Voyager Therapeutics Inc (VYGR) 2017 Q2 法說會逐字稿

Good day ladies and gentlemen and welcome to the Q2 2017 Voyager Therapeutics earnings conference call. At this time all participants are in a listen-only mode, later we'll conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) And as a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Matt Osborne, Vice President of Investor Relations and Corporate Communication. Sir, you may begin.

Thank you, Operator. Good morning and welcome to the conference call. This morning we issued a press release, which outlines the results and corporate highlights for the second quarter of 2017. The release is at Voyagertherapeutics.com. Today in our call, Steve Paul, Voyager's President and CEO, will briefly discuss our recent corporate including R&D highlights; Bernard Ravina, Voyager's Chief Medical Officer, will review the pipeline program highlights; Jane Henderson, Voyager's Chief Financial Officer, will review the second quarter financials and other activities, and then we will open up the call for your questions. 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, August 8, 2017. Voyager disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to today's earnings release, as well 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, I will pass the call over to Steve.

Thank you Matt, and good morning everyone. During the second quarter we made great progress across all functions of the business. And I'll briefly describe the highlights before turning the call over to Bernard. For our lead program for advanced Parkinson's disease we believe VY-AADC could offer a compelling alternative for the 1000s of advanced Parkinson's disease patients who already elect to undergo deep brain stimulation each year, and based on the mechanism could be synergistic with novel non-oral forms of levodopa currently in development. We are pleased to have recently successfully dosed our first patient using a posterior trajectory aimed at potentially improving surgical times and increasing coverage of the specific region of the brain we are targeting, as Bernard will discuss. We also advanced our ALS candidate targeting the SOD1 mutation closer towards the clinic, we announced selection of a lead candidate for our Huntington's Disease program. And our lead candidate optimization efforts continue to progress for our other programs, including our candidate for Friedreich's ataxia. Underpinning all of this progress requires optimizing multiple parameters in parallel, including selection of the ideal AAV vector capsid, engineering the transgene payload, establishing effective delivery to the CNS, and having a manufacturing process in place to produce high quality vector at scale. All core competencies here at Voyager that continue to differentiate us as leaders in developing gene therapies for severe neurological diseases. Our efforts on one very important aspect of gene therapy development mainly AAV capsid optimization also continues to advance. Most recently exciting work led by doctors Ben Deverman, and Viviana Gradinaru at the California Institute of Technology and recently published in Nature Neuroscience identified novel AAV capsids with a significantly greater ability to cross the blood/brain barrier after systemic IV administration than the current historical standard AAV9. In fact, in adult mice one of these unique AAV capsids provided up to 100 fold increase in gene transfer to the central nervous system compared to AAV9 after a single intravenous administration. Obtaining similar results from translational studies in non-human primates now underway by Voyager could be transformational as we consider these AAV capsids for our current and future programs. And we are thrilled to be partnered with the Gradinaru Laboratory at Cal Tech to further advance this technology. Bernard will now discuss some of the exciting progress with our programs including our Parkinson's disease program.

Thanks, Steve and good morning everyone. As Steve mentioned, the Parkinson's program continues to progress. We recently safely completed our first posterior trajectory case. Investigators have identified additional patients and plan to perform more cases in the next few months. This approach has potential to shorten the overall surgical time, it could also increase the coverage of the putamen compared to cohorts 1 through 3 of the Phase I-B trial that used the trans-frontal or top-of-the-head approach. We continue to follow patients in the 3 cohorts Phase I-B trial. Later this quarter we plan to report 6 month data from cohort 3 and longer-term data from cohorts 1 and 2.Cohort 3 will help determine if higher concentrations of vector can add to motor symptom improvement beyond what was observed in cohort 2. The initial results we reported late last year for cohort 2 at 12 months were already clinically meaningful and were well within the range of our product profile. Replicating these results in cohort 3 would be further validation of our approach. Lessons from cohorts 1 through 3 in the Phase I-B trial, as well as from the posterior surgical approach trial will inform the dose selection and the design of our pivotal program. We will initiate that program later this year. We've outlined the design of the pivotal program, which will consist of a single Phase II and a single Phase III trial conducted in staggered parallel. The program focuses on key aspects of motor function measured over a sufficient period of time to detect a meaningful and durable benefit compared to placebo. The design of this program has a number of key features. These included optionality, with respect to timing of filing of BLA and flexibility with respect to selecting the right endpoints. The Phase II trial will inform us early on if we properly blinded the study with placebo surgery and if we obtained sufficient coverage of the putamen with the increased number of surgical sites that we'll have for the Phase II. Achieving both in the Phase II will allow us to begin enrolling the Phase III in staggered parallel, while the Phase II continues blinded follow-up. Pending discussions with the regulatory authorities, a large treatment effect observed in the Phase II may support a BLA submission in the ongoing Phase III trial would then be supportive or confirmatory. Importantly, anything we may learn about the clinical efficacy endpoints from the Phase II trial we can apply to the Phase III before it's un-blinded. In summary, we're very pleased with the design of the pivotal Phase II, III program its robustness, optionality and flexibility. We will provide more details on expected enrolment rates closer toward the start of the program later this year. As Steve mentioned, we also made good progress during the quarter on our lead clinical candidate VY-SOD101 from a monogenic form of ALS. A single intrathecal injection of VY-SOD101 has the potential to durably reduce the levels of toxic mutant SOD1 protein in the spinal cord and slow the progression of SOD1 ALS. Slowing the progression of this fatal disease would be a dramatic therapeutic advance. Our IND enabling work on this program continued during the second quarter with preclinical pharmacology testing complete and toxicology studies underway. In terms of our Huntington's and Friedreich's ataxia programs we announced the selection of a lead candidate for Huntington's, where we aim to suppress the expression of the toxic mutant Huntington protein. And we're making good progress toward selecting the lead candidate for our Friedreich's ataxia program, where we aim to replace missing frataxin. The goal of both programs is it to slow or even halt the progression of these devastating neurological diseases with a one-time treatment. I'll now pass the call over to Jane, who can walk you through our financials in more detail.

Thanks, Bernard. And good morning everyone. Of then in the next few moments reviewing the financials and guidance before we move to Q&A. Voyager reported a GAAP net loss of $18.9 million or $0.73 per share for the second quarter ended June 30th, 2017 compared to a GAAP net loss of $9.3 million or $0.37 per share for the same period in '16. Collaboration revenues were $1.2 million for the second quarter of '17 compared to $3.7 million for the second quarter of '16. Collaboration revenues reflect recognition of payments for research and development services provided to Voyager under the Sanofi Genzyme collaboration agreement. These revenues can vary, based on quarterly assessments of expected or anticipated efforts under the collaboration. These revenues decreased during the second quarter of '17 from the prior year quarter primarily due to ongoing reviews of programs under the collaboration. R&D expenses were $15.3 million for the second quarter compared to $10.5 million for the same period in '16. The year-over-year increase in R&D expenses was primarily due to the development of Voyager's pipeline, as well as increased personnel and facility cost to support the pipeline advancement. G&A expenses of $4.5 million for the second quarter of this year compared to $2.9 million for the same period in 2016. This increase was primarily due to facility and personnel cost to support Voyager's growth. Voyager ended the quarter with total cash, cash equivalents and marketable debt securities of $141.3 million. The company has no long-term debt. In terms of guidance, we continue to expect to end 2017 with total cash of approximately $90 to $100 million. We continue to project that our existing cash will be sufficient to fund operating expenditures and capital expenditures into 2019. As a reminder the 2017 year-end cash and runway guidance does not assume that Sanofi Genzyme opts in for the ex-US rights to Parkinson's program. For this program if they opt in, there is no cash exercise payment from Sanofi Genzyme. However, the cost for this program would be roughly shared between the 2 companies. The cash runway into 2019 also does not include potential business development transactions. We remain committed to pursuing business development opportunities around some of our un-partnered programs and platform capabilities. Our goal is retaining value for the company and obtaining significant sources of capital. With that we'd now like to open the call up for questions. Operator?

[Operator Instruction]. Our first question comes from the line of Philip Nadeau with Cowen Company.

First on the staggered Phase II, III trials for VY-AADC, you mentioned that you look at the Phase II to determine whether the sham surgery accurately or adequately blinds investigators and patients. Can you talk a little bit more about that, what in particular are you going to look for to see if it's adequately blinded?

So really what we're looking for there is to make sure that the appropriate blinding procedures were followed, so there are extensive blinding procedures that will articulate further as we get more towards the end of the year, but that involves the surgical team, how the drug is dispensed, how the images during the surgery are handled and how some of the information about how the procedure went was handled. We will also do things like have independent raters at the site, so the treating neurologist is different from the rating neurologist. So there'll be several steps to ensure the blind. What you really want to do in a situation like this is make sure that you've adequately captured all of those steps and then you also have an audit trail that all of those steps were appropriately followed and nobody sort of accesses the surgical images who shouldn't. So there are a bunch of things in all of these blinding procedures that will go from the point that the patient arrives for surgery up through the completion of that procedure.

And then second, you also mentioned that the Phase II could support a filing if there was a robust finding on the primary endpoint. Can you give us some idea of what would be a robust benefit?

Yes, so we will unpack some of the powering assumptions again as we get closer towards the end of the year and we initiate this. For the Phase II I think cohort 2 at 12 months gives you a reasonable benchmark for what that would look like. So approximately a 2-hour treatment effect compared to the placebo or sham surgery. So cohort 2 at 12 months was about a 4-hour improvement in on time, if you think that the placebo surgery would be about an hour or at most 2 hours, a placebo effect that should put you in the right range.

And on the ALS program, I believe in the press release you said IND filing late 2017 or early 2018, when do you think the first patient can enter that trial and when could we get some preliminary data?

Yes, so the start up for these studies if you submit an IND, the startup is in the 4 to 6 month timeframe alone for IRB reviews and all the other things that happen with the gene therapy startup. So it puts you Q2 of next year for first patient in and then a reasonable point to look for biomarker data, CSF SOD1 measures, things like that would be about 6 months after dosage.

And our next question comes from the line of James Birchenough with Wells Fargo.

Just a few follow-up questions. Just on the posterior approach in the one patient you have dosed so far, if you can't give specific details, I understand, but can you say whether it confirmed a thesis of being able to do this in a shorter time and achieve a greater putamen coverage?

Just to sort of familiarize people a little bit, it's the same drug being administered in overall the same surgical procedure, it's just different positioning of the patient and the trajectory at which the cannula enters is posterior instead of top of the head. So overall it's the same surgical procedure, but we think it really offers the opportunity for greater efficiency, shorter surgery as well as incrementally better coverage. So we will talk about the coverage in these patients at the end of the quarter with the rest of the clinical data from cohorts 1 through 3. Overall, we're really pleased with how it went, it was a shorter surgery and again we'll talk about coverage in a few weeks.

Jim, we would like to just get a few more patients under our belt before we publicly disclose what we've seen just to make sure what we see is what we see and it's consistent.

We did see this patient leave the next day with just a couple of Tylenol, so confirmed what we've seen with many other patients in the first 3 cohorts.

Pesuming with the whole cohort.

So, just in terms of optimizing the value of the gene therapy over the longer term, you have got some moving pieces, where you're seeing improvements in on time and reducing levodopa dose over the first 6 months. Is there value to actually increasing the levodopa dose beyond that point to really optimize on time and other measures? I'm just trying to get a sense of whether you feel like you've fully have explored the moving parts of the enzyme and the levodopa dose and whether there's some protocol you might be able to implement to push the levodopa dose back up over the longer term?

Right, so it's a good question, so there are 2 parts to making this work, there's the ADC enzyme and there's the substrate levodopa and generally as you've seen, we've had reductions in dose both because the dyskinesias, which subsided as people reduced their doses, but also because they didn't need as much. So what we'll allow going forward is what Parkinson's specialists do routinely, which is to manage that levodopa to optimize on time, minimize off time. But so far what we're seeing is sustained reductions due to the enhanced sensitivity and increase in dopamine production.

And Jim although the numbers are small, one of things we are encouraged by is the fact that the 12 month data really does look a bit better than the 6 month data. The 6 month data still looks pretty good but we're seeing progressive affects that we really are encouraged by studies in the monkeys as well and from some of the earlier preclinical data so we're really encouraged by that and that raises the questions about what will happen with the levodopa dose as time progresses.

And maybe just a final question on the ALS program, the SOD1 mutation is fairly infrequent but I believe there's more frequent mutations that affect the ALS progression. Are there plans to move beyond SOD1, could this be a gateway to the larger mutations and maybe an update on where you might be with other mutations beyond SOD1?

Yes absolutely. So, the most common mutation for the inherited forms of ALS is C9orf72. It looks like a toxic gain-of-function mutation and so silencing C9orf72 exactly as we are doing for SOD1 is the strategy and we're well on our way on that program right now.

And our next question comes from the line of Christopher Marai with Nomura.

I just want to know if we can maybe move towards the SOD1 ALS program. I know you had mentioned that you've got a second generation AAV capsid and basically got a hundredfold better -- perhaps CNS penetration than some of the AAV9. Perhaps, you could comment on potential preexisting immunity to that specifically. And then 2, IP freedom to operate there. How should we look at that? Is that something that you have or you believe you have full freedom to operate with respect to? And then finally just in terms of manufacturing, when you think about that SOD1 ALS program, do you anticipate having capacity and the process all set and in place prior to going into patients and then with that capacity in process cover everything through commercialization?

Let me see if I can handle these one at a time with respect to the Cal Tech capsids I believe you've asked about that, what we've publicly disclosed that these do in our hands work as described in the 2 publications. They are very effective at delivering genes to the CNS the brain and spinal cord in preclinical models primarily in mice. And so what we're doing now is very busily attempting to replicate and extend that data to non-human primates, to monkeys, which we believe is a better proxy of what will happen in humans and these studies are moving along very quickly and encouragingly. However, until we see those data, we won't know exactly whether those capsids become ideal for delivering genes, silencing genes, or delivering genes after IV or systemic administration. As we've said if that does turn out to be the case the data support that this could be very transformational because delivering IV is always better when you want to get broad distribution of a particular gene. This would not work, obviously, for our Parkinson's program but for diseases that more globally affect the brain or the spinal cord these capsids would really, really be game changers in our opinion. So, those studies are underway and once we see the results of those we'll decide whether they constitute second generation program for let's say for ALS. Now, for the second question on manufacturing -- let me comment on the preexisting immunity. As you probably know these are AV9 variants. They were designed as -- there are 7 more inserts into AV9. So, there theoretically is the risk of having cross reactive neutralizing antibodies to AV9 that would cross react and potentially neutralize these capsids at some frequency in the population. We're also doing those studies as well to determine what that is but it would be a similar scenario frankly for virtually all of the AV capsids that are being dosed systemically. The advantage of intrathecal dosing, which is where we are right now with our ALS program, is that the CSF levels of neutralizing antibodies are by definition about 0.1% of what circulates in the body in the blood so the systemic exposures are -- the CSF exposures of these antibodies are greatly, greatly reduced and therefore we don't anticipate huge problems even if there are some circulating antibodies in the blood. The amount of vector produced there still reasonable much less than what you'd need after -- if you went systemically and we're able to produce that vector quite readily with the process that we have up and running at the back of our Sf9 platform. So, we don't anticipate any problems in production or manufacturing as being on the critical path for this program.

(Operator Instructions) And our next question comes from the line of Tom Shrader with Stifel.

Back to the posterior surgical front. Is there any history here for implants that are delivered one way and then the delivery is changed, do you need full approval, or is your sense that if you have data and surgeons are used to the surgery that they're going to wait for approval or just your thought on what approval would look like for just simply a different surgical route.

So, the surgeons could take a variety of trajectories and they do that with the existing procedures like for epilepsy and for deep brain stimulation. So, those aspects or like the hardware associated with it is really left at surgeon's discretion. And there's precedent for this posterior delivery approach just the angle and it's done with the clear point system. So, it's used in temporal lobe ablations for refractory epilepsy. So, there has been 100s of cases done that way using the clear point system for epilepsy. So, there's clinical experience so really that's why I emphasize, yes for us, for the purposes of our program we think this is going to be a more efficient surgery and for the most part people will want to do posterior trajectory for that reason. But overall, it's the same surgical procedure with the same hardware.

And Tom, like any drug, we will define with our pivotal trial dose and volume coverage gives some parameters to the surgeons so that they have an idea of what's safe and efficacious and that's what they will aim for and we would envision in the future other surgical devices, other surgical approaches, the area of neurosurgery is changing pretty rapidly in terms of robotics and other sorts of things. We will we will make and make available the drug with the data set from the pivotal trial and that will give the surgeons those parameters that they need.

Exactly. The range of coverage with the drug and then surgeons will be able to use posterior or if appropriate [transferal] trajectory.

So, all you need is data.

Correct.

And then I had one other question. I don't know if you want to rehash it, but your decision to get out of SMA, I'm just a little curious why given the fact that the current routes may not even be able to make the material they need to treat type twos And any thoughts there, was there more there than that? I mean I know you're behind but in type twos with systemic delivery you may be not behind at all. So just your thoughts there if you're willing to revisit old things.

Yes, we pause the program, Tom, obviously science advances and with new data we will always stay flexible and opportunistic. I will say just one remark it has nothing to do with SMA particularly specifically, but these new capsids are really pretty exciting to us and we just want to wait the data set from the monkeys but this could be a game changer as earlier.

Yes.

Okay. This concludes our call and I want to thank everybody for attending this morning and for your thoughtful questions. So, we every much look forward to updating you on our progress in the near future. Thank you.

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