Voyager Therapeutics Inc (VYGR) 2015 Q4 法說會逐字稿

Good morning and welcome to the Voyager Therapeutics fourth-quarter and full-year 2015 financial and operating results conference call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open up the call for your questions. (Operator Instructions). Please be advised that this call is being recorded at the Company's request.

At this time, I would like to turn the call over to Sarah McCabe of Stern Investor Relations. Please proceed.

Thank you, operator. Good morning. This is Sarah McCabe with Stern Investor Relations, and welcome to the Voyager Therapeutics fourth-quarter and full-year 2015 financial and operating results conference call. This morning, we issued a press release which outlines these results and provides the business update that we plan to discuss today. The release is available at www.Voyagertherapeutics.com.

Today on our call, Steve Paul, President and CEO, will discuss the business and clinical highlights, Jeff Goater, CFO, will review the financial results, and then we will open up the call for your questions. Bernard Ravina, VP of Clinical Development, is also on the call and will be available for Q&A.

Before we begin, just a reminder that the estimates and other forward-looking statements included in this call represent the Company's view as of today, March 17, 2016. Voyager disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to today's earnings release as well as Voyager's filings with the SEC for information concerning risk factors that could cause actual results to differ materially from those expressed or implied by such statements.

With that, let me pass the call over to Steve.

Thank you Sarah, and good morning everyone. 2015 was certainly a momentous year here at Voyager. In February, we entered into a transformative strategic collaboration with Sanofi Genzyme, in April we closed our series B financing, and in November, we completed a successful IPO, all the while continuing to make significant progress advancing our pipeline of novel AAV gene therapies for severe CNS diseases.

I just want to take a moment to thank all of our Voyager employees, our board members, advisors and consultants for their extraordinary efforts and hard work that has placed us in an excellent operational and financial position moving forward.

Since the founding of Voyager, we have assembled an outstanding R&D team that has pioneered significant advances in AAV gene therapy, neuroscience, CNS drug discovery, and that, importantly, has extensive drug development expertise.

The CNS is an attractive therapeutic area for AAV gene therapy for a number of key reasons. Durable gene expression is achievable in the CNS due to the fact that the target cells or neurons are no longer dividing. In our Parkinson's program, for example, we have data showing sustained therapeutic gene expression out four years in patients and over eight years in preclinical studies.

Targeted delivery to specific regions of the brain and broader delivery to the spinal cord is achievable using AAV. And this has been shown in both preclinical and clinical studies. There are many CNS diseases that are monogenic, or caused by a single gene, so the biological target and thus therapeutic strategy we are pursuing is highly validated.

Because the CNS is a relatively contained or enclosed space due to the blood-brain barrier, it is immune privileged. Thus the likelihood of a significant immune response following vector administration is relatively low, and the challenge of pre-existing immunity to administering our viral vectors is minimized.

Importantly, we estimate that over 1,300 patients, including some 200 patients with various CNS disorders, have been treated with various AAV gene therapy candidates, and to date no AAV related serious adverse events have been reported.

Today, we have five programs targeting severe CNS disorders in our pipeline, including AAV gene therapies for the potential treatment of advanced Parkinson's disease, a monogenic form of amyotrophic lateral sclerosis, or ALS, Friedrich's ataxia, Huntington's disease, and spinal muscular atrophy, or SMA.

Our most advanced clinical candidate, VY-AADC01, is currently in a Phase Ib dose ranging safety study for the treatment of patients with advanced Parkinson's disease. Now, Parkinson's disease affects approximately 700,000 patients in the US, and 7 million to 10 million patients worldwide. While most patients' symptoms are reasonably well control by medications, most notably L-dopa or levodopa, for three to five years post diagnosis, patients that have the disease long enough will eventually reach a point in the progression of the disease where their motor symptoms are no longer adequately controlled by levodopa.

It is estimated that up to 15% of the prevalent population with Parkinson's disease, or approximate 100,000 patients, in the US have motor fluctuations that are not adequately controlled by levodopa or existing oral therapies. These patients with advanced Parkinson's disease currently have limited therapeutic options and could be candidates for our product, VY-AADC01.

So what are we trying to achieve with this potential gene therapy product? We seek to restore Parkinson's disease patients' responsiveness to levodopa or to turn back the clock on their disease by delivering the gene for the critical enzyme that converts levodopa into dopamine and only in a specific region of the brain that is depleted of dopamine and controls the motor symptoms of Parkinson's disease. The gene that we are delivering encodes for the enzyme aromatic L-amino acid decarboxylase, or AADC, in a region of the brain known as the putamen. This is where levodopa is converted to dopamine to control the motor symptoms of the disease.

In the typical course of Parkinson's disease, there is a dramatic reduction in AADC levels in the putamen and this reduction in AADC levels is strongly correlated with the worsening of patients' motor symptoms as the disease progresses. In addition, we are targeting cells in the putamen that do not die as the disease progresses, and it has been shown that sustained for at least four years if not longer expression of AADC in these neurons in Parkinson's disease patients can be achieved following a single treatment with VY-AADC01. Based upon preclinical and clinical studies completed today, we believe that achieving adequate coverage of the putamen with our vector will be critical to achieving clinically meaningful efficacy.

Now, our Parkinson's program also employs a combination of biomarkers that are relatively unique in the gene therapy field. First, we are delivering our vector using a real-time intraoperative MRI guided system that allows the neurosurgeon to visualize precisely where the vector is being used, and importantly, we can also quantify and optimize how much of the target tissue, in this case the putamen, is being exposed to the therapy.

Second, we are using positron emission tomography, or PET, and a radio tracer called fluorodopa that allows us to literally measure the activity of the gene product, the enzyme AADC that we are delivering. We measure the activity of this enzyme at baseline prior to the treatment and again six months after the patients are treated to confirm adequate delivery and expression of the therapeutic gene.

Finally, we use an intravenous levodopa challenge test which allows us to objectively measure patients' increased sensitivity to levodopa six months after treatment compared to patients at their baseline.

Now, in addition to the biomarkers I just described, we are also evaluating the severity and change in the patients' motor symptoms based upon well-accepted clinical endpoints that have historically been used to gain regulatory approval of Parkinson's disease medications such as improvement in patient self-rated off-time using a diary, and the unified Parkinson's disease rating scale, or UPDRS, administered by a clinical neurologist.

Our current Phase Ib trial can enroll up to 20 patients where we plan to again optimize both the delivery and the dose of our vector. Of course, the primary goal of this Phase Ib trial is to further establish the safety of VY-AADC01, but we will assess for signs of efficacy, as I've already described. As of October 2015, we disclosed that eight patients had been treated in ongoing trial, and that no vector-related adverse events or hemorrhages had been seen.

In addition to safety, we are also evaluating all patients in the trial using the biomarkers and clinical efficacy endpoints I highlighted earlier. Just to reiterate, all of these biomarkers and clinical efficacy measures are determined at baseline and then again at six months following treatment. However, each patient is also evaluated clinically at three months post treatment.

In October of 2015, we disclosed encouraging signs of efficacy in the first patient dosed in the second cohort from our ongoing trial. This was the sixth patient dosed overall in the trial but, importantly, this was the first patient to receive a higher infusion volume and dose in order to achieve greater coverage of the putamen versus the coverage we achieved in the first five patients in our lower dose, lower volume cohort number one where the coverage of the putamen achieved was suboptimal and no remarkable signs of efficacy were seen at six months following treatment.

Now, in this patient, patient number six, we saw the following at three months post-treatment: a four hour reduction in off-time with corresponding increases in on-time and sleep; an 11 point reduction, or a 69% improvement, in his UPDRS3 motor score on medication. These improvements and clinical scores also coincided with approximately a 40% reduction in patient number six daily dose of levodopa.

The clinical improvement seen in patient number six was considerably greater than that seen in the aggregate in cohort one, our lower dose group, which we believe is likely comparable to that observed with placebo or sham treatment. And it was also more consistent across the endpoints measured. On average, the patients in cohort one only had a reduction in off-time of about two hours and only an 11% improvement on average in UPDRS3 motor scores at three months. Thus, we are encouraged by the results in patient number six.

Enrollment in our ongoing Phase Ib trial remains on track, and we expect to report topline human proof of concept data in the fourth quarter. These topline results will include six-month follow-up data from our first 10 patients, the five patients in cohort one and the five patients in the higher volume and higher dose cohort two. Again, at the six-month time point, we will have all of the biomarkers and clinical efficacy measures I've already mentioned.

We will also provide an interim update on this trial sometime in mid-2016, and this update will include coverage data from the first 10 patient cohorts one and two enrolled in our trial.

Earlier this year, we initiated GMP production activities for VY-AADC01 in collaboration with MassBiologics, an FDA-licensed manufacturer affiliated with the University of Massachusetts Medical School. The collaboration is utilizing MassBiologics' new 30,000 square foot manufacturing facility in Fall River, Massachusetts. Also as planned, a second clinical trial site was initiated earlier this year at the University of Pittsburgh School of Medicine, and our initial clinical trial site at the University of California San Francisco continues to enroll patients as well.

Let me now take a moment to review the three key pillars of our product engine, our platform, before touching on our other pipeline programs. First, as I've said, we believe strongly that delivery to the CNS must be optimized to ensure that the AAV vector and gene we are delivering are getting to be appropriate target region and cells of the brain and spinal cord to have clinically meaningful effects. We are doing this for each of our product programs, most notably for our Parkinson's disease program, as I've just illustrated, but also for our spinal cord programs using relatively noninvasive CSF dosing.

Second, we are investing in advanced capabilities in the area of AAV vector engineering and optimization in order to identify novel capsicum vectors that have the characteristics, including tissue tropism and distribution properties, which are optimal for a given disease.

And third, we have built our own AAV production and manufacturing capabilities based upon our baculovirus/Sf9 platform. We have both research grade AAV production and GMP manufacturing capabilities operational and in-house. This platform produces high-quality vector and is readily scalable, important attributes as we look ahead to late stage clinical development and commercialization of our drug candidates.

While our initial programs are targeting CNS disorders where either gene replacement or gene knockdown is the goal, the capabilities we have built via our product engine are readily applicable to therapeutic areas outside of the CNS and our novel AAV vectors can be leveraged to deliver other types of therapeutic genes, such as genes that encode for monoclonal antibodies as well as the payloads needed for gene editing and to deliver to other tissues such as the liver and muscle. Generally, these all represent new areas we may pursue independently or with a partner in order to create further value for our Company.

In addition to our clinical stage Parkinson's program, we are also focused on advancing four preclinical programs. These programs are all monogenic CNS disorders where either a loss of or abnormal discretion of a specific gene has been identified as the absolute cause of the disease. Our programs include VY-SOD101 for a monogenic form of ALS targeting the knockdown of the gene for superoxide dismutase 1, or SOD1, VY-FXN01 for Friedrich's ataxia targeting the replacement of a healthy version of the protection gene, VY-HTT01 for Huntington's disease targeting the knockdown of the Huntington gene, and VY-SMN101 for SMA targeting the replacement of a healthy version of the survival motor neuron 1 gene. I'm pleased to say that each of these programs continues to progress nicely and we are still targeting our next IND filing for late 2017.

On that note, I will pass the call over to Jeff to walk through our financials in more detail.

Thank you Steve. As Steve mentioned, we are in a strong financial position as a result of the Sanofi Genzyme collaboration, our series B financing, and our successful IPO, all completed in 2015.

In this morning's press release, we reported cash, cash equivalents and marketable securities totaling approximately $224 million as of December 31, 2015, compared to approximately $161 million as of September 30, 2015. The total includes net proceeds of approximately $73 million from our IPO in November of 2015.

Our GAAP net loss for the fourth quarter of 2015 was $8.8 million, or $0.67 per share, compared to a net loss of $5.2 million, or $6.58 per share, for the same period in 2014. Our GAAP net loss was $38.3 million, or $9.14 per share, for the year ended December 31, 2015, compared to a net loss of $17.7 million, or $27.83 per share, for the same period in 2014.

Our R&D expenses for the fourth quarter of 2015 were approximately $9.2 million compared to $3 million for the same period in 2014. The increase was largely due to expenditures in advancing development of our pipeline and product engine, including increased R&D personnel costs associated with the growth of the Company. Our R&D expenses were $27.7 million for the year ended December 31, 2015 compared to $8.9 million for the same period in 2014.

Our G&A expenses were $3.2 million for the fourth quarter of 2015, compared to $1.5 million for the same period in 2014. The increase was largely due to expenditures in G&A personnel associated with the growth of the Company, including expenses related to operating as a public company. G&A expenses were $9.9 million for the year ended December 31, 2015 compared to $5.5 million for the same period in 2014.

To support our continued growth and advancement of our pipeline, we signed an agreement to lease an additional facility in Cambridge, Massachusetts in January of 2016. The additional facility will include laboratory and office space and is projected to be ready for occupancy in early 2017. We estimate the capital expenditures associated with the buildout of this facility will be approximately $5 million in 2016.

Based on our current operating plan, we expect to end 2016 with cash, cash equivalents and marketable securities of approximately $160 million, and we project that our existing cash, cash equivalents and marketable securities will be sufficient to fund operating expenses and capital expenditure requirements into 2019.

Now, before I turn the call over to the operator for your questions, I do just want to take a moment to briefly highlight upcoming investor events mentioned in our press release. On March 22, we will be presenting at the Alliance for Regenerative Medicine's Fourth Annual Cell and Gene Therapy Investor Day at the Metropolitan Club in New York City. On April 29, we will be hosting our first R&D day at the Le Parker Meridien Hotel in New York City. The R&D day agenda includes presentations on both our Parkinson's disease and monogenic ALS programs, as well as presentations from leading KOLs in each of these areas. We will also highlight new opportunities in CNS gene therapy. Invitations were sent last week. If you need an invitation, please contact Sarah McCabe at Stern Investor Relations. Her contact information can be found on our website.

With that, we would now like to open up the call for questions. Operator?

(Operator Instructions). Josh Schimmer, Piper Jaffray.

Good morning. Thanks for taking the questions. I have 2.5 questions. First, can you describe the learning curve at the Pittsburgh site in terms of the procedure and their ability to adopt it seamlessly?

Thanks Josh. This is Steve. I'm going to turn this over to Bernard.

So, the Pittsburgh site is actually very experienced doing clear point for deep brain stimulation. So that's why we selected them as a site. The neurosurgeon there, Mark Richardson, also has quite a bit of experience doing infusions for other indications such as brain tumors, so they are really very well prepared to participate in this study. So, the learning curve is -- they really doing extremely well.

Yes. And Josh, let me add that the teams have sort of cross-trained, so they visit each other in the OR at each institution. For example, at UCSF, on the last patient, the team from Pittsburgh was there, and the team from UCSF will travel to Pittsburgh and will be participating in the initial surgeries there as well. So, there's a very, very close connection between those two teams.

How do you then think about scaling it up into a broader group of centers for Phase III and then commercialization?

That's a great question. And again, as we indicated earlier, we are using a clear point system as a commercial system. That's available at some 20-plus academic medical centers. We plan to then identify, and we've already started that process, a number of other surgical sites or medical centers that can do this procedure and scale up from there. Conceivably, we will begin initiating studies at other sites in the very near future.

Good. And then for the ongoing trial, are you screening patients for baseline immunogenicity to AAV2? In your prepared remarks, it sounded like not necessarily. And also are you looking at baseline PET imaging to confirm some threshold level of AADC activity? And how are you finding -- if so, how are you finding kind of the baseline screen or success rate for diminished activity?

We think the problem of pre-existing immunity for intra-cerebral administrations we are doing is going to be very, very markedly reduced. As you know, antibodies in the systemic circulation get into the brain only at about 0.1% mass-to-mass volume. And therefore, we don't think this is going to be a problem moving forward. Having said that, we are routinely screening patients now. In the event we find someone with a high titer of antibody against AAV2, we will eliminate them, exclude them from the study because recently don't want that to be a confounding factor. It doesn't seem to have been much of a problem to date. I think there's only been one patient that had high enough antibodies to make us want to select another patient for the trial. So, moving forward, we don't think this is going to be a problem.

I forgot your next question, Josh, did you have another one?

Baseline AADC imaging (technical difficulty)

Yes. Actually, of course we do get the PET scan at baseline, but the patients are really enrolled on the basis of the severity of their motor symptoms to begin with, the response, the early response the patient had to levodopa. We don't really use AADC PET as a way of screening patients. It's uniformly dramatically reduced in these patients just to begin with. This is a very, very common finding. So we don't use the PET for that purpose.

We do want to obviously use the PET to make sure that we've delivered enough of the gene. And as I underscored, in this case, we can actually measure the gene product itself, the enzyme, the catalytic activity of that enzyme with the PET tracer fluorodopa. So it's really quite a unique opportunity to help us know how much we've actually given back, if you will, or delivered back to the patient.

Got it. Thank you very much.

Jeff Chen, Cowen & Company.

Hi, good morning. Thanks for taking my questions. The first one is on the decision in terms of the need to increase dosing if necessary. Is that decision going to be made midyear when you announce the putamen coverage, or is that more toward Q4 data disclosure?

It's a great question. This is a dose ranging study. Our goal is of course to both assure that we are safe, that the procedure is safe, and then also to optimize the dose. It is our current thinking that we will get additional data. And the three-month data as we reported for patient number six, for patients number seven, eight, nine and 10 should be informative, and that will help us determine whether or not we should increase the dose further. We can go up with the current formulated product, up on the dose about sixfold. We could also potentially increase the volume of it. The volume looks pretty good right now with respect to the coverage we've obtained. Particularly we've seen good coverage in patient number eight, which we've reported already. So I think we're just going to have to take it patient by patient, but in aggregate, we would love to see the results for the first -- the second five patients at three months to determine whether we need to dose escalate even further.

Great. That makes sense, thanks. And so then the data at the -- in Q4, in terms of prioritization of what's most important in all of these biomarkers, and this was off-time in UPDRS scores, could you help us understand which ones that you would emphasize on in terms of clinical benefit?

I think they're all pretty importantly -- they tell us different things. So the PET scans will tell us how much of the gene we've delivered, and to what extent does that expressing active protein active enzyme, and that's pretty important to us. And we will have reference standards there with patients that don't have Parkinson's disease, etc. So we will get some really good idea of how much we've delivered.

The levodopa challenge test is a relatively objective way of looking pre- and post-surgery at the responsiveness of the patient to levodopa, so I like that test a lot in terms of what it might tell us. And most importantly obviously, though, is are we getting, are we achieving a clinically meaningful response of the patient post-surgery versus pre-surgery on his or her off-time, and on-time, and UPDRS measurements. Obviously, we like to do that without any troublesome dyskinesia. So I think all of them are important.

For me, the clinical endpoints trump, but showing that the biomarkers, since this is a noncontrolled or a non-sham controlled trial, are all going in the right direction are also important.

Thank you very much.

David Nierengarten, Wedbush.

Thanks for taking the question. Maybe stepping aside from Parkinson's for a second, I was just wondering if there have been -- or how you have been watching the competitive landscape evolve in CNS gene therapy and if that has changed or affected your prioritization for your next IND. Thanks.

Not really. We do watch and monitor the competitive landscape quite closely. We think we are in a very competitive position right now with all of our programs, and so they are advancing as at rapid rate as we can advance them. And again, we think the likelihood is that the next IND will be in ALS or Friedrich's program, or both, around the same time, hopefully towards the end of next year.

Okay. Thanks.

I'm showing no further questions. I will now turn the call back over to Steve Paul for closing remarks.

In closing, we just want to thank everyone for their interest and in their support of Voyager Therapeutics. We are extremely excited about the transformative potential of AAV gene therapy and we are highly motivated to develop these novel therapies for patients with these severe CNS diseases. 2015 was clearly a transformative year for the Company, and we are looking forward to an even better 2016.

Thanks again for your time and we look forward to updating you on our progress again very soon. Thank you.

Thank you. Ladies and gentlemen, that does conclude today's conference. You may all disconnect, and everyone have a great day.