Editas Medicine Inc (EDIT) 2019 Q1 法說會逐字稿

Good afternoon, and welcome to Editas Medicine's First Quarter 2019 Conference Call. (Operator Instructions) Please be advised that this call is being recorded at the company's request.

I would now like to turn the call over to Mark Mullikin, Vice President of Finance and Investor Relations at Editas Medicine.

Thank you, operator. Good afternoon, everyone, and welcome to our first quarter 2019 conference call. Shortly after the market closed, we issued a press release providing our financial results and corporate updates for the first quarter of 2019. 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. 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 Interim Chief Executive Officer, Cindy Collins.

Thanks, Mark. Good afternoon, everyone, and thanks for joining us for our first quarter 2019 corporate update. In addition to Mark, I'm joined today by several members of our executive team including Charlie Albright, our Chief Scientific Officer; Vic Myer, our Chief Technology Officer; Eric Ek, our Interim Chief Financial Officer; and Tim Hunt, our Senior Vice President of Corporate Affairs.

Thanks to the hard work of our dedicated team of editors, 2019 is off to a strong start with tangible progress on several of the goals we outlined on our last call. In the first quarter, we expanded and accelerated our development of universal allogeneic cell medicines for cancer through a newly formed collaboration with BlueRock Therapeutics. We initiated IND-enabling activities for a potentially best-in-class medicine for sickle cell disease and beta thalassemia. And we made progress in collaboration with our partner, Allergan, towards dosing patients with EDIT-101 for LCA10 in the second half of the year. EDIT-101 is the first in vivo CRISPR medicine approved for human dosing and represents the translation of years of clinical research and scientific advancement into a potentially transformative treatment for patients.

We are confident in where Editas stands today, capitalizing on the strong start to the year and anticipating numerous upcoming milestones.

Now let me turn the call over to our Chief Scientific Officer, Charlie Albright, to discuss our pipeline in greater detail.

Thanks, Cindy. It is a great time for the company, and I'm happy to be here to update you on our pipeline of transformative genomic medicines.

Let's start with our development of engineered cell medicines. We're excited to begin work with BlueRock Therapeutics to develop universal allogeneic cell medicines to treat cancer, using the complementary technologies of CRISPR gene editing and induced pluripotent stem cells. In particular, gene-edited iPSC-derived allogeneic cell medicines represent truly universal off-the-shelf treatment that can be mass-produced with superior quality, greater scale and lower cost than autologous or donor-derived therapies.

Further, we believe that the highly edited medicines that will be possible with iPS-derived cells will be required to unlock the full potential of cellular medicines, particularly in solid tumors where the greatest unmet need exists. The combination of our unparalleled CRISPR gene editing platform and BlueRock's expertise in stem cell development and differentiation brings together 2 leaders in their respective fields. In this collaboration, we retain rights to edited cells developed for the use in the field of oncology including T cells, NK cells, macrophages and other immune effector cells. The technological complementarity, distinct therapeutic areas of focus and desire for collaboration make BlueRock a great partner and we look forward to productive collaboration.

The BlueRock collaboration builds on our existing efforts in oncology. In particular, we have wholly-owned efforts in NK cells and a partnership with Celgene for engineered T-cell medicines for solid tumors and hematologic malignancies. Our work with Celgene and BlueRock are the 2 examples of how we are expanding and accelerate our oncology cell medicine platform as we look to derive the next generation of cancer therapies.

We've also made significant progress towards developing an engineered cell medicine for sickle cell disease and beta thalassemia. We believe we have a potentially best-in-class treatment for these severe diseases, utilizing CRISPR to edit the beta-globin locus. This editing directly increases fetal hemoglobin and is differentiated from others that target the BCL11A enhancer site to indirectly upregulate fetal hemoglobin.

In December, we presented data at the American Society of Hematology demonstrating some of the reasons we believe we can develop a superior medicine. Since that time, we have -- our confidence has continued to build based on our work. We have finalized the design of the clinical candidate and started IND-enabling activities within an experimental medicine. We look forward to providing updates at medical conferences through the remainder of the year.

Now transitioning to our in vivo CRISPR medicines. Our lead program EDIT-101 for LCA10 is poised to be the first in vivo CRISPR medicine administered patients in history. In partnership with Allergan, we are conducting an open-label, dose-escalation study to evaluate the safety and efficacy of EDIT-101 in approximately 18 patients in the U.S. and Europe. We remain on track to screen patients midyear and dose in the second half. Concurrently, our natural history study of LCA10 patients is ongoing. The natural history study helps us identify clinical endpoint measures while also serving to strengthen ties to ophthalmology centers of excellence and introduce Editas to the Lebers patient community. Initial data were presented by the principal investigator, Dr. Eric Pierce of Massachusetts Eye and Ear, at the Retinal Cell and Gene Therapy Innovation Summit last week.

Following EDIT-101, we are advancing additional genomic medicines for serious ocular diseases, starting with Usher Syndrome 2A or USH2A. Our development of USH2A builds on the work we've done with the LCA10 program. Like LCA10, USH2A is a genetic disease that affects ciliary proteins and photoreceptors. In vivo data have been promising, and we are developing a treatment for Usher patients that leverages the same AAV vector, promoter and Cas9 enzyme as for EDIT-101. In particular, our USH2A medicine differs only in the guide RNA specific to the USH2A gene and represents the power of our platform to accelerate the development. Our academic collaborators from Massachusetts Eye and Ear presented preclinical in vivo proof of concept of our approach last week at the American Society of Gene and Cell Therapy Annual Meeting. In this work, the researchers demonstrated that CRISPR gene editing of Exon 13 of the human USH2A gene can rescue the retinal phenotype and restore auditory function in a mouse model.

Based on this data, we are optimizing a lead candidate and are on track to be ready for an IND-enabling study this year.

Our ocular programs are the most advanced programs within our in vivo pipeline and we look forward to expanding efforts in additional therapeutic areas that leverage this work.

Our industry-leading platform including our exclusive access to staph aureus Cas9 and extensive capabilities translating science into treatments for patients makes us enthusiastic about the potential to target additional genetic diseases.

Now let me turn the call over to our Interim Chief Financial Officer, Eric Ek, to discuss our progress in building the business and review our financial results.

Thanks, Charlie. It's my pleasure to update you on key developments we've had over the past quarter and to summarize the financial results we are reporting today. As Charlie mentioned, we have formed a research collaboration and entered into a nonexclusive cross-license agreement with BlueRock Therapeutics. In each of their respective fields, Editas Medicine gains nonexclusive rights to BlueRock's iPSC and cell differentiation technology and intellectual property, while BlueRock gains nonexclusive rights to Editas Medicine's CRISPR technology and intellectual property. Each party is responsible for the payment of milestones and royalties to their respective partner for any licensed engineered cell medicine developed in their respective field.

Turning to the numbers. We have summarized our financial results for the first quarter in the press release that we issued an hour ago, and full details will be available in our Form 10-Q. Our cash, cash equivalents and marketable securities decreased $27 million in the first quarter to $342 million as of March 31, 2019, from $369 million as of December 31, 2018. Our uses of cash totaled $30 million and include cash operating expenses of $29 million and capital expenditures of $1 million. Key noncash items recorded in our income statement include $8 million of stock-based compensation, $1 million of depreciation and a $5 million increase in our working capital. Our sources of cash totaled $3 million and consisted of $1 million of interest income and $2 million of stock option exercises by our employees. We believe our cash, cash equivalents and marketable securities of $342 million as of March 31, 2019, provides at least 24 months of capital to fund our business.

And with that, I will hand it back to Cindy.

Thank you, Eric. As part of our EM22 long-range goal, we talk openly about our Inspiratas culture at Editas Medicine. In Q1, we marked progress on EM22 by rolling out what we call our elements of Inspiratas, which is an initiative to highlight and shape the outstanding culture we have here at Editas. We'll talk more about our elements of Inspiratas in the future, but ensure Inspiratas captures Editas at its best, a place where revolutionary science happens daily and our employees, editors are driven to tackle yet unsolved medical challenges while being part of a community working for the common goal of serving patients.

At Editas, it is truly an exciting time for the company. We are on the verge of treating the first patient ever with an in vivo CRISPR gene-editing medicine. We are advancing best-in-class medicines that may revolutionize the treatment of cancers, sickle cell disease and other serious intractable diseases. And we are working to further extend the reach of gene editing as we tackle new indications, explore new targets and expand our platform to deliver on the promise of CRISPR technology.

We look forward to continuing to forge this journey in partnership with the broader community, patients, clinicians, employees and investors. With that, we thank all of you for your interest and support and are happy to take your questions. Operator?

(Operator Instructions) Our first question comes from the line of Amanda Murphy with William Blair (sic) [BTIG].

So I actually had a few on the BlueRock collaboration and iPSCs in general. So I guess just starting out with BlueRock, I was -- I'm not sure if you can share or how much you can share, but I was just curious sort of why you selected them and what they bring to the table, specifically in terms of reprogramming and building a clinical cell line, if you will.

Sure, Amanda. This is Charlie. So we thought BlueRock was going to be a great partner and we just had that kickoff meeting yesterday and are really excited about it. They bring both proprietary and nonproprietary research really with how to take dedifferentiated cells into iPSCs. It's an incredibly complementary partnership because we're interested in oncology and they're interested in cardiovascular neurology and immunosuppressive mechanisms. And so -- and we think the 2 technologies of gene editing and iPSC-derived cells are really going to create a powerful partnership.

And then I've just been trying to -- not going to ask you for timing or anything like that. But is the right way to think about any candidates that emerge from the partnership as more of a longer-term part of the pipeline? And then thinking about -- you mentioned solid tumors but also that I think it also covers heme, so would you consider going after some low-hanging fruit initially with some of the heme cancers, or how should we think about the evolution?

Yes. This is -- we have rights to all oncology indications and all cell types, which is really powerful. So we obviously have some ideas about where we're going and going to do here. We haven't shared them more broadly. And yes, all the things you mentioned are on the table. And I'd also say that all cell types focused on oncology are on the table as well. So that's part of the reason we're really thrilled with the deal because it really gives us the ability to work broadly in the space that -- around which we're trying to build a business.

Again and just the last one. I think you mentioned it was not exclusive, so I just was curious if you had thought about exclusivity just on both sides in iPSCs and then with CRISPR from your side.

We decided to do a nonexclusive deal that gives both parties the option to go and work with additional parties in our field of interest, which I think is also quite powerful, all part of why we thought it was a great deal.

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

This is Connor Meehan on for Matthew Harrison. We were just looking to hear a little about your sickle cell approach and sort of what you guys think differentiates your program clinically. And then just a quick follow-up afterwards.

Sure. We have 2 bases for differentiation. One of them we discussed at length at the ASH meeting, American Society of Hematology meeting, last December. And we were awarded one of the best in the ASH posters for the work. And so that -- in that study, we showed that cells edited at the beta globin locus, which is where we're editing, reconstitute the -- erythroid lineage normally. In contrast, cells edited at the BCL11A enhancer locus, which is what all of our competitors are doing, had a significant decrease in the cells with the erythroid lineage in mice. Obviously if this translated into humans, this could be a significant safety and efficacy issue, so that's the first basis for differentiation. The -- that -- those slides and related items to that can be found on our website, and we're happy to go into more details. It's a somewhat complicated story. And then we're also excited about the amount of fetal hemoglobin we can induce, and we'll be having more to say about that in upcoming scientific meetings later this year. That's obviously also key to driving the efficacy of the product.

Got it. I'll definitely follow up with some -- the PowerPoints on your website. Would it be possible to just comment quickly on the IND-enabling steps you guys need to take? And I guess maybe a quick comment on the expected duration as well.

We haven't provided guidance on the timing, and I think it's like -- as usual, the IND-enabling activities are not atypical and -- or put in a positive way, they're typical for a cell-based medicine in this field, and we'll obviously be discussing those with regulators along the way to make sure that we're all happy about those.

Our next question comes from the line of Steve Seedhouse with Raymond James.

So I know there's a lot of features of EDIT-101 that can be leveraged in USH2A and other eye indications. But how much of the know-how and tools that you've developed are applicable to non-retinal programs? How much time could you save on subsequent non-retinal indications?

I think much of what we learn with EDIT-101 is going to be useful in other in vivo editing indications. So we do think AAV delivery in general is the preferred way to deliver these agents. And the work we've done with EDIT-101 enables that. So as you probably realize, we have exclusive access to Staph aureus Cas9, which allows us to make an all-in-one AAV with 2 guide RNAs, that's unique to Editas. And we're obviously going to take that learnings. And so basically, we believe anywhere where you can deliver AAV, we're going to be able to deliver the editing machinery. And so we are in the process of evaluating other indications that -- where the unmet need and the other aspects of disease selection makes sense and we'll have more about -- to say about that in the future.

Okay. And then Charlie, regarding the sickle cell and beta thal program. So given what you just mentioned you presented at ASH last year regarding BCL11A versus beta-globin locus, I think if I'm remembering correct, that was sort of a single time point that you showed. I'm curious what happens over time in the mice? Does the proportion of edited cells or fetal hemoglobin fraction decrease over time after engraftment? And is it any different when you edit at the beta-globin locus?

It's -- we had -- I think we presented data from both 8 weeks and 16 weeks last year, and 16 weeks is kind of the standard time where things have reached a steady state. And so the -- and there were marked differences at both time points between editing at the BCL11A enhancer and editing at the beta globin locus. I can't recall if there was a difference between 8 weeks and 16 weeks on either one of them.

Okay. And the data presentation at EHA this year for the hemoglobin opti program, is that more data comparing these methods? Or is it some other experiments?

We're actually in the process of figuring that out right now.

Okay. One quick question on the BlueRock collaboration. Is this basically a way to regain sort of more favorable economics on an allogeneic CAR T platform? Is that a fair way to characterize the deal?

Right now, as part of our Celgene relationship, we're not allowed to work on T cells and engineer T cells in oncology. We are allowed to work on non-T cells in oncology, and so that could be a way to think about things in the short run. And we have indicated that we're interested in NK cells. And then I think in the long run, our interests are obviously broader.

Okay. So you're not able to develop CAR T as part of that BlueRock collaboration, is what you're saying?

Not as long as we have -- as the current relationship with Celgene is intact, and that research portion of that expires in May 2020.

Understood, okay. And one last question. I just wanted to ask about, going back to the mouse studies of EDIT-101 and the LCA10 preclinical model, so this is in the Nature Medicine publication, but also -- like for example you presented at the ASGCT recently. You get to about 20% editing, I think, just above, within 8 weeks, and then it doesn't increase. If anything, it drops back down to about 10% over time, out to week 40. I'm just curious, is there turnover or decline of the actual cells that have been edited? Are they dying and turning over in the eye?

No. We have no evidence of that. We don't think there's a decrease between the time points you mentioned. And it's also important that, that's -- that editing is not corrected for the frequency of the retina that was transduced. So that really -- if you look at the dose response curve from that last presentation, it leveled off at 50% productive editing, which is essentially the maximum you can get in it. And we think it gets there and then stays there.

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

First, on the natural history study in LCA, can you talk about how that study dovetails with your efforts in your clinical trials? Is it possible that you can use that study to identify patients and speed the screening portion of the study along?

Yes, is the short answer. So that study does several things for us. It gives us familiarity with the scales, it helps us set up the sites. It's -- essentially the sites that are being used in the natural history study are the same sites that -- many of the same sites that will be used in the interventional study, and there'll be patients that are enrolling in the natural history study. We obviously -- it's their decision in consultation with their primary care physician as to what they -- whether they enroll in the interventional study or not. But clearly, they'll have familiarity with both the site and the study, and then they can make their own informed decision.

That's helpful. Then second, a follow-up question on the Celgene collaboration. Do you have any visibility into Bristol-Myers' desire to continue that collaboration? Or maybe more broadly, is there any update on the progress of the collaboration towards the clinic?

We have -- we can only say limited things now that we're -- that the collaboration is part of Celgene. As you can appreciate with a larger pharma partner, their interest in disclosure is not the same as our -- as it was with Juno. All we know is what's been stated publicly, which was that the cell-based medicines part of the Celgene acquisition is an important part of the BMS strategy going forward, and their efforts, particularly in liquid tumors, synergizes very nicely with the BMS focus on solid tumors. And I think -- from the outside, I think it represents a very interesting merger of 2 complementary portfolios, both of which have a large focus on oncology. So for those reasons, we're optimistic that the merger actually will bring good things with respect to the collaboration.

And any sense of timing, when we could see IND-enabling studies?

We can't say anything at this point.

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

This is Xiaobin dialing in for Gina. Maybe just a follow-up on the EDIT-101 question. With the natural history data, would you be able to refine more about the enrollment criteria regarding like patient age or visual acuity? And then the second question, with the -- just -- so what additional steps are you taking to activate the size? And then last one is based on the kinetics of gene editing. Would you sort of speculate on the time line that we can see initial efficacy?

Let me start with the last question, and then I'm not sure I got the second one, and I'll hit the natural history one. So in mice and non-human primates, editing was completed in approximately 6 weeks. After editing, you need to reexpress the CEP290 message, the CEP290 protein and rebuild the outer segments. We believe that will be sufficient to allow light to be detected, and then from that, you'd activate the visual pathways to establish vision. So there's a good reason to believe that we could -- potential patients could potentially see benefit in a few months, is the answer. When we'll disclose clinical data, which is probably what you actually want to know, is an entirely different question, and that will depend very much on the results we see in our consultations with our collaborators, Allergan. The natural history study will potentially let us refine both entry criteria and the endpoints that we look at in the patient group. That's all part of -- was all part of the objectives of running a natural history study. And so yes, it has a potential to alter that. I'm not sure I caught the middle question.

Yes. Just more asking about sort of what's left to start clinical, to dose the first patient, the part of the site activation.

Right. And so all the usual things to activate the site, the IRB approval, the traditional safety approval, delivering the drug product to the site. We plan to enroll patients in the middle of the year, so we're virtually in the middle of the year, based on our definition of second and third quarter. And so we'll start enrolling patients and then dose someone in the second half of the year.

Our next question comes from the line of Cory Kasimov with JPMorgan.

This is Matthew on for Cory. So the first one, I wanted to follow up on the previous questions for your sickle cell disease and beta thal program. In referring to it as best-in-class, can you expand on that a little bit, especially as it compares to non-gene-editing approaches? Basically, I'm wondering if your confidence here is mostly based on fetal hemoglobin levels.

Yes. And so it's a little bit hard to do that comparison with -- in the database the way that we're willing to disclose at this point because you're -- basically you're doing different things. So the gene therapy approaches, you have -- what I mean by that is in the gene therapy approaches you're expressing beta globin, but it has to outcompete the endogenous sickle beta globin. And so it's actually not clear how that competition is going to go. In our case, we're actually doing 2 things. We're turning on fetal hemoglobin and we're turning off the sickle globin. So doing that pharmacologic comparison is actually quite challenging. Suffice it to say that we do believe that the combination of what we're doing is -- has the potential to be best in class, and part of that as well is based on the human genetics. As you recall, the patients with elevated levels of fetal hemoglobin can reach a level of fetal hemoglobin that actually suppresses the sickle cell symptoms. And so this is the mechanism that nature has taught us can actually rescue the disease.

Got it. And then I guess just based on what you just said, what's your like broad-level strategy to demonstrate this clinically?

We're going go into patients and measure fetal hemoglobin levels and symptoms that come from that.

Got it. And then just one follow-up. Can you provide an update for the CEO search?

Sure. Our searches are well underway, and we're really looking forward to hiring excellent executives to help us lead the company through the next phase of growth as we move into the clinic. Still no comment on timing. We'll update you when the timing is right, but those searches are quite active at this point.

Our next question comes from the line of Peter Lawson with SunTrust Robinson Humphrey.

Just on LCA10, how long should we think about the period it takes to identify, screen and dose the patients? And then, have any of the patients that are on the natural history consented to be part of the interventional study?

We can't comment on whether anybody -- you're basically asking whether anybody's enrolled yet, and we can't comment on that. Clearly, we hope and believe that the natural history study will aid in the enrollment in the LCA10 interventional study. As with any Phase I gene therapy-like study, there will be an interval between dosing the first patient and dosing subsequent patients. And we haven't provided the details for that. I would just say these are typical intervals of the gene therapy development space right now.

Got you. And then just on the number of sites did this roll over from the natural history study, but how many sites do you have and how many others would you add? And what's the timing around that?

Yes. We have 4 sites in the U.S. and 3 sites in Europe, is my recollection. You guys are testing my memory of all the numbers today. And we have an IND approved right now, so the sites in the U.S. will be opened first. And we feel that those will be sufficient to get us well started on the clinical trial. And we'll work on opening Europe and the European sites, because we do believe we need, in the long run, the patients from the Europe. But we're good in the short run.

Got you. And then when do you think you could start the thal sickle cell trial?

We haven't provided that guidance yet, but you'll be the first one I'll call, Peter.

(Operator Instructions) Our next question comes from the line of [Denise Meacham] with Guggenheim Securities.

This is Whitney. Actually, just one. So on USH2A, you mentioned that there are some additional optimization ongoing there. So wondering -- and sorry if I missed it, but wondering if you can give us any color on the optimizations that you're working through.

Actually, there's nothing unusual with that. We're finishing up the pharmacology package that supports the nomination of a development candidate, which will put us in a position to be IND -- ready for IND-enabling studies at the end of the year. So we're on track for that.

And I'm showing no further questions in queue at this time. I'd like to turn the call back to Cindy Collins for closing remarks.

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

Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect.