Regenxbio Inc (RGNX) 2017 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q2 2017 REGENXBIO Inc. Earnings Conference Call. (Operator Instructions) I would now like to turn the call over to Patrick Christmas, Senior Vice President and General Counsel. Please go ahead.

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 3 months ended June 30, 2017. 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 Management's Discussion and Analysis section of REGENXBIO's quarterly report on Form 10-Q for the quarter ended June 30, 2017, 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 date of this call, August 8, 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, and good afternoon everyone. Thanks for joining us. On today's conference call, we will provide a recap of our recent progress, an update on our product candidates and financial results for the second quarter of 2017. We will also review anticipated upcoming milestones for REGENXBIO and then open the call for questions.

At REGENXBIO, our mission is to improve lives through the curative potential of gene therapy based on proprietary NAV Technology Platform. As a reminder, our AAV 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 AAV gene therapy product candidates are designed to provide long-lasting effects, potentially significantly altering the course of disease and delivering improved patient outcomes.

We are currently advancing an internal pipeline of product candidates that employ our proprietary NAV Technology Platform within 3 disease areas: retinal diseases, metabolic diseases and neurodegenerative diseases. These areas of focus have been strategically selected because we believe they can be uniquely addressed by our vectors, and within each focus area there are many diseases with urgent unmet medical needs.

Beyond our internal product programs, we selectively license components of our NAV Technology Platform, most typically single vectors for single indications, to third-party companies whose vision and commitment to gene therapy is aligned with our own. Our NAV Technology Platform consists of over 100 novel adeno-associated viral vectors, or AAV vectors, including AAV7, AAV8, AAV9 and AAVrh10. Our vectors are the results of world class research conducted at the University of Pennsylvania in the lab of Dr. Jim Wilson. These efforts were aimed at discovering and developing safer and more effective gene delivery vehicles than those that had been previously discovered.

The resulting AAV vectors, the foundation of our NAV Technology Platform, were found to have the following significant and differentiating attributes as compared to earlier generation AAV vectors: higher expression and increased durability; broad and novel tissue selectivity; reduced immune response; and improved manufacturing ability.

REGENXBIO has an exclusive worldwide license to the NAV Technology Platform. Our goal is to utilize these vectors to enable the development of one-time disease-altering gene therapy treatments.

Before I review the past quarter and summarize our upcoming milestones, let me say a bit more about our commitment to patients in all that we do. Since our inception, our patient-focused mission has remained the same, even as our company, our platform and the field of gene therapy has evolved significantly. Our support of the patient communities we work with is unwavering. We're actively engaged with patient advocacy organizations to ensure that we have an acute understanding of the patient experience. And we are using these insights to guide the development of our product candidates and to allow us to be a reliable and compassionate partner with our patient communities.

We believe single-administration gene therapy treatments that significantly alter the course of disease will create a meaningful impact for the heroes we work with every day: the patients and the families living with disease.

I'd now like to turn to an update of our product candidates in the retinal, metabolic and neurodegenerative disease areas. Our product candidates are currently targeting the following indications: wet age-related macular degeneration, or wet AMD;

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mucopolysaccharidosis type I and type II, or MPS I and MPS II.

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retinal disease franchise.

In May, we were pleased to announce the dosing of the first patient in the Phase I clinical trial evaluating RGX-314 for the treatment of wet AMD, a disease that affects more than 2 million patients in the United States, Europe and Japan. Wet AMD is characterized by abnormal blood vessel formation in the retina, resulting in fluid leakage into the macula, causing diminished, distorted or even total vision loss. The standard of care therapies for wet AMD inhibit vascular endothelial growth factor, or VEGF. The neutralization of VEGF both reduces the fluid leakage from abnormal blood vessels and prevents their proliferation, which effectively controls the disease state and yields improvement in visual acuity.

While effective, standard of care dosing regimens require frequent and inconvenient administration typically requiring injections in every eye, every 4 to 8 weeks. This frequent and inconvenient administration imposes a significant burden on patients and often leads to a lack of compliance. Lack of compliance has a direct impact on the disease state, impeding the efficacy of the therapeutic regimen and allowing progression of vision loss.

Physicians and patients remain interested in new therapies for wet AMD due to the burden of the frequent treatment and the need for longer-lasting, effective therapies.

314 -- RGX-314, that is, by contrast is administered with one-time subretinal injection. Utilizing the NAV AAV8 vector, RGX-314 is expected to encode a gene for a monoclonal antibody fragment in cells in the retina. The expressed protein is designed to neutralize VEGF activity, employing a similar mechanism as the standard of care. A NAV AAV8 vector has been selected for this program because it has demonstrated effective transduction of retinal cells in multiple preclinical animal studies. We believe the one-time administration of a highly efficacious gene therapy product encoding an inhibitor of VEGF has the potential to address the challenges associated with existing therapies.

We are currently enrolling patients in a multicenter, open-label, dose-escalation Phase I clinical trial of RGX-314 in up to 18 wet AMD patients previously treated with and responsive to anti-VEGF therapy. The primary objective of this clinical trial is to evaluate the safety of one-time subretinal delivery of RGX-314 in up to 18 wet AMD patients at 24 weeks.

Additionally, we will be evaluating several efficacy parameters, including best-corrected visual acuity and SD-OCT. The clinical trial is being conducted at 6 leading retinal surgery centers across the United States. This Thursday, Dr. Stephen Yoo, Chief Medical Officer at REGENXBIO, will be presenting an overview of the program at the Ophthalmology Innovation Summit as part of the 35th Annual Scientific Meeting of the American Society of Retinal Specialists, or ASRS, in Boston. Dr. Jeffrey Heier, Co-President and Director of Retinal Research at Ophthalmic Consultants of Boston and a principal investigator of the RGX-314 Phase I clinical trial, will present the RGX-314 Phase I clinical trial design and overview at the ASRS as well.

We will be providing an interim update on the Phase I clinical trial by the end of 2017.

I'll now turn to our metabolic franchise and the development of RGX-501 for the treatment of HoFH, for which there are -- we are currently enrolling patients in a Phase I/II clinical trial. HoFH is a rare genetic disorder caused by mutations in the gene encoding the low-density lipoprotein, or LDL, receptor. The LDL receptor is responsible for the removal of LDL cholesterol from the bloodstream. When mutations occur in LDL receptor genes, the LDL pathway is severely disrupted, resulting in an accumulation of LDL cholesterol in the bloodstream that can lead to coronary artery disease at a young age, a severe and ultimately fatal condition.

Current standard of care therapies for HoFH are often insufficient to lower LDL cholesterol to normal levels, requiring many patients to receive regular apheresis, a treatment associated with significant burden for patients and caregivers and one that does not ultimately correct the underlying cause of the disease.

RGX-501 seeks to address the underlying genetic defect responsible for HoFH by correcting the receptor deficiency responsible for the disease pathology. As with all of our product candidates, RGX-501 is designed to be a one-time therapeutic administration, an approach that has the potential to alleviate treatment burden and fill an urgent unmet need.

Our gene therapy product candidate uses the NAV AAV8 vector, a vector that has demonstrated highly efficient transduction of hepatocytes, or liver cells, to encode a functional copy of the LDL receptor gene.

The clinical trial is being conducted at the University of Pennsylvania. Enrollment continues to progress in the dose escalation Phase I/II clinical trial evaluating the safety and efficacy of intravenously administered RGX-501 in patients with HoFH, and we look forward to sharing an interim update with this Phase I clinical trial by the end of 2017.

I would now like to share an update on our neurodegenerative franchise, where we have 2 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 disorders that belong to a family known as lysosomal storage disorders. MPS I and MPS II are caused by defects in the IDUA and IDS genes, respectively. In both diseases, the defective genes result in enzyme deficiencies that lead to accumulation of glycosaminoglycans, or GAGs, which would normally be broken down by the missing enzymes. Intracellular GAG accumulation leads to cell and tissue damage, causing severe disease pathology associated with a wide range of physical symptoms and, in severe patients, significant cognitive deficits.

While there are approved and marketed enzyme replacement therapies for the peripheral symptoms of both MPS I and MPS II, treatments for the CNS symptoms of the disease are severely limited or nonexistent. As such, our programs are designed to address this area of urgent unmet medical need.

Both RGX-111 and RGX-121 utilize the NAV AAV9 vector, selected for its affinity to cells of the central nervous system, to encode a healthy copy of the defective gene. Again, as with all of our product candidates, we are employing a one-time administration approach. For RGX-111 and RGX-121, the therapy will be administered directly into the cerebrospinal fluid via an intracisternal administration to optimize the exposure of RGX-111 or RGX-121 to target cells in the CNS.

We are pleased to announce that the investigational new drug application, or IND, for the Phase I clinical trial for RGX-111 for MPS I is active as of August 4, 2017. Site activation in the planned multicenter, open-label, multi-cohort dose-escalation trial is now underway to support recruitment and patient enrollment. With the first patient expected to be dosed in the first half of 2018, we anticipate also filing an IND for RGX-121 for MPS II in the second half of 2017, which will incorporate feedback received from the FDA in its review of the IND application for RGX-111.

In addition to our internal product candidates, we continue to advance and leverage our NAV Technology Platform through efforts of our external partners and licensees. As of June 30, 2017, our technology has been licensed to 9 NAV Technology licensees and is currently employed in the development of more than 20 partner product candidates, 8 of which have advanced to clinical stages of development.

As licensee programs continue to move forward and achieve efficacy and safety milestones, we believe they further validate the strength of the NAV Technology Platform and provide additional data that collectively drive the advancement of the AAV gene therapy space.

One example demonstrating the strength of our platform and its potential for clinical significance is the announcement by our partner Shire of its submission of an IND application for SHP654, which utilizes the NAV AAV8 vector to deliver the factor VIII gene for the treatment of hemophilia

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serves to broadly validate the use of gene therapy as a treatment modality as well as to specifically validate the use of our NAV Technology Platform for the design of potentially transformative therapies.

We also continue to be encouraged by partners such as AveXis, which last quarter announced alignment with the FDA on their good manufacturing practice, or GMP, commercial manufacturing process for AVXS-101. AVXS-101 utilizes the NAV AAV9 vector to target spinal muscular atrophy type I. This alignment with FDA marks a significant milestone creating a potential path forward for the use of their robust Phase I data as the basis for the company's plan to initiate a single-arm pivotal trial for AVXS-101 in the U.S. in the third quarter of this year.

In June, we were pleased to expand our partnership with the AveXis through our exclusive worldwide license agreement for AveXis to develop and commercialize gene therapy treatments using the NAV AAV9 vector to treat 2 additional rare neurological monogenic disorders: Rett syndrome and ALS, caused by mutations in the SOD 1 gene.

In summary, we've had a very productive quarter, paving the way for a number of significant clinical advancements in 2017. And with that, I would now like to turn the call over to Vit for a review of our financials. Vit?

Thank you, Ken. REGENXBIO ended the quarter on June 30, 2017, with cash, cash equivalents and marketable securities totaling $208.5 million as compared to $159 million as of December 31, 2016, an increase of $49.5 million. Research and development expenses were $13.9 million for the 3 months ended June 30, 2017, compared to $10.7 million during the same period in 2016. This increase was primarily due to personnel costs and manufacturing-related expenses.

General and administrative expenses were $6.4 million for the 3 months ended June 30, 2017, compared to $6.2 million during the same period in 2016. REGENXBIO's net loss was $14.5 million or $0.47 per basic and diluted common share for the 3 months ended June 30, 2017, compared to a net loss of $14.4 million or $0.55 per basic and diluted common share for the 3 months ended June 30, 2016.

As of June 30, 2017, REGENXBIO had 30.9 million common shares outstanding. REGENXBIO now expects full-year 2017 cash burn to be between $75 million and $85 million, (sic-see press release "$75 million and $80 million") which will support the continued development of its lead product candidate programs. Full-year 2017 cash burn guidance excludes the effect of REGENXBIO's previously announced underwritten public offering of common stock in March 2017 and the underwriters' exercise of their option to purchase additional shares in April 2017, which resulted in aggregate net proceeds through REGENXBIO of approximately $81.5 million after deducting underwriting discounts and commissions and offering expenses.

With that, I will turn the call back to President and CEO, Ken Mills, to review our upcoming 2017 milestones.

Thank you, Vit. We expect 2017 to be -- continue to be a pivotal year for clinical advancement and validation of REGENXBIO's internal and partner product candidates with the initiation of the Phase I clinical trial of RGX-314 in wet AMD and the Phase I/II clinical trial

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first interim data updates for each trial by the end of 2017. With our strong cash position, we look forward to executing on our upcoming milestones and providing you with further updates in clinical data this year.

With that, I would like to open the call for any questions. Operator?

(Operator Instructions) Our first question is from Matthew Harrison with Morgan Stanley.

I have 2, if you don't mind. So first, can you just comment, in the press release you said that there were some specific points of feedback on the 111 IND that you're going to incorporate in the 121 IND. Could you just elaborate on what those points are? And then I have a follow-up.

Sure, and thanks for the question. So in the process of discussing the clinical protocol around RGX-111 with the FDA, we had many requests as part of the IND application related to inclusion criteria as well as objectives, particularly for secondary outcome measures. And where we landed was, we think, in a really excellent place, through a lot of discourse with FDA over the review period. And in particular, I think we've been clear about the fact that the intent-to-treat population for these programs is really ultimately in pediatric populations. And so one of the things that we were able to advance was an understanding of how we could, as quickly and as safely as possible, navigate both the RGX-111 and RGX-121 programs into those populations

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input from both the patient communities, the KOLs and the experience that we had with the data. So now that we have that clarity, we're able to make some adjustments. RGX-111 and 121 in the populations in Hurler and Hunter, while similar, are not truly identical. There are some nuanced differences between the populations. And we think we will be able to take that feedback and focus on progressing the 121 program with the same sort of assertiveness around that ultimate goal.

Okay. Perfect. Thank you. And then second question is, can you just comment more broadly on what kind of background work you guys are doing to continue to advance and maintain your broad IP portfolio around your vectors and how we should think about that versus your ability to maintain sort of a leadership position there?

Sure. I think intellectual property is something that we take very seriously. It has been the lifeblood of the company in many ways since the formation, and we expect that it continues to be an important and meaningful value driver for shareholders as we both introduce new programs to the REGENX pipeline but also leverage the NAV Technology Platform and additional licensing. And I think we have a multithreaded strategy that involves additional research and investment in exercising both the platform itself but also new science around the NAV Technology Platform. And our continued relationship with the University of Pennsylvania as well as the addition of Olivier as our Chief Science Officer have really reinforced our ability that we think -- and strengthened our ability to exercise that particular thread.

And then in addition, there's always the undercurrent of continued focus on the prosecution and advancement of the underlying intellectual property. And there I think we take it as seriously, if not more seriously, than any company in the space and have brought in internal expertise as well as world-class external support to be able to both develop and mature intellectual property that we think has long-lasting and significant value for shareholders.

Our next question is from Ying Huang with BofA.

Hi, this is [Chen] on for Ying from Bank of America Merrill Lynch. Just a couple questions, the first one that you have 2 clinical programs right now, and can you inform us the status of the enrollment, and have you seen any dose response?

And the second one is, not sure how much color you can provide on the safety. Do you see any elevation of the liver enzyme and you need to use steroids?

And lastly, I noticed that your financial guidance lowered a little bit for the cash burn. Can you provide more details on that?

Hi, [Chen]. This is Ken. I'll take the first part of the question, which is -- so we actually have 3 clinical stage programs right now with the IND for MPS I, the RGX-111 program, becoming active just within the last week. But you're right, 2 of the programs, to clarify, are currently enrolling: RGX-501 and RGX-314. And we haven't reported any data on those programs to date. We're expecting interim updates on both of those programs at the end of 2017, where we'll be able to report data both about the primary objectives of safety and secondary objectives as patients have begun enrolling.

Both in the second quarter and second and third quarter of those programs we expect to have some initial data on at least the first cohorts of both of those studies, if not additional patients, on a sort of time measured basis.

With respect to the cash adjustment, yes, Vit alluded to, and to clarify, the revised guidance for 2017 is now between $75 million and $80 million for the year. That's an adjustment from the initial guidance we gave back in January of $75 million to $85 million. And it's really just a function of being able to establish at mid-year a little bit more sharpening of our understanding of where we think costs have been incurred and where we think we're going to land at the end of the year. Nothing changed with respect to the tactics or the strategic plan; It just felt like

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at mid-year.

Our next question is from Gbola Amusa with Chardan.

From your press release, it seems like you now have 11 internal and external programs in clinical development. So just of those 11, 8 are from your 20 partnered programs and, of the 8 partnered programs, you're providing updates on 2 of them. So my question there is, do those 2 updates represent a view on which partnered programs are most relevant economically for REGENXBIO? So that's my first question.

My second one is a specific one on 501 and HoFH. Could you comment there on what aspect of the animal data or the animal model that enabled your confidence for putting that one into the clinic?

Sure, Gbola. Thanks for the questions. With respect to highlighting a couple of the clinical stage programs among our licensees, you're absolutely right. We now have, under the NAV Technology Platform, between REGENX and partnered programs, 11 programs at clinical stage, and 8 of those are partnered.

We've just gotten into a practice lately, Gbola, of highlighting some of the recent highlights from some of the licensees. I think Shire made its announcement about the hemophilia A IND roughly about a month ago. And there was also an update from AveXis within the last quarter. But there have been updates from other of the licensees as well. So we're just trying to use the opportunity on the earnings call to highlight a couple of the examples for yourselves and the broad shareholder audience. Otherwise, no specific indication from us about the value of any of those programs; just trying to be useful in terms of our communication.

With respect to the 501 HoFH support, we really move forward -- and again, this was a program that was developed in collaboration at the University of Pennsylvania with both Jim Wilson, our scientific founder, as well as Dan Rader, the lipid specialist at UPenn, who advised us on both clinical candidate design and selection. And the basis of our interest and support around this program was reductions in LDL cholesterol from preclinical animal models that Dan had basically published on as well as used and guided us in terms of the design of a preclinical proof-of-concept where at multiple different dose levels, we saw significant changes in baseline LDL cholesterol in the animals in ranges that achieved up to and near 90% reductions in LDL cholesterol.

So recognizing that the standard of care in the treatment of HoFH, other treatments that have been introduced have been able to achieve somewhere in the range of 30% to maybe 50% reductions, we thought that this preclinical data in the animal models supported a profile that was much different than standard of care, much improved, of course, and something that allowed us to progress, both with the support of that data, a model for a clinical program that we think could support a product that would address still significant unmet need in that population.

And I'm showing no further questions. I would now like to turn the conference back over to Ken Mills, President and CEO, for any further remarks.

Thanks, operator, and thanks everyone for the questions and thank everyone listening in for joining us on the call this afternoon.

We certainly have made several important milestones and have several important catalysts in the next 6 months, and we look forward to progressing our pipeline and providing you with updates. Have a great day.

Ladies and gentlemen, thank you for participating in today's conference. You may all disconnect. Everyone, have a good day.