Editas Medicine Inc (EDIT) 2020 Q2 法說會逐字稿

Good afternoon, and welcome to Editas Medicine's Second Quarter 2020 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 second quarter 2020 conference call. Earlier this afternoon, we issued 2 press releases. The first press release announces the termination of our agreement with Allergan for the development of ocular medicines, returning full control of these programs to Editas Medicine. The second press release provides our financial results and corporate updates for the second quarter of 2020.

A replay of today's call will be available on the Investors 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. Except as required by law, 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, Cindy Collins.

Thank you, Mark. Good afternoon, and thank you, everyone, for joining us for our corporate update call for the second quarter of 2020. In addition to Mark, I am joined by Charlie Albright, our Chief Scientific Officer; and Michelle Robertson, our Chief Financial Officer.

The second quarter of 2020 has been an important period for the advancement of our pioneering gene editing programs, continuation of building out the development organization and CMC and strengthening the balance sheet. All of this leaves us well positioned to continue to revolutionize treatments for genetic blindness, cancer, sickle cell disease and neurological conditions.

Our momentum is even more significant given the considerable challenges we and the broader scientific community are still facing with the continuing COVID-19 pandemic. I am proud of our team, whose dedication and implementation of a robust business continuity plan has enabled us to remain on track with the guidance we shared last quarter.

I would now like to review some of our key recent accomplishments. As Mark mentioned, we are thrilled to regain full control of our ocular medicines including EDIT-101, the first in vivo CRISPR medicine to be administered to patients. Our 2017 agreement with Allergan has been terminated, and we have entered into a new agreement with AbbVie that returns development and commercialization rights for ocular medicine to Editas.

Over the coming months, we will transition activities previously carried out by Allergan, including regulatory and clinical activities as well as manufacturing activities for EDIT-101 and Edit-102 to Editas. Additionally, we will purchase inventory for EDIT-101 and EDIT 102-programs and add staff in clinical development, research, manufacturing and quality.

For our lead program, EDIT-101 for LCA10, we will resume dosing in the Phase I/II Brilliance clinical trial now that sites have been cleared to dose patients after the COVID 19 related pause. We remain on track to complete the adult low dose and dosed at least 1 patient in the adult mid-dose cohort by the end of this year.

I am pleased to report that we are continuing to progress our differentiated engineered cell medicines for cancer and hemoglobinopathy. We remain on track for filing our IND by the end of the year for EDIT-301, our cell medicine for sickle cell disease. We have identified the lead investigator as well as our CRO and are beginning to identify clinical sites.

We continue to advance IND-enabling studies for our lead oncology candidate, EDIT-201, an allogeneic, healthy donor NK cell medicine for the treatment of solid tumors. Additionally, we continue to advance our iPSC-derived NK programs for solid tumors as well. We believe our proprietary Cas12a engineering for both our healthy donor and iPSC-derived NK cell medicines will propel Editas to generate transformative cell medicines for solid tumors, an area with a pressing unmet need for innovative treatment solutions.

As we advance our pipeline towards the clinic, we continue to build our manufacturing capabilities, both internally and externally. To support this robust pipeline in the years ahead, we recently announced 2 important agreements. We signed a multiyear lease agreement for a clean room space with Azure to perform preclinical and early phase clinical manufacturing activities for our engineered cell medicines. Editas employees perform all manufacturing and analytical work. Securing dedicated GMP manufacturing space to support the development of our cell medicines, including EDIT-301 and EDIT-201 and our iNK program provides us with needed flexibility and control as we advance these programs into the clinic.

We also entered into a strategic partnership with Catalent, who will provide critical manufacturing infrastructure and support from their facilities in Baltimore, Houston and Philadelphia. Catalent's integrated support will include supplying raw materials, viral vectors and engineered cell medicine production as well as storage and distribution of finished product for clinical trials. Lastly, we continue to build out our manufacturing facility in Boulder to manufacture guide RNA.

On the organizational front, we onboarded 18 employees over the past quarter, primarily in development and CMC, to continue to advance our programs towards the clinic. At the executive level, we hired a Chief Business Officer, Gad Berdugo, who has more than 25 years of experience in biotech, and we continue our search for a Chief Medical Officer. We could not accomplish any of this without the support of our investors.

Our recent offering of common stock resulted in gross proceeds of approximately $216 million. These funds significantly strengthen our balance sheet, enabling the continued development of our best-in-class in vivo and engineered cell medicine pipeline while demonstrating the continued confidence among the investment community in our strategic approach and execution. We thank you.

With that overview, I would now like to turn the call over to our Chief Scientific Officer, Charlie Albright, to discuss additional pipeline updates.

Thanks, Cindy, and thanks, everyone, for joining the call today. I'll start with our in vivo editing medicines, which constitute the first pillar of our therapeutic strategy. Earlier this year, we are proud to report dosing of the first patient with an in vivo CRISPR medicine, with dosing of EDIT-101 in the Brilliance clinical trial.

On our last call, we shared that the first 6 weeks of safety data from the first patient dose supported dosing -- with the second patient. We are pleased to report today that the first patient remains stable following their 3-month follow-up evaluation. We look forward to dosing more patients presenting additional clinical data with EDIT-101 in the near future.

Following EDIT-101, our next ocular program is EDIT-102 for Usher Syndrome Type 2A. With the termination of our agreement with Allergan, we will transition manufacturing processes and materials from Allergan to Editas to advance this program into IND-enabling studies. We are expanding our in vivo pipeline to indications beyond ocular, using our knowledge from our ocular programs. As previously disclosed, we are collaborating with AskBio in the neurology program.

Switching to engineered cell medicines, the other strategic pillar of our therapeutic strategy. We are encouraged with our progress with EDIT-301, our potentially best-in-class medicine for hemoglobinopathies EDIT-301 remains on track for an IND filing for sickle cell disease this year.

As a reminder, EDIT-301 increases fetal hemoglobin by leveraging our proprietary Cas12a to edit the beta-globin locus at a site where naturally occurring human mutations increase fetal hemoglobin and suppress sickle cell disease symptoms. The human genetic support for our approach decreases potential safety risks. Importantly, this human genetics support does not exist for the BCL11A enhancer site. Further, our approach induces more fetal hemoglobin in preclinical studies and editing at the BCL11A enhancer region. We believe this increased fetal hemoglobin will translate into improved efficacy in the clinic.

We presented preclinical proof-of-concept in an oral presentation at EHA. In this presentation, we showed we could officially edit hematopoietic stem cells from sickle cell disease patients, and that these edited cells had improved properties indicative of reduced sickling propensity. Further, we showed cells from healthy donor-derived hematopoietic stem cells were maintained in vivo and then elevated in pancellular fetal hemoglobin expression following EDIT-301 treatment. These data add to our package supporting the best-in-class potential of EDIT-301. For these reasons, we are eager to test EDIT-301 in the clinic and remain on track to file an IND for sickle cell disease this year.

In preparation for this Phase I/II trial, we've identified the lead principal investigator, engaged a CRO, begun site selection and are planning an investigator meeting in the fourth quarter. Further, our recent agreement with Azure provides the necessary infrastructure to manufacture the clinical trial material.

As we have shared, Editas is growing its investment in oncology. Cell-based medicines have shown transformational activity in liquid tumors. The major unmet need, though, exists in solid tumors where we aim to develop differentiated off-the-shelf medicines. Our proprietary editing capabilities position us uniquely to deliver on our vision for oncology.

We've made substantial progress with our lead candidate, EDIT-201, a healthy donor-derived allogeneic NK cell medicine for the treatment of solid tumors. We continue IND-enabling studies. As part of these efforts, our collaboration with Sandhill has accelerated the acquisition and expansion of healthy donor NK cells. We in intend to present updated preclinical data from this program in a scientific congress later this year.

We also continue to advance our engineered iPSC-derived NK cell medicine program, recently presenting in vitro data at ASGCT. These data showed that our CRISPR Cas12a editing platform enhanced iPSC-derived NK cell tumor-killing properties and support the transformative potential of these cells with some off-the-shelf medicine. We believe these treatments can be an important new treatment option that exploits the intrinsic properties of NK cells while avoiding the side effects of T cell therapies such as graft-versus-host disease and cytokine release syndrome. Our lead experimental medicine will contain multiple genetic changes, and we'll provide further updates on this program later in the year.

Now I'll turn the call over to our Chief Financial Officer, Michelle Robertson.

Thank you, Charlie, and good afternoon, everyone. Editas remains in a strong financial position as we advance our programs forward. Our cash, cash equivalents and marketable securities as of June 30, 2020 were $598.7 million compared to $415 million as of March 31, 2020. The increase was largely due to the $203.7 million in net proceeds raised from the company's recent equity offering. The proceeds we raised from our recent equity offering have strengthened our balance sheet, and we expect our current cash balance will fund our operating plan into 2023.

We are well positioned to continue execution across our clinical and preclinical pipeline, funding both our ongoing Brilliance trial and also enabling the advancement of additional in vivo and ex vivo candidates into the clinic. The use of proceeds include further build-out of the development organization, enhancement of our CMC and analytical capabilities and the advancement of all of our programs.

Now I'd like to review our income statement for the second quarter of 2020. Revenue was $10.7 million compared to $2.3 million for the same period last year. Revenue in the current quarter includes $7.6 million in cash revenues received in connection with an out-licensed agreement. Total operating expenses were $42.1 million, net of noncash stock compensation expense of $5.4 million compared to $38 million for the same period last year.

Research and development expenses were $28 million compared to $23.6 million for the same period last year. The increase in our R&D expenses was primarily attributable to the expansion of our development organization, external expenses related to IND-enabling studies for our EDIT-301 program and nonrecurring fees related to licensing.

General and administrative expenses were $14.1 million compared to $14.4 million for the same period last year. The decrease in our G&A expenses was attributable primarily to lower professional services and patent-related fees.

I reiterate that our strong balance sheet will provide support and flexibility for our pipeline progress into 2023 as well as our commitment to fiscal discipline with allocations of our capital.

With that, I'll now turn the call back over to Cindy.

Thank you, Michelle. I am incredibly proud of the dedication from the leadership, employees and trusted partners at Editas, who have enabled tremendous clinical, scientific and corporate progress despite the challenges that remain from COVID-19. We are incredibly excited to advance the 2 pillars of Editas to provide differentiated CRISPR medicines that have the potential to revolutionize the treatment of genetic blindness, cancer, sickle cell disease and neurological diseases.

As the first and only company to treat a patient with an in vivo CRISPR gene editing medicine, we look forward to further strengthening our position as the leader in the space with additional programs advancing to the clinic and our expansion to broader indications beyond ocular. We are also excited with our progress in engineered cell medicines where our differentiated Cas12a editing has generated in vivo proof-of-concept preclinical data in our hemoglobinopathies and oncology programs. Our recent manufacturing agreement enable the continuation of our rapid progress across these programs.

We will continue our efforts to expand the reach of gene editing across our platform and look forward to significant organizational velocity in partnership with our employees, partners, shareholders, physicians, and of course, patients. We thank all of you for your continued interest and support.

With that, we will open up the call for Q&A. Operator?

(Operator Instructions)

Our first question comes from Gena Wang with Barclays.

This is Peter for Gena. I guess I had a question or 2 on EDIT-301. My first one is, I think you showed potentially a best-in-class HbF levels in preclinical studies, maybe you had about 50% HbF levels versus maybe 30% to 40% by CRISPR, for example. And my question is, I guess, to what extent do you know about having those additional beyond, so-called 30% threshold, would translate to additional clinical benefit? And I have one more question after that.

Sure, thanks. This is Charlie. So the clinical data with fetal hemoglobin induction retrospectively shows that more fetal hemoglobin is better. And I think you will see as the trials progressed that while some of the markers are normalized or close to normal from the 30% hemoglobin inductions, you will see that others are not. And so markers of red cell hemolysis, for instance, are unlikely to be normalized, although we haven't seen all that data. And those -- the normalization of those markers and their increased elevation will have an effect on those symptoms in the progression of the disease in sickle cell disease.

Got it. And my one more question is also on EDIT-301. Is there any risk of being cutting out the HBG? I think it's HBG2. Is that an issue at all, given that, I guess, cleavage site would be identical between the -- the cleavage site in front of HBG1 and HBG2?

You're talking about making the deletion because of the duplication of the HBG1/2. Is that the question you asked?

Yes, yes, yes.

Yes. We know that's a really rare event right now. So we're not -- number one, we're not concerned, in general. And secondly, it's a very rare event.

Okay. And that rare event is no safety issue?

No, it won't be an issue. It will just mean we'll be missing 1 of the 2 HBG alleles.

Our next question comes from Matthew Harrison with Morgan Stanley.

This is Max Skor on for Matthew Harrison. Could you provide any additional color regarding the royalty range and milestones associated with the new AbbVie deal? And how should we think about gating factors or initial clinical time lines for the USH2A program?

So I'll take the first -- yes, I'll take the first part of that question. So we jointly agreed with AbbVie that we would not disclose the financial terms this quarter. And -- however, the payment we are obligated to pay in Q3 is not material to our cash runway, which will still take us into 2023, and I'll let Charlie take the second part of that.

I'll answer the time line question. So we will have a few transition services associated with the transfer of the assets back to Editas, and we are really thrilled to be able to regain control of these. LCA10 time line is not going to be impacted at all. And we will be transferring, as we indicated in the prepared remarks, some of the manufacturing activities as well. So we are not going to speak to time lines on today's call because we need to assimilate all the transition activities that need to occur from a regulatory, clinical and manufacturing perspective.

And our next question comes from Phil Nadeau with Cowen & Company.

First question is a follow-up on the pending of the deal with Allergan. Can you talk a little bit about what gave rise to the decision to get the writes back where -- was Editas opportunistic in seeking those writes back? Or did the priorities at AbbVie/Allegan change after the merger such that they weren't particularly interested in the program any longer?

So I certainly don't want to speak on behalf of AbbVie or speculate what the rationale was, but we were certainly thrilled that they identified and believed that we were the best home for these assets and for this portfolio, given that the technologies had originated within Editas.

Okay. Fair enough. And then second question is on 301. What remains to be completed before the IND. And are any of those activities at risk because of COVID?

All the activities to get to the IND are the typical activities, which were at the tail end of all of them right now. So we remain on track to file the IND by the end of the year, and that's required a really incredible effort from the team this year.

Our next question comes from Steve Seedhouse with Raymond James.

Great. Charlie, you mentioned the first patient in the LCA10 study remains stable following a 3-month follow-up. I just wanted to clarify stable in that context, is it with respect to the safety and overall health? Or are you referring to vision there?

[The patient is stable with respect to safety] (corrected by company after the call) and so we eagerly await the next update from that in the dosing of the second patient.

Okay. And then on the new deal with AbbVie, could you just clarify also if that -- does that include now other Editas programs beyond ophthalmology? Or is this just restricted to the previously contemplated programs?

These are the programs that were part of the 2017 Allergan agreement, so they are LCA10, USH2A and RP4 and a fourth program to be identified.

Okay. And last question, I was hoping you could just comment on base editing as a technology and if Editas has any interest in pursuing base editing to supplement your already broad gene editing platform.

I'll comment from a science standpoint and leave the business comment to somebody else. The -- we looked at base editing early on. It's an interesting technology. It has own distinct platform. We feel we can do what we need to do with the combination of Cas9, and importantly, Cas12a. And there's still a lot to be understood about face editing as a technology. We're happy with where we are.

Our next question comes from Yanan Zhu with Wells Fargo Securities.

The first question regarding the regaining of RICE. Just wanted to confirm, has AbbVie seen any clinical data generated from the first patients -- the first patient?

Yes. As you might recall, the LCA10 program was a co-development/co-commercialization program. So both Editas and Allergan had an active seat at the table as it related to the clinical development and the clinical trials.

Got it. And could you give a little more color on the timing of data? I think Charlie mentioned the near future for the EDIT-101 program. So if it's not -- if it's difficult to be very specific on the timing, could you share some of your decision criteria on when to report, such as patient number or follow-up time?

So I will start. The hope is that we will have data to share later this year. As you know, we have treated the first patient. We are in the process of continuing to map and screen patients for dosing the second patient, and we think we will successfully dose the second patient in cohort 1 as well as the first patient in cohort 2 this year. And the clinical trial sites are open now, and we have clearance through AbbVie to move forward in dosing the next patient. So it will largely depend on what the dataset looks like, the robustness of it, and we will have to take that decision on a patient-by-patient and collectively what we see from the study. I don't know, Charlie, if you want to add any other color.

No, I think that's absolutely right. We are eager to talk about the data, and we will release it in a time frame that makes sense from both an investor standpoint and being accurate in a representation of what's happening.

Got it. And on the EDIT-201 healthy donor NK program, could you share some high-level color on what's your first iteration of the product looks like, such as how many edits? And I think you previously mentioned, it's not a car NK, it's -- rather it works with antibody therapeutics, such as anti-HER2, anti-eGFR. So any further characterization of the EDIT will be very helpful. And also, with regard to data -- preclinical data later, this year, would you be able to be a little more specific on the timing of that preclinical data?

Sure. We do look forward to providing a full preclinical package for EDIT-201 later this year, and so we're going to hold off on the -- on that because we hope to get that into a scientific meeting. We're reluctant to tell you about which meeting because it all depends on the abstracts and getting submitted -- accepted and when we're going to talk or a poster, et cetera. So we wouldn't want to bias any of those things, but we really do want to talk about it. So one way or the other, we're going to talk about it this year, hopefully, at a robust scientific meeting.

Great. Then last question. Regarding the iPSC program, could you speak to the method of the iPSC platform? Obviously, it's licensed from BlueRock. How is that platform differentiated from others like Sage Therapeutics' method of deriving iPSC cells? And also, in terms of IP, intellectual property position, what's your thought there? Is there any overlap?

Sure. Well, first, it's important to realize that what we got from BlueRock were GMP-qualified iPSC lines, and that's really important because the accessing GMP-qualified lines is not a simple thing to do. So that alliance with BlueRock in that specific way allowed us to accelerate the program significantly.

So what we're in the middle of doing is merging a world-class editing platform and creating a world-class iPSC platform. We've talked quite a bit about our foundational IP position in both Cas9 as well as Cas12a. Right now, we're using Cas12a for our cell-based medicines, and it's a very good enzyme, and it puts us in a great intellectual property positions. We are developing our own methods where we need to avoid the intellectual property that others have filed.

Sorry, I meant the IP position for BlueRock's iPSC technology platform, whether that -- how the -- whether that have any overlap with other iPSC platforms?

I wouldn't want to -- I'm probably not the right person to comment on the intellectual property for BlueRock. I'll just say that we feel comfortable with the position we're in.

Question from Joon Lee with Truist Securities.

Congrats on the progress. Just following up on the ocular program. Charlie, you mentioned that the vision is stable. It's stable and safety is a good thing, but as I recall, ProQR's program, the antisense program, they were able to see a visual improvement by month 3, 5, recall correctly. How long would you need to wait, do you think, even efficacy? And I have a follow-up.

Yes. We've talked before about seeing efficacy in a small number of months. I mean, I think the important thing to recognize is this patient is life perception only, and it's a low dose. So this is going to be the most difficult place for us to see efficacy in this study. So we are eagerly awaiting a fulsome look at the dataset there.

Okay. And regarding the NK cell strategy, you have an allo and an induced NK programs. How are you planning to sort of divvy up the indication or -- because they look very -- are they synergistic? Or are they more kind of ballistic?

We're making -- as in other areas, we are making differentiated medicines. So we don't expect the 2 products to cannibalize each other. In fact, we expect to learn things from the EDIT-201 or healthy donor program to test some biological hypotheses that will be relevant for subsequent NK products, whether they are healthy donor or iPSC-derived.

Okay. So would you be developing these allo and induced NK cells for the same diseases or different diseases?

We haven't disclosed the indications yet, that will come in due course. Again, we have sensitivity around this from a competitive perspective.

Of course. Sure. And then just do you -- I mean, do you still benefit or get IP from the scientific co-founders that -- of your company? And if so, how do those discoveries at those academic labs get decided whether it goes to you guys or some other company, say?

Yes. We're obviously in contact with the entire world to the extent we can. Our founders are among the folks we talk to. And so I'd just leave it at that, that we're constantly on the lookout for technologies that would make sense to improve our platform.

And our next question comes from Jay Olson with Oppenheimer.

Just a follow-up on the AbbVie deal. I was curious now that you regained full rights to that ocular portfolio, are there any decisions that you would make differently or things that you would change with regards to either the clinical development of 101 or the strategic direction that program is moving in now that you have the freedom to make those decisions independently?

We don't have any intention to change the strategic direction or the clinical development strategy. I would say that I think we will be able to make decisions more quickly because we don't have to make joint decisions and be able to advance the programs more rapidly.

Okay. Great. And then just on 301, as you progress towards an IND, are there any initial thoughts you can share with regards to the clinical trial design in terms of patient numbers or segmentation of patient populations about age or genotypes?

Yes, we wouldn't really want to comment on that at this point. Clearly, getting the IND and getting the patients is I think, a top priority for us. But we don't really want to comment on the details of that past -- past that at this point.

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

Great. So with that, we thank you all for participating in today's call and for your support as we work to bring transformative new medicines to patients. Take care, and be safe.

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude your program, and you may now disconnect.