Orchard Therapeutics PLC (ORTX) 2019 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Orchard Therapeutics First Quarter 2019 Earnings Call. (Operator Instructions) And as a reminder, today's conference call is being recorded.

I'd now like to turn the conference over to Renee Leck, Director of Investor Relations. Please go ahead.

Thanks, operator. Good morning, everyone, and welcome to Orchard's First Quarter 2019 Investor Update. You can access slides from today's call by going to the Investors section of our website, orchard-tx.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 the most recent Form 20-F filed with the SEC and any other filings that we may 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.

With that, I'll turn the call over to President and CEO, Mark Rothera.

Thanks, Renee. Welcome, everyone, and I hope many of you enjoyed a long holiday weekend. On today's call, we plan to update you on the progress we have made over the last quarter and discuss this morning's exciting announcements related to the expansion of our neurometabolic disease portfolio with a new clinical-stage program.

Before we dive into the recent news, I'll spend just a few minutes reminding you about Orchard's vision and our scientific platform. We are a pure-play gene therapy company with a focused approach and singular vision, transforming the lives of patients with life-threatening diseases around the world. Our expertise lies in developing ex vivo autologous hematopoietic stem cell, or HSC, gene therapies with a focus today on rare genetic diseases, a platform technology that has been clinically validated. Recall that we now have clinical proof-of-concept in 5 programs in 5 different disease areas across 3 different physiological systems.

The majority of our remarks today will focus on our neurometabolic franchise because of this morning's news, but we also have program in primary immune deficiencies and hemoglobinopathies.

In the primary immune deficiencies area, we are preparing regulatory filings in 2 diseases, ADA-SCID with an FDA filing anticipated in 2020 and Wiskott-Aldrich syndrome, or WAS, with FDA and EMA filings anticipated in 2021. In addition, we declared clinical proof-of-concept in X-CGD at ASH in December last year and are making good progress in designing the registration trial and endpoints that we would like to discuss with regulators in the coming quarters.

Our program in transfusion-dependent beta-thalassemia also recently achieved clinical proof-of-concept, and as next steps, we intend to design a pivotal trial, conduct further CMC process development work and engage regulators. As a reminder, this program has PRIME designation in Europe.

With over 150 patients treated across our portfolio and follow-up showing durability of response going out to 8 years or more, we believe we have one of the most robust and comprehensive clinical data sets in the field of gene therapy. In addition, the Orchard team has a deep understanding of developing and commercializing medicines to treat rare diseases that will be invaluable as we continue to expand our global footprint and prepare for multiple potential product launches over the next 2 to 3 years.

Turning to this morning's news. I'm thrilled by the progress and expansion of our neurometabolic diseases franchise where we have 3 unique news items to talk about. First, we secured an exclusive worldwide license for 6 clinical-stage gene therapy programs in MPS-I to add to our portfolio; second, we brought forward the regulatory time line for our MLD program in Europe; and finally, we wanted to draw your attention to some encouraging news out of the University of Manchester where the first patient with Sanfilippo syndrome type A, or MPS-IIIA, was treated under a specials license. Early signs of the treatment are positive, and Bobby will share more details shortly.

Now let's focus on our MPS-I deal announcement. We have entered into a new collaboration with a Fondazione Telethon and Ospedale San Raffaele in Milan, Italy, that includes a program with exciting clinical data using ex vivo HSC gene therapy technology. This collaboration gives us another clinical-stage asset in neurometabolic diseases and an opportunity to help patients with a highly debilitating condition which impacts cognitive, cardiovascular and skeletal function amongst other serious complications and for which the current standard of care is inadequate. Bobby will say more about this in his remarks.

I want to congratulate the team within Orchard that drove this transaction to completion and look forward to our expanded relationship with our partners in Milan as we bring their science through development and onto the market to treat MPS-I patients.

We've built Orchard systematically to be a company driven by innovation with an intense focus on the patient. That helped us secure the GSK gene therapy portfolio last year and continues to make us a partner of choice for companies and academic centers driven by a common purpose of delivering these potentially transformative medicines to the patients. We will continue to be opportunistic to seek out and secure exciting programs that leverage our platform and capabilities.

Next is our most advanced program in the neurometabolic disease franchise, metachromatic leukodystrophy, or MLD, a rapidly progressing condition characterized by a devastating loss of motor and cognitive function, often at very young age. OTL-200 has shown impressive clinical results in this indication and is approaching its first regulatory filing in Europe. As we announced this morning, we conducted a positive pre-MAA meeting with the European Medicines Agency in early May. We are now bringing forward our submission to the first half of 2020, narrowing our previous guidance. Our goal is to get this therapy to patients as rapidly as possible not only in Europe but in the U.S. and markets around the world.

Further cementing our leadership in the neurometabolic diseases arena, we have declared that a proof-of-concept clinical trial in the third condition MPS-IIIA will be starting this year. Our partners at the University of Manchester, from whom we licensed our MPS-IIIA program, have recently shared some exciting news on the first patient to be treated with ex vivo HSC gene therapy. This patient was treated under a specials license, granted by the U.K. government and outside of our clinical protocol, and we are very encouraged by the results to date. We look forward to the initiation of the trial later this year after a CTA filing.

Beyond the exciting news in neurometabolic diseases, we've also made significant progress executing on our 2019 plan, including the achievement of several important milestones thus far this year. In addition to the transfusion-dependent beta-thalassemia proof-of-concept data I mentioned previously, we have provided multiple data releases for our lead programs. Most recently, we presented the registration data set in MLD at the European Blood and Marrow Transplant meeting in March.

We're also pleased to have dosed the first patient in a clinical trial for WAS, using the cryopreserved formulation of OTL-103. This is in line with our strategy to launch with a cryopreserved formulation for all of our products. Recall, the registrational trials for our LEAD-3 programs were conducted using a fresh formulation.

For the rest of our time together, we will use the following agenda: next up, Bobby Gaspar, our Chief Scientific Officer, will discuss the progress in our neurometabolic franchise in more detail. Frank Thomas, our Chief Financial Officer and Chief Business Officer, will then review our first quarter financial results and provide more detail about our new credit facility, which we also announced today, and how that impacts our cash runway. I'll return to close with some commentary on our current view of the market opportunity addressed by our portfolio and review our remaining 2019 milestones. Bobby?

Thank you, Mark, and hello, everyone. I'd first like to spend some time reminding you of the technology and the approach we are using across our entire gene therapy portfolio and then give you some insights into the 3 neurometabolic programs where we have some very encouraging news to share today.

First, let's take a step back. Our approach is to use ex vivo autologous hematopoietic stem cells, or HSCs, to deliver gene-modified cells to patients with very severe rare diseases. This approach is very powerful because HSCs are self-renewing. This means once engrafted in the bone marrow, the HSCs continue to self-renew and give rise to gene-modified progeny, which is why we see the durability effect across each of our rare diseases indications. The other important characteristic of HSCs is that they have the ability to become multiple different cell lineages, including cells of the immune system, red blood cells, platelets and macrophages, which gives us the opportunity to correct multiple cell types and, therefore, correct multiple different diseases. Most importantly, for what we are going to talk about today, a subset of HSCs can cross the blood-brain barrier through a natural process to become microglia in the brain. This is very important for CNS-related conditions because by correcting HSCs, we can correct microglia and, therefore, deliver genes and enzymes in the brain that allow for the correction of severe neurodegenerative diseases. This is an extremely exciting prospect that has already been demonstrated in preclinical models.

Now let me talk about MLD where we have demonstrated the application of our HSC platform in the clinical setting. As we announced this morning, earlier this month, we had a positive pre-MAA meeting with the EMA for MLD. We are now bringing forward our targeted submission to the first half of 2020. The acceleration of the MAA submission time line for MLD is an especially exciting development for this deadly disease given that there are no effective treatment options available for patients.

Enzyme replacement therapy is not an option due to the inability of ERT to cross the blood-brain barrier and allogeneic transplantation is associated with significant limitations in a severe neurodegenerative condition such as this.

We are committed to commercializing our therapies globally for the benefit of our patients. We plan on leveraging the MAA into a biological license application with the FDA. We are currently undertaking development activities to bridge from the EU to U.S. regulatory requirements in anticipation of this filing. Based on our current expectations, our plan is to file the BLA approximately a year after the MAA submission.

Let me briefly remind you about the data in this program. We presented strong clinical data at the European Society for Blood and Marrow Transplantation meeting in March from 20 early onset MLD patients from the registrational trial that have all reached the study's primary endpoint. This data demonstrates significant correction of both the motor function and cognitive function in comparison with patients in the natural history cohort. Also, insertion site analysis presented at the American Society of Gene & Cell Therapy supported the safety of using HSC gene therapy in this condition with no evidence of clonal dominance.

In anticipation of our upcoming filings, we're well with the process of transitioning this program from a fresh cell formulation to the cryopreserved formulation that we plan to use in the commercial setting. Indeed, 4 patients have already been dosed in our ongoing cryopreserved formulation trial, and we plan to present engraftment data by the end of this year. The potentially transformative effect that we've seen in MLD is one reason we feel this HSC gene therapy approach can be applied to other neurometabolic diseases. That is why we are extremely excited to share our news about MPS-I, the only ex vivo autologous HSC gene therapy program currently in clinical development.

We previously had an option to license this program as part of our April 2018 transaction with GSK. However, given the exciting data emerging in patients, which was recently showcased at last month's ASGCT meeting, we've made the strategic decision to fully license the clinical-stage program as part of an expanded collaboration with Fondazione Telethon and Ospedale San Raffaele, the same partners for our programs in MLD, WAS and transfusion-dependent beta-thalassemia.

Now let me talk a little bit about MPS-I. This is a condition which is caused by mutations in the IDUA gene, an enzyme that breaks down lysosomal storage products. The absence of the enzyme means that there is a buildup of these storage compounds in multiple different systems of the body. This is a multi-systematic disease that affects the skeleton, the joints, the heart, and importantly, in its most severe form, known as Hurler syndrome, could affect the brain and cause a significant neurodegeneration. The underlying disease phenotype requires effective correction of multi-organ systems, including the central nervous system. Current treatment strategies, including enzyme replacement therapy and allogeneic transplantation, have multiple limitations. There is limited efficacy with ERT due to its inability to cross the blood-brain barrier and correct the underlying neurodegenerative phenotype, which is one of the most significant characteristics of the disease. Allogeneic transplantation also has limitations and works best when patients are treated at a young age and when IDUA enzyme activity is restored to normal levels. Transplantation also comes with risks of morbidity and mortality most commonly related to alloreactivity.

Our approach, similar to that, which has been used so successfully in MLD, is to overexpress the IDUA gene in autologous HSCs and then deliver those gene-modified cells intravenously to patients with this severe disease. This approach allows gene-modified cells to produce high levels of the IDUA enzyme to correct the peripheral problems. The gene-corrected HSCs also cross the blood-brain barrier, become microglia and secrete enzyme in the brain that leads to long-term correction of the neurological defects. This approach has produced encouraging preliminary clinical data in MPS-I patients who have been treated with autologous gene-modified cells.

As our partners at the San Raffaele Telethon Institute for Gene Therapy presented at ASGCT just a few weeks ago, I will summarize. A total of 4 patients, all under the age of 3 have been treated to date with gene therapy. These patients all had the severe Hurler form of the disease with advanced features such as corneal clouding, carpal tunnel syndrome, umbilical hernia, kyphosis of the thoracolumbar spine and knee contractures. The selected conditioning regime was well tolerated in all patient. Engraftment in the bone marrow and periphery by assessment of the vector copy number was seen in the first 2 patients with sufficient follow-up to assess these parameters.

In the patient with the longest follow-up of 9 months, we observed supernormal IDUA enzyme expression in the cerebrospinal fluid, confirming the overexpression we are looking to achieve with this approach. Rapid metabolic correction of GAG levels in the CNS and urine suggest peripheral and central correction at this early time point. Clinically, the patient is more interactive with improved motor skills, regression of corneal clouding and upper airway congestion and has resumed growth, suggesting clinical improvement. We look forward to updating you on this proof-of-concept trial. We expect to complete enrollment of up to 8 patients in the first half of 2020. 1-year follow-up data will be available in 2021.

The last update I'd like to give you in the neurometabolic space is in Sanfilippo A and B, also known as MPS-IIIA and MPS-IIIB. These are preclinical programs licensed from the University of Manchester. MPS-IIIA and MPS IIIB are lysosomal storage disorders where, similar to MPS-I, an enzymatic defect, leads to buildup of lysosomal storage compounds and results in severe cognitive defects.

In MPS-IIIA, which is caused by mutations in the SGSH gene, disease onset leads to severe motor and cognitive impairment. Patients show deteriorating function and are often confined to wheelchairs with mortality in the late teens and early 20s. This is another disease like MLD with no effective treatment options. We believe our ex vivo HSC gene therapy approach, which has produced compelling clinical results in MLD and now early data in MPS-I, will have significant clinical benefit in this disease. We are on track to file a clinical trial application and expect the trial to open for enrollment at the University of Manchester later this year.

In the meantime, as Mark mentioned, the University of Manchester recently treated its first MPS-IIIA patient under physician-initiated specials license. The U.K. government grants such licenses for the use of an unlicensed pharmaceutical product in situations of high unmet need when there is no other treatment option available. Data at 3 months in this patient suggests the successful engraftment of gene-modified HSCs and overexpression of SGSH enzyme. This is an exciting development, especially as we embark upon a trial of MPS-IIIA with the same research team later this year, utilizing the same technology and procedures that were used to treat this patient. We wish the family and the investigators well with the treatment of this patient.

We have also licensed an MPS-IIIB program from the University of Manchester, which uses the same technology. This program has also shown preclinical proof-of-concept, and this data was recently presented at ASGCT.

In closing and to summarize, we're excited to add MPS-I to our portfolio of now 6 clinical-stage programs to advance our timing for the MLD European regulatory filing and to move the MPS-IIIA program into the clinic this year on the heels of the encouraging data generated by the University of Manchester.

Let me now hand over to Frank to make his remarks.

Thanks, Bobby. 2019 has already been a very busy year for Orchard and today was no exception. Financially, we also had some new news to report with the addition of new capital to strengthen our cash position. We remain well capitalized to execute our business plan. As we build out our portfolio, our manufacturing capabilities and the commercial footprint, we have continued to find ways to finance the growth with the most attractive cost of capital available.

Today, we announced that we entered into a 5-year senior credit facility with MidCap Financial, which builds on an already strong balance sheet and investor base. We ended Q1 with a cash position of approximately $300 million, and this new capital available under the credit facility plus our current cash balance provides runway extension now into 2021. The facility allows us to borrow up to $75 million with $25 million funded at closing and $50 million accessible in 2 tranches upon the achievement of certain clinical and regulatory milestones in the next 24 months. There's an interest-only period of up to 36 months and the coupon rate is LIBOR plus 6%. So we believe we've secured capital at an attractive cost to the company, and the interest-only period allows us to utilize this capital to achieve additional milestones with minimal impact on our near-term burn rate.

You might recall our commitment to build our manufacturing facility in Fremont, California. This credit facility will support some of that investment in construction and equipment with a nonequity-based source of capital.

As with the rest of our business plan, we are taking a strategic approach to manufacturing. This includes leveraging our existing CMO relationships for our first 3 potential product launches while preparing to bring the Fremont manufacturing site online for the other programs in our pipeline, such as X-CGD, transfusion-dependent beta-thalassemia and the multiple preclinical programs we are advancing. This manufacturing strategy enables us to own and manage our capacity needs while establishing redundancies in the commercial supply chain for our initial launches.

As part of this strategy, we are also undertaking work to improve the efficiency of both drug product and vector production by utilizing new technologies in the gene therapy space with transduction enhancers, stable cell lines and automated cell processing. These innovations will reduce the cost of goods for our HSC gene therapy products over the long term and deliver optimal therapies to patients as quickly and efficiently as possible.

Mark already touched on our focus to find new and complementary programs as part of our business development strategy, and we are committed to doing this in a capital-efficient way. The MPS-I deal structure with a small upfront payment followed by success-based future milestone payments and royalties on net sales enables us to balance risk while maximizing the potential of the program. And because we've grown our capabilities around the world, we are continuing to see opportunities for new programs. We remain focused on bringing in programs where we have a high probability to succeed and where appropriate value can be delivered to our shareholders. The MPS-I program and deal structure represents a good example of the strategy.

You can find the full financial results for the first quarter in this morning's press release, which I will briefly highlight here. R&D expenses were $17.5 million for the first quarter of 2019 compared to $9.2 million in the same period in 2018. The increase was primarily driven by costs associated with clinical-stage programs acquired from GSK in April 2018.

SG&A expenses were $10.8 million for the first quarter of 2019 compared to $4.5 million in the same period in 2018. This increase was primarily due to personnel costs to support public company operations as well as cost to market Strimvelis and prepare for the potential commercialization of 3 late-stage development programs.

We used about $40 million of cash in the first quarter of 2019, which included a significant pay down of 2018 accrued expenses some related to deferred payments on the GSK transaction for inventory and transition services.

And with that, I'll now turn the call back over to Mark.

Thanks, Frank. I want to close by spending a few minutes discussing 3 areas. The market opportunity for our clinical-stage programs, patient identification efforts and market access preparations.

First, let's cover the market opportunity for our primary immune deficiencies and neurometabolic diseases clinical-stage programs. Based on ongoing work by our commercial team and with the addition of the MPS-I program, we now estimate that the market opportunity for the 6 programs in these 2 franchises is over $3 billion per year. This is based only on the incident populations and only covers countries that reimburse orphan drugs. This does not take into account the various factors that will ultimately define the number of addressable patients for each indications. I'll speak to efforts underway for 2 of these factors, patient identification and market access, in a moment. Prevalent populations also exist for each of these indications, and our estimates now include ADA-SCID, MLD, MPS-I and MPS-IIIA. These prevalent populations along with X-CGD and WAS represent additional revenue potential.

Our clinical program in transfusion-dependent beta-thalassemia recently achieved proof-of-concept, and we estimate that there are 5,000 incidents and approximately 150,000 prevalent patients, respectively, in countries that reimburse orphan drugs. Given the size of the patient population, we see potential for significant revenue generation in this indication for our program.

As our lead programs in ADA-SCID and MLD approach their first regulatory filings, we have a few key initiatives in mind as we prepare the ground for multiple upcoming launches. The first involves patient identification. We are deploying a 2-pronged effort focused on education around early symptoms and also newborn screening.

For ADA-SCID, our focus is on educating the patient and physician community around symptomatology that is well documented in the literature. ADA-SCID is also listed on the Recommended Uniform Screening Panel in the U.S., known as RUSP. Newborn screening has been adopted in all 50 U.S. states and has been implemented or is in the pilot stage in over 10 other countries.

For MLD, much of this work is underway, as we look to define early signs of the disease and then make these more widely known through collaboration with physicians and patient organizations. This could shorten the time to diagnosis. A well-characterized assay and pilot studies for newborn screening are also in development.

Now let me spend a few minutes sharing our views about market access. These are extremely valuable therapies that have the potential to transform patients' lives with a single administration. The durability of outcomes demonstrated to date reinforces this notion. Our goal is to get these therapies to as many appropriate patients as possible as fast as possible. Right now, scientific innovation is evolving faster than the structures in place to pay for these once-and-done therapies. Our near-term focus is on creatively working with a current system to offer a flexible range of payment options that meet the needs and preferences of our various payer partners. These options include, but will not be limited to, at-risk arrangements, which we're comfortable with given the sustained outcomes we're seeing.

At the same time, we're also collaborating more broadly with payers, policymakers, advocates and think tanks to evolve the current payment systems to better reflect the different paradigm created by these once-and-done therapies. For instance, we're very active in the MIT NEWDIGS Financing of Cures in the U.S. initiative where we partner with stakeholders across the continuum of health care to identify, test and implement some very novel approaches to paying for these therapies.

Before we open the line for Q&A, I'd like to remind you of the important list of milestones we remain on track to achieve by the end of 2019. Firstly, present data from the cryopreserved product formulation studies for OTL-200 in MLD and OTL-101 for ADA-SCID. Secondly, published 3-year follow-up data in 8 patients from the registrational trial for OTL-103 for WAS; and finally, design and engage regulators on the registrational trial for OTL-102 for patients with X-CGD. These catalysts all lead to regulatory filings for 3 potential new products in 2020 and 2021.

I'll now open the call for your questions. Operator?

(Operator Instructions) And our first question comes from Anupam Rama from JPMorgan.

For OTL-200 in MLD, what was it in the EMA discussion that allowed the time lines to be moved up to the first half of '20? And can you also remind us of the gating factors that need to be completed between EMEA (sic) [EMA] and FDA filings?

And then a second question. For the ongoing Phase I/II program in MPS-I, I think the ASGCT slide suggested that you'd enroll patients 4 through 6, so that kind of leaves 2 patients and -- to enroll, and the slide suggested that there have been several patients that have been identified. So why the guidance for the first half of '20 -- why couldn't you complete the enrollment sooner, potentially, given all the progress that's been made?

Yes. Anupam, thank you very much for the question. So first, starting with MLD, as we said, we had a pre-MAA meeting in Europe. And really, these meetings are aimed at providing applicants with information that's going -- that will assist them in finalizing an upcoming marketing authorization application, and they typically, these kind of meetings address product-specific legal, regulatory and scientific issues in order to facilitate subsequent validation and assessment of the application. And essentially, we didn't see any showstoppers in this, which means that today, our view is that we're going to bring forward the guidance from 2020 to the first half of 2020. We view that as a positive interaction. We know what we need to get done, and we're confident about filing in the first half of 2020.

And then with regard to the U.S., really, what we're focusing on now is sort of undertaking development activities to bridge from an EU filing to a U.S. regulatory filing and anticipating some of those elements that are going to be required. In particular, as you know, we are focusing on cryo formulation engraftment data and demonstrating that cryo cells or cryo formulation performs in the same way as fresh formulation, and we're also undertaking CMC work. So we're going to use the learnings from our conversations with the FDA already on the ADA-SCID program to inform what we think we need to do, and we expect over the next 12 months to have multiple touch points with the FDA as we refine that filing strategy. So I think that answers your first question.

Now with regard to the second question, you're quite right that their presentation at ASGCT did allude to additional patients coming through, but what we felt today was that we would focus on the data that they presented on the first 4 patients, which really start to inform all of us on the potential of this therapy to really address the issues that MPS-I patients, particularly Hurler syndrome patients face today and the inadequacies of current treatments that they have available.

And our next question come from Ritu Baral from Cowen.

I did want to dig into the data on Slide 18, the ASGCT MPS-I data a little more. Can you talk a little bit to maybe the variability seen in the 4 patients on the VCN and as well on the enzyme activity in this data set so far?

Yes. I'll say maybe a few words to start with, Ritu, thanks for the question, and then hand over to Bobby. I think the important thing to sort of start off is just to remind everybody that current standard of care is not really addressing the needs of these MPS-I patients, particularly those with the Hurler syndrome where they're suffering cognitive, cardiovascular and skeletal function issues. And the reason we're excited about this program is that it is already well advanced in the clinical proof-of-concept study with the 4 patients we alluded to providing preliminary data, which we think is encouraging. And so I think you're alluding then to data relating to 1 patient in particular that is the longest follow-up patient so far with 9 months of follow-up. And maybe, Bobby, I could ask you to just speak to this data on Slide 18.

Yes. I think -- so well, we're very encouraged by the data that we've got so far. So as you know, 4 patients have been dosed. We've got 2 patients where we can look at the relatively midterm reconstitution. So these patients have engrafted. There's been good hematological reconstitution after the conditioning process. We're seeing vector copy numbers in the periphery. We're also seeing supernormal expression of IDUA in the periphery in both of those patients and also reduction in GAG levels in both of those patients. And also, in the patients, in the 1 patient that is now 9 months post gene therapy and who has had evaluation in the CSF, we start -- we're now seeing increased IDUA expression in the CSF to supraphysiological levels and also significant reduction in CSF GAGs as well. So we're seeing in both of these patients peripheral expression of IDUA enzyme over and above normal levels and reduction in GAG levels, so that should correct the peripheral -- long-term, will correct the peripheral aspects of the disease. And in one patient, obviously, at -- with a longer follow-up, an increase in enzymatic expression of the CSF as well, so -- which is encouraging as far as CS -- CNS correction is concerned.

And because this supraphysiological expression levels is what we saw at MLD as well.

Yes. So yes, and I think there's a lot of data to demonstrate for MPS-I that, that overexpression is what is necessary to correct the underlying disease. So certainly, the murine models of this disease show -- state that -- demonstrate that overexpression is required to correct all the different aspects of the condition. And when you look at transplantation -- allogeneic transplantation, the best outcome -- where, of course, you can't get overexpression, but the best outcomes have been in patients who achieve near-normal levels of IDUA expression in the periphery after an allogeneic transplant. So all of this talks to the fact that you get the best results when you optimally express the IDUA enzymes. So again, this is early data in this disease, but it's clinical. There's follow-up in 9 months in one patient, and we're seeing that encouraging IDUA activity.

So on Slide 18, the blood spot, the green lines in the third column, the blood spot data, those green lines are individual patient lines?

No. No, that's just in that one patient at multiple different time points. So what you're saying is the drug product in the light shaded, which says DP, and then bone marrow, which has been accessed at 1 month, 3 months and 6 months post-gene therapy. And you're looking at the vector copy number in the bone marrow at those different time points, and they all look very consistent. So it's a VCN of between 2 and 2.5 in all of those. So actually, it's very consistent data.

Got it. And then the -- what are the clinical endpoints being measured in this study, especially as it relates to what Mark mentioned, the neurocognitive function, the skeletal muscle -- the skeletal abnormalities? Are these patients of an age where you could actually move the needle on those?

So this is an early proof-of-concept study, which isn't designed to look at neurocognitive endpoints. So it's mainly looking -- and the primary endpoints in this study are to look at safety and also to look at IDUA activity in the dried blood spots. There are some secondary endpoints, which will also look at other parameters, but it's not primarily designed to look at neurocognitive function. This is something that we would have to look at in a follow-up registration study, which is what we are planning.

Got it. And when do you think you might present additional follow-up data from these early patients and then the additional patients from MPS-I?

I think that it's a little early to guide you on that, but I think given that we have in the past guided in advance of sharing data or at medical meetings through abstracts or presentations, we will do the same in this program as well.

Could we expect an update before end of 2019? Or might it be a 2020 thing?

I think that's something that we'll have to discuss. Of course, we're announcing the license of this program today, and we'll see the follow-up of these patients, see how more patients are being dosed. And once we know when future presentations are going to be made at conferences, then we'll, obviously, inform of you that.

And our next question comes from David Nierengarten from Wedbush Securities.

I had a couple also on MPS-I, just to double check on the study design with and without previous exposure to ERT. Are these patients all not taking ERT anymore? I just wanted to double check on that. And then on the -- there's a peer company out there, of course, with a MPS-I program in the preclinical stage, are there any comparisons or differences between the programs at a preclinical level that increases your confidence in your programs or important differences to keep in mind as your program advances?

Yes. I'll start off with the second question, then hand over to Bobby. I think the way we've approached this, again, is this is a highly debilitating condition and current standard of care is inadequate, particularly when you look at the most severe form, Hurler syndrome. And this fits extremely well with our portfolio because we're already in a neurometabolic diseases franchise, we have a lot of expertise in this area, and we also have a strong working relationship with SR-Tiget. We work with them, as you know, on the WAS, on the MLD and beta-thalassemia programs. And so it's easy to slot this in and work with them on this program. But I suppose the most important point is we are attracted by the fact that this is a clinical-stage program which is well down the track of engaging and enrolling patients into a proof-of-concept study. And so we think that this is an advanced program that has already completed preclinical and is well down that first phase of clinical with encouraging data. So that was the primary reason we felt was important to license this in, and it complements our current portfolio.

So with that, I'll maybe hand over to Bobby to address your second question.

Yes. So David, yes, there are -- so in this study, it is open to patients who have both been treated with ERT and patients who have not been treated with ERT. So there is a mixture of that in this study so far. So there are some patients who have not been exposed to ERT previously, and therefore, obviously, don't have any antibody production to ERT. And there are also patients who have previously been on ERT and who have developed some anti-IDUA antibody. So it is a mix as far as those are concerned. The patients all stop ERT prior to their gene therapy procedure. The conditioning regime is also adjusted to try and induce tolerance to patients who may have developed anti-IDUA antibodies. I hope that answers your question.

That does. That's exactly what I was getting at.

And our next question comes from Graig Suvannavejh from Goldman Sachs.

Congrats on all the progress. I just have two questions, if I could. My first, just could you remind us given the exciting data you've shared on your beta-thalassemia program and given where the competitive landscape is, where you see the opportunity for that program?

And then my second question, and I appreciate the comments that you added around market access. Clearly, we had the Novartis Zolgensma product just approved last week and they've announced their pricing strategy. I was just wondering if you could comment on how -- what you're seeing with Novartis' approach how that impacts or shapes how you're thinking and just your overall thoughts on how they've decided to go ahead with pricing?

Okay. Great. Thank you, Graig. And so I'll begin with the beta-thal question. Yes, I'd remind you that if you look globally, the incidents of beta-thalassemia is about 25,000 patients per year. The prevalence is near to 300,000. So this is a very large indication for a highly personalized medicine to be made available. So our primary hypothesis is that there is room for a second gene therapy entrant like ours, and we have seen encouraging data in the proof-of-concept study. And that study really allows us to speak to, I think, a number of elements of differentiation as well. Not just the study itself, the patient population, but the vector, the conditioning. And maybe, Bobby, you could speak to those elements and how to position ourselves.

Yes. Just to remind you about that, so I think one of the things is the population of patients that have been treated so far. So in terms of the severity of red blood cell transfusions, which also correlates to the underlying genotype, this is a severe patient population with high levels of red blood cell transfusions per year. And also, we've treated pediatric patients as well, so patients younger than 12 years of age who have become transfusion-independent after the one-off administration. So there are some differences in the population that have been treated in comparison to other programs.

The other thing -- important thing to say, there are differences in -- within the vector itself. So the vectors that we're using is differentiated both in terms of the regulatory regions, the locus control regions of beta-globin LCR and also, certain intronic enhancer regions within the vector. And also, just again to remind you, this is a wild-type beta-globin gene. It doesn't contain an anti-sickling mutation. So all of those factors are difference between the patient population, the vector and what has been done in other programs. The conditioning protocol has also been different as well. So I think there -- as Mark says, there's an opportunity to move this differentiated program forward into what is a very large patient population.

So perhaps to address your second question, it's good to see new treatments coming to the world, like Novartis' recent announcement. Patients with SMA suffer a terrible journey, and their families. And so we're delighted to see another option be made available that could be transformative for these patients.

Now clearly, when it comes to things like value and pricing, we need to take a highly individualized approach to all of our programs and we'll be looking at them all individually. These are really complex, highly technical, personalized medical treatments. We're talking about, as you know, harvesting a person's own stem cells, inserting a working copy of the defective gene and returning these to patients. And we're looking at potentially stopping or curing these conditions in a single administration. So the once-and-done nature of these therapies has tremendous potential to free up health care resources over the long term that would otherwise be consumed by patients, and that financial impact shouldn't be underestimated.

And as I said, we're going to be looking at each of our programs and thinking about the medical value of these programs over the long term, but also the cost offsets in the system. And I -- we see ourselves as part of the conversation of how do we adapt to system, which was really originally set up for chronic care from a payer and reimbursement point of view to one that can successfully integrate curative or transformative one-off treatments. And in a way, we're really open as far as the different possible structures to that, and I -- we alluded to that in the actual earnings call. We are engaged with many stakeholders in this conversation. We're open to the possibility of things like risk sharing or stage payments, but I don't think it's a one-size-fits-all model. There are many different payers that have maybe different needs. And once we've agreed on the value proposition, we need to think about how do we tailor the payment model to their needs.

And that concludes our question-and-answer session for today. I'd like to turn the conference back over to Mark Rothera for closing remarks.

Well, really, I just wanted to thank everyone for joining today's call, especially with this morning's exciting announcements in the neurometabolic diseases arena and the progress also that we're making across the rest of the portfolio. I think we're really advancing Orchard closer and closer to realizing our vision of fundamentally transforming the lives of patients around the world with rare diseases through innovative gene therapies.

So with that, thank you very much, and look forward to the next opportunity to speak with you.

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