Earnings Call Transcript - EDIT Q3 2020

Operator, Operator

Good afternoon and welcome to Editas Medicine Third Quarter 2020 Conference Call. All participants are now in a listen-only mode. There will be a question-and-answer session at the end of this call. Please be advised that this call is being recorded at the Company’s request. I would now like to turn the call over to Mark Mullikin, Vice President of Finance and Investor Relations at Editas Medicine.

Mark Mullikin, Vice President of Finance and Investor Relations

Thank you, operator. Good afternoon everyone and welcome to our third quarter 2020 conference call. Earlier this afternoon, we issued a press release providing our financial results and corporate updates for the third quarter of 2020. A replay of today’s call will be available on the Investors section of our website approximately two hours after its completion. After our prepared remarks, we will open the call for Q&A. As a reminder, various remarks that we make during this call about the Company’s future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent quarterly report on Form 10-Q, which is on file with the SEC. In addition, any forward-looking statements represent our views only as of today, and should not be relied upon as representing our views as of any subsequent date. Except as required by law, we specifically disclaim any obligation to update or revise any forward-looking statements, even if our views change. Now, I will turn the call over to our Chief Executive Officer, Cindy Collins.

Cindy Collins, Chief Executive Officer

Thank you, Mark. Good afternoon, and thank you everyone for joining us for our corporate update call for the third quarter of 2020. In addition to Mark, I am joined by Charles Albright, our Chief Scientific Officer; and Michelle Robertson, our Chief Financial Officer. Our progress during the third quarter has laid an important foundation for the advancement of our best-in-class in vivo and ex vivo CRISPR medicine pipeline. We resumed dosing in the BRILLIANCE Phase 1/2 trial, the first clinical trial of an in vivo CRISPR medicine, while advancing our engineered cell medicines to treat sickle cell disease and cancer towards the clinic. Starting with our in vivo programs, regaining full operational control of our ocular programs through our new agreement with AbbVie provides us with valuable flexibility as we work to strategically advance our pipeline. We have transferred the CRO contracts and the IND for the Phase 1/2 BRILLIANCE trial of EDIT-101 for LCA10 back to Editas, and we plan to finish transferring CMC activities in the fourth quarter. We are pleased to report that we have completed dosing of the first cohort in BRILLIANCE and enrollment remains active. However, we are experiencing delays due to the ongoing COVID-19 pandemic, which has made the logistics of screening and dosing patients more challenging, particularly for patients residing outside the United States. We are making every effort to accelerate enrollment in this landmark trial that holds the potential to help blind people see again. Turning to our ex vivo CRISPR cell medicines, we remain on track for an IND filing for EDIT-301 in the fourth quarter and are proud to be one step closer to bringing a potential best-in-class medicine to patients with sickle cell disease. We will present new EDIT-301 data as well as our progress in building a robust, scalable manufacturing platform for the program at the upcoming American Society of Hematology (ASH) meeting in December. On the regulatory front, we were pleased to announce that we received Rare Pediatric Disease Designation from the U.S. FDA for EDIT-301. This designation is a significant milestone that highlights the serious and life-threatening nature of sickle cell disease. In oncology, we are advancing EDIT-201, an allogeneic NK cell medicine to treat solid tumors. We will present preclinical data at ASH which shows increased effector function of EDIT-201 compared to non-edited NK cells, and will also show data at the upcoming Society for Immunotherapy of Cancer (SITC) Annual Meeting. Before handing the call over to Charlie for more detailed updates across our pipeline, I would like to touch upon some corporate highlights from the quarter. Our manufacturing agreements with Azzur Group and Catalent provide us with capacity and flexibility as we advance our programs into the clinic. These agreements support the preclinical and clinical development of a pipeline including EDIT-101, EDIT-301 and EDIT-201. We are proud to have established a strong manufacturing program to support the development of our programs particularly given the importance of having scalable, clinic-ready manufacturing in place to support the delivery of AAV and cell-based therapies. On the intellectual property front, we were pleased with the U.S. Patent and Trademark Office's recent decision granting the Broad Institute’s motion for priority benefit in the ongoing interference proceedings regarding certain Broad CRISPR/Cas9 patents exclusively licensed by Editas Medicine. As a result of this decision, Broad enters into the priority phase of the interference as the Senior Party while the opposition remains the Junior Party for purposes of determining which entity was the first to invent the use of CRISPR/Cas9 for gene editing in eukaryotic cells. As a reminder, the Junior Party carries the burden of proof in the proceedings. The proceedings remain ongoing with motions, requests, and observations expected to be filed by both parties over the next six months in preparation for another round of oral arguments. We look forward to the resolution of these proceedings and remain confident that the outcome will be positive for the Broad Institute and by extension for Editas Medicine. With that overview, I would now like to turn the call over to our Chief Scientific Officer, Charlie Albright, to discuss our pipeline updates.

Charles Albright, Chief Scientific Officer

Thanks, Cindy, and thank you for joining the call today. Starting with our in vivo editing medicines, we continue to make progress with our ocular programs and are pleased to report the completion of dosing of the first cohort in the BRILLIANCE trial of EDIT-101 for LCA10. As Cindy mentioned, we've experienced slower enrollment due to the COVID-19 pandemic and remain eager to advance the trial to bring this potentially transformative medicine to patients with LCA10. Switching gears to engineered cell medicines, an important strategic pillar at Editas that continues to gain momentum. We continue to make progress with EDIT-301, our autologous cell medicine being developed as a potential best-in-class durable medicine for sickle cell disease. We remain on track to file an IND for EDIT-301 by year-end. Furthermore, we've identified the lead principal investigator of the trial and engaged the contract research organization to support the trial, and we're planning to hold the investigator meeting before the year-end. As a reminder, EDIT-301 leverages our proprietary Cas12a to directly edit the beta-globin locus for the mutation that causes sickle cell disease. Editing at this site increases fetal hemoglobin more than can be achieved by editing at the BCL11A enhancer region. We believe this increased fetal hemoglobin will translate into better patient outcomes. Furthermore, our editing approach is supported by human genetics, as some people with high levels of fetal hemoglobin due to mutations in the region we are editing do not have symptoms of sickle cell disease. In contrast, editing of the BCL11A site is not supported by human genetic data. We look forward to presenting additional data on EDIT-301 at the upcoming ASH Annual Meeting. The presentation will detail successful on-target editing at CD34 cells from healthy donors and sickle cell disease patients with our proprietary Cas12a. In these studies, we will show that editing was efficient, greater than 90%, and specific, as there were no measurable off-targets. Further, editing of CD34 cells from healthy donors in sickle cell patients led to robust fetal hemoglobin induction. Red blood cells derived from editing of the sickle cell patient CD34 cells show that this increased fetal hemoglobin reduced the negative consequences of sickle hemoglobin. Finally, we will show more than 90% editing of CD34 cells from healthy donors and sickle cell disease patients with a functionally closed semi-automated system. We know that we are editing the long-term progenitors in this experiment, as we found more than 90% in grafted edited cells in mice. These data together support our ability to manufacture EDIT-301 at scale. Taken together, these data support the advancement of EDIT-301, a medicine with the potential to transform the lives of sickle cell patients. Moving next to our oncology programs, we continue to make progress of EDIT-201, our edited healthy donor-derived NK cell medicine. As a reminder, EDIT-201 uses our proprietary Cas12a to knockout the CISH and TGF beta genes. CISH is a negative regulator of the IL-15 pathway, a major survival pathway for NK cells. CISH and TGF beta is a well-known inhibitor of immune cell function in the tumor microenvironment. We look forward to presenting data at the upcoming ASH and SITC meetings. At ASH, we will present data showing NK cells with CISH and TGF beta knockouts are more potent than unedited cells, particularly in the presence of TGF beta. We also show that the combination of therapeutic antibodies and EDIT-201 further enhances tumor cell killing. These data support the continued advancement of EDIT-201, a medicine with the potential to provide valuable benefits to cancer patients. We also continue to progress our engineered iPSC-derived NK cell medicines. At the upcoming ASH meeting, we will show that knocking out the CISH and TGF beta with Cas12a enhances NK potency, specifically double knockout clones, which were differentiated into NK cells were more effective than controlled NK cells in killing tumor cells in a spheroid model. These data support the potential of our NK program as an off-the-shelf cell therapy to address a broad range of oncology indications. Further, we expect these NK cells will avoid the challenges associated with T cell immunotherapy such as graft versus host disease and cytokine release syndrome. We're excited by our progress and we will continue to provide periodic updates on our NK program. Overall, we've made considerable progress across our two pillars. We're on track to file our IND for EDIT-301 this year, and we continue dosing of EDIT-101, the first ever CRISPR in vivo medicine. We're proud of our progress and look forward to updating you in the future on our pipeline progress. With that, I'll turn the call over to our Chief Financial Officer, Michelle Robertson.

Michelle Robertson, Chief Financial Officer

Thank you, Charlie, and good afternoon everyone. Editas remains in a strong financial position as we advance our portfolio of experimental CRISPR medicines. Our cash equivalents and marketable securities as of September 30th were $521 million compared to $599 million as of June 30, 2020. The proceeds we raised from our equity offering last quarter have strengthened our balance sheet, and we expect our cash balance will fund our operating plan into 2023. With this strengthened balance sheet, we are well positioned to continue execution across our clinical and preclinical pipeline, funding both our ongoing BRILLIANCE trial and also enabling the advancement of additional in vivo and ex vivo candidates into the clinic. Revenue was $62.8 million for the third quarter of 2020 compared to $3.8 million for the same period last year. The increase in revenue was the result of the Company recognizing the remaining deferred revenue balance related to the Allergan collaboration, offset by certain fees paid to Allergan in connection with the termination of our previous agreements. Research and development expenses for the third quarter of 2020 were $34 million compared to $23 million for the same period last year. The increase in our R&D expenses was attributed primarily to an increase in expenses related to the clinical and manufacturing development of EDIT-101 and our other programs, including a one-time expense of $5 million for acquiring the LCA10 license from our collaborators. In addition, the Company continued to invest in the clinical CMC organizations, which resulted in an increase in employee and facility related expenses compared to the prior year. General and administrative expenses for the third quarter of 2020 were $19.9 million compared to $16 million for the same period last year. The increase in G&A expenses is attributed primarily to an increase in expenses for professional service fees incurred by the Company in connection with the termination of the Allergan agreements, as well as an increase in employee and facility related expenses. Total operating expenses for the third quarter of 2020 were $48 million net of non-cash stock-based compensation expense of $5.8 million. At this time, we do not expect any material negative financial impact from COVID-19. We will continue to monitor the situation and provide an update in the future. With that, I'll now turn the call back over to Cindy.

Cindy Collins, Chief Executive Officer

Thank you, Michelle. I'm incredibly proud of our progress, which was achieved through the dedication of our strong leadership team, employees, and valued partners. We have advanced our two strategic pillars and are encouraged by our momentum as we aim to provide differentiated CRISPR medicines that have the potential to revolutionize the treatment of genetic blindness, cancer, sickle cell disease, and neurological conditions as the first and only company to have administered an in vivo CRISPR medicine. We have carved our place as a leader in the genomic medicines field. The presentation of our data and strategy for engineered cell medicines, which leverage our differentiated Cas12a editing marks a new phase of development at Editas, particularly for our oncology program. These data combined with a strong foundation for scalable manufacturing leaves us well positioned to advance these medicines to the clinic. We are excited about our progress and we look forward to advancing more medicines into and through the clinic. We thank all of you for your continued interest and support. With that, we will open the call for Q&A.

Operator, Operator

Our first question comes from Cory Kasimov with JP Morgan.

Unidentified Analyst, Analyst

This is a stand-in for Cory. So I think it was touched on a little bit in the prepared remarks, but the FDA clearly has high standards of gene therapy these days, particularly with the recent news. So, has your mini-session approach with EDIT-301 changed at all, especially with what you will use in the clinic next year? And do you see this as a potential way to perhaps gain ground on competitors? And then just lastly, if you have any longer-term plans to bring the manufacturing in-house?

Cindy Collins, Chief Executive Officer

First of all, the manufacturing for EDIT-301 is being done in-house through the least space cleaner space that we have at Azzur and we don't have any plans at this point in time to bring that wholly in-house. We will evaluate our options as we move the program forward. And we do believe we have gained ground with the most recent announcements on Bluebird's delay on PLA submission, and we have always believed that during the COVID period we were making headway while we were working on our IND. So, we feel that we're in a very competitive position with the 301 program.

Operator, Operator

Our next question comes from Gena Wang with Barclays. Your line is now open.

Unidentified Analyst, Analyst

This is a stand-in for Gena. So I have two questions, if I may, firstly about EDIT-101. So when do we expect some initial data on presentations either from the low-dose cohort or after you dose some additional patients? And the other one is about EDIT-201. So after the ASH presentation, what's your next step in the preclinical and clinical development? Have you identified any particular tumor types that might be more susceptible to your therapy?

Cindy Collins, Chief Executive Officer

I will take the first question and then I'll ask Charlie to address the second issue. We have not determined when we will disclose data at this point in time. We have a new CMO who will be joining us who will consult with us to discuss the plan for releasing data. But as you've heard, we have now achieved dosing of the first cohort and we're eager to move forward. However, it will largely depend on the new CMO's view of how she wants to approach data release going forward. Charlie, do you want to take the second question?

Charles Albright, Chief Scientific Officer

The second question was about development strategy for EDIT-201, and yes, we do think there are tumor types where these medicines will be more effective, but we're not ready to disclose them at this moment in time.

Operator, Operator

Our next question comes from Phil Nadeau with Cowen. Your line is now open.

Phil Nadeau, Analyst

First is on the LCA program. In light of the fact that the first cohort is enrolled, but you're experiencing some delays due to COVID. I'm curious about your most recent thoughts on when we could see data from there?

Cindy Collins, Chief Executive Officer

As I mentioned, the data will be reviewed, and we will do that in consultation with the new CMO who is joining us. It will depend largely on what the data set looks like, and we want to be responsible about what data we release and make sure that it is a comprehensive set of data. We're not eager at this point to release on a patient-by-patient basis.

Phil Nadeau, Analyst

And the second is on the significance of going in as the senior party?

Cindy Collins, Chief Executive Officer

So, the senior party generally has a stronger position, as I mentioned. The junior party holds the burden of proof for the proceedings. And they have to go first in terms of putting forth their depositions and their data. We or the Broad, on our behalf, will go second. So, we believe that this puts us in the strongest position overall. I think the data suggests that the majority of the time, the senior party prevails. We continue to remain extremely confident in our patent portfolio from the Broad.

Operator, Operator

Our next question comes from Matthew Harrison with Morgan Stanley. Your line is now open.

Thomas Lee, Analyst

Hi, good evening. This is Thomas Lee standing in for Matthew Harrison. Can you talk about your thoughts on initial dosing strategies in sickle cell? Given that you're editing a unique site, how low a dose do you need to start versus being able to start at a more potentially efficacious dose? Thanks.

Charles Albright, Chief Scientific Officer

Sure. So you don't do a dose response in a hematopoietic stem cell transplant experiment like we're doing for sickle cell disease. The dose is set because you want to ensure that you get good engraftment. There is no dose-finding study. We know what the dose should be, and that's why it's key that you add in a really high fraction of hematopoietic stem cells. We've shown in preclinical studies and will show more in ASH that we've added more than 90% of the edited cells and that we have engraftment that could lead to pancellular distribution, and those are the key properties.

Operator, Operator

Our next question comes from Steve Seedhouse with Raymond James. Your line is now open.

Seymour Slatkin, Analyst

Yes, hi. This is Seymour Slatkin standing in for Steve Seedhouse. My first question is about the BRILLIANCE study. You mentioned there was a slowdown, and to what extent does that impact your dosing in the mid-dose cohort? Previously, regarding dosing some patients in mid-dose by year-end, but we haven't seen that guidance anymore?

Cindy Collins, Chief Executive Officer

That's correct. We've adjusted the guidance. As I mentioned, we are seeing a bit of a challenge with the COVID situation. We have patients located outside of the U.S. that cannot travel easily because of travel restrictions across borders. There is also some reluctance of patients to be treated during the COVID period as well. We continue to enroll and screen patients; the clinical sites are all open, and we continue to work directly with the investigators to bring those patients forward.

Seymour Slatkin, Analyst

Okay, thank you for that. And I'm not sure if you can comment on any safety from the BRILLIANCE study? The first patient looks like they have about eight months of follow-up now. I'm not sure if you can say whether the safety is good enough to continue dose escalations now, assuming COVID delays are fixed?

Cindy Collins, Chief Executive Officer

So, I will say that we are clear to dose that patient.

Seymour Slatkin, Analyst

And one last question regarding one of your ASH 2020 abstracts for double knockout NK cells. Could you talk about the importance of IL-15 presence? You mentioned that the cells are grown in the presence of IL-15. But is that something that can also be used to co-administer through actual treatments? And what other targets are you trying to test?

Charles Albright, Chief Scientific Officer

By targets you mean the knockout targets or the tumor. I'm sorry, I didn't understand.

Seymour Slatkin, Analyst

It's basically the targets for the other therapy that you want to co-administer with NK cells?

Charles Albright, Chief Scientific Officer

Yes. So, we decided it's preferable to increase the sensitivity of the NK cells with IL-15, and that's why we're knocking out the CISH gene, because it's a negative regulator of the IL-15 pathway. We're doing that in a way that we're not going to co-administer with IL-15. We've seen both in vitro and in vivo that in mouse models, that's quite effective. I'm still not clear on the target question. So, we've got two knockouts, but we haven't disclosed the tumor types that we're going to test in humans yet, if that was the question.

Operator, Operator

Our next question comes from the line of Joon Lee with Truist. Your line is now open.

Joon Lee, Analyst

On EDIT-101 disclosure, I appreciate that you're trying to be responsible for the patients, but I'm sure the investors are eager to learn about some of the efficacy and safety. Is it fair to assume that you will face something about the efficacy and safety in 2021? Or are you not willing to commit to that just yet? And I have a follow-up question.

Cindy Collins, Chief Executive Officer

We are not ready to commit to that just yet, and I want to do this in consultation with our new CMO and develop a data release plan with her.

Joon Lee, Analyst

Just a couple of technical questions for Charlie. For 301, EDIT-301, there is a duplication, I believe, where in for hemoglobin 1, gamma 1 and 2 promoter, where you kind of target. So do you need to knockout both to have a clinical set to therapeutic effects? There are obviously several combinations of outcomes such as a deletion between the duplicated promoters and the single knockout dual. So is there one outcome that is desired for your therapy goal? Thank you.

Charles Albright, Chief Scientific Officer

No, that's a great question. And you're right, it's a complex locus. We have done a detailed genotype, phenotype analysis and we look forward to disclosing that in upcoming scientific meetings because it is fascinating. Suffice it to say that we have more than 90% of the edited cells expressing what we believe are therapeutically relevant concentrations of fetal hemoglobin. So even though the locus is complex, we are able to achieve our therapeutic goals.

Operator, Operator

Our next question comes from Yanan Zhu with Wells Fargo Securities.

Yanan Zhu, Analyst

Hi, thanks for taking my questions. So, first, maybe a few questions on EDIT-201. So, this is to be used together with antibody therapeutics. Do you expect repeat dosing for EDIT-201? And also wondering about the strategy to prevent rejection by host T cells. Would it be just lymphodepletion? And also lastly, is there any concern that lymphodepletion will impact the endogenous NK cell compartment, which could have been a contributor to ADCC, and if they are impacted, would that have any negative consequences? Thanks.

Charles Albright, Chief Scientific Officer

Right. Great questions. This is Charlie. Yes, we do anticipate doing lymphodepletion to prevent the rejection of the NK cells that we're using in this first iteration of our NK cell platform. We think that the NK cells we are adding are going to be very efficient in engaging the therapeutic antibodies. Based on our preclinical studies, we believe that this will return favorable clinical outcomes, so we're not worried about some of the things you mentioned.

Yanan Zhu, Analyst

And whether it's a repeat dosing strategy?

Charles Albright, Chief Scientific Officer

Yes, we want to leave open the ability to repeat dosing so that we take that into account in the way we think about both the preclinical studies we do and the clinical studies we conduct.

Yanan Zhu, Analyst

Got it. So maybe one more question for EDIT-301. The BCL11A targeted approach has demonstrated rapidly 45% to 60% fetal hemoglobin in a couple of patients in Phase 1 trials to date. Do you think that benchmark can be surpassed based on your preclinical work? And also, will a higher HbF provide additional clinical value?

Charles Albright, Chief Scientific Officer

Yes, we do believe that more than 50% in fetal hemoglobin and sickle cell patients can be achieved. In fact, we need to do that with our medicine and we believe that will provide clinical benefit above and beyond what you can see with the current therapies. While they are showing impressive results on vaso-occlusive crisis, we believe that there are a lot of other things that are not yet adequately tested in these trials and that they significantly contribute to the premature mortality that characterizes this disease. We look forward to providing clinical benefits above and beyond what's possible now.

Operator, Operator

That concludes the question-and-answer session. I'd like to turn the call back to Cindy Collins for closing remarks.

Cindy Collins, Chief Executive Officer

Great. So with that, we thank you all for participating in today's call and your support, as we work to bring transformative new medicines to patients. Take care and be safe.

Operator, Operator

Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect.