Good afternoon, and welcome to PepGen's Fourth Quarter and Full Year 2023 Earnings Call to discuss its financial results and recent corporate developments. At this time, all participants are in a listen-only mode. Following the manager's prepared remarks, we will hold a question-and-answer session. As a reminder, this call is being recorded today, Thursday, March 6, 2024. I would now like to turn the conference call over to Emiko Bryant, Chief of Staff of PepGen. Emiko, please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining today's call. Earlier today, we released our financial results for the fourth quarter and full year 2023 and provided an update on recent corporate developments. The press release and our 10-K filed with the SEC this afternoon outlining our financial results are both available on our website at pepgen.com. Joining me on the call today are James McArthur, PhD, President and Chief Executive Officer; Dr. Michelle Mellion, Senior Vice President, Head of Clinical Development; and Noel Donnelly, Chief Financial Officer. As a reminder, we will be making forward-looking statements regarding our financial outlook in addition to regulatory and product development plans and research activities. These statements are subject to risks and uncertainties that may cause actual results to materially differ from those forecasted. A description of these risks can be found in our most recent 10-K on file with the SEC. PepGen does not undertake any obligation to publicly update its forward-looking statements as a result of new information, future events, or changes in its expectations. I will now turn the call over to our CEO, James McArthur. James?

Thank you, Emiko, and good afternoon, everyone. PepGen made meaningful progress over the course of 2023, including the initiation of our first inpatient clinical trials evaluating programs derived from PepGen Enhanced Delivery Oligonucleotide, or EDO, cell-penetrating peptide platform in two neuromuscular diseases with high unmet medical need. Our lead clinical program, PGN-EDO51 or EDO51, is designed for the treatment of patients with Duchenne Muscular Dystrophy, also known as DMD, whose disease is amenable to an exon 51-skipping approach. As a reminder, an estimated 13% of people with DMD, or approximately 4,200 individuals in the U.S. and EU, have a mutation amenable to an exon 51-skipping approach. Our second clinical program, PGN-EDODM1 or EDODM1, is designed for the treatment of Myotonic Dystrophy Type 1, or DM1. We estimate that DM1 affects more than 100,000 people in the U.S. and Europe for whom there are currently no approved disease-modifying treatments. Here at PepGen, developing potentially transformative medicines is the foundation of our mission and long-term vision for building the company. We believe that both our DMD and DM1 programs have the potential to be disease-modifying and meaningfully improve outcomes for patients. Our team is committed to advancing these important programs through the clinic with a sense of urgency to get them to the people living with these diseases as quickly as possible. We believe our recent stock offering puts us in a strong financial position for our team to execute on this commitment. The net proceeds from this offering, together with our existing cash and cash equivalents, extend our projected cash runway into 2026. Turning to the latest updates and highlights from our clinical programs, we are pleased to announce we have completed enrollment for cohort 1 in CONNECT1-EDO51, evaluating the 5 mg per kg dose in DMD patients in our first Phase II clinical trial. Following the review of the safety data of the 5 mg per kg dose cohort by our Data Safety Monitoring Board, and assuming an acceptable emerging safety profile, we plan to escalate to the second cohort at 10 mg per kg of EDO51. The same process will take place prior to advancing to cohort 3. In parallel, earlier this week, we announced we received clearance from the MHRA in the UK to initiate CONNECT2-EDO51, our Phase II study of EDO51 in people with DMD amenable to an exon 51-skipping therapy. We currently expect to be initiating dosing in cohort 1 evaluating the 5 mg per kg dose level in patients in the UK in the third quarter of 2024. Following CONNECT1's preliminary data readout for the 5 mg per kg cohort, we expect to open trial sites for CONNECT2 in other geographies, including the U.S., subject to regulatory authorizations. We anticipate reporting preliminary data for the CONNECT1 5 mg per kg cohort in mid-2024, including safety, exon skipping, and dystrophin production. Based upon externally available data and using our own clinical and nonclinical work for internal modeling assumptions, PepGen expects treatment with EDO51 in DMD patients to produce high levels of dystrophin protein. At the 5 mg per kg dose level, we expect to see greater than 1% of normal levels of dystrophin protein above background levels in the CONNECT1-EDO51 trial as measured by Western Blot analysis following four repeat doses of EDO51 in DMD patients. For our 10 mg per kg dose cohort, if EDO51 were to achieve dystrophin levels of greater than 7%, this would be the highest level of dystrophin production achieved by a DMD exon-skipping therapy to date. Our modeling projections for this dose level suggest the possibility that we could potentially achieve greater than 9% of normal levels of dystrophin protein. The combined safety and dystrophin expression data package from CONNECT1 and CONNECT2 is designed to support a potential path towards accelerated approval, assuming alignment with regulatory authorities. Turning to our DM1 development program, we were pleased that the clinical hold on EDODM1 was lifted by the FDA in October 2023. Following discussions with regulatory authorities, we are advancing our EDODM1 therapy at the same dose level starting at 5 mg per kg across all countries, including the U.S., in the Phase I FREEDOM-DM1 clinical trial for people living with DM1. Just last month, EDODM1 was granted fast track designation by the FDA, which is designed to facilitate the development and expedite the review of potential therapies designed to treat serious diseases and conditions with clear unmet medical needs. Importantly, fast track designation allows for early and more frequent communication with the FDA, which can potentially lead to earlier drug approval and access for patients. In December 2023, PepGen announced the first patient was dosed in the Phase I FREEDOM-DM1, single ascending dose clinical trial, and we expect to report preliminary data, including safety, splicing correction, and functional outcome measures from at least the 5 mg per kg dose cohort in the second half of 2024. We expect both the 5 mg per kg dose and 10 mg per kg dose evaluated in the FREEDOM-DM1 clinical study to be pharmacologically active and believe that the 10 mg per kg dose could exhibit meaningful splicing correction and myotonia correction. In addition to our FREEDOM-DM1 trial, we expect to open our FREEDOM2-DM1, placebo-controlled multiple ascending dose clinical trial in DM1 patients in the second half of 2024. An important differentiator of our PGN-EDODM1 is that it is designed to selectively target the pathogenic DMPK RNA with the CUG repeat expansion rather than degrading both the normal as well as the pathogenic DMPK RNA. As a result of this selectivity, and based on our preclinical data, we believe that EDODM1 has the potential to achieve superior correction of splicing events at well-tolerated dose levels, which could lead to improved functional outcomes for patients. In addition to our clinical programs, our research team continues to advance and evaluate our preclinical candidates in key areas of focus for neuromuscular and neurologic disorders. PGN-EDO53 is our lead preclinical program designed to skip exon 53 of the dystrophin transcript, a therapeutic target for approximately 8% of patients with DMD. We previously reported superior exon skipping in repeat dose studies in nonhuman primates, and our team is commencing IND and CTA-enabling studies in 2024. We look forward to providing more details as we progress. I will now turn the call over to Dr. Michelle Mellion, PepGen's Head of Clinical Development, to provide an in-depth review of the trial designs of the ongoing clinical trials in DMD and DM1 that I just mentioned. Michelle?

Thank you, James. Starting with our clinical trials in DMD, CONNECT1 is a Phase II 13-week open-label, multiple-ascending dose clinical trial that is enrolling both ambulatory and non-ambulatory boys and young men living with DMD amenable to an exon 51-skipping approach. Each of the DMD patients must be at least eight years of age to enroll and will provide a muscle biopsy pre-dose and on week 13. The dosing of EDO51 will occur once every four weeks for 12 weeks. We will evaluate safety data from three subjects in the 5 mg per kg dose cohort with the DSMB before progressing to the 10 mg per kg dose cohort. We will evaluate further dose escalations based upon the evaluation of safety data from prior dose cohorts. CONNECT2 is a multinational Phase II 26-week double-blind, placebo-controlled multiple ascending dose clinical trial that will enroll both ambulatory and non-ambulatory boys and young men living with DMD amenable to an exon 51-skipping therapy who are at least six years old. Participants will provide a muscle biopsy at baseline and then at week 25. ED051 will be administered every four weeks for six months. The DSMB will review the data before we proceed to the next dose cohort. In February, we received authorization from the MHRA for our CTA to initiate CONNECT2 in the UK and are planning to open the study in the EU and the U.S. later this year following regulatory clearance. Turning to our EDODM1 development plan, we are pleased to have dosed the first patient in our FREEDOM-DM1 global Phase I single ascending dose randomized, double-blind, placebo-controlled trial of EDODM1 in DM1 patients in December 2023. FREEDOM-DM1 will enroll a total of 24 DM1 patients randomized 3 to 1 in favor of drug versus placebo, evaluating 5, 10 and up to 20 mg per kg with dose escalation following the review of safety data from prior dose cohorts. The subjects will provide a muscle biopsy at baseline followed by a single infusion of EDODM1 with muscle biopsies taken again at day 28 and week 16. Our FREEDOM-DM1 study will inform our planned multinational Phase II trial in DM1, a multiple ascending dose clinical trial that is designed to support potential regulatory approvals subject to alignment with regulatory authorities. We anticipate opening the Phase II trial of EDODM1 in the second half of 2024 following discussions with the regulators. With that review of PepGen's clinical development plans, I will now hand the line to Noel Donnelly, our Chief Financial Officer, to review our latest financial results. Noel?

Thank you, Michelle. My comments will reflect the high-level financial results of our fourth quarter and full year 2023 period. More details are provided in this afternoon's financial results press release and in the corresponding SEC filing. As of December 31, 2023, PepGen held $110.4 million in cash and cash equivalents compared to $181.8 million on December 31, 2022. As James mentioned previously, on February 9, 2024, PepGen successfully completed an underwritten stock offering of 7.53 million common shares for gross proceeds of approximately $80 million. Based on our current operating plans, PepGen's current cash and cash equivalents, including the proceeds of the offering, are expected to fund operations into 2026. Net loss for the fourth quarter of 2023 was $19.5 million. Our net loss for the full year 2023 was $78.6 million. Research and development expenses for the three months ended December 31, 2023, were $16.3 million. For the full year 2023, research and development expenses were $68.1 million. The increase in research and development expenses in the fourth quarter of 2023 compared to the fourth quarter of 2022 was primarily attributable to costs associated with the advancement of the company's PGN-ED051 and PGN-EDODM1 programs, including preclinical, clinical, and manufacturing costs related to our ongoing and future clinical trials. General and administrative expenses were $4.5 million for the three months ended December 31, 2023. General and administrative expenses for the full year 2023 were $16.6 million. The increase in general and administrative expenses was primarily due to an increase in personnel-related costs. Finally, as of February 29, 2024, PepGen had approximately 32.4 million shares outstanding. And with that, I will turn the call back to James.

Thank you, Noel. I'm very proud of our team's ability to advance multiple clinical programs in 2023 and look forward to continuing the successful operational execution over the course of 2024 and beyond. This year is an important time for PepGen as we will have multiple upcoming clinical data readouts from our ongoing clinical trials in DMD and DM1, marking the first inpatient clinical data from our proprietary EDO platform. To quickly review our anticipated data announcements for the year. In the middle of 2024, we expect to report preliminary data from the 5 mg per kg dose cohort in CONNECT1-EDO51, the multiple ascending dose trial in boys with DMD. We plan to provide safety, exon 51-skipping, and dystrophin production data. For the multinational FREEDOM-DM1 Phase I trial of EDODM1 in patients with DM1, we anticipate reporting preliminary safety, splicing correction, and functional outcome measures from at least the 5 mg per kg dose cohort in the second half of 2024. With that, I will open the call for questions. Operator?

Thank you. Our first question comes from Joseph Schwartz from Leerink Partners. Your line is now open.

Hi, everyone. This is Jenny on for Joe. I was just wondering if you could talk a little bit more about the mechanism of PGN-EDODM1? And if you expect a blocking risk approach to result in a more specific profile and how that might read through to splicing correction and any implications for safety? Thank you.

Thank you, Jenny. Our mechanism, unlike other approaches, which are seeking to degrade both the pathogenic DMPK and the nonpathogenic DMPK, is targeting the CUG repeat. And we've been able to demonstrate in cell-based models that we can liberate MBNL1 as well as reduce the number of toxic foci and nuclei of patient cells, as well as dramatically correct this splicing in patient cells. In those models, we're also similarly able to correct splicing and importantly, correct both the electrophysiologic as well as the observable myotonia in the mouse model. This is a very profound response, and we were able to do this at dose levels, which we were able to demonstrate achievable with our EDO051 technology in healthy volunteers, which employs the same EDO peptide and conjugation chemistry to the PMO. As such, we believe that we are specifically targeting the toxic species that drive this disease and coupling it to our EDO platform technology, which has been demonstrated to reduce the highest level of exon 51-skipping following a single dose in humans, as well as robust delivery in nonhuman primates and mice, coupled with excellent exon skipping. As such, we believe that at doses that we say are low risk, we can achieve robust levels of splicing correction that will allow us to demonstrate correction of myotonia and improvement in strength. Although it's not been demonstrated that efficiency is a toxicologic challenge in this disease by indiscriminately knocking down DMPK, we believe that we will be able to avoid this by targeting the RNA species that are pathogenic and drive the fundamentals of this disease.

And thank you. One moment for our next question. And our next question comes from Paul Matteis from Stifel. Your line is now open.

This is James on for Paul. Thanks for taking our question. I just had one as it relates to the upcoming readout. Just as it relates to dystrophin specifically, there's been some discussions recently about different cuts of dystrophin, including an adjusted figure that accounts for muscle fat content. And you mentioned for your study at 5 mg per kg, you're looking for greater than 1% dystrophin in that. For 10 mg per kg, hoping to get above 9%. I guess, one, are these unadjusted dystrophin measures? And then two, just how much above 1% dystrophin do we need to see initial readout to have confidence that we can get to 9% plus at the next dose? Thanks so much.

Great. I appreciate the question. So you're correct that we are planning on reporting dystrophin levels above background. The reason why this is important is an individual enters the study with 0.5% endogenous levels of dystrophin and one can only elevate it by 0.3%. It's really a net of 0.3% gain of dystrophin. And so we are looking to see at least a 1% gain over background in terms of dystrophin levels at the 5 mg per kg dose level, but we have the possibility to see higher levels still. The reason why this 1% would give us confidence that at 10 mg per kg, we could produce 9% or better levels of dystrophin in patients is that when we looked in our nonhuman primate studies, we've observed that a single dose at a low level of 20 mg per kg produces approximately 2% dystrophin. But following four monthly doses of EDO51 in nonhuman primates, this has increased to almost 35% exon skipping. I apologize, I misspoke. It was 2% exon skipping going to 35% exon skipping. Obviously, higher levels of exon skipping will produce higher levels of dystrophin production. But it gives us a good sense that going from low single-digit levels we have the potential to see much higher levels of exon skipping and dystrophin production. This is also supported, as I mentioned in the call, by our modeling work based on both primary work in cells in the mouse model, nonhuman primates, and of course, the work we have done in healthy volunteers.

And thank you. One moment for our next question. And our next question comes from Tazeen Ahmad from Bank of America. Your line is now open.

Great. Thanks so much for taking my questions. Just two quick ones on DMD. For the 10 mg per kg cohort, have you already started the process of identifying patients for that? And based on your timeline for when to expect the 5 mg data, do you think it would be a reasonable expectation to have data from the 10 mg cohort this year as well?

Thank you, Tazeen. So we see a lot of enthusiasm from our clinical investigators for the CONNECT1 clinical study, and we anticipate seeing robust recruitment of this study. As I've mentioned, we've already recruited cohort 1 of the 5 mg per kg cohort, and we anticipate reporting out that data set mid of this year. As soon as we have an update regarding recruitment, we will give more guidance in terms of the timing of the 10 mg per kg data readout, but we anticipate being able to report that in a timely fashion based on the enthusiasm we're seeing for those patients as well as the investigators in the study.

And thank you. One moment for our next question. And our next question comes from Laura Chico from Wedbush.

Hey. Good afternoon, guys. Thanks very much for taking the questions. I have two for you. So with respect to CONNECT1 data. James, I'm wondering if you could spend a moment discussing a little bit more about the preliminary kinetics and the pace of exon skipping that you're seeing with initial doses. I think in the nonhuman primates, if I'm not mistaken, there was kind of a maximal effect or a plateauing that occurred over time. I'm curious if you kind of anticipate seeing that in the patient samples. I guess what's the expectation that the magnitude of skipping can increase over time? And then I have a quick follow-up for you.

Terrific. I appreciate the question, Laura. You're correct. When we look at our nonhuman primate data for both our 51 as well as our 53 program, we got to observe some of the greatest increases that we've seen in terms of exon skipping is occurring from dose 1 to dose 2, a smaller level from dose 2 to dose 3, and a smaller increase still from dose 3 to dose 4, and it does appear that we are reaching these very high levels of exon skipping by dose 4, and there may not be incrementally that much more to achieve. As such, we do anticipate seeing better than 7% and very likely above 9% dystrophin production based on the level of exon skipping and the modeling work that we've done based on the extrapolation we've done from prior work from other companies where we compare our single-dose exon skipping in humans to their single-dose exon skipping in humans. And then lastly, based on the very extensive nonhuman primate modeling work we've done looking at both single and multiple doses. As such, we do expect to see very robust levels of exon skipping following four doses. And this will be reflective of what we're able to achieve long term.

Okay, that's helpful. And then maybe one quick question on DM1, and I'll hop back in the queue here. With respect to the magnitude of splicing correction that you're looking for, I'm wondering if you could kind of share any more color around what you think would be a meaningful level, and if you could just remind us with respect to FREEDOM1, what's the extent of functional assessments that we will be getting in the second half update? Thanks very much.

Let me first speak to the splicing correction work that we've done preclinically, and then I'll hand it over to Michelle Mellion to speak to the outcome measures that we'll be looking at in FREEDOM1. So in terms of the preclinical work that we have conducted, we've observed that with higher and higher levels of splicing correction in the mouse model, which is granted an engineered animal model, we can observe higher and higher levels of myotonia correction, both from the standpoint of the dragging the high lens as we observed in this model as well as measurement by electrophysiology. As such, if we're looking at 30%, 40% splicing correction at that level in the mouse model, we're beginning to see robust levels of correction of myotonia. And as we approach 60% at higher levels of splicing correction, we can begin to approach 70%, 80% correction of the myotonia. So we do believe it's important to be able to demonstrate better than 25% splicing correction to see really robust changes in terms of the physiology and the pathology of this disease. With that, I'll turn it over to Michelle to speak to the outcome metrics that we'll be looking at in FREEDOM1.

In FREEDOM 1, our clinical outcome measures include a full assessment of symptoms related to DM1. This assessment includes the vHoT, which is an assessment of myotonia that I believe most are now familiar with, as well as strength assessments of several different muscles, including risk and other functional outcome measures such as the 10-meter walk test, and these will be done at different endpoints or time points during the study to assess the impact of splicing correction on these assessments.

And I just want to add to what Michelle said. As was mentioned earlier, the FREEDOM1 clinical study is a single ascending dose clinical study, and we expect both based on our work as well as the work of others that following a single dose, we can reasonably expect to see both robust splicing correction as well as changes in terms of myotonia. Some of the other assessments that Michelle mentioned that we will be looking at may take multiple doses before we start seeing a meaningful change there. But we will get a very good sense from the data that we'll be presenting this year on the power of the EDODM1 molecule to really change the pathology of this disease.

And thank you. One moment for our next question. And our next question comes from Ananda Ghosh from H.C. Wainwright & Company. Your line is now open.

Hi, James. Thanks for the opportunity. I had two questions, one on DMD, and that is with respect to the recent SRP-5051 data. What does that data tell you about your program concerning the platform and the EDO51? And then I have one follow-up question on the DM1 program.

Thank you, Ananda. I appreciate the question. So we have done a cross-trial comparison of the ability of EDO51 to mediate exon 51 skipping in humans following a single dose. There, we were able to observe six-fold higher levels of exon 51 skipping compared to a single dose of the 5051 molecule at 20 mg per kg. The 20 mg per kg 5051 was relatively well tolerated, and at 10 mg per kg, ED051 demonstrated following the single dose in humans only grade 1 reversible transient adverse events. So a very, very well tolerated drug. We anticipate, as we extrapolate forward, that we could be producing six-fold higher levels of exon skipping and potentially dystrophin than what was observed in both the three-month Momentum A and the six-month Momentum B clinical studies with 5051. This supports our contention that we have the potential to produce greater than 9% dystrophin levels in patients following four doses. And so we remain very confident, both based on the extrapolation in the cross-trial comparison to that clinical data, the work that we've done in animal modeling and nonhuman primates, and the overall modeling work that has incorporated both mouse, nonhuman primate, and human data with EDO51 that indeed, we'll be able to see better than 9% dystrophin in patients. If we could even achieve 7% dystrophin production with an exon skipping approach, this will be the highest level of dystrophin produced by any exon-skipping drug. We project that it will be produced by any exon-skipping drug, and so we would feel that to be a huge success, but we believe based on all the work we've done, we have the potential to produce greater than 9% dystrophin in patients.

Got it. Thanks. With respect to the DM1 program, there has been a debate in terms of what kind of primary endpoint the companies might see as the DM1 programs advance. There have been a lot of discussions around the vHoT. So what is your take about the agency's view on the primary endpoint in the DM1 program? And my follow-up question to that is, is there a correlation between the splicing correction and the vHoT assay measurements?

Perhaps I could start off, and then I'll ask Michelle Mellion to add to my thoughts. So these conversations with regulators are ongoing, and so we cannot speak to what would be the approval endpoints from our FREEDOM2 clinical studies and beyond. What we can say is that we believe that splicing is an important mechanistic underpinning of the EDODM1 program, and with greater levels of splicing correction, we have, in animal models, seen greater levels of myotonia correction. As such, we would expect to see with greater levels of splicing correction in patients, greater levels of myotonia correction, and long-term correction of many of the movement-related topologies of this disease. So it is our anticipation that all of these will go into ultimately what would become an approvable endpoint. But let me allow Michelle to perhaps add to that.

Yes, that's right, James. I believe that we will learn from our FREEDOM-DM1 study, which is our single ascending dose study about the potential impact on several of these intermediate endpoints such as vHoT and potentially at later time points grip and strength. It is likely that looking at the totality of these endpoints taken together, the vHoT strength, grip, and may have selected functional endpoints such as the 10-meter walk test, we'll be able to assess the full impact of splicing correction over multiple doses in a future study on these endpoints to appreciate the potential impact on the disease that our therapies will have for this population.

Got it. Thanks very much. Much appreciated.

Thank you.

Thank you. And I am showing no further questions. I would now like to turn the call back to James McArthur for closing remarks.

Thank you, operator, and thank you, everybody, for participating in today's call. If you have any questions or follow-up items, please do reach out to me or Noel. We look forward to connecting with all of you soon at upcoming investor conferences. Have a great evening. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.