination of sequential as well as parallel enrollment of patients within each dose cohort. The initial patients will be separated by a few weeks. And then after review of the safety data, additional patients would be enrolled in parallel.

And on the kinetics side, we see complete editing in our preclinical models in a matter of a few weeks. We expect the editing to lead to expression of the normal CEP290 protein and then that to restore the outer segments. Predicting how long that is to impact vision, of course, is imperfect science at best. And so we do expect, though, to see responses in a reasonable window of time.

Our next question comes from Peter Lawson from SunTrust Humphrey.

Just on the LCA10. Do you think that's first half 2019 that we could see the initial data? And how would you release that data? Would you wait for a medical conference or top line initial responses from the first patients?

So we're taking the communication about this one step at a time. First, obviously, communicating that we have filed the IND in late October, and the next step focusing on the allowance of the IND. After that, we'll be working with our partner, Allergan, to provide additional clarity on other time lines, which includes dosing of the first patient and what the future plans would be for data presentation. At a high level, our approach will be to share data at scientific forums, medical conferences once there is a robust picture of the safety and the efficacy profiles of the product.

Got you. And then just the hiring of Dr. Morgan to head up oncology, could you remind us when the partnership with Juno ends and just your ability to operate in that field freely?

Sure. I'll ask Andrew to speak to that.

Peter, it's Andrew. So the partnership with Juno ends in May of 2020, so a little over 1.5 years from now.

And then inside that time frame, you're still allowed to kind of operate to a certain degree within the oncology space. Could you remind us how you can operate within that space?

Yes, the terms of the arrangement are that we are exclusive within engineered T cells for oncology. And so we're excited by the work we're doing with Celgene and Juno. We're also very excited more broadly about what we can do on oncology. And Rick's addition to the team, I think, enables us to build on all of the learnings that we've developed over the last set of years both to contribute to our work with Celgene, formerly Juno, during the period of that collaboration but also to put us in a position where in the long run, we're able to make multiple different categories of engineered cell medicines for cancer.

And our next question comes from Steve Seedhouse from Raymond James.

Congratulations on filing your IND.

Thank you.

Sure. I had a question just on the ASH abstract. I mean, if you just -- obviously, editing HSCs at the BCL11A erythroid enhancer locus is inferior to editing at the globin locus. Presumably, this is one of the reasons why you are pursuing sort of the different editing site. I am curious if that abstract essentially captures the crux of the rationale for the different approach. Or are there other reasons beyond what's suggested by these studies for Editas' unique approach?

And just as an extension to that, what are the key things we should be focused on in these studies describing the abstract? We've been getting questions about the differences between mouse models used in this study versus others. So what's the significance, I guess, of that detail? And is there anything else you would direct our focus to?

Charlie?

Sure. This is Charlie. And so yes, we do believe that this -- our approach has a potential to deliver a differentiated medicine based on the safety, which would play into the efficacy, as we discussed. There are other reasons to believe our therapy can be differentiated. We haven't disclosed all of those yet. But clearly, increasing the amount of fetal hemoglobin you could deliver and doing it by having the fewest off-target sites or a couple of things, it might also be advantageous and you'll start to see some of that data as we release it as well. We did use a new mouse model that allows us to look at the erythroid lineage in a way that the previous mouse models did not allow, and that's part of the reason we've been able to see what we saw.

Okay. And just on preclinical models in this setting. I mean, how important do you think nonhuman primate models are? There's some recent work, including an abstract at ASH, describing these models and for translating, in particular, a gene editor to a gene therapy, HSC transplant products in sickle cell or beta thalassemia and -- do modify HSCs' performance substantially different in NHPs, primates versus mice.

Yes, we have not done any NHP work ourselves. I think all preclinical models have their advantages and disadvantages. The advantage to the mouse system is that you're putting the actual human cells that you've edited into a mouse. Obviously, you have to engineer that mouse to allow to accept those human cells. In the case of the nonhuman primate models, you have to develop a surrogate so that you can edit the nonhuman primate hematopoietic stem cells, and that has advantages and disadvantages. And one of the challenges there is just the length and complexity of doing those studies.

Okay. I just had one last question on the LCA program. So you've -- I mean, you've often categorized editing as either productive or not with deletions and inversions being productive. I'm just curious if -- is there a range of CEP290 expression that results from productive editors? There's always a very narrow band, something like fourfold or eightfold, that's very predictable. Have you done single-cell expression analysis or anything that gets you an answer? Or in other words, is the productive edit a binary switch or not?

Well, yes, and so the pharmacology with gene editing, of course, is different than the pharmacology with traditional small molecules. And so when we productively edit a cell, that cell now expresses the normal levels of CEP290 from that gene -- from that copy of that gene. And so we expect that the productively edited cells will express at least 50% of the normal levels of CEP290. And so we know from human genetics that patients that have one normal copy of CEP290 have normal vision. And so we will edit a fraction of the photoreceptors and restore them to essentially normal function. And for a variety of reasons that we have discussed before, we believe that correcting as little as 10% of the photoreceptors to normal function will allow a restoration of vision. So we're optimistic because we can greatly exceed the 10% bar with the editing we've seen in nonhuman primates and mouse models.

And our next question comes from Gena Wang from Barclays.

Two from me. The first one is regarding LCA10. Just wondering, any initial biomarker data you think will be a good measurement to share with us to look at the first -- the dose escalation study? We understand CEP290 is intracellular protein, like any other way you can -- give you a sign that it's not sufficient, you can dose higher?

So I'll ask Gerry to talk about what the endpoints are that we're actually looking at in the trial. Obviously, in our preclinical work, we're able to look at editing very extensively in the mouse model, the nonhuman primate work as well as in our in vitro human retinal explants. So there's a number of assays that we've done preclinically to instruct us about editing levels and how that relates to dosing. And then in the clinic, we'll be measuring a number of endpoints.

Right. So we'll be looking at a variety of endpoints both anatomic, electrophysiologic as well as clinical endpoints. And certainly, some endpoints that have been looked at in prior clinical studies, like the full-field light sensitivity threshold, gives you an idea of retinal sensitivity. That is a very sensitive endpoint. Pupillometry, which doesn't require patient cooperation per se -- it's really an objective endpoint built on the pupillary reflex in response of the retina to light, that would also be a biomarker of sorts.

But we're also looking at clinical endpoints like visual acuity and patient's ability to navigate in a mobility course. So we have a range of endpoints we'll be looking at that we'll piece together. And again, just to remind you being a Phase I/II study, first-in-human study, this is primarily a safety and tolerability study. So we'll be looking at that very closely as well.

Okay. That's very helpful. My next question is regarding the BCL11A. You certainly have a different approach. And just wondering, regarding the enhancer domain, like how thorough you test it? Like how many different guides you test it for that region? And also, what would be the underlying mechanism to explain the selective reduction in erythroid lineage output?

It's Charlie. I'll start with the second part of that. And so we know from a lot of published studies that you cannot knock out the BCL11A gene. And so that's lethal and it affects multiple lineages. So the idea behind affecting the enhancer, the BCL11, was to get around those problems and selectively knock it down in the lineages that would affect hemoglobin expression.

That does not rule out the possibility that, that enhancer -- knock out of that enhancer doesn't affect some of the other fundamental properties of BCL11A gene. And we believe that some of those underlie the reason for the reduced erythroid lineage in the mouse model that we looked at. And we've looked at -- suffice to say, we've looked at some of the common guides that target the BCL11A enhancer.

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

The first one, on the design of the Phase I study, starting first in adults with severe disease and then more moderate disease and then children. Was this a sort of strategy request from the FDA? Or was this informed by maybe your natural history study? Or is there anything you can tell us about the cadence of that? And then in some of the assessments that you just mentioned, are there any special considerations that we should be thinking about when we compare adults with more severe disease and compared to children or anything like that?

Gerry, do you want to speak to that question?

Sure. The design of the Phase I/II study, the dose escalation with adults followed by children on that is a design that we've added through various experts in the field. I think in general, with especially rare diseases, if there are adults that have a particular disease phenotype, generally, FDA prefers to see adults treated before children since children are considered a vulnerable population. And so we take the safety very seriously and want to ensure that we're able to dose adults before children. We'll also have a data monitoring committee review the data in adults before we go into children.

And then the question about the -- maybe getting at potential difference in response between adults and children. That's -- part of the reason for this design is to look at variables like age, disease duration, severity and see whether there are any differences among patients with different characteristics. I will point out that in the LUXTURNA trial that Spark conducted, some of the best responders were adults. So we're very optimistic because not only of data like the Spark data, but also the fact that in these patients, one of the characteristic features is that there is a retained island of photoreceptors in the fovea and the macula, which is responsible for daytime vision. And that persists throughout life. It's just not functioning properly. So we think that with EDIT-101, we can, in a sense, turn those cells back on and hopefully see an improvement in vision.

(Operator Instructions) And our next question comes from Cory Kasimov from JPMorgan.

This is Matthew on for Cory. Just a follow-up on the Phase I/II trial design. I'm curious if you can provide details on the severity of patients you plan to enroll in the study and then how easy it will be to find these patients.

Sure. Gerry, do you want to speak to this one as well?

Sure. We'll looking at a range of visual acuity. Our natural history study is posted on ClinicalTrials.gov, and you can see the broad range there from light perception normally all the way up to approximately 20/40 vision. So we'll be looking at a pretty broad range treating patients with more severely affected vision loss as the initial patients in the cohort and then expanding it to patients with better visual acuity.

As far as finding these patients?

Oh, well, that's one of the advantages of the natural history study is that it helps to identify patients that also may be interested in receiving treatment at some point. So we have a number of sites that are active and enrolling patients that we now view patient enrollment as being limiting the study.

Okay, great. And then I have one on your sickle cell disease program just in regards to the data you'll be presenting on ASH. Just curious if you believe that -- or I guess, your takeaways for what this means for non-gene editing BCL11A targeting approaches?

We don't have any experience with those approaches. They may or may not have the same issues.

Thank you. And I'm showing no further questions at this time. I would now like to turn the call back to Katrine Bosley, CEO, for any further remarks.

Great. So thank you. And with that, we thank all of you for participating in today's call and for your support as we work to bring new transformative medicines to patients. Have a great evening.

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