Orchard Therapeutics PLC (ORTX) 2020 Q2 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Orchard Therapeutics Second Quarter 2020 Earnings Conference Call. (Operator Instructions) At this time, I would like to turn the conference over to Ms. Renee Leck, Director of Investor Relations. Please begin, ma'am.

Thanks, operator. Good morning, everyone, and welcome to Orchard's second quarter 2020 investor call. Our latest corporate slide deck with information supporting today's call can be found on the Investors section of our website, orchardtx.com.

Before we get started, I'd like to remind everyone that statements we make on this call will include forward-looking statements. Actual events and results could differ materially from those expressed or implied by any forward-looking statements as a result of various risk factors and uncertainties, including those set forth in our quarterly Form 10-Q filed with the SEC and any other filings that we make. In addition, any forward-looking statements made on this call 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.

And with that, I'll turn the call over to our CEO, Bobby Gaspar.

Hello, everyone, and welcome. We're happy to join you today to discuss the progress we've made over the last few months executing Orchard's new strategic vision. You'll remember that our vision is comprised of 4 pillars that we feel position orchard for long-term growth and sustainable value creation. These are: First, prioritizing our portfolio investments and placing emphasis on our neurometabolic programs; second, establishing a focused commercial model; third, investing in next-generation manufacturing innovations; and fourth, creating operational efficiencies. Today, our Chief Operating Officer, Frank Thomas, and I will focus on developments within 2 of those pillars, including our momentum and progress in neurometabolic disorders and the advancement of our manufacturing strategy. Finally, we've done a thorough analysis of the potential value of OTL 200, and I'll close with some important insights on how that assessment has informed our thinking around price as we approach a potential approval and launch. Later in the year, you'll also hear more about our work in larger indications, including genetic subsets of frontotemporal dementia, or FTD, and Crohn's disease at an investor event we plan to host in the fourth quarter.

Starting with neurometabolic diseases. We have seen that HSC gene therapy has the potential to dramatically improve the lives of patients, who are often children, by potentially curing them of their disease. We believe this is due to the unique properties of HSCs to naturally migrate into the CNS and deliver therapeutic genes and proteins to the brain, which is why we are placing special emphasis on these diseases in our portfolio. Our pipeline spans multiple indications and developmental stages in this field, including a registrational program that would be the first approved therapy for a devastating condition known as metachromatic leukodystrophy, or MLD, 2 promising proof-of-concept programs in MPS-I and MPS-IIIA, and a preclinical pipeline that includes programs in MPS-IIIB and a genetic subset of FTD, amongst others. Taking our updates for these programs in order, for OTL-200 for MLD, which will now be known as Libmeldy in Europe, we are pleased to report that we have recently responded to the initial list of questions from the European Medicines Agency, known as the Day 120 questions. We are very pleased to have arrived at this important juncture in the path to a potential approval this year and to be working with the EMA to deliver this incredibly important medicine to affected children and their families. We are committed to bringing this therapy to the U.S. as well, and it is our plan to file an IND and seek RMAT designation for OTL-200 by the end of this year.

In MPS-I, our OTL-203 program recently received 2 designations; 1 for orphan drug and 1 for rare pediatric disease from the FDA in recognition of the critical need to develop new treatments for this disease given its severe life-limiting nature. You'll recall from our presentation at ASGCT in May that the first primary outcome measure from our proof-of-concept study was met, with all 8 patients achieving hematological engraftment. Engraftment and biomarker activity have also translated into improved motor skills, stable cognitive scores and normal growth in the first 2 patients who were treated over 12 months ago. Given the promising results we've seen to date, we plan to initiate a registrational trial for this program next year, while the initial trial continues to generate clinical data. In preparation for the registrational phase, we are working internally and with experts in the field to develop the protocol, including the relevant endpoints, to position OTL-203 for clinical and commercial success. We intend to seek input from both the FDA and EMA on this protocol and we'll provide you with more details as we finalize the design in early 2021.

MPS-IIIA represents our third clinical program in this space, and we are pleased to have enrolled 3 patients in a proof-of-concept study for OTL-201. We are continuing to enroll patients and expect to present interim data for this trial next year.

The organization has made considerable progress in the prioritization of our neurometabolic programs, and I will now turn the call over to Frank to discuss recent developments on a second pillar of our new strategic plan in manufacturing.

Thanks, Bobby. Manufacturing is another core pillar where we've executed well over the past 3 months, aligned with our objectives to scale our manufacturing investment to meet our capacity needs over time and focus near-term on investing in new technologies. We recently had news supporting both objectives, which I'll take a moment to recap here. First, we announced a multiyear extension of our collaboration with MolMed, our manufacturing partner, who produces vector and drug product for many of our key programs, including for the potential upcoming launch of Libmeldy. The collaboration now provides capacity and security of supply, which will enable us to transition multiple programs from clinical to commercial scale manufacturing. MolMed has previously obtained good manufacturing practice authorization for the manufacture of Strimvelis, our marketed product for the treatment of ADA-SCID in the EU. Renewing our collaboration with MolMed marks an important step in our evolution as a company while retaining the option to build our own capabilities at a future date.

The focus of our second announcement from this past month was the stable producer cell line, an emerging technology in the space. The license agreements we signed with GSK for their lentiviral stable cell line technology in Wiskott-Aldrich syndrome and transfusion-dependent beta-thalassemia has the potential to significantly improve the way that viral vector is made. Currently, the largest component of our cost of making our gene therapies comes from lentiviral vector production, which uses methods that have been around for some time. The current processes can be inefficient, which is due in part to the fact that they rely on a multi-plasmid system that must be restarted each time a batch of viral vector is produced. The deal we signed with GSK gives us access to a technology that has the ability to stably integrate all the components of a vector into a producer cell in a single step. This alleviates the need to produce or buy plasmid on a regular basis, dramatically reducing the time and cost involved in manufacturing vector. This process enables us to select a clonal producer line that can generate vector at hind titer, increasing both the consistency and efficiency of vector, and ultimately, drug products. A snapshot of the stable cell line technology was presented at ESGCT last year using work from our OTL-300 program, and we believe this work can be leveraged and applied to development plans in OTL-103 for WAS as a post-approval supplement and potentially other future indications. The work of our scientists, along with those at GSK, are making a significant advancement in manufacturing a reality.

Beyond manufacturing, we have spent the past 3 months implementing many of the important operational changes that support the broader strategic plan. With a disciplined approach to investing in high-value programs, we have a strong cash position and a streamlined footprint heading into the second half of 2020. Cash and investments were $229 million as of June 30, 2020, and the cash used to fund operating activities was approximately $50 million in the first quarter, but after our restructuring, we saw the cash burn for operating activities declined to $38 million in the second quarter of this year, which is indicative of what we expect in the next several quarters with some fluctuations up or down depending on certain R&D activities. This gives us runway into 2022, excluding funds available under our credit facility and any other non-dilutive capital. We anticipate being able to achieve numerous milestones within this time frame, including our first potential approval and launch of Libmeldy in the EU and additional regulatory milestones and data releases. You can find the financial results from the second quarter in our press release. But importantly, I believe we've managed to focus our business and investments in a way to create shareholder value without the need for near-term financing.

We're at an important inflection point for the company as we balance commercial activities for Libmeldy with an exciting pipeline of product candidates moving through all phases of development, and we are 100% committed to making the promise of our therapies a reality for the benefit of patients, our community and our stakeholders. I'll now hand it back to Bobby to close with a discussion of that commitment in the context of value and pricing.

Thanks, Frank. I'd now like to spend a few minutes talking about Libmeldy, which is approaching key regulatory milestones in Europe this year.

You've previously heard me describe MLD as a rapidly progressing fatal genetic disorder. But today, I would like to talk about what that really means for the child and family.

MLD is a very cruel disease. In its most severe, yet most common form, a baby begins to develop normally, but then starts to rapidly lose the skills he or she had gained. Affected children lose the ability to walk, talk, and ultimately, to interact with the world around them before they die, usually aged around 5, with palliative care often as their only option. It is difficult to imagine the anguish of those parents and families who have to watch their child pass away in this terrible manner.

In research we undertook, we found that nearly half of MLD caregivers, usually the child's parents, reported feeling overwhelmed. And many said they had experienced moderate to severe symptoms of anxiety or depression. Caregivers also reported a notable economic impact on their household, from lost wages and added expenses each year, and all of this while dealing with the unquantifiable emotional impact of caring 24/7 for a terminally ill child. It's humbling. And in fact, even the physicians and payers whom we have engaged ranked MLD amongst the worst neurodegenerative conditions with regards to disease severity and level of unmet need.

With Libmeldy, if approved, we are looking at the potential to transform the life of a child with MLD in a single administration. Our HSC gene therapy approach is highly differentiated in its ability to offer durable and potentially curative effects. With Libmeldy, the first patient was treated over a decade ago, and we have 8 years of follow-up data on the first 6 treated patients. In total, the Libmeldy dataset encompasses 142 patient years, which positions us to come to market with robust follow-up data on the therapy.

Moreover, if we look across our entire HSC portfolio, we have nearly 20 years of data in our longest-standing program, and overall, our data spans more than 170 patients. In determining the price for Libmeldy, we have taken into account durability as well as other factors contributing to its potential clinical impact. Indeed, we have conducted an extensive health economic assessment, applying robust methodologies widely used by key health technology assessment bodies like the U.K.'s National Institute for Health and Care Excellence, or NICE. Based on our analysis and in looking at the last 20 years of NICE appraisals, we estimate Libmeldy exceeds the number of quality adjusted life years or qualities gained by any other therapy on the market today. On top of that, Libmeldy is designed to be a onetime administration. If approved, we believe Libmeldy offers extraordinary human and economic value. In key markets, upon approval in the EU, we expect to set the price of Libmeldy in the range of EUR 2.5 million to EUR 3 million, which is significantly less than the full value-based price. This anticipated EUR 2.5 million to EUR 3 million range for Libmeldy is less than the average 10-year cumulative cost for many chronic or lifelong rare disease therapies, such as certain enzyme replacement therapies on the market today, which do not offer the potential for full genetic correction or a potentially positive impact on cognitive outcomes. We are also committed to balancing the need for a sustainable path forward for innovation with a need for all stakeholders to share in the potential value of Libmeldy. As such, we are open to flexible payment arrangements, including value-based payment options over 5 years or more, especially given the strength of the data and durability of the clinical effect seen with this HSC gene therapy approach. We have been in regular discussions with payers in Europe about our expected price range, and believe it is in line with their expectations based on numerous factors, most importantly, the magnitude of clinical impact and the severity and rarity of the disease.

On that point, just to put population size into perspective, we currently estimate the global incidence of MLD to be approximately 1/5 the incidence of SMA, another very rare condition. As we work to get Libmeldy across the regulatory finish line in Europe, our commercial team is collaborating with payers to identify pathways for early access. Since MLD is rapidly progressing and degenerative, it is crucial the child can be treated within the therapeutic window. Because of this urgency, we are working with local and national governments and treatment centers in key European markets on newborn screening, diagnostic awareness and access-related issues. Our pricing and reimbursement preparations are on track, and we are engaging with a number of stakeholders to determine the best options for potential early access in countries that provide these avenues.

Let me close by saying what it means to Orchard, for us to be so close to offering a potentially transformative gene therapy for this deadly childhood disease. I have spent over 25 years as a pediatrician and academic, and bringing HSC gene therapy to severe genetic diseases has been my life's work. I have seen firsthand the anguish and helplessness that families feel when their young chart is diagnosed with a deadly, fast-progressing condition. It has taken many, many years, but I believe we and the gene therapy community are on the brink are fundamentally changing the outcome of certain pediatric rare genetic diseases, and with that, opening possibilities for many children, their families and our society.

Operator, please open the line for questions.

(Operator Instructions) Our first question comment comes from the line of Yaron Werber from Cowen.

So a few questions, if you don't mind. Maybe starting with MLD and the 120-day questions for EMA, and also just getting an update on where you are with FDA, can you give us a little bit of a sense, what were some of the questions that EMA were asking that are typical that you need to respond to, and the kind of the overlap with FDA? That's the first question.

Okay. Maybe I'll take that one. Thanks, Yaron. Yes, so it's -- we're very pleased to say that we've been able to respond to the Day 120 questions from the EMA in time. So we had a very active and collaborative dialogue with the EMA on this submission, both actually prior to the submission itself and after the Day 120 questions came through. And the exchange around the Day 120 questions was really in line with our expectations. So they covered clinical and CMC topics, and we've been able to address their responses, and those are now back in. So the -- hopefully, if all goes well, we'll be looking at a CHMP opinion in the fall and hopefully, a full approval before the end of the year.

And to your other question about the FDA and EMA questions, again, they both had questions around clinical and CMC topics, but there was nothing that was specific to the EMA or the FDA. So it wasn't -- they were picking on the same topics in both agencies. So there were different topics that came through.

Okay. Great. And Bobby, one of the things we've been hearing from our consultants is that at FDA, now that everybody essentially is remote, that's slowing things down a little bit, and especially CBER, that's probably contending a little bit more with COVID-19. It's probably adding them to be a little overworked than maybe, I don't want to say distracted, but communication's a little harder and everything is slowing down. Do you have any sense -- and maybe those who've had long-term interactions with FDA might be more further along than other companies that are sort of newer to -- in their interactions with FDA. Any sense from you kind of how has the cadence of the interaction been happening? And how much would opening an IND really help facilitate communication?

I don't know that I can shed too much light on that. I mean, we have had interactions with the FDA earlier this year, both on MLD and on Wiskott-Aldrich syndrome. And those have been as planned. As you know, we're planning to submit an IND and seek for RMAT designation later this year for MLD. And we haven't been given any indication that we should be delayed in any way. But of course, we'll need to see what happens once we submit that IND.

So I'd say, I can't tell you any more than what we have known through our interactions. And so far, it has been as planned.

Okay. Great. And maybe a final question. Any sense how many patients are actually already diagnosed with MLD in Europe through registries?

Okay. And Frank, maybe can I hand that one to you?

Of course. Yes, Yaron, so as we get ready for the launch of Libmeldy in Europe, we've got a commercial team in place. And one of the key activities that they're undertaking is patient identification. And key is here, because of the rapidly progressing nature of the disease, is that we do very much think about the opportunity as an incidence-based opportunity. There certainly are prevalent patients. I think the question is going to be whether they're progressed too far for them to benefit from the therapy. But our focus is going to be on trying to identify these patients early and putting in place the diagnostic, and eventually, newborn screening, to make sure that they do get identified early on and can benefit from Libmeldy. So the team is out, again, very focused on identifying patients that could be eligible for the therapy and also on putting in place the disease awareness and diagnostic initiatives to identify more of these patients.

Our next question or comment comes from the line of Anupam Rama from JPMorgan.

I know we've talked a lot about MLD, MPS-I and MPS-IIIA recently, but I was wondering if we could get an update on the XCGD program and how we should be thinking about that in the context of your broader strategy that you've kind of outlined.

Thanks, Anupam. So yes, on XCGD. So just to remind you, so this program showed proof of concept. We talked about that some time ago. And we saw the best responses for XCGD in the older patients. So these were late adolescents and young adults. Now it also does affect pediatric patients as well. And in some of those pediatric patients, we did not see robust engraftment of the gene-modified cells. And it's unclear as to why that should actually be the case.

So we have -- in order to move to a pivotal study, we want to be able to treat the entire population rather than just one section of the population. And so what we're doing is we are treating more pediatric patients with an amended conditioning protocol and so that we can treat as they see successful engraftment in those patients as well, and then move to a pivotal study as, say, that treats the entire population. So that's the next piece of work on the pediatric front.

The other thing is that this is a large indication, and we want to have the right manufacturing in place for such a large indication. So there's work ongoing in terms of how we make vector and also about how we transduce the patient cells. And for example, using transduction enhancers to facilitate effective, more efficient transduction. So there's a piece on amending the protocol to treat pediatric patients as well and also on the manufacturing. Once we have those in place, then we'll be able to move to the pivotal study. So that's the work that's ongoing.

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

This is Peter for Gena. I guess one question on MLD. relative to -- so could you just remind us whether you still expect to submit IND in second half? And relative to IND dismission, when do you think you might be able to give clarity on whether the current data would be sufficient to move to pivotal study versus maybe needing to do another study?

And secondly, on the GMFC-MLD, the secondary endpoint that you collected, do you have that data both for all the active integrated data population as well as natural history?

Okay. I'll take that. So thank you very much for that question. And as you rightly said, our intention is to file an IND and seek RMAT designation by the end of the year. And by doing that, we hope we will be able to have an interaction with the FDA, so dialogue with the FDA in early 2021. And once we've had that interaction with them, then we will have greater clarity on the BLA submission time line. So that's when we'll be able to give you more information about that time line, when we've had that opportunity to discuss our full data package with them.

Our intention is to analyze the patients we have already treated, and analyze them in the way that the FDA has guided us to. And so that is what we would -- that is the package that we will put forward in the IND. But of course, it will only have clarity about whether that will be sufficient once we've had our interactions with the FDA about our BLA submission.

And to your final point, as far as the GMFC scores are concerned, we have been able to analyze all our patients that we've treated so far and the natural history of patients with that score.

Our next question or comment comes from the line of David Nierengarten from Bush Securities.

Just one on the regulatory process here and the anticipated approval in Europe. Is there any difference between your anticipated indication? So in Europe, are you anticipating full approval through all ages from infantile to early juvenile? And similarly, with the IND in the United States cover all (inaudible)? Or would it require to be split between early juvenile and later onset? Or how is that progressing?

Thanks, David. And so as far as we have submitted the Day 120 questions, a number of questions came through from the EMA at Day 120, and that did cover clinical CMC topics included in discussions around the label as well, and we've responded to all of that. So I think we will be able to give greater clarity as the CHMP opinion comes through on the label, and so we can give you more detail at that time.

And similarly, we will be -- and certainly, we will be interacting with the FDA and what patients we include the label will be the subject of those discussions as well. And again, I think it's only when we've had that discussion with the FDA that we can give you more clarity around that.

Just to kind of just highlight, that we have treated infantile patients and we have treated juvenile patients in the early juvenile form of the disease. So those are all patients that have been treated in our clinical development.

And maybe just a quick follow-up. You've discussed infantile screening, of course and such to identified patients. I mean, is it fair -- do you assume that your initial focus will be more on the, as Frank put it, to the incident population? So the early infantile population, rather than the juvenile population?

I think there's 2 strands to this, really. One is -- and it's all about early diagnosis. Newborn screening, clearly, is very important in being able to identify all patients who have a mutation in that MLD gene, the ASA gene. And so in fact, we've been working very hard on that. So we actually anticipate a pilot in the U.S. starting before the end of the year, and also a pilot in Europe and Italy also starting before the end of the year. And so we're putting a lot of effort into those pilots and other pilots as well so that we get wider implementation of newborn screening.

But before newborn screening starts, it is all about trying to get early diagnosis. And so we do have disease awareness activities in place, better diagnostic testing so that if there is a suspicion of the disease, that you get a diagnosis, a genetic diagnosis as quickly as possible. So all of those efforts are ongoing. And that will have importance both for the incident population, but also for the prevalent population that may exist as well. So that physicians are made aware of the fact that this individual, who is maybe losing motor skills, could have MLD, and they'll do the right tests to be able to diagnose that child early. So these kind of activities will help both with the incident and the prevalent population.

(Operator Instructions) Our next question comment comes from the line of Graig Suvannavejh from Goldman Sachs.

This is Anna for Graig Suvannavejh. We wanted to just get a little bit more clarity on when we might see the next data on the FTD and CD programs? And also, if you can tell us a little bit more about the opportunity you see in FTD.

Thank you very much. And thank you for asking that. And so as you know, as part of our new strategic plan, we want to invest and place interest on larger indications because we strongly believe that HSC gene therapy has the opportunity to address some of these larger indications. And we've picked out a genetic subset of FTD, frontotemporal dementia, and also Crohn's disease as well. And again, the reason for that is because what we have seen in ultra-rare conditions gives us biological insights and understanding, and tells us that mechanism of HSC gene therapy activity can address these larger indications. So for example, in FTD, it's about the migration of HSCs across the blood-brain barrier into the CNS through this natural mechanism, delivering genes and therapeutic proteins to the CNS. And we've seen how that has an effect in MLD, and we've been able to pick out a genetic subset of FTD where it may have a similar benefit. And so we will talk more about that genetic subset. We'll talk about the mechanism of action, the gene involved, at an Investor Day later in the year. And we'll give you more detail about the timing of that day and the content once all of that is confirmed.

Similarly, for Crohn's disease, we've seen how HSC gene therapy can correct the colitis that is seen in chronic granulomatous disease. So children with CGD have terrible colitis that looks histologically like Crohn's disease. And when they get HSC gene therapy, that colitis resolves. And it's because gene-modified HSCs can migrate into the gut tissue and they can respond to bacterial invasion and prevent the abnormal inflammatory response that is seen in CGD. So in a subset of Crohn's disease, again, there is a macrophage defect. And again, by using gene-modified HSCs, we can correct those tissue-resident macrophages and prevent the abnormal inflammatory response and prevent the colitis from occurring.

So those are the kind of broad mechanisms why we believe HSC gene therapy can address these larger indications in FTD and Crohn's disease, and we'll talk more about the specific genes, the mechanism, the patient population and the opportunity at our Investor Day later this year.

But if I can just ask one quick follow-up. When you say genetic forms of FTD and CD, can we make the assumption that it covers more than one particular genetic population? Or is it really focused on just one particular genetic defect?

Thank you. At the moment, it is 1 specific genetic subset of FTD and 1 specific genetic subset of Crohn's disease.

I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to management for any closing remarks.

Thank you very much. And I'd like to thank you all for tuning in. And I hope this has been an opportunity for us to be able to give you that update on our progress in neurometabolic disorders and also the value of Libmeldy as we prepare for a potential approval by the end of this year and a launch in 2021. Thank you very much.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day. Stay safe.