Earnings Call Transcript - PASG Q4 2022

Operator, Operator

Good morning, and welcome to the Passage Bio Fourth Quarter and Full Year 2022 Financial Operating Results Conference Call. At this time, all participants are in listen-only mode. Following the formal remarks, we will open the call up for your questions. Please be advised that this call is being recorded at the company's request. Now, I'd like to turn it over to Stuart Henderson, Vice President, Corporate Development and Investor Relations. Stuart, please proceed.

Stuart Henderson, Vice President, Corporate Development and Investor Relations

Thank you, operator. This morning we issued a press release that outlines the topics we plan to discuss today. This release is available on the Passage Bio website under the Press Releases and Statements section of Investors and News. On today's call, Chief Executive Officer, Will Chou, will review our fourth quarter 2022 and recent business highlights; Mark Forman, our Chief Medical Officer, will review our clinical programs; and Simona King, our Chief Financial Officer, will review our fourth quarter and full year 2022 financial results. Before we begin, please note that today's call may include a number of forward-looking statements. These forward-looking statements are based on assumptions that are subject to risks and uncertainties that could cause the company's actual results to differ significantly from those suggested by these statements. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Please refer to the company's filings with the SEC for information concerning risk factors that could cause its actual results to differ materially from expectations, including any forward-looking statements made on this call. Except as required by law, the company disclaims any obligation to publicly update or revise any forward-looking statements to account for or reflect events or circumstances that occur after this call. It is now my pleasure to pass the call over to Will.

Will Chou, CEO

Thanks, Stuart, and thank you all for joining us this morning. I want to begin today's call by briefly reflecting on this past year. By honing our strategy and operational focus, we ended 2022 in a strong position and I'm proud of the work the team did to lay the groundwork and build the momentum needed to ensure we can deliver meaningful clinical data from our two lead programs in 2023. I'm excited about what 2023 has in store for Passage Bio, and I'm pleased to report that the year is already off to a strong start, with the presentation of additional data from cohorts 1 through 3 of our Imagine-1 clinical trial for GM1 gangliosidosis at the WORLDSymposium last month. The data shared at WORLDSymposium continue to demonstrate that PBGM01 administration is well tolerated, has a positive safety profile, and exerts a biological effect across all treated infantile GM1 patients. Mark will review these results in more detail shortly. But this data builds upon the information we presented in December and adds to our confidence in the potential benefit that PBGM01 may offer the GM1 patient community. To date, we've completed dosing of the first four cohorts in our Imagine-1 study for a total of eight patients and look forward to reporting initial data from Cohort 4, which is early infantile patients treated with a high dose by midyear. Based on the encouraging data we have generated thus far and our supporting preclinical data, we are moving forward with plans to treat additional patients with a higher dose than doses administered in Cohorts 1 through 4. We also plan to revise our study inclusion criteria to maximize the benefit-risk profile of PBGM01. By treating additional patients at a higher dose, we will generate important clinical data to further inform dose and patient selection, as well as discussions with regulatory authorities on the design of the confirmatory study. For our upliFT-D trial for frontotemporal dementia or FTD, we remain focused on driving patient identification and recruitment initiatives and expanding our global footprint of clinical trial sites. Based on the momentum we are experiencing, we expect to report initial safety and biomarker data from Cohort 1 in the second half of the year. While our primary focus is on generating meaningful clinical data for our GM1 and FTD programs, we also continue to advance our promising preclinical programs in Amyotrophic Lateral Sclerosis, Huntington's disease, and Temporal lobe epilepsy through our ongoing innovative research partnership with 10 gene therapy program. Moreover, following the prioritization of our research and development efforts announced last November, we remain committed to exploring strategic alternatives to advance our two clinical stage programs for Krabbe disease and Metachromatic leukodystrophy. In addition, we continue to leverage our strong in-house analytical capabilities at our CMC lab at Princeton West, as these capabilities provide a competitive advantage and are critical to support ongoing and future clinical development of our programs. Lastly, we are supported by a strong balance sheet, providing us with the necessary runway to generate meaningful clinical data for our GM1 and FTD programs. Simona will describe our financials in more detail, but we expect existing cash resources to fund operations into the first half of 2025. With that, I will now turn it over to Mark to review our two lead clinical programs and the recent GM1 data.

Mark Forman, Chief Medical Officer

Thank you, Will. Let me begin with a brief overview of our lead program, PBGM01, for GM1 Gangliosidosis, and then I will review key findings from the interim data shared in December of last year and more recently at the 19th Annual WORLDSymposium. GM1 is a fatal pediatric neurological lysosomal storage disorder caused by a GLB1 gene mutation that results in low activity of the beta-galactosidase enzyme. This leads to rapid neurological decline and in the most severe forms, unfortunately, to mortality within several years. Patients with GM1 are a rare and underserved population, and there are currently no disease-modifying therapies for this disorder. Our Imagine-1 clinical trial focuses on the early and late infantile forms of GM1, which are the most severe forms of the disease. The dose escalation portion of this global Phase 1/2 trial is an open-label study with PBGM01, enrolling four distinct cohorts divided by age and dose level. Our approach uses a next-generation proprietary AAVhu68 capsid, administered by the Cisterna Magna to deliver a codon-optimized GLB1 transgene to increase beta-galactosidase enzyme activity in the brain and peripheral tissues. We've experienced strong momentum in our Imagine-1 trial. To date, we've completed dosing of the first four cohorts in the dose escalation portion of the study, representing a total of eight patients. In December of last year, and more recently at the WORLDSymposium, we were excited to share promising interim results from the first three cohorts in the study. These cohorts represent the low-dose cohorts in both early and late infantile patients and the high-dose late infantile cohort for a total of six patients. Key findings from these interim data are as follows. First, we're excited to see that PBGM01 continues to be well tolerated and has a favorable safety profile. There have been no treatment-related serious adverse events, no evidence of dorsal root ganglion or DRG toxicity, no immune response requiring adjustments to the immunosuppression, and no complications related to the ICM procedure. Second, we observed dose-dependent increases in CSF beta-galactosidase enzyme activity, the enzyme of interest, and dose-dependent decreases in CSF GM1 ganglioside levels, a key substrate of beta-galactosidase. Biomarker Data also demonstrates that ICM delivery of PBGM01 leads to β-Gal activity in both the CNS and the peripheral. Third, turning to clinical results, we observed that patients with a lower developmental delay at dosing experienced a better response to treatment on the Vineland and Bayley developmental scales regardless of dosage level. We also reported imaging data from the MRI severity score, which can be used to assess treatment effects on brain volume and white matter integrity based on baseline and follow-up MRIs. At this interim analysis, PBGM01 administration was associated with stabilization of MRI severity scores in all treated patients at a follow-up period of 6 to 12 months. In contrast, published natural history data from late infantile GM1 patients showed MRI severity scores increased in the majority of children at a follow-up period of six months to four years. Overall, the data generated to date give us confidence that PBGM01 is exerting a biological effect in all treated patients with infantile GM1. Based on the favorable safety profile of PBGM01 to date, the observed dose response in key biomarkers, and supporting preclinical data, we plan to treat additional patients at a higher dose than has currently been evaluated in the first four cohorts. Additionally, we are revising study inclusion criteria to maximize the benefit-risk profile of PBGM01. These modifications to the study design will provide us with valuable clinical data to inform dose and patient selection as we seek to optimize the therapeutic benefit of PBGM01. Moreover, these additional data will also allow us to have productive interactions with regulatory authorities on confirmatory study design and the pathway towards a biologics license application. We are excited to continue to advance our Imagine-1 program and expect to dose the first patient at the higher dose in the second half of 2023 following regulatory review. Next, let me discuss PBFT02 for frontotemporal dementia with granular mutations. FTD is a devastating form of early-onset dementia affecting patients between the ages of 40 to 65. The form of the disease we are seeking to treat with our therapy is caused by a granulin or GRN gene mutation, which resulted in a deficiency of progranulin. It is estimated that about 5% to 10% of FTD is caused by a GRN mutation. We are utilizing the AAV1 capsid to deliver a functional copy of the granulin gene via ICM delivery to the CSF. The goal of this treatment and delivery approach is to potentially provide higher-than-normal levels of the progranulin protein to the CNS to overcome the deficiency in granulin gene mutation carriers. Our upliFT-D clinical trial is investigating two dose levels of PBFT02 and is sequentially enrolling two cohorts. Based on the results of the first two cohorts, we have the optionality for a third dose level. The primary endpoint of the study is to evaluate the safety and tolerability of PBFT02. Secondary endpoints include disease biomarkers and clinical outcome measures. We continue to focus on activating additional clinical trial sites around the globe and on driving a variety of initiatives to support patient identification and recruitment. Based on the momentum in these efforts, we expect to share initial safety and biomarker data from Cohort 1 patients in the second half of 2023. These data will focus on safety and CSF levels of progranulin.

Simona King, Chief Financial Officer

Thank you, Mark. As we reported in our press release this morning, cash equivalents and marketable securities were $189.6 million, as of December 31, 2022, as compared to $315.8 million as of December 31, 2021. Following the streamlining of our operations and prioritization of our research and development efforts announced last quarter, we expect these existing cash resources to fund operations into the first half of 2025. We will continue to manage our cash burn judiciously as we focus on program execution. R&D expenses were $17.7 million for the quarter ended December 31, 2022, and $86.1 million for the year ended December 31, 2022, compared to $33 million and $117.7 million for the same quarter and year-end 2021. G&A expenses were $10.6 million for the quarter ended December 31, 2022, and $49.3 million for the year ended December 31, 2022 compared to $17.2 million and $60.1 million for the same quarter and year-end 2021. Net loss was $27.1 million for the quarter and $136.1 million for the year ended December 31, 2022, compared to $51.2 million for the quarter and $185.4 million for the year ended December 31, 2021. Let me now turn it back to Will for closing remarks.

Will Chou, CEO

Thank you, Simona. The primary focus for 2023 is on strong execution and continuing to generate meaningful clinical data from our lead programs in GM1 and FTD. We expect to achieve several program milestones this year. By mid-2023, from our Imagine-1 study, we plan to report initial safety and biomarker data from cohort 4, which is early infantile patients treated with a high dose. In the second half of 2023, we look forward to dosing the first GM1 patient at a higher dose than those previously evaluated, and to reporting initial safety and biomarker data from cohort 1 of our uplifted study. Prior to taking your questions, I would like to thank my colleagues at Passage Bio, who have shown their commitment to the pursuit of our ambitious mission. We also continue to be grateful for the support of the patients, families, and clinical trial investigators who have chosen to participate in our studies, as well the support of our partners at the Gene Therapy Program. With that, I would like to open the call for your questions.

Operator, Operator

Thank you. We will now take any questions you may have. Our first question comes from Yaron Werber with Cowen. Your line is open.

Brendan Smith, Analyst

Hi, this is Brendan standing in for Yaron. Thank you for addressing our questions and congratulations on your progress. We have a couple of quick inquiries. Regarding the dose escalation plan, can you confirm if additional patients have already been identified? It seems you're moving forward with both early and late infantile for the higher dose. Additionally, could you clarify if there is a specific threshold you aim for in terms of biomarker response or functional improvement, or are you primarily focused on maximizing efficacy before moving to a pivotal study? Lastly, concerning a potential pivotal study based on your current knowledge, how long do you anticipate needing to follow patients to support approval for GM1? Thank you very much.

Will Chou, CEO

Hey, thanks for the question, Brendan. I'm going to turn that over to Mark. Do you want to answer?

Mark Forman, Chief Medical Officer

Thank you. Regarding the dose escalation phase cohorts under consideration, we have seen significant interest in our trial over the past few years, with inquiries from many families, including those with both early and late infantile cases. We have been reviewing these cases, and based on the adjudicator's assessment, most of these children are likely to meet the revised eligibility criteria we are establishing. Therefore, we are confident in our ability to recruit quickly, even with the stricter inclusion criteria. As for the second question about the required beta-galactosidase activity, we do not yet know the exact amount needed to address the deficits in these patients. However, we have observed in animal models that even modest increases in beta-galactosidase activity, particularly in the transgenic mouse knockout model we used in our preclinical studies, were linked to clinical improvements. Consequently, we are primarily using the pharmacodynamic marker, CSF levels of GM1 gangliosides, to guide our program. Our recent data presented at WORLD indicates that at six months on the high dose, we were able to reduce these levels by 75%, and our objective is to normalize these levels. Moving forward, we will focus on the reduction of GM1 ganglioside levels alongside clinical outcomes, which we anticipate will serve as a lagging indicator.

Will Chou, CEO

The last question was on follow-up. And so in terms of clinical follow-up, there is a long lead-time for seeing developmental changes. At a minimum, we would at least need to have a follow-up of six months.

Brendan Smith, Analyst

Okay. Got it. Thanks very much guys.

Operator, Operator

Thank you. And our next question coming from the line of Madhu Kumar with Goldman Sachs. Your line is now open.

Omari Baruti, Analyst

Hi, this is Omari on for Madhu. So, I have two questions. First, what are the specific outputs that you're looking for in early infantile high-dose cohort for GM1 to pursue registrational studies? And then second do you have any visibility or registrational endpoint in GM1?

Will Chou, CEO

Okay, I'll take the first one and then I'll turn the second question over to Mark. So, in terms of specific outputs that we're looking for, it's really two. We're looking for durable decreases in GM1 ganglioside as Mark referenced previously and we're looking for improvement in development.

Mark Forman, Chief Medical Officer

And the second question was regarding the registrational output. And we will be having ongoing discussions with the health authorities to define the endpoints that will be used for these studies and we'll certainly provide updates on what those are as they come defined following our discussions with health authorities.

Omari Baruti, Analyst

Okay. Thank you so much.

Operator, Operator

Thank you. And our next question coming from the line of Laura Chico with Wedbush. Your line is open.

Laura Chico, Analyst

Good morning. Thanks very much for taking my questions. The first one on GM1, how do the inclusion criteria changes impact potential labeling? I guess what I'm asking is would this still be something that would be applied more broadly to GM1? And then in terms of perhaps a preclinical question, we're hearing about more constraints on NHP supply chain issues. I'm just curious how that might impact some of the preclinical efforts that you've got going on right now? Thank you.

Will Chou, CEO

Okay. Sure. In terms of inclusion criteria, as you know, any protocol amendments we make are subject to regulatory review. So, we will be happy to share the details of the inclusion criteria changes after that review is complete. What we have said previously is we're looking to treat patients who are earlier on. And as you know, all GM1 patients pass through earlier stages, and our goal is to identify and find these patients at an earlier stage so we can maximize the risk-benefit of the product. In terms of patient identification, what we do know is from the patients who have been suggested for the trial, who have been given to our adjudicator, we know that there are many patients who fit our new recommended inclusion criteria for the protocol. And so we feel confident in our ability to recruit these patients.

Mark Forman, Chief Medical Officer

So the second question is around impacts to our preclinical programs in terms of non-human primate availability. And our preclinical programs are done in collaboration with the gene therapy program at the University of Pennsylvania. And to date, the availability of primates has not impacted any of the ability of any of our preclinical pipeline to advance. So not an issue right now, but certainly it's something that we're carefully monitoring and we'll be working closely with our colleagues there to ensure that that doesn't hold things up.

Laura Chico, Analyst

Thanks very much.

Operator, Operator

Thank you. One moment please for the next question. And our next question coming from the line of Neena Bitritto-Garg with CitiGroup. Your line is open.

Unidentified Analyst, Analyst

Hi, good morning, everyone. I have two questions. First, regarding PBGM01, could you share what the higher dose is, or at least how much higher it is compared to the current dose? Second, concerning PBFT02, we remember there were patients lined up last quarter. Can you explain why they haven't been dosed yet, and have you administered the second dose to a patient? Thank you.

Will Chou, CEO

Sure. So for GM01, as we mentioned before, the protocol changes are subject to regulatory review. So as soon as that review is complete we would be happy to share the new dose. In terms of PBFT02, we indeed have patients in the queue. We have GRN positive patients who are at sites who are being queued up for future treatments. In terms of dosing, we are not providing specific details on patient-to-patient dosing within each cohort.

Operator, Operator

Thank you. One moment please for the next question. And our next question coming from the line of Yun Zhong with BTIG. Your line is open.

Yun Zhong, Analyst

Hi. Good morning. Thank you very much for taking the questions. So a follow-up question on dose escalation. Have you got approval on dose escalation itself, or would that still be dependent on data from Cohort 4? And on patient selection, sorry if I missed this, but is the next patient going to be late onset or early onset, or are you going to explore both early onset and late onset patients with the high dose? And finally, I think you talked before about the developmental delay as a very critical factor affecting treatment outcome. But the two patients in Cohort 4 seem to have very short delays, but not by design. So are you going to look for those patients specifically with the short delay?

Will Chou, CEO

Yes. Thanks for the question. So in terms of dependency on Cohort 4, no, we are increasing the dose right now. We are moving to do that regardless of any results for Cohort 4. For the additional patients that we will treat at dose 3, the higher dose, we are going to be treating both early and late infantile patients. And then I'll turn it over to Mark for the last question.

Mark Forman, Chief Medical Officer

Right. So can you just remind me again of the last question, make sure I understand it.

Yun Zhong, Analyst

Yes. It's about developmental delay. And you talked in the past that it seems to be a very critical factor affecting treatment outcome. And both Cohort 4 patients have very short delays, but not really by design, that it looks like it was accidentally they had a short delay. So are you going to look for specifically patients with short delays to improve potential treatment outcomes, please?

Mark Forman, Chief Medical Officer

The goal moving forward is to revise the inclusion criteria to focus on earlier stages of the disease, as mentioned earlier, with the aim of identifying patients who have the highest risk-benefit profile. The current inclusion criteria will not exclude those patients, but the objective will be to enroll more patients with that profile while minimizing delays in the process.

Yun Zhong, Analyst

Okay. Great. Thank you very much.

Operator, Operator

Thank you. One moment please for our next question. And our next question coming from the line of Danielle Brill with Raymond James. Your line is now open.

Unidentified Analyst, Analyst

Hey, guys. This is Alex on for Danielle. Just looking at past notes, I believe that for the GM1 program that the expectation was to have the end of Phase 2 meeting with the agency somewhere in 2023. But with the added cohorts, when do you expect that conversation to take place? Are we looking more like a 2024 event?

Will Chou, CEO

What we plan is to go discuss the registrational pathway with regulatory authorities with data from the additional patients who are being treated at a higher dose. So indeed that will not be in 2023, as we plan on treating the first patients at this higher dose in the second half of this year.

Unidentified Analyst, Analyst

Great. Thanks for the color.

Operator, Operator

Thank you. One moment for our next question. And our next question coming from the line of Whitney Ijem from Canaccord. Your line is open.

Whitney Ijem, Analyst

Yes, thank you for the question. Regarding FTD, you mentioned that the update later this year will include safety and biomarker data. Can you clarify if the biomarkers include NFL levels, and are there any other biomarkers we should consider? Also, how do you view the target levels for this first dosing cohort?

Will Chou, CEO

Sure. So let me take that one Mark. So our initial data from Cohort 1 is going to focus on safety and CSF progranulin level. So we plan to report progranulin levels at baseline and after 30 days in the CSF. What was the second part of your question?

Whitney Ijem, Analyst

So regarding CSF progranulin, is there a target level that you're aiming for? What are your expectations since this is the first dose cohort in relation to that potential target?

Will Chou, CEO

Sure, of course. So based on our preclinical data, what we saw at this current dose level is physiologic levels of CSF progranulin. So our expectations would be to at least see physiologic levels of CSF progranulin. I would like to say that, before we discussed the patient recruitment and because of all the patients we have who are identified at sites who are GRN positive, we are confident and looking forward to sharing data from the first cohort of patients in the second half of this year.

Whitney Ijem, Analyst

Got it. And then, second part of the question I guess is, I believe there is targeting enrollment of three patients in this first cohort, correct me if I'm wrong. But is the expectation to provide data on a complete cohort, or will you provide data on if it ends up not being a complete cohort dose in the second half you'll provide data on whatever patients you have treated?

Will Chou, CEO

We'll be providing data on multiple patients from the first cohort. And we will be able to give more specific guidance to that later this year.

Whitney Ijem, Analyst

Okay. Great. Thanks for taking my questions.

Operator, Operator

And I'm showing no further questions in the queue at this time. Ladies and gentlemen, thank you for participating in today's conference. This does conclude your program. And you may now disconnect. Everyone have a great day.