Regenxbio Inc (RGNX) 2016 Q4 法說會逐字稿

Good day ladies and gentlemen, welcome to the REGENXBIO Inc. fourth quarter 2016 earnings conference call. At this time, all participants are in listen-only mode. Later we will conduct a question and answer session, and instructions will be given at that time. (Operator Instructions). As a reminder, this conference is being recorded. I would now like to turn the call over to Mr. Patrick Christmas, Senior Vice President and General Counsel for REGENXBIO. Sir, you may begin.

Good afternoon, and thank you for joining us today. With us are Ken Mills, REGENXBIO's President and Chief Executive Officer, and Vit Vasista, our Chief Financial Officer. Earlier this afternoon REGENXBIO released financial and operating results for the three months and full year-ended December 31st, 2016. The press release reporting our financial results is available on our website at www.regenxbio.com.

Today's conference call will include forward-looking statements regarding our financial outlook in addition to regulatory and product development plans. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted, and can be identified by words such as expect, plan, will, may, anticipate, believe, should, intend, and other words of similar meaning. Any such forward-looking statements are not guarantees of future performance, and involve certain risks and uncertainties. These risks are described in the Risk Factors and the Management's discussion and analysis section of REGENXBIO's Annual Report on Form 10-K for the fiscal year ended December 31st, 2016, which is on file with the Securities and Exchange Commission, and available on the SEC's website.

Any information we provide on this conference call is provided only as of the day of this call March 17th, 2017, and we undertake no obligation to update any forward-looking statements we may make on this call, on account of new information, future events or otherwise. Please be advised that today's call is being recorded and webcast. In addition, any unaudited or pro forma financial information that may be provided is preliminary, and does not purport to project financial positions or operating results of the Company. Actual results may differ materially. I would now like to turn the call over to Ken Mills, President and Chief Executive Officer of REGENXBIO.

Thank you Patrick. Good afternoon everyone. Thanks for joining us today. On today's conference call we'll provide a recap of our progress over the past year, an update on our development programs, and financial results for the fourth quarter and full year 2016. We will also review anticipated milestones for REGENXBIO over the next 12 months, and then open up the call for any questions. At REGENXBIO our mission is to improve lives through the curative potential of gene therapy based and our proprietary NAV Technology Platform.

We are deeply committed to supporting the patient communities we work with, and are engaged with several patient advocacy organizations to better understand the needs of their communities. The unique perspectives of patients and advocates help guide our development programs, and we strive to be viewed as a trusted, credible partner in the community. Our gene therapy product candidates are designed to deliver genes to cells to address genetic defects, or to enable cells in the body to produce therapeutic proteins that are intended to impact disease. Through a single administration our gene therapy product candidates are designed to provide long lasting effects, potentially significantly altering the course of disease, and delivering improved patient outcomes.

Internally we are advancing a pipeline of product candidates based on our NAV Technology Platform for retinal, metabolic, and neurodegenerative diseases, areas where we believe our gene delivery vectors are uniquely suited to impact specific mechanisms of diseases for patient populations with significant unmet medical needs. We also selectively license elements of our NAV Technology Platform, typically single vectors used in single indications, to third-party companies in the gene therapy space who share our vision. Our NAV Technology Platform consists of over 100 novel adeno-associated viral vectors, or AAV vectors for short, including AAV7, AAV8, AAV9 and AAVRH10. These vectors were discovered as part of a focused effort at the University of Pennsylvania to develop safer, more effective gene delivery vehicles than those that had previously been discovered.

The resulting AAV vectors, the foundation of the NAV Technology Platform, were found to have the following important and differentiating attributes when compared to earlier generation AAV vectors. Higher and longer-term gene expression, broad and novel tissue selectivity, lower immune response, and improved manufacturability. REGENXBIO exclusively licensed these AAV vectors from Penn to form the NAV Technology Platform, with the goal of developing and enabling the development of one time disease-altering gene therapy treatments. While our organization, the gene therapy field, and the universe of product candidates using NAV Technology have expanded significantly since we started out in 2009, our patient focused mission has remained the same.

Now that I have shared the mission and strategy, I'll turn and update on our four lead internal development programs in the following indications. Wet age-related macular degeneration, or wet AMD, homozygous familial hypercholesterolemia, or HoFH, Mucopolysaccharidosis Type I, and Mucopolysaccharidosis Type II, MPS I and MPS II respectively. I will begin with RGX-314 for the treatment of wet AMD, our lead therapeutic candidate in our retinal disease franchise. Wet AMD, which may impact over 2 million individuals in the US, EU, and Japan combined, is characterized by the formation of excess blood vessels in the retina resulting in fluid leakage that leads to diminished, distorted, or even total vision loss.

The current standard of care for wet AMD is the treatment with one of a class of vascular endothelial growth factor, or VEGF, inhibitors, which neutralize VEGF activity to impair the formation of blood vessels that lead to this vision loss. While effective, these standard of care therapies require frequent and inconvenient administration by injections directly into the eye, with typical dosing regimens requiring administration every four to eight weeks to maintain efficacy. This dosing regimen places a burden on the patient, and often results in a lack of compliance. Patients often experience vision loss with reduced frequency of treatment.

With RGX-314 we utilize the NAV AAV8 vector, which is expected to encode a gene from a monoclonal antibody fragment. The expressed protein fragment is designed to neutralize VEGF activity, modifying the pathway for formation of these new leaky blood vessels, and retinal fluid accumulation. We are using the NAV AAV8 vector because it has demonstrated very effective transduction throughout the eye in pre-clinical animal models. In the pre-clinical animal models with conditions similar to macular degeneration, significant and dose dependent reduction of blood vessel growth and prevention of disease was observed after a single sub retinal dose of RGX-314.

Importantly, these animals have demonstrated broad expression of anti-VEGF mRNA and protein throughout the retina, lending support to our thesis that the NAV AAV8 will be capable of driving sufficient anti-VEGF activity to yield clinically meaningful outcomes. This February we were pleased to announce that the IND for the Phase I trial for RGX-314 is active. The multi-center open label multi-cohort dose escalation trial in wet AMD is guided by our robust pre-clinical work. This Phase I trial will seek to evaluate sub retinal delivery of our RGX-314 in up to 18 wet AMD patients, that have been previously treated with and been responsive to anti-VEGF therapy. Patients will receive a single dose of RGX-314. Primary endpoints include adverse events, certain laboratory measures including immunological parameters, and ocular examinations and imaging, including best corrective visual acuity and SD-OCT.

The primary purpose of the clinical study is to evaluate the safety and tolerability of RGX-314 at 24 weeks, after a single dose of RGX-314 administered by sub retinal delivery. Importantly, RGX-314 is being developed under a multi institutional collaboration with world-renowned gene therapy and ophthalmology experts, Jim Wilson, Jean Bennett, and Al Maguire at University of Pennsylvania's renowned Gene Therapy Program and Center for Advanced Retinal and Ocular Therapeutics, and with Peter Campochiaro at Johns Hopkins Wilmer Eye Institute. In addition, six leading retinal surgery centers across the United States, including Penn and Johns Hopkins are expected to participate in the Phase I of RGX-314. We remain on track to begin enrollment by mid-2017, and we expect to provide an interim trial update by the end of this year.

I would like to move now to our metabolic franchise, where we are developing RGX-501 for the treatment of HoFH. HoFH is a rare genetic disorder caused by defects in the low density lipoprotein, or LDL receptor gene. Patients with HoFH have little to no LDL receptor function, leading to an accumulation of LDL cholesterol in the bloodstream. This accumulation can precipitate coronary artery disease at a young age, a severe and ultimately fatal condition. We are very pleased to announce today that last week in collaboration with our partners at Penn, the first patient was enrolled in the Phase I/II clinical trial evaluating RGX-501 for the treatment of HoFH. RGX-501 uses our NAV AAV8 vector, selected also due to this vector's high tropism for hepatocytes, and is expected to deliver a healthy copy of the LDL receptor gene to liver cells.

RGX-501 seeks to address the underlying genetic profile responsible for HoFH, by directly correcting the receptor deficiency responsible for the disease pathology through a one-time IV administration. The primary end point of the single-site dose escalation study is to evaluate safety of the one time administration of RGX-501. The secondary endpoints are measures of changes from baseline in LDL cholesterol at 12 weeks, and other clinical outcome measures. Patients will receive a single dose of RGX-501. Penn continues to actively recruit and screen additional patients to enroll in the trial, both from its own patient population, and in other centers that treat HoFH patients. We anticipate sharing an interim trial update by late this year. As a reminder we have received Orphan drug designation for RGX-501 from the US FDA.

Finally, I would like to update you on our neurodegenerative franchise, where we have two product candidates in development for diseases of the central nervous system, or CNS. RGX-111 for the treatment of MPS I, and RGX-121 for the treatment of MPS II. MPS I and MPS II are rare genetic diseases caused by defects in the IDUA and IDS genes, respectively. These defects lead to deficiencies of enzymes required for the breakdown of waste products inside of cells. Ultimately deficiencies in these enzymes leads to a number of physical symptoms and patients with severe forms of this disease also exhibit significant cognitive decline. While there are currently approved and marketed treatments designed to address the peripheral symptoms of these diseases, options to address the CNS manifestations of MPS I and MPS II are severely limited. Therefore the CNS manifestations of MPS I and MPS II, which are the biggest areas of unmet need in these diseases, are the focus of our programs for RGX-111 and RGX-121. Both RGX-111 and RGX-121 utilize the NAV AAV9 vector, selected for its affinity for cells in the CNS. RGX-111 and RGX-121 are designed to be administered directly into the cerebral spinal fluid, to maximize delivery of the therapy which is intended to treat all cells in the CNS.

We plan to file an IND for the Phase I/II trial of RGX-111 for MPS I in the first half of 2017. Enrollment in this study is expected to commence in the second half of 2017, and in addition we remain on track to file an IND for the Phase I/II trial of 121 for MPS II also in mid-2017, and manufacturing of material to support the planned RGX-121 trial is ongoing. We have received rare pediatric designation and Orphan drug designation for both RGX-111 and RGX-121.

I would now like to quickly touch on manufacturing, a key focus for REGENXBIO. In 2016 we invested in our internal capabilities in areas such as process development and analytical characterization. We opened our advanced manufacturing and analytics lab to enable these capabilities, and to further solidify our position as a leader in the AAV gene therapy space. We have also initiated the manufacture of materials for the initial studies in each of our four lead programs, and broadened our network of leading contract manufacturing organization partners.

In addition to our internal development programs, we as a company are advancing our NAV Technology Platform through the efforts of partners and licensees. As of December 31, 2016 our technology has been licensed to nine NAV Technology licensees, and is currently employed in the development of more than 20 partnered product candidates. As licensee programs continue to move forward and achieve safety and efficacy milestones, we believe that they validate the strength of the NAV Technology Platform, and provide additional data that collectively drives the advancement of the AAV gene therapy space.

We continue to be encouraged by partners such as AveXis, who recently announced the design of an EU pivotal trial of AVXS-101, which uses the NAV AAV9 vector in the treatment of spinal muscular atrophy. The EU pivotal will reflect a single arm design matching that of the US-based trial, further suggesting the potential for a favorable regulatory environment for effective gene therapies based on our NAV Technology Platform.

Overall, 2016 has been an extremely productive year as we have made significant advancements in all of our programs, paving the way for a strong year of execution in 2017. I would now like to turn the call over to Vit for a review of the financials.

Thank you Ken. REGENXBIO ended the year on December 31st, 2016 with cash, cash equivalents, and marketable securities totaling $159 million, as compared to $216.4 million as of December 31, 2015, a decrease of $57.4 million.

Research and Development expenses were $16.1 million, and $45.5 million for the three months and year-ended December 31st, 2016, compared to $4.8 million, and $17.3 million during the same periods in 2015. The increased R&D expenses in the 2016 periods were primarily due to increased research and development personnel costs, due to growth with headcount, and increases in pre-clinical research and development, manufacturing and clinical trial expenses.

General and administrative expenses were $5.7 million, and $23.6 million for the three months and year-ended December 31st, 2016, compared to $4.2 million, and $11.9 million during the same periods in 2015. The increased G&A expenses were primarily due to the growth of the G&A organization, and establishing the infrastructure to meet the requirements of a public company, and our business objectives.

Our net loss was $19.6 million and $63.0 million, or $0.74 and $2.38 per basic and diluted common share for the three months and year-ended December 31st, 2016 respectively, compared to a net loss of $5.2 million and $22.8 million, or $0.20 and $2.59 per basic and diluted common share, for the three months and year-ended December 31st, 2015 respectively.

As of December 31st, 2016 we had 26.5 million common shares outstanding. REGENXBIO reiterates that it expects full year 2017 cash burn to be between $75 million and $85 million. With that, I will turn the call back to Mr. Mills to review our upcoming 2017 milestones.

Thank you Mr. Vasista. We expect 2017 will be a pivotal year for the continued clinical advancement and validation of REGENXBIO's internal and partnered pipeline candidates. With the recent initiation of the Phase I/II trial for RGX-501 for HoFH, and with the Phase I trial for RGX-314 for wet AMD on track for enrollment by mid-2017, we expect to report our first interim trial updates for each trial by the end of year. Additionally, as I noted earlier, we are on track to file the IND for RGX-111 in MPS I in the first half of this year, and we expect to begin enrollment in the Phase I/II trial in the second half of 2017. We are also on track to file our IND for RGX-121 for MPS II in mid-2017, and manufacturing of material to support the planned RGX-121 trial is ongoing. With our strong cash position we look forward to executing on the upcoming milestones and providing you all with further updates on patient enrollment and clinical data this year. With that, I would like to open up the call for questions. Operator.

Thank you. (Operator Instructions). Our first question comes from Ying Huang of Bank of America Merrill Lynch. Your question, please.

Hi. Thanks for taking my questions. Maybe Ken, my first question has to do with the protocol for the AMD program. I think you are excluding some patients with the baseline AAV neutralizing antibodies. Can you talk about the screen failure rate for the enrollment of that trial?

Hi Ying. Yes. Thanks for the question. So just to clarify on RGX-314 which is the Phase I clinical trial in wet AMD, we actually don't have an exclusion criteria based on neutralizing antibodies. So it's not typical in AAV studies that use sub retinal treatment, to exclude patients on the basis of neutralizing antibodies. So that--

I was referring to the AMD trial? I am sorry, the HoFH trial (Multiple Speakers).

Okay. I got you. Yes. So in RGX-501 that is an exclusion criteria on the basis of neutralizing antibody titers. And I think that what we have seen in the screening and enrollment process, Ying, is what is consistent with our expectations with respect to the epidemiology data, and so I think for the AAV8 vector, we would predict or expect that on the order of 20% to 25% of patients might have neutralizing antibody titers that would exclude them from this trial at this time.

Got it. And then another question on the, well, I guess on the AMD trial, because with AGTC trial, I think there was a prophylaxis measure to prevent inflammation. Are you going to use similar measures for the AMD trial for 314?

I want to make sure I understand. With respect to prophylaxis, I'm not sure I entirely know the AGTC study that you're referring to, but the RGX-314 study involves a sub retinal route of administration, and I think that route of administration is consistent with studies that have been run by groups like Spark with respect to their RPE65 program, and I don't know of the use of any prophylaxis treatment to treat any kind of observed events associated with that route of administration. So I think that's consistent with our clinical implementation for a sub retinal route of administration.

Got it. Thanks. And then maybe just if I could squeeze a last one. For example, if you look at some of the sublicensees in the data reported, sometimes you see variability. For example, the Hemophilia B data from Dimension. Do you have any insight on that, why sometimes you will see this kind of variability, and how would you I guess prevent that from happening in your own trial? Thanks.

Sure. Yes. We don't have much insight beyond what is publicly available with respect to other people's studies, including with the NAV Technology Platform. We do think that there have have been a number of studies that have reported really good results with respect to safety and dose response in clinical studies. With respect to our own internal programs, I think having achieved the milestone of first patient dosing in the RGX-501 study, we're going to continue to support what's needed for all of the patients in those studies, and the physicians that we work with as well as the investigators at the sites, are certainly putting patient care first, and at this point we're just happy to have reported the first patient dosing.

Okay. Congratulations on all of these programs in the clinic. Thank you.

Yes. Thanks Ying.

Thank you. Our next question comes from Gbola Amusa with Chardan. Your question, please.

Hi. Thanks for taking my call. Ken, on RGX-314, I have a couple questions, and then a question on manufacturing after that. For 314 are you able to say whether the antibody fragment encoded for in that product is ranibizumab, or can you say when disclosure on the fragment might occur? And then on that program, other than the obvious look at safety, is there anything we could see on efficacy by the end of the year potentially, that could provide some proof-of-concept on RGX-314? And then on manufacturing, as you transition to being a clinical company on multiple fronts, could you provide a broad update on your progress for the internal programs, specifically with regard to any major milestones we can look to in 2017 to confirm things are on track? Thanks.

Sure. Thanks, Gbola. Thanks for the questions. I'll take them in order. So with respect to RGX-314 it is an antibody fab fragment that was developed in partnership with the pre-clinical partners at the University of Pennsylvania. It's a proprietary product. We're certainly filing intellectual property around the protection of the transgene and compositions of the product as well, so there won't be any additional disclosure on RGX-314 at this time, other than to confirm that it is a monoclonal antibody fragment that is targeted at VEGF.

With respect to the RGX-314 Phase I clinical trial. So certainly as a Phase I study, the primary outcome as I alluded to is safety in patients at 24 weeks post a single administration of RGX-314. We do have secondary outcomes including measures of best corrected visual acuity, central retinal thickness as measured by OCT, and we also will be looking to make measures of expression of the protein product of RGX-314 in the eye over the course of the development.

And with respect to the last question about manufacturing, really I think 2016 has been a fantastic year of kind of growth of capabilities, in terms of process development, analytics and manufacturing for REGENXBIO, and when you're in the process of having four clinical trials become active over the course of 12 to 18 months, and then looking forward to plans for expectations of the outcomes of those studies supporting additional manufacturing needs, it's an investment that we think is well supported with respect to the direction that the Company is going.

We have certainly been able to support all of the studies that are active, and are on track to support all of the studies with respect to investigational material that's going to be needed over the course of this year, and I think coming into 2018, continue through work in process developments and improvements in analytics, both internal to REGENX as well as with partners, to improve processes as we hope to take steps forwards toward commercialization.

Great. Thank you, Ken.

Thanks.

Thank you. (Operator Instructions). I am showing no further questions at this time. I would like to turn the call back over to Mr. Mills for closing remarks.

Thank you, Operator. And thank you all for joining us on the call this afternoon. We certainly have several important milestones and catalysts to come up over the next year, and we look forward to progressing our pipeline, and interacting and providing you with further updates. Have a great day.

Ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may now disconnect. Have a wonderful day.