Hello, and thank you for standing by. Welcome to the Q4 and Full Year 2022 REGENXBIO Earnings Call. At this time, all participants are in a listen-only mode. After the prepared remarks, there will be a question-and-answer session. Instructions will be given at that time. As a reminder, this call is being recorded. It is now my pleasure to introduce Chief Legal Officer, Patrick Christmas. You may begin.

Good afternoon, and thank you for joining us today. Earlier this afternoon, REGENXBIO released financial and operating results for the fourth quarter and full year ended December 31, 2022. The press release is available on our website at www.regenxbio.com. Today's conference call will include forward-looking statements regarding our financial outlook in addition to regulatory and product development plans. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted and can be identified by words such as expect, plan, will, may, anticipate, believe, should, intend, and other words of similar meaning. Any such forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties. These risks are described in the risk factors and the management's discussion and analysis sections of REGENXBIO's annual report on Form 10-K for the full year ended December 31, 2022, and comparable Risk Factors sections of REGENXBIO's quarterly reports on Form 10-Q, which are on file with the Securities and Exchange Commission and available on the SEC's website. Any information we provide on this conference call is provided only as of the date of this call, February 28, 2023, and we undertake no obligation to update any forward-looking statements we may make on this call on account of new information, future events, or otherwise. Please be advised that today's call is being recorded and webcast. In addition, any unaudited or pro forma financial information that may be provided is preliminary and does not report to project financial positions or operating results of the company. Actual results may differ materially. I would now like to turn the call over to Ken Mills, CEO of REGENXBIO. Ken?

Thank you, Patrick. Good afternoon, everyone. Thanks for joining us. I'm pleased to begin today's call with a recap of our recent business highlights, as well as an update on our corporate goals. Dr. Steve Pakola, our Chief Medical Officer, will then provide an update on our clinical programs; and Vit Vasista, our Chief Financial Officer, will provide an overview of financial results for the fourth quarter ended December 31, 2022. At the end of the call, we will open up the line for questions. At REGENXBIO, our mission is to improve lives through the curative potential of gene therapy, and we are focused on developing therapies for diseases that have significant unmet need. We continue to be a leader in gene therapy with thousands of patients who have been dosed with AAV therapeutics derived from our NAV technology platform. Today, we recognize that we're at the intersection of Rare Disease Day and the final day of February that was part of Low Vision Awareness Month. I'm encouraged by the momentum in AAV gene therapy. With recent approvals, upcoming regulatory decisions, encouraging clinical trial outcomes, and positive signals and actions from leaders at the FDA regarding the importance of accelerating gene therapy development, I believe the opportunity for gene therapy and, particularly, AAV therapeutics has never been stronger. Additionally, with our expected near-term approval goals, and continued efforts from research through clinical development and commercial-ready manufacturing, I'm proud of REGENXBIO's leadership in this field. We've continued to make great progress in the fourth quarter and throughout the course of the year, advancing our internal pipeline as we execute our 5x25 strategy to advance five AAV Therapeutics from our internal pipeline and license programs into pivotal stage or commercial products by 2025. To summarize some of our program and operational highlights, we've made significant progress across our global eye care collaboration with AbbVie. Enrollment is ongoing in the ATMOSPHERE and ASCENT pivotal trials for RGX-314 for the treatment of wet AMD using subretinal delivery. The pivotal trials are expected to support the BLA filing in 2024. REGENXBIO's NAVXpress platform process has been incorporated into these pivotal trials and is expected to be produced at our manufacturing innovation center for future commercialization of RGX-314. Related to that, earlier this month, we presented initial data from a Phase I bridging study of RGX-314 using subretinal delivery where we evaluated wet AMD patients receiving RGX-314 manufactured by our NAVXpress platform process at the same dose level being used in the two pivotal trials. The clinical profile of these pivotal doses of RGX-314 using the commercial scale process is encouraging and provides validation for our plans for future commercialization. Now we've also progressed RGX-314 this year using suprachoroidal delivery for both wet AMD and diabetic retinopathy, with positive interim data updates in the last quarter of 2022, supporting the emerging clinical profile and the potential of this in-office approach for a one-time gene therapy. The AAVIATE and ALTITUDE trials are ongoing, and we expect to complete recent enrollment of recently announced new cohorts in these trials in the first half of 2023 and report additional interim data, including initial data from these cohorts in the second half of 2023. Quickly moving over to our rare disease pipeline. We announced earlier this year that the AFFINITY DUCHENNE trial of RGX-202 is active and recruiting patients. Duchenne is a key piece of our 5x25 strategy and represents a large patient population with significant unmet need. Our Duchenne program features a highly differentiated product candidate, including an optimized novel microdystrophin and a unique AAV capsid, which has the potential to improve muscle strength, motor function, and increase access to gene therapy for boys with Duchenne. We are also starting our trial using our proprietary commercial-scale cGMP NAVXpress manufacturing process that has demonstrated increased purity and yield and that we believe will support efficient advancement from the clinic to commercial readiness. Today, we announced that we expect to report initial data from the AFFINITY DUCHENNE trial in the second half of this year. As I mentioned, our NAVXpress platform process and the commercial scale manufacturing innovation center represent key differentiators for REGENXBIO that we're using across our entire clinical trial pipeline to support accelerating the development of AAV Therapeutics. Our pivotal program for RGX-121 for the treatment of MPS II or Hunter Syndrome also is expected to incorporate our NAVXpress drug product manufactured at our manufacturing innovation center to support future commercialization. And today, we announced that the CAMPSIITE trial, the pivotal trial is expected to complete enrollment in the first half of 2023 to support a BLA filing in 2024 using the accelerated approval pathway. We had multiple presentations last week at the 2023 WORLDSymposium, where we certainly provided positive updates from trials associated with RGX-121 as well as RGX-111 in severe MPS I or Hurler Syndrome and treatments that we're developing for CLN2, a form of Batten disease, all of which Steve will review in greater detail momentarily. We expect to share additional updates on Batten, Hurler, and the Hunter program plans and clinical progress throughout 2023. With that, I'm going to turn the call over to Steve, so he can review in more detail our clinical progress.

Thank you, Ken. I'll begin with an update on RGX-314, which is being developed in collaboration with AbbVie to treat wet AMD and diabetic retinopathy. RGX-314 uses the NAV AAV8 vector to deliver a gene encoding a therapeutic antibody fragment to inhibit vascular endothelial growth factor, or VEGF. Wet AMD is the leading cause of vision loss in people over 60, affecting more than 2 million patients in the US, Europe, and Japan. The current standard of care for wet AMD patients are anti-VEGF treatments, which require patients to receive frequent injections in the eye. Real-world evidence shows that patients with wet AMD are severely undertreated due to the unsustainable treatment burden of these frequent injections. As a result, the majority of wet AMD patients experience significant vision loss over time. Last quarter, we presented positive data from the Phase I/IIa long-term follow-up study of RGX-314 for the treatment of wet AMD using subretinal delivery at the AAO annual meeting that was held in October. We expect this trial, along with our two ongoing pivotal trials, ATMOSPHERE and ASCENT, to support our planned BLA submission in 2024. As Ken mentioned, we also presented data from the Phase II pharmacodynamic bridging study of RGX-314 for the treatment of wet AMD using subretinal delivery at the Angiogenesis Conference earlier this month. The data demonstrated that RGX-314 produced by the NAVXpress platform process exhibited a similar clinical profile to the initial adherent cell culture process used in the Phase I/IIa trial, validating the NAVXpress platform process to support the production of RGX-314 for future commercialization. RGX-314 has been well tolerated in this ongoing trial. Patients in the two high-dose cohorts also demonstrated stable to improved BCVA and CRT and meaningful reductions in anti-VEGF burden, with the majority of subjects injection-free. The Phase II pharmacodynamic study is designed to evaluate the same dose levels being used in the two pivotal trials. We also continue to advance two additional RGX-314 programs for the treatment of wet AMD and diabetic retinopathy using in-office suprachoroidal delivery. Last quarter, we announced new data from the Phase II AAVIATE trial, a randomized dose escalation study evaluating RGX-314 in subjects with wet AMD. We also announced the expansion of this trial to further explore the third dose level in a sixth cohort with a short course of prophylactic ocular steroids following RGX-314 administration to potentially prevent the observed incidence of mild to moderate IOI. Patients are being enrolled in cohort 6 regardless of NAV status. Moving to RGX-314 for the treatment of diabetic retinopathy, DR is a complication of diabetes and is the leading cause of blindness in adults between the ages of 24 to 75 and affects an estimated 27 million patients worldwide. DR is a slowly progressing disease that can lead to vision-threatening complications, including diabetic macular edema and neovascularization, which can lead to blindness. Like in wet AMD, patients with DR are treated with anti-VEGF therapy, which has proven to reduce the risk of developing vision-threatening complications. However, due to the unsustainable treatment burden of frequent anti-VEGF injections, many patients with this condition either elect to forgo treatment or put off receiving any treatment until symptoms become unavoidable. We believe a one-time gene therapy like RGX-314 could potentially overcome this hurdle and provide an important therapy for DR patients to significantly alter their disease progression. In November, we announced new data from ALTITUDE, our randomized controlled dose escalation Phase II trial evaluating suprachoroidal delivery of RGX-314 in patients with DR at the Retina Society Annual Meeting. We also announced that we expanded that trial to include a higher third dose level with patients stratified by DRSS levels across cohorts and all receiving a short course of prophylactic ocular steroids following RGX-314 administration to potentially prevent the observed incidence of mild IOI. Shifting to our rare disease portfolio, RGX-202 is our potential one-time gene therapy for the treatment of Duchenne, being developed as a highly differentiated product designed to deliver a transgene for a novel microdystrophin that includes the functional elements of the CT terminal or CT domain found in naturally occurring dystrophin. In preclinical studies, the presence of the CT domain has been shown to recruit several key proteins to the muscle cell membrane, leading to improved muscle resistance to contraction-induced muscle damage in dystrophic mice models. Additional design features, including codon optimization and reduced CPG content have the potential to improve gene expression, increase translational efficiency, and reduce immunogenicity. RGX-202 is designed to support the delivery and targeted gene expression throughout skeletal and heart muscle using our NAV AAV8 vector and a well-characterized muscle-specific promoter. In January, we announced that our Phase I/II AFFINITY DUCHENNE trial is active and recruiting and will assess the safety and tolerability of RGX-202 as well as microdystrophin protein expression levels, muscle strength and functional measures, and muscle MRI in patients with Duchenne. We are on track to dose our first patient in this trial using commercial-scale cGMP material from our NAVXpress platform process in the first half of this year. We are also recruiting patients in the AFFINITY BEYOND trial, an observational screening study with the primary objective to evaluate the presence of AAV8 antibodies in patients with Duchenne to potentially help identify participants for the AFFINITY DUCHENNE trial and other possible future trials of RGX-202. We also continue to progress our two programs for mucopolysaccharidosis, RGX-121 for MPS II and RGX-111 for MPS I. Last week, we presented positive data from both programs at the 2023 WORLDSymposium. Additional positive interim data from the Phase I/II/III CAMPSIITE trial of RGX-121 for MPS II showed that patients in cohort 3 using the pivotal program dose continue to demonstrate the largest reduction in CSF GAG and these patients continue to approach normal levels at week 48. As a reminder, heparin sulfate or HS and D2S6, a component of HS, closely correlate with severe MPS II or GAGs that are key biomarkers of I2S enzyme activity and are being measured in the CSF at baseline and after the administration of RGX-121. CSF GAGs have the potential to be considered a surrogate endpoint that is reasonably likely to predict clinical benefit in MPS II disease under the accelerated approval pathway, as the buildup of GAGs in the CSF of MPS II patients correlates with clinical manifestations, including neurodevelopmental deficits. Additionally, patients demonstrated continued improvement in neurodevelopmental and daily activity skill acquisition up to three years after RGX-121 administration. As of January 30, 2023, RGX-121 was reported to be well tolerated across all cohorts, with no drug-related serious adverse events. At World, we also shared additional positive interim data from the Phase I/II trial of RGX-111 for the treatment of severe MPS I. As of January 17, 2023, RGX-111 was reported to be well tolerated, with no drug-related serious adverse events. Patients demonstrated positive IDUA biomarker activity in the CNS and encouraging continued neurodevelopmental skill acquisition as measured by age and developmentally appropriate validated instruments for neurodevelopmental testing. Following these two programs, we are also developing two programs to help treat the manifestations of CLN2. RGX-181 to treat the neurodegenerative manifestation and RGX-381 to treat the ocular manifestations. As we recently announced, we expect to initiate the Phase I/II clinical trial of RGX-381 in the UK in the first half of this year. And late last year, a patient was dosed under a single Patient Investigator-Initiated Study of RGX-181 in Brazil. To conclude, we have made significant progress with data updates and trial progression across all of the programs in our pipeline, as we continue working toward our goal of 5x25. As Ken mentioned, today is Rare Disease Day, and February is Low Vision Awareness Month, and I'd like to take this opportunity to acknowledge the patients, caregivers, investigators, and physician partners who participate in our work. Without them, our progress in advancing our programs with the goal of delivering the curative potential of gene therapy simply would not be possible. And with that, I would like to turn the call over to Vit to review our financial guidance.

Thank you, Steve. REGENXBIO ended the quarter and year on December 31, 2022, with cash, cash equivalents and marketable securities totaling $565 million, compared to $849 million as of December 31, 2021. The decrease was primarily driven by cash used to fund operating activities and capital expenditures in 2022. R&D expenses were $242 million for the year ended December 31, 2022, compared to $181 million in 2021. The increase was primarily attributable to personnel costs and expenses associated with clinical trials and manufacturing and relief activities for our lead product candidates and was partially offset by REGENX-314 development costs reimbursable by AbbVie and under our Eye Care collaboration. In accordance with the collaboration agreement, REGENXBIO was responsible for the funding of certain ongoing clinical trials for REGENX-314 through the end of 2022, while other RGX-314 development costs were shared with AbbVie. Beginning in 2023, AbbVie will be responsible for funding the majority of all RGX-314 development expenses. We expect the balance in cash, cash equivalents, and marketable securities of $565 million as of December 31, 2022, to fund our operations into 2025. This cash runway guidance is based on the company's current operational plans and excludes the impact of any payments that may be received from AbbVie on the achievement of development or commercial milestones under our RGX-314 collaboration. With that, I will turn the call back to Ken to provide final thoughts.

Thanks for that update, Vit. I'd like to reiterate that REGENXBIO continues to perform at a very high level and is inspired by the patients, families, caregivers, and other stakeholders that we encounter every day in our journey to improve lives through the curative potential of gene therapy. In 2022, we made meaningful progress with our RGX-314 trial enrollment objectives and geographic expansion planning. We also established in-house manufacturing to meet global clinical and commercial regulatory standards. We remain committed to developing treatments for rare diseases and made significant advancements with our pipeline of treatments for diseases that we outlined, such as Batten, Duchenne, Hurler, and Hunter syndrome, the latter of which we expect will support a BLA filing using the accelerated approval pathway. Our history, science, resources, people, and values combined to make us an industry leader in gene therapy and in the development of potentially groundbreaking therapies. We have an amazing team of scientists and engineers dedicated to expanding the understanding and the application of AAV vectors, applying the differentiated capabilities of the NAV technology platform and exploring opportunities to generate new innovative AAV Therapeutics that have the potential to significantly impact patients' lives. We look forward to 2023 with a number of important updates on all of our research and clinical-stage programs. With the balance sheet to fund our mission and operations into 2025, I believe we have a clear and definable path to achieve 5x25, the vision, and continue to lead what's possible in AAV Therapeutics. With that, operator, we will turn the call over for questions.

Thank you. And our first question comes from Gena Wang with Barclays. Your line is open.

Hello, can you hear me?

Yes.

Hi. This is Xiao on for Gena. Thank you so much for taking our question and congratulations on the progress. We have two questions on 314 suprachoroidal in wet AMD and one question on DMD 202. So far on 314, the new prophylactic cohort 6, the dose is around E412. So what type of data would you consider successful and will give you confidence this will be the pivotal dose? And under what condition would you consider to further escalate the dose? The second question is about DMD. So what should we expect in your update in the second half of 2023? How many patients? And in addition to the biomarker data you just mentioned, would you report any functional endpoints? And what type of benchmark data should we use to evaluate the update?

Xiao, thanks a lot for those questions. I'll take them and then Steve, if you want to add any color, let me know. I think the guidance about the second half of the year, we're talking about AVA and ALTITUDE updates for the trials. We're ongoing with the enrollment of the cohorts that include the prophylaxis. And I think it's early to predict precisely when the updates will occur. But I think what you can expect from us is sort of the normal structure of updates that we have when we get to six-month time points for cohorts in our wet AMD and diabetic retinopathy studies. I think it's too early to be talking about any interpretation of the data that was due because we don't have any specific data to talk about. We obviously have a lot of benchmarking when it comes to how we made those decisions around subretinal profile in terms of transitioning to pivotal. And I think in the second half of this year, when we have additional data to bring forward, we'll be able to talk to that specifically. Thanks for that question. On the 202 side, I think, again, we're in the process of sort of active and recruiting study today. So we're giving guidance for the second half of the year data. I think we have outlined in our clinical trial design that in the first three to six months of assessments, we're going to see things that are more weighted toward early biomarker assessments and maybe certain types of imaging outcomes. I think some of the functional outcomes would be things that will be tracked in the study at time points closer to maybe nine or 12 months. So I think that's what we have in terms of the trial design. I think as we get into the second half of the year and closer to the point in time where we'll have those data updates, we'll be able to provide more information. I think in terms of benchmarking, we've talked about this microdystrophin as being differentiated in the class of microdystrophin. We've talked about the C-Terminal domain, bringing scientific and I think interesting potential clinical opportunities for differentiation. Early on, it will be looking at the expression of the microdystrophin construct in biopsies and its effect on some of the imaging techniques that are available, and we'll certainly be looking at safety in the first-in-human examination here of RGX-202. So those are the things that I think we can expect to compare to in the second half of the year.

Thank you very much.

Thank you. Our next question comes from Dane Leone with Raymond James.

It sounds like the probably two more popular ones that have been coming in from investors recently. The first one is, do you have a sense when you will have first data from the 202 program of the first patients or patients you treated with DMD? What the path forward will be from a clinical strategy? Obviously, right now, there's been discussion that Sarepta has disclosed tonight that they will not, in fact, have an ADCOM. So I guess, thoughts given how their program works out, how you would approach your clinical development program? And then the second one is quite popular that whether in your view and your team's view 9001 infringes on your IP patent states? Thank you.

Thanks, Dane. I always appreciate your questions and getting straight to the point. Until we have data, we are not going to focus on the specifics of our next steps regarding the clinical development of 202. Currently, we believe we have a strong program to evaluate early safety, assess biomarker activity, and examine functional outcomes. These aspects align with the guidelines of programs that others, such as Sarepta and Pfizer, have undertaken with microdystrophin products at later stages of development. We believe we have the advantage of observing the scientific, clinical, and regulatory strategies used by others. We feel confident about our scientific benefits, CMC differentiation, and a capsid that addresses market and clinical access needs. However, we want to obtain safety data and biomarker data and begin to see that RGX-202 is showing what we consider a clinically meaningful profile. We will dose patients and expect to start reporting results in the second half of the year. Regarding our intellectual property and its relation to other programs, we have previously mentioned that we identified patents in our portfolio linked to an action we've taken regarding Sarepta. I can say that this is ongoing, and our legal team is managing it. We will share material updates as they become available, but for now, there's nothing more to add.

Thank you very much.

Thanks.

Thank you. Our next question comes from Alec Stranahan with Bank of America. Your line is open.

Hey, guys. This is John, I'm on for Alec. Just a couple of questions from us. So the first one, for your NAVXpress platform, how long do you expect the transition to the new platform to be? And when can we expect current products and clinical needs to be fully supported by the platform? So that's the first one. Second question on 314, I think the last time we talked, could you maybe just give more color on framing the market for 314? I think assuming you're still targeting patients who require frequent injections and would opt for the one-time treatment. So what percentage of patients would you say fall into that category? That's it for me.

Yes. Great, John. I appreciate the question. I'll take the first one, and I'll let Steve handle the second here. So NAVXpress, we got to practice the pronunciation because this is a new trademark name for us. Our platform process that is a bioreactor process that we have actually been using our CDMOs. But have also now installed here at scale in our Rockville facility, our manufacturing innovation center. And we opened that center last year, John. So we've been incorporating and designing plans to incorporate material based on the NAVXpress process into our RGX-314 program, both for subretinal pivotal for suprachoroidal. We're incorporating it into RGX-121, especially for the pivotal phase programs; it's important to get patient exposures with the commercial process as we complete our pivotal phase program to support our BLA. When it comes to something like RGX-202, we'll actually be starting out of the gate in the clinic with that process, and that's been a point of emphasis we've been making is that we think there's going to be therefore an efficient transition through clinic and in that transition from clinics to commercial. And then with other programs that we guided to like program updates for RGX-111 in the second half of the year, we said that we've already started the process of making additional RGX-111 material with the NAVXpress process. So, basically, everything is there now. In some cases, we're incorporating it into late-stage execution. In other cases, we're beginning clinical trials and clinical investigation with that process, and we think that this is very important to be at this stage to have a high-quality, high purity, high-yield process and one that's very reproducible. So thanks for that. I'll let Steve talk about 314 market.

Hi, John, Steve here. Yes, a common question is how to segment the spectrum of wet AMD and diabetic retinopathy patients. Regarding wet AMD, you mentioned patients who require more anti-VEGF treatments and need more frequent injections. It makes sense that those needing injections every month or every two or three months have a greater burden, so they and their caregivers may find more value in treatment compared to those needing injections less often. However, the reality is that regardless of the frequency of injections, patients prefer fewer injections and fewer visits to the eye doctor. Therefore, we see a one-time treatment option that can either eliminate the need for reinjections or significantly reduce the treatment burden for those who still require them as having value across the spectrum. Even with treatments like faricimab and high-dose Eylea, many patients still need frequent injections. We see opportunities across this range. With subretinal delivery, clinicians identify a subset of patients they consider for this treatment. We're enthusiastic about suprachoroidal delivery as an in-office administration method that could increase the number of patients clinicians might consider. Diabetic retinopathy really broadens the possibilities because none of the current or experimental treatments that require repeat injections, even if infrequently, can meet the significant unmet need for high-risk DR patients like a one-time administration could.

Steve, I was reflecting on your discussion regarding the conversation you had at Angio with Charlie and Peter Kaiser when they were presenting the bridging study data. Charlie mentioned that he currently sees about 25% of the patients in his clinic who could possibly transition to a one-time gene therapy. He noted this right after reporting the data from the bridging study, which involves doses we are examining in a pivotal phase alongside the commercial process. As the program has developed, we have received similar feedback from physicians, which is interesting because it indicates that clinicians are beginning to quantify these experiences based on their daily practice, especially as new treatments are being introduced in clinics currently. There you go, John.

Thanks, guys for the question.

Thank you. Our next question comes from Ellie Merle with UBS. Your line is open.

Hi. This is Sarah on for Ellie. Thanks so much for taking our questions. I have two questions. First, on suprachoroidal wet AMD and DR. Are you thinking that you would wait to start a pivotal program there until you move until you get data from the subretinal Phase III and sort of timelines for entering that? And then second for DMD. I just want to confirm if the data update that we're going to get in the second half will include microdystrophin as a biomarker? Or should we be expecting something else?

Thanks, Sarah. I appreciate you with your questions. No, I think that we have learnings across both programs with respect to pharmacology and sort of planning for one-time gene therapy with respect to wet AMD in particular. But there's no entanglement between the execution on pivotal phase for subretinal and decisions that are being made with respect to suprachoroidal. I think that point in time was at the beginning of the program, not where we are now with respect to suprachoroidal. Right now, suprachoroidal decision-making is with AbbVie and REGENXBIO in a place where it's looking at the data that's coming out from the doses that are being explored, evaluating that clinical profile against the target product profile independent of subretinal. Second question for Duchenne, Yes, I mean for us, measures of microdystrophin are the biomarker of choice for our initial assessments. And as I alluded to in an earlier question, there may be additional things that earlier time points like 3 months to 6 months that we may be able to bring forward. But from a biomarker perspective, I think that we view microdystrophin measured from biopsy collection was something that will be important to assess.

Great. Thanks.

Thank you. Our next question comes from Luca Issi with RBC Capital Markets. Your line is open.

Great. Thanks for taking our question. This is Lisa on for Luca. Maybe just another one on DMD on the microdystrophin biomarker. Will the 54% expression level seen from Sarepta's commercial manufacturing method kind of be the bogey here for success? And then maybe one on 314, I was just looking at the bridging study data, and I noticed that one of the patients in the high-dose group did not receive a full dose at the time of the subretinal procedure. So I was just wondering if you can walk us through what happened there, like why this patient didn't get the full dose? And if there's any learnings from this. Thank you.

Hi, Lisa, I can take the second one. So we've had very good compliance and success with the surgical procedure across the different studies that we've done. This was just a one-off case where the full dose wasn't administered. There was no particular need to change anything in terms of this. We're able to pick this up in this kind of a rare instance because we monitor all the cases. So we have a trainer at every single surgical case and then also the same for our SCS suprachoroidal delivery.

And with, Lisa, your first question about I guess, the number that you threw out associated with some data that Sarepta brought forward. I would say that there's going to be different methods. There's going to be different assessments. There's certainly some level of heterogeneity in sort of collection. I think we want to be within the range of what I think is reasonable to have been observed at dose levels that we're starting at with respect to what we can in animals, what others have seen in animal, and the translatability of that, because we're getting good responses in the DMD models in humans. So I don't know that I'd go to a specific number, though, because I also think that when we're talking about the amount of protein that we may be expressing, you have to remember that the REGENX protein is going to be different. Like Steve alluded to, it's got elements of a functional domain that other proteins don't have. And so that could mean that that function could translate into positive clinical benefit at a different type of concentration, a different type of protein level. And we still want to be in the range of things that we've observed in vivo in our preclinical work, and that is similar to ranges of things that Sarepta and Pfizer and Solid and others who have worked in the space with AAV gene therapy have seen. So that's where we're heading.

Thanks so much for taking my question.

Thanks a lot.

Thank you. Our next question comes from Andreas Argyrides with Wedbush Securities. Your line is open.

Great. Hey, guys. Thanks for taking my questions. Just a quick one here. KOLs we've spoken with have expressed enthusiasm around 314 impact on reducing disease worsening in DR. How are you thinking about the upcoming results and how they will inform the decision to take it forward? And what's the bar for saving efficacy?

Hi, Andreas, great question. The key consideration for us is we know these patients are not getting treated, even though we know anti-VEGF prevent progression to vision-threatening complications. So for us, a one-time treatment that can decrease progression is the goal, basically. Now traditionally, anti-VEGFs that require repeated injections into the eye have looked at this from a certain regulatory bar of showing a certain proportion of patients who can have a two-step improvement, and we can certainly look at that. But what we've seen is that the overall goal is to take patients who otherwise are going to inexorably get worse over time and change that trajectory. So on average, they're getting better, not worse. So we really have an opportunity to look at this across the spectrum of not just the traditional approaches of decreasing the proportion of patients who have at least a two-step worsening and increasing the proportion of patients who have a two-step improvement, but we're able to really look across the spectrum and see are we seeing patients improve? And I think that's an opportunity that exists for a one-time treatment where the benefit-risk of such an approach can really allow that. So that's what we're going to be able to look at across now three different dose levels and look at our traditional time points that we look at six months, for example, as an initial look, even at dose level three to see how do we look on those traditional validated FDA approvable endpoints as well as across the whole spectrum of diabetic retinopathy disease.

Okay. Great. Thanks for taking my question.

Thank you. Our next question comes from Mani Foroohar with SVB Securities. Your line is open.

Hi, good afternoon. This is Mani on the line. I have a few quick questions. For the Duchenne program, how do you expect potential Sarepta approval to affect enrollment timelines? Additionally, ahead of the MPS filing, how should we consider the buildup of the commercial infrastructure regarding its impact on capital expenditures and operating expenses?

Thank you for the questions. Regarding Duchenne, we've noted it as a significant area of unmet need with a large population. It resembles hemophilia, where numerous studies have been conducted for hemophilia A and B, and various products are at different stages of development without any evidence impacting enrollment. This has been consistent even with past studies involving Sarepta, Pfizer, and Solid. Therefore, we do not anticipate any negative effects on enrollment. We remain optimistic about a differentiated profile for our medicines as we advance them towards commercialization. Concerning MPS II, we plan to provide updates in the second half of the year regarding our program plans as we approach 2024 and focus on the BLA filing. I do not expect significant increases in capital expenditures; rather, we may see changes in operating expenses related to building our commercial infrastructure, including personnel and other resources. We will offer further details once we reach the milestones of full pivotal enrollment and complete our preparations for the BLA filing.

Thank you.

Thank you. Our next question comes from Caroline Palomeque with Berenberg. Your line is open.

Thank you for taking my question. My first question has already been addressed, but I would like to ask for additional guidance regarding your expected royalty revenue for 2023. I am aware that several companies are achieving positive results using your AAV vectors, and I wonder if you could provide more details about that. Thank you.

Sure, Caroline. I think in 2023, we're expecting to continue to see top line royalty recognition from Zolgensma. And we also have some license revenue that's recognized from a number of agreements that we have in place that are associated with things like annual fees. But I think this guidance this year has focused on the fact that our operating plan outside of those revenues and materially, the transition of top line revenue from Zolgensma right now is going to pay back the transaction that we entered into with Healthcare Royalty Partners, the $200 million financing we did a couple of years ago. So we don't use that to continue to build out the balance sheet. We have that cash on hand already. I think we do see some other things on the horizon in terms of potential product approvals. We outlined some of this in the press release today, certainly, groups like Ultragenyx and Rocket are strong performers with respect to either transitioning or in later stages of development, but we're not including any of those in our guidance today.

Thanks.

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