Regenxbio Inc (RGNX) 2017 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the REGENXBIO Third Quarter 2017 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the conference over to Patrick Christmas, General Counsel. 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 3 months ended September 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,

(technical difficulty)

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 section and the Management's Discussion and Analysis section of REGENXBIO's quarterly report on Form 10-Q for the quarter ended September 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, November 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 third 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 the lives through the curative potential of gene therapy based on our 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 uniquely be addressed by our vectors, and with each focus area, there are many diseases with urgent unmet medical needs.

Beyond our internal development 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, including AAV7, 8, 9, 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 previously discovered. These resulting AAV vectors were the foundation of our NAV Technology Platform, and 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 manufacturer 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. Our support of patient committees 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 this quarter, I wish to specifically acknowledge how grateful we are to the patients and families that have visited us here in Rockville and with our collaborators worldwide over the past few months. 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 for 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, homozygous familial hypercholesterolemia and mucopolysaccharidosis type I and type II.

I will begin with RGX-314, the lead product candidate in our retinal disease franchise for the treatment of wet age-related macular degeneration. I'm pleased to announce today that we recently completed dosing in the second cohort of our Phase I clinical trial of RGX-314.

As of today, a total of 12 patients from 4 different sites have been now treated with RGX-314, and we're very encouraged with the recent momentum of the program. In cohort 2, 5 patients were enrolled and dosed over 7 days -- about as quickly as the protocol allows.

I will speak about the clinical trial in more detail, but first, I want to provide a short overview of wet AMD, current standard of care and RGX-314. RGX-314 is being developed for the treatment of wet AMD, a disease that we believe affects more than 2 million patients in the U.S., EU and Japan. Wet AMD is characterized by abnormal blood vessel formation in the retina, which results in fluid leakage into the macula, causing diminished, distorted or even total vision loss. Standard-of-care therapies for wet AMD inhibit vascular endothelial growth factor, or VEGF. The neutralization of VEGF prevents the proliferation of new abnormal blood vessels and reduces the fluid leakage from these vessels, effectively controlling the disease state and yielding an improvement in visual acuity.

While efficacious, standard-of-care dosing regimens require frequent and inconvenient administration, typically monthly or bimonthly injections into the eye. These regimens impose a significant burden on patients and caregivers, often leading to poor compliance. And poor compliance has a direct impact on the disease state, as it impedes the efficacy of the therapeutic regimen and allows for progression of vision loss. For physicians and patients, there remains an urgent need for long-lasting effective therapies for wet AMD due to the burden of this frequent treatment and the associated reduction in efficacy.

In contrast to the standard of care, RGX-314 is administered with a one-time subretinal injection. Utilizing a NAV AAV8 vector, RGX-314 is expected to encode a gene for a monoclonal antibody fragment in the cells of the retina. The expressed antibody fragment is designed to neutralize VEGF activity, employing a similar mechanism as standard-of-care therapy. The NAV AAV8 vector has been selected for this product candidate because it has demonstrated effective transduction of retinal cells in multiple preclinical animal models.

We believe 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. As I mentioned previously, we have now fully enrolled 12 patients across 2 dose cohorts in the dose escalation Phase I clinical trial of RGX-314. Based on the 12 patients dosed, we are encouraged by the preliminary safety and tolerability profile observed with RGX-314. Following a planned review by an independent data safety monitoring board, we expect to enroll 6 additional patients in a third and final dose cohort beginning in the first quarter of 2018.

The primary objective of the RGX-314 clinical trial is to evaluate the safety of a one-time retinal delivery of RGX-314 at 24 weeks. Additionally, we will be evaluating several efficacy parameters, including best-corrected visual acuity and OCT. The clinical trial is being conducted at 6 leading retinal surgery centers across the United States. We are encouraged by the significant patient and physician enthusiasm for the trial and with the progression of enrollment so far. We expect to provide further details regarding this clinical trial, including updates on enrollment, the procedural implementation and preliminary safety and tolerability in our year-end 2017 corporate update to schedule to be released during the first week of January, 2018.

I'll now turn to our metabolic franchise and the development of RGX-501 for the treatment of HoFH. I'm excited to announce today that we recently completed dosing in the first cohort of our Phase I/II trial of RGX-501. Review of data from the first cohort has been conducted by an independent data safety monitoring board, who has granted clearance to proceed to the next dosing cohort based on their assessment of the safety and tolerability data. We expect to begin dosing patients in the second cohort prior to year-end 2017.

As a reminder, 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 removal of LDL cholesterol from the bloodstream. When mutations occur in both 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 both patients and caregivers, yet one that does not ultimately correct the underlying cause of the disease.

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

This gene therapy product candidate uses the NAV AAV8 vector, a vector that has demonstrated highly efficient transduction of hepatocytes in both clinical and preclinical studies. The RGX-501 clinical trial is a Phase I/II trial being conducted at the University of Pennsylvania. We are pleased to have the DSMB support for initiation of the dosing in the second cohort. As with RGX-314, we expect to provide further details regarding the RGX-501 clinical trial, including further updates on enrollment and preliminary safety and tolerability in our year-end 2017 corporate update scheduled to be released during the first week of January 2018.

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 IDUA and IDS genes respectively. In both diseases, the defective genes result in enzyme deficiencies that lead to an accumulation of glycosaminoglycans or GAGS, which normally would be broken down by these 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 to treat peripheral nervous system symptoms of both MPS I and MPS II, treatments for CNS symptoms of the disease are severely limited or nonexistent. As such, our programs are designed to address this area of urgent unmet need. Both RGX-111 and RGX-121 utilize the NAV AAV9 vector, selected for its strong affinity for CNS cells. Again, as with all 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. The route of administration was selected to optimize the exposure of the target CNS cells to RGX-111 and RGX-121.

In the third quarter, we were pleased to announce that the IND for the Phase I clinical trial of RGX-111 for MPS I is active. Site activation in the planned multicenter, open-label, dose-escalation trial is underway to support recruitment and patient enrollment, with the first patient expecting to be dosed in the first half of 2018. We anticipate filing an IND for RGX-121 for MPS II between now and the end the fourth quarter of 2017.

Beyond the advancement of our lead product candidates, we expanded the depth of our expertise and breadth of our development capabilities this quarter. We further strengthened the REGENXBIO management team with the appointment of Shiva Fritsch as Senior Vice President, Human Resources. Shiva brings substantial experience in the biotechnology industry having served numerous human resources leadership roles at Novavax, Howard Hughes Medical Institute and Human Genome Sciences and we're thrilled to have her on board.

Additionally, last month, we initiated the build-out of a state-of-the-art 15,000-square-foot research and development facility. The facility will be adjacent to REGENXBIO's advanced manufacturing and analytics lab located in Rockville, Maryland. This new facility will support the expansion of REGENXBIO's internal gene therapy research capabilities for the creation of novel gene therapy technologies as well as the origination of new lead product candidates. The combination of our existing manufacturing lab infrastructure with this new R&D focus space will enable REGENXBIO to continue to expand our leadership position in AAV gene therapy.

We continue to advance and leverage our NAV Technology Platform through efforts of external partners and licenses. And as of September 30, 2017, our AAV vector technology has been licensed to 10 NAV Technology licensees and is currently employed in the development of more than 20 partner product candidates, 7 of which are in active clinical development.

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

One example demonstrating the recent strength of the platform is the potential for clinical significance and announcement by our partner Shire that the IND for SHP654 which utilizes the NAV AAV8 vector to deliver the Factor VIII gene for the treatment of hemophilia is both active and has received orphan drug designation from the U.S. FDA. Shire's position as an established leader in the hemophilia space validates the use of gene therapy as a treatment modality in this indication and demonstrates the utility of our NAV Technology Platform for the design of potentially transformative therapies in hemophilia.

We also continue to be encouraged by partners such as AveXis, which recently announced that it has commenced the pivotal trial for AVXS-101 for the treatment of spinal muscular atrophy or SMA type I. AVXS-101 uses -- utilizes the NAV AAV9 vector. AveXis's progress marks the significant milestone for the NAV Technology Platform and for patients and families with SMA type I. We continue to look forward to additional updates as the program progresses.

And the breadth of the platform continues to be highlighted with numerous other companies entering the clinic. Notably in this last quarter, Audentes Therapeutics reported the dosing of the first patient in their Phase I/II clinical trial evaluating AT132, which uses the NAV AAV8 vector for the treatment of X-linked myotubular myopathy. Additionally, Dimension Therapeutics, which has since been acquired by Ultragenyx, dosed the first patient in their Phase I/II clinical trial of DTX301, which uses the NAV AAV8 vector for the treatment of ornithine transcarbamylase deficiency.

In summary, we had a productive quarter during, which we significantly advanced our internal product candidates towards the goal of delivering meaningful therapies to patients.

With that, I would like to turn the call over to Vit for a review of our financials.

Thank you, Mr. Mills.

REGENXBIO ended the quarter on September 30, 2017, with cash, cash equivalents and marketable securities totaling $191.1 million compared to $159 million as of December 31, 2016, an increase of $32.1 million. Research and development expenses were $12.5 million for the 3 months ended September 30, 2017 compared to $12.6 million during the same period in 2016.

General and administrative expenses were $9.4 million for the 3 months ended September 30, 2017, compared to $6.2 million during the same period in 2016. This increase was primarily due to professional services cost incurred in connection with the proposed merger with Dimension. In October, 2017, the merger agreement with Dimension was terminated, and we received $2.9 million termination fee, which will be netted against our costs incurred related to the transaction.

Our net loss was $20.7 million or $0.67 per basic and diluted common share for the 3 months ended September 30, 2017 compared to a net loss of $18.2 million or $0.69 per basic and diluted common share for the 3 months ended September 30, 2016. As of November 3, 2017, we had 31.1 million common shares outstanding.

REGENXBIO continues to expect full year 2017 cash burn to be between $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, which resulted in aggregate net proceeds to REGENXBIO of approximately $81.5 million after deducting underwriting discounts and commissions and offering expenses.

With that, I will turn the call back to Mr. Mills to review our upcoming 2017 milestones.

Thanks, Vit. So 2017 continues to be a pivotal year for both the growth of the clinical advancement of our internal product candidates, but as well our partner pipeline and overall for the validation of the NAV Technology Platform. As we complete 2017, we think the significant progress in the Phase I clinical trial of RGX-314 in wet AMD, advancement of the Phase I/II clinical trial of RGX-501 for HoFH, we're looking forward to further details regarding each trial in our year-end 2017 corporate update scheduled to be released the first week of January, 2018. We look forward to executing on these upcoming milestones and providing you with further updates.

And with that, I will open up the call to questions. Operator?

(Operator Instructions) The first question is from Gbolahan Amusa of Chardon.

I have some questions on your upcoming data due for RGX-314 in wet AMD and RGX-501 in HoFH. So on 314, just based on when you plan to capture the data for the upcoming January 2018 presentation, what would be the theoretical maximum treatment duration that could be reported for safety or efficacy at that time? And then I have a follow-up on 501.

So we reported for the 314 study that the first patient was dosed in May 2017. And obviously, we continue to accrue data in terms of safety and tolerability as well as secondary endpoints since that time. When we look to report updates in the beginning of 2018 based on end-of-year measures, we should have approximately then 6 months of information about that patient.

Great. And then for 501, I've a question about the animal data that motivated the program. Could you remind us how quickly LDL levels were normalized in that model and whether such a response could in theory be expected in humans over a similar time frame?

Sure, certainly on the front part of that question, the data that was part of our filings associated with RGX-501 study were conducted at Penn in a model that showed normalization could occur, I think, in a range of maybe 3 to 4 weeks up to 6 to 8 weeks. And I think the experience that the field has with respect to these translational models is that, that's roughly the same range that we've seen normalization of both expressions and markers that kind of resemble when we've hit steady-state for AAV. So we think there is similar expectation there.

The next question is from of Reni Benjamin of Raymond James.

This is Bin Lu on behalf of Ren. Can you hear me okay?

Yes Bin.

First question I have is, can you provide a bit more color regarding the interim updates you will have on the wet AMD program like, specifically, are we going to see data from all 12 patients? And also, the data on the primary as well as the secondary measures? And then I have a follow-up.

Great. Thanks, Bin, for the question.

So as we reported, we just completed the dosing of the second cohort in the RGX-314 study. And we were really pleased with respect to the progress of that enrollment in the second cohort where we were able to capture the last 5 patients in that cohort over 7 days.

It's November right now. And so before the end of the year, we're going to have patients who have been administered the RGX-314 treatment as part of that cohort out about 30 days, not more than 60 days. And so over that period of time, we have the opportunity to accrue some of the early data, but not as much as we're going to be able to have accrued on the basis of the first cohort where patients were enrolled. As I mentioned in response to Gbola, the first patient was enrolled in May, and we had patients enrolling subsequently all the way through when we reported finalizing the first cohort in September.

So at this point, most of the patients that we have enrolled in this study are still at an early stage. We're getting very preliminary looks at safety and tolerability and we've been very encouraged by that. The accrual of that data will continue between now and the end of the year and what we're aiming to report on in the beginning of January is the time point that we have at the end of the year when we can accrue and compile all of that data on both safety, tolerability and information about -- hopefully, the feedback that we have from the Data Safety Monitoring Board with respect to the second cohort in terms of supporting the progression to the third cohort in the first quarter of 2018.

Great, that's very helpful. Just a follow-up question on the wet AMD program. Can you clarify, has the first safety review finished for the first dosing cohort? And when do you think the second AMD review will be finished?

That's right. So by reporting that we've initiated and completed the second dose cohort, we basically are acknowledging that the Data Safety Monitoring Board has reviewed the preliminary data from the safety and tolerability for the first dose cohort and given us that go ahead. So we've initiated that dose escalation. We are right now compiling all of the data for submission to the DSMB, again, on the basis of the second cohort and expect to be able to initiate the third dosing -- third cohort dosing by the first quarter of 2018.

The next question is from Joshua Schimmer of Evercore ISI.

Ken, how are you thinking about preparing for the next wave of programs? And how far along are you in identifying what next indications you might choose to pursue? And what are you looking for from the initial clinical efforts across your 4 programs that you've already identified to then decide, which of that next wave to really prioritize?

Hey, Josh. Thanks a lot, a great question.

Since the beginning of the year, the objectives of the company have been to basically get the lead product candidates, the 4 lead product candidates to a point where they are in the clinic and enrolling patients or set up to begin enrollments in 2018 and as we reported here today, notwithstanding the RGX-121 IND which we're expecting to file between now and the IND, we feel that we've met those objectives and are reporting on some even encouraging recent progress with respect to enrollment and something like the 314 study.

Also, since the beginning of the year, we had Olivier join us and start to have some influence in both how we're thinking about next steps with respect to the pipeline, feed that into sort of the precommercial and commercial planning group. And also, start to be influenced by how we're going to think about data that's coming out of the programs, which we would expect in 2018.

I think that as demonstrated by the exercise that we went through with Dimension Therapeutics, first-order interest on our part is to think about the pipeline against the franchise areas that we're focused on right now -- basically the metabolic franchise, retinal franchise and the CNS franchise because those are areas we feel are some of the most derisked with respect to the NAV Technology Platform and areas where we think that we're going to accrue additional data to inform really smart decisions about how to add. So that's been our initial focus.

But we're also influenced by the science and sort of the world around us and, I think, we have a unique opportunity to take inventory of things, of course, that are happening in our NAV Technology universe even in areas that might be adjacent to retinal, metabolic and CNS. And so 2018, I think, is going to be a time point where we'll look to take advantage of the data from our internal programs, the influence of external, kind of communications with the NAV Technology licensees and data reported there and start to think about how to shape the next generation of programs in the REGENXBIO pipeline.

Have you articulated or do you have strategy for number of new INDs per year or is it little early to start going down that path?

We haven't given guidance on that at this point, and I think so far sort of the metronome of the first 4 has been 1 or 2 programs entering the clinic per year, at least starting with enrollment if we look at 501 and 314 starting this year and 111 and 121 starting next year. So in terms of how we've been designing and building the capabilities at the company, that sort of cadence feels right.

(Operator Instructions) The next question is from Ying Huang of Bank of America Merrill Lynch.

Maybe Ken, can you confirm that for each dose cohort for higher dose, you have to go back to DSMB for review for each of the clinical programs? And then on the 501, we understand that many patients are already on PCSK9. So shall we expect additional LDL lowering and is that expectation from the data release in the beginning of 2018?

Thanks, Ying.

So that's right: to baseline us, so these are all first-in-human studies and in these dose escalation studies first-in-human with gene therapy, the recommendations and support from the regulators at FDA as well as the institutions that we're working with are that we're doing data safety monitoring reviews in between each dose cohort. And so that's true and how we've applied that thinking to the RGX-501, the RGX-314 and also, I would expect it for the first-in-human studies that we'll be initiating next year with respect to RGX-111 and 121. And I think that's a great exercise that we are able to report on because it means objectively an outside party is looking at safety and tolerability and data that we've accrued and sort of acknowledging its support for moving forward. And so that's why we're happy to report on that progress both 314 and 501.

Turning attention to the second part of your question with respect to PCSK9 inhibition, yes this is something that, I think, we talked about in the past. The emergence of PCSK9 inhibitors while we've been in the midst of launching a gene therapy study in HoFH has been one that we have been very much in communication with both the investigators as well as the physicians, who are referring patients into this study.

We don't have complete information right now in terms of how the accrual is going with respect to patients on or off PCSK9 inhibition, but it is something that is allowed under the study. In fact, it's actually allowed for people to receive RGX-501 treatment and then even at some point, go on PCSK9 perhaps to sort of evaluate the interplay between the 2 treatments. And having just completed the first dose cohort, I don't think that we would have enough data to sort of report on anything about that type of interaction or basically information around PCSK9 and RGX-501. But that's something that we're keeping an eye on and something that's on our mind as the program progresses and something I would expect for RGX-501 is relevant as we get towards later stages of this first-in-human study.

If I may have follow up, since you already had 2 cohorts with the AMD program and 1 cohort for FH program, have you guys observed any liver enzyme elevation or any other immunogenicity reactions?

That's a great question and, I think, the preliminary outcomes of these first-in-human studies, I think, we generally have been encouraged by the safety and tolerability and again, that's reflected in the review by the DSMBs. And we're also accruing data on the secondary measures. But we'll update more of these details as we've accrued more data even between now and at the end of the year in our press release in January.

There are no further questions at this time. I would like to turn the call back over to Ken Mills for closing remarks.

Thank you. And thank all of you who joined us today for the call this afternoon. We feel we've made significant progress and that there are some near-term milestones and catalysts that we are pursuing. We look forward to progressing our pipeline and providing you all with further updates. Have a great day.

Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect. Good day, everyone.