Earnings Call Transcript - RGNX Q2 2023

Operator, Operator

Good day, and thank you for standing by. Welcome to the Q2 2023 REGENXBIO Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. Please be advised today’s conference is being recorded. I would now like to turn the conference over to your speaker today, Patrick Christmas, Chief Legal Officer. You may begin.

Patrick Christmas, Chief Legal Officer

Good afternoon and thank you for joining us today. Earlier this afternoon, REGENXBIO released financial and operating results for the second quarter ended June 30, 2023. 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 in comparable risk factors sections in 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, August 2, 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 purport to project financial positions or operating results of the company. Actual results may differ materially. I would like to now turn the call over to Ken Mills, CEO of REGENXBIO. Ken?

Ken Mills, CEO

Thank you, Patrick. Good afternoon, everyone. Thanks for joining us. I'm pleased to begin today's call with a recap of some 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 second quarter ended June 30, 2023. 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're focused on developing therapies for diseases that have significant unmet needs. We continue to be a leader in gene therapy with thousands of patients who have been dosed with AAV therapeutics derived from our proprietary NAV technology platform. Recently, it's been a significant time of growth for the AAV gene therapy industry and REGENXBIO. We're developing a deeper understanding of gene therapy market access model and digesting regulatory approval, including the FDA's support of biomarkers and surrogate endpoints to support accelerated approval. There are now five FDA-approved AAV therapeutics. And I'm pleased how REGENXBIO remains the leader in the gene therapy space as our 5x25 strategy is on track for advancing five AAV therapeutics from our internal pipeline and license program into pivotal stage for commercial products by 2025. What distinguishes REGENXBIO as a leader in AAV therapeutics is our platform, pipeline and products. There are thousands of patients who have been dosed with AAV therapeutics derived from our NAV technology platform and hundreds more receiving treatment every quarter. We estimate approximately two children per day are receiving ZOLGENSMA, which uses our NAV AAV9 vector. We believe that we have a strong pipeline of AAV therapeutics ourselves with the potential to deliver one-time treatments to address significant unmet need for patients living with common and rare diseases. At REGENXBIO, we are conducting over 12 active clinical trials, using six different forms of delivery devices in three therapeutic areas: retinal, neuromuscular and neurodegenerative diseases. In 2023, our team is executing on two pivotal phase programs that include over 1,000 subjects to support the goal we have to file our first BLA in 2024 and 2025. We're observing that, on average, one new patient is being dosed in REGENXBIO clinical trials daily. Our work in retinal disease primarily centers around the strategic partnership we entered into with AbbVie at the end of 2021 to develop and commercialize ABBV-RGX-314 or 314 an investigational gene therapy. AbbVie is a strong and complementary partner for REGENXBIO. We expect to leverage AbbVie's global development and commercial infrastructure within eye care with our expertise in AAV gene therapy clinical development and deep in-house knowledge of manufacturing. Together, we're developing 314 to be the first one-time therapeutic option in major retinal vascular diseases to address significant unmet need for patients. Overall, our pipeline of AAV therapeutic candidates is addressing high unmet need for millions of patients in diseases that represent current market opportunities of over $20 billion. Just a few weeks ago at our Investor Day in July, we introduced some new clinical trial data from our retinal programs using suprachoroidal delivery and our Duchenne microdystrophin candidate, and we provided specific guidance about additional upcoming interim trial updates. From our AAVIATE and ALTITUDE trials, we reported that mild-to-moderate intraocular inflammation previously observed with suprachoroidal delivery is mitigated with short-course topical steroid eye drops. And we reported safety updates from the initial dosing in cohort 1 of the AFFINITY DUCHENNE study to support a well-tolerated profile of our candidate RGX-202 today. Now, I'll turn the call over to Steve, so that he can review in detail a bit more about the clinical progress and pipeline updates.

Steve Pakola, Chief Medical Officer

Thanks, Ken. I'll begin with 314, which is being developed in collaboration with AbbVie to treat wet AMD and diabetic retinopathy via subretinal and suprachoroidal route of administration. 314 utilizes our NAV AAV8 vector to deliver a gene encoding a therapeutic antibody fragment to inhibit VEGF. The anti-VEGF market opportunity is poised to grow significantly as the population ages. 314 for the treatment of wet AMD via subretinal delivery is being evaluated in two ongoing pivotal trials ATMOSPHERE and ASCENT. We recently announced the expansion of these studies to enroll a total of 1,200 patients in the US, Europe, Japan and Israel to support global development of the program. We also recently initiated a Fellow Eye treatment study as part of the pivotal program using subretinal delivery. This study is evaluating the safety, efficacy and immunogenicity of subretinal 314 administration in the fellow eye of patients with bilateral disease from ATMOSPHERE and ASCENT, who previously received a subretinal injection of 314. Overall, we plan to complete all these trials in time to support global regulatory submissions in late 2025 through the first half of 2026. Additionally, earlier this week, we presented new interim results from our Phase 2 pharmacodynamic study designed to evaluate the same dose levels being used in the two pivotal trials. The updated interim data demonstrated that RGX-314 manufactured using our NAV Express platform process was well tolerated and in both the low-dose and high-dose cohorts through six months patients achieved expected protein levels along with stable to improved BCVA and CRT as well as meaningful reductions in anti-VEGF burden, with most subjects remaining injection free. This study is now fully enrolled. We also have two ongoing Phase 2 trials that fall under our collaboration with AbbVie, assessing in-office suprachoroidal delivery of RGX-314 in for treatment of wet AMD in the AVA trial and treatment of diabetic retinopathy in the ALTITUDE study. AVA is an active control dose escalation trial evaluating RGX-314 for the treatment of wet AMD. We recently presented safety data at our Investor Day from Cohort 6, evaluating dose level 1x12 GC pre-eye that included short-course prophylactic ocular steroids following administration of RGX-314. The initial data presented continues to support the safety profile of RGX-314 and highlighted the inclusion of short-course prophylactic steroid eye drops, which resulted in zero cases of intraocular inflammation. We plan to present full six-month results from Cohorts 5 and 6 at the Hawaiian Eye meeting in the beginning of 2024. ALTITUDE is the active controlled dose escalation study of RGX-314 for the treatment of DR. We're very excited about the opportunity in DR given the size of the market, which exceeds that of wet AMD and because we believe this patient population can benefit the most from a potential one-time gene therapy. During our Investor Day, we presented initial interim data from Cohorts 4 and 5 at dose level 3, and with short-course prophylactic steroid eye drops following RGX-314 administration. The data demonstrated that RGX-314 was well tolerated with no drug-related serious adverse events in 29 patients from these cohorts. And just as observed in wet AMD, the inclusion of short-course prophylactic steroid eye drops resulted in zero cases of IOI in all patients. We look forward to presenting full 12-month results from cohorts 1 to 3 at the American Academy of Ophthalmology Meeting later this year. Moving to Duchenne. As Ken mentioned in his remarks, at our Investor Day, we were pleased to announce our new exon skipping program to complement RGX-202. Duchenne patients face high unmet need, and we are committed to bringing multiple treatment options for these boys. Our first program, RGX-202 is a 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 CP domain found naturally occurring dystrophin. 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. During our Investor Day, we reported safety data from the Phase 1/2 affinity Duchenne trial. The data we presented on the two patients, ages 4 and 10 showed that RGX-202 was well-tolerated in both patients with no drug-related serious adverse events. Time of post-administration follow-up was 45 days and more than three months. We continue to actively recruit patients in this trial, and we look forward to presenting additional data at the World Muscle Society Congress later this year, that will include longer-term safety data and initial microdystrophin protein expression levels in muscle at three months. We also continue to enroll patients in affinity beyond an observational screening study that is evaluating the prevalence of AAV8 antibodies in patients with Duchenne. Moving to our other rare disease programs. We are developing two programs for Mucopolysaccharidosis, MPS II and MPS I. RGX-121 is an investigational one-time AAV therapeutic for the treatment of MPS II, also known as Hunter syndrome, being evaluated in the ongoing Phase 1/2/3 CAMPSIITE trial. In May, we announced that we received regenerative medicine advanced therapy or RMAT designation from the FDA. Recognizing the preliminary data we have presented to date indicates its potential to address the unmet medical need for patients with Hunter syndrome. We completed enrollment of 10 patients for our CAMPSIITE trial in the first half of 2023 and remain on track to support a BLA filing in 2024 using the accelerated approval pathway. Now on to RGX-111, an investigational one-time AAV therapeutic for the treatment of severe MPS I. We have completed enrollment of the Phase 1/2 trial and we remain on track to share additional updates on plans for this program later this year. In addition to these two programs, we also are developing RGX-181 to treat the neurodegenerative manifestation and RGX-381 to treat the ocular manifestations of CLN2 or Batten disease. Physician investigators in Brazil continue with follow-up for the first child with CLN2 disease dosed with RGX-181 under a single patient investigator-initiated study, and we expect investigators to report initial interim data from the single patient including six-month results at the Society for the Study of Inborn Errors of Metabolism Annual Symposium later this year. We are also happy to report the recent dosing of our first patient with RGX-381. To conclude, we have made significant progress with data updates and trial advancements across all our programs as we continue toward our goal of 5x25. Lastly, I'd like to thank the patients, families, clinicians and patient advocacy representatives who are involved in and support all these trials. And with that, I turn the call over to Vit to review our financial guidance.

Vit Vasista, Chief Financial Officer

Thank you, Steve. REGENXBIO ended the quarter on June 30, 2023 with cash, cash equivalents and marketable securities totaling $415 million compared to $565 million as of December 31, 2022. The decrease was primarily driven by cash used to fund operating activities during the first half of 2023. R&D expenses were $60 million for the second quarter of 2023 compared to $61 million for the second quarter of 2022. The decrease was primarily attributable to an increase in developmental cost reimbursement from AbbVie under our Eye Care collaboration. We expect the balance in cash, cash equivalents and marketable securities of $415 million, as of June 30, 2023, 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 upon the achievement of developments or commercial milestones under our 314 collaboration. With that, I will turn the call back to Ken to provide final thoughts.

Ken Mills, CEO

Thanks, Steve and Vit for those important updates about our clinical progress and our financial performance. REGENXBIO continues to perform at a high level, as we execute on our mission of improving lives for the curative potential of gene therapy. In addition to our platform and pipeline, our end-to-end capabilities also set us apart as a leader, with our manufacturing innovation center here in Rockville running scalable commercial-ready batches of AAV Therapeutics. And our research and early development team continues to advance what's possible in gene therapy. We provided clear examples of these capabilities at our Investor Day, when we presented data from the manufacturing innovation center performance, including on product quality and yield. And when we introduced plans for a new IND for a candidate with exon-skipping science to expand our commitment to Duchenne. Looking ahead for the remainder of the year and early into next year, we anticipate a number of important clinical pipeline milestones. Let me summarize. Next month, as Steve mentioned, investigators at the Society for the Study of Inborn Errors of Metabolism will report the first initial data six-month follow-up from the first patient dosed with RGX-181 for the treatment of CLN2 form of Batten disease. This is a five-year-old child and this is part of the data from our third neurodegenerative program. In October, at World Muscle Society, we expect to share additional interim data for patients in cohort 1 of affinity, Duchenne, including longer-term safety and the first Microdystrophin Expression protein levels in Muscle at three months. In November, we plan to report additional interim data from the ALTITUDE trial of 314 suprachoroidal delivery for the treatment of diabetic retinopathy at the American Academy of Ophthalmology meeting being held. This will include full 12-month results from cohorts 1 and 2 and 3. And finally, in January of next year, investigators will report on additional interim data from the Phase II/III trial of RGX-314 suprachoroidal delivery for the treatment of wet AMD including full six months results from Cohort 5 and 6, and this will be at the Hawaiian Eye and Retina meeting. So we have a lot of important value-driving catalysts ahead of us this year. And with the balance sheet in place to continue to fund our mission and operations into 2025, as Vit described, we have the focus and high-performing team, strong collaborators and the trust of the clinical and patient community partners, it's a clear and definable path for us to achieve our '5x'25 vision and continue to lead what's possible with AAV Therapeutics. We want to thank all of you for listening today, and we look forward to providing you additional updates, as we continue on this path for the remainder of this year and into next year.

Operator, Operator

Thank you. Our first question comes from Dane Leone with RJF. Your line is open.

Dane Leone, Analyst

Hi. Congratulations on all the progress, thanks for taking some questions for us. Two questions kind of have been percolating with investors recently. One, it seems like you've given us more detail around what efficacy data we could expect from both AAV and ALTITUDE. Just one question regarding AAVIATE should we expect 12-month data from Cohorts 1-4 alkaline eye or will it be just a full look across all Cohorts two months fix? And then secondly, can your team elucidate what Axle assays around protein expression of microdystrophin we could see at world? And whether you would expect some method of comparability to your peers that have ongoing the DMD programs as well? Thank you.

Ken Mills, CEO

Thanks, Dane, for the good question. Steve, do you want to take the alkaline eye piece?

Steve Pakola, Chief Medical Officer

Sure. So hi Dan and thanks for the questions. So for the AAVIATE Wet AMD update, we have discussed the latest results that we have for a six-month follow-up. We haven't said more as far as longer-term follow-up in part because of the later Cohorts and the dynamic nature in these interim updates of ongoing studies as well as really seeing when we might be able to do a data cut, and we always have the overhang of also reaching alignment with AbbVie as we get closer to this type of meeting. So that's the type of thing that we can update as we get a little closer.

Ken Mills, CEO

And on the microdystrophin protein expression Dane, we are working with methods that we think will be able to be used for comparison to methods that have been used by others in clinical investigation of the microdystrophin class of products. So I think that as we come into world muscle, I think we all know that forms of Western Blot Assays as well as Liquid chromatography-mass spec have been used in assessments of other patients. And we think that we will have methods to support interpretation of that and some forms of comparison keeping in mind that there are always nuances in assays, but I think things that the community will be familiar with from us.

Dane Leone, Analyst

Excellent. I look forward to seeing the data. Thank you.

Operator, Operator

One moment for our next question. Our next question comes from Gena Wang with Barclays. Your line is open.

Unidentified Analyst, Analyst

Hi. It's Tony on for Gena. I have two questions. I guess, first, briefly, can you remind us of the IP and Royalty status for some of your partner programs, including with the Rocket for Danon Disease and Ultragenyx or GSD1a as well as any IP rights to Rh74 And then another one on DMD with updates expected from Sarepta Advisory later this year, what kind of bar would you be looking for in terms of efficacy for protein expression and Nsa?

Ken Mills, CEO

Sure, Tony. Thanks a lot for the question. Yeah, with respect to programs that are part of our NAV Technology licensee universe, certainly Rocket and in program in the Ultragenyx GSD1a programs are under license for two different vectors, Rockets using AAV9, NAV AAV9 and Ultragenyx using NAV AAV8 in the case of GSD1a licenses we entered into several years ago. We tend to have royalties that are in the range or similar to the type of compensation that we're receiving, for example, on the Zulgensma royalty. So starting in the high-single-digits and going up on a tiered basis up into double digit ranges. With respect to IP as it relates to your second question, we currently have two lawsuits that are involving patents relating to the manufacturing of Sarepta's product as well as patents that involve the composition of Sarepta's product, both of which use AAV-Rh74 that they refer to. And so we updated recently on the second lawsuit, the first lawsuit that involves the patents relating to manufacturing of the product is actually scheduled for trial in the beginning of 2024. With respect to your second question, I think this builds off of Dane's question about microdystrophin data and expression and where the program for RGX-202 is going, which we're very encouraged about some of the initial safety data we provided just a few weeks ago. When it comes to microdystrophin expression, we think that RGX-314 is within the class of, you know, treatments, candidates that have been explored clinically so far, including both Sarepta and Pfizer and some others, like Solid. We're at a 1e14 dose currently in our trial, and I think that is, again, adjusting for understanding that there can be sometimes differences in assays and quantitation of different AAV products similar to where Pfizer is in its pivotal program. And my understanding of Sarepta's accelerated approved product is that they're slightly above that 1.3e14 in terms of dose level. So we'd be coming into observations of some of the first clinical data that we'd see at 90 days looking to achieve similar protein expression with respect to RGX-202 to what others are achieving. Now, the key there is that we believe that once we express microdystrophin in the muscle of children, that our microdystrophin has the potential to be more potent or more efficacious because we're the first clinical candidate to design into the AAV microdystrophin that's being expressed a substantial component of the C-terminus, as Steve alluded to, the C-terminal domain, which we've established pre-clinically, both in AAV experiments and in other work, to be meaningful in terms of improving the strength and the biological function of a microdystrophin. 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. During our Investor Day, we reported safety data from the Phase 1/2 affinity Duchenne trial. The data we presented on the two patients, ages 4 and 10 showed that RGX-202 was well-tolerated in both patients with no drug-related serious adverse events. Time of post-administration follow-up was 45 days and more than three months. We continue to actively recruit patients in this trial, and we look forward to presenting additional data at the World Muscle Society Congress later this year, that will include longer-term safety data and initial microdystrophin protein expression levels in muscle at three months. We also continue to enroll patients in affinity beyond an observational screening study that is evaluating the prevalence of AAV8 antibodies in patients with Duchenne.

Operator, Operator

One moment for our next question.

Unidentified Analyst, Analyst

Hi, good afternoon. This is Lorena Song on for Mani. I know earlier you had touched a little bit on the infringement lawsuit and I was wondering if you could provide or if there were any updates that were available in terms of the timing for the second lawsuit as well as kind of the potential level of damages that is thought of and the potential division between the company and the University of Pennsylvania?

Steve Pakola, Chief Medical Officer

So we don't have any update on the timing of the second lawsuit. As I alluded to, the first case is scheduled to go to trial in early 2024. And that's the otherwise the exact timing of the second lawsuit is not yet built.

Ken Mills, CEO

I believe it's essential for everyone to recognize that in AAV gene therapy, there are still boys and children in some of our trials, as well as in others, who cannot access therapy for various reasons. Sometimes, they are unable to receive commercial therapies due to preexisting immunology factors. They may qualify for treatment with one type of vector based on serology but not with another. While Duchenne is a rare disease, it has a higher incidence and prevalence compared to other areas we are involved in regarding clinical development. Therefore, we have not observed, nor do we anticipate, any impact on our ability to enroll participants in the RGX-202 program, which is currently in clinical stages. And as we go forward, I think additional data for microdystrophin class of products on the basis of the fact that our product is of that class when we have the opportunity to show our microdystrophin data, emphasizing that our microdystrophin is a potentially better form of and more similar to full-length dystrophin or more naturally biologically active forms of truncated dystrophin, I think should be really exciting because it could show that there's evidence of incremental improvement with existing technology. But really, I think we should be thinking about RGX-202 as an improvement to the first generation of microdystrophin both on the basis of inclusion of the C-Terminal domain as well as the potential to bring some of the benefits of the manufacturing innovation center into focus. And all of that in addition to, look, there's just going to be boys that aren't going to be able to access the other treatments.

Operator, Operator

One moment for our next question.

Unidentified Analyst, Analyst

Thank you. Regarding the Duchenne program, what do you anticipate the impact of the recent approval will be on potential recruitment or enrollment in your study, as well as the potential effects from the study results expected later this year?

Steve Pakola, Chief Medical Officer

Yes, it's important for everyone to understand that there are still boys in our trials and others who cannot access therapy for various reasons. Sometimes this is due to preexisting immunological factors that allow them to potentially receive treatment from certain types of vectors but not others. Duchenne is a rare disease, yet it has a higher incidence and prevalence compared to other areas we are exploring in clinical development. We have not encountered, nor do we expect to encounter, any challenges in our ability to enroll participants for the RGX-202 program, which is currently in the clinical stage. Moving forward, I believe that additional data regarding the microdystrophin class of products will be significant. Our product belongs to this class, and when we present our microdystrophin data, highlighting that our microdystrophin is a potentially superior form that closely resembles full-length dystrophin or more biologically active versions of truncated dystrophin, it should be very promising. This could provide evidence of incremental improvements over existing technology.

Operator, Operator

Thank you for your questions. One moment for our next question.

Unidentified Analyst, Analyst

Thank you. And actually speaking of the potential differentiation in terms of potency, should we expect to see impacts on muscle function or muscle strength maybe earlier than other programs, say at the six-month readout?

Ken Mills, CEO

I think that it's hard to assess that from the animal models because they're very different in certain forms than the human aspects of the disease, as you get later in the progression, the animal models can be fragile in different types of ways. And so you can always collect that same longitudinal data. I think on the basis of our understanding, I think we would expect to see more clear separation at something like the one-year time point. And I think it could be possible for certain types of measures to distinguish themselves between the six and 12-month time points as well. We certainly wouldn't expect it would be something that would accompany the microdystrophin measures from the biopsies at three months.

Unidentified Analyst, Analyst

Thank you so much for your clarification.

Operator, Operator

One moment for our next question. Our next question comes from Caroline Palomeque with Berenberg Capital Markets. Your line is open.

Caroline Palomeque, Analyst

Hi, thanks for taking the question. So on RGX-314 for subretinal wet AMD, are there any updates on enrollment from AbbVie on the pivotal trial to set atmosphere, especially since they increased the number of patients as well as the trial sites in the study? Thanks.

Ken Mills, CEO

Hi, Caroline, so we don't have any change in our guidance. So everything is going very well post the expansion, the global expansion of the pivotal program. And we continue on track to complete these studies so that we can achieve BLA and European regulatory submissions in late 2025 through the first half of 2026. And yes, we're trucking along.

Operator, Operator

And I'm not showing any further questions at this time. And this does conclude today's presentation. You may now disconnect, and have a wonderful day.