Solid Biosciences Inc. Q1 FY2021 Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to the Solid Biosciences Update Call. At this time, all participants are in a listen-only mode. I would now like to hand the conference over to your speaker today, Mr. Tim Palmer, Corporate Communications Manager at Solid Biosciences. Sir, you may begin.

Good morning, thank you, operator. Before we get started, I would like to remind everyone that during this conference call, we may make forward-looking statements, including statements about the company’s financial results, financial guidance, future business strategies and operations and product development and regulatory progress, including statements about the ongoing IGNITE DMD clinical trial. Actual results could differ materially from those discussed in these forward-looking statements due to a number of important factors, including uncertainty inherent in the clinical development and regulatory process, the extent and duration of the impact of the COVID-19 pandemic and other risks described in the Risk Factors section of our most recently filed Annual Report on Form 10-K and other periodic reports filed with the SEC. We undertake no obligation to update any forward-looking statements after the date of this call. With me on today’s call are Ilan Ganot, Co-Founder, President and Chief Executive Officer of Solid Biosciences; Dr. Joel Schneider, our Chief Operating Officer; Dr. Cathryn Clary, our Acting Chief Medical Officer; and Carl Morris, our Chief Scientific Officer. For opening remarks, I’d like to turn the call over to Ilan Ganot, Ilan?

Thank you, Tim. Good morning and thank you for joining us today. The focus on today’s call is to provide an update on our current corporate activities as we continue progress along our 2021 corporate goals and what our progress means for patients with Duchenne muscular dystrophy. First, we provide an update on dosing in IGNITE DMD. Two patients were dosed this quarter in IGNITE DMD using SGT-001 produced with our improved manufacturing process and under an amended clinical protocol. As previously reported, Patient 7 has been dosed safely and continues to do well. Today, we are reporting on an additional patient dosed, Patient 8 experienced a serious adverse event or SAE, but has since been discharged, and as of the patient's 30-day follow-up visits, laboratory values have either returned to normal or continue to trend towards normal. At the moment, Dr. Cathryn Clary will review this SAE and the steps we are taking to evaluate its course. Following Cathryn’s review of the patient dosing, Dr. Carl Morris will present on encouraging long-term biopsy data collected from the first three patients dosed at the 2E14 vg/kg dose. Carl will also present this data later today at the American Society of Gene and Cell Therapy Annual Meeting. The data provide evidence of sustained microdystrophin expression for 12 months to 24 months post dosing in our study, supporting the recently reported positive trends in clinical biomarker and functional data from the IGNITE DMD study. To our knowledge, IGNITE DMD is the first Duchenne gene therapy trial to show durable microdystrophin expression out to 24 months. In conjunction with our growing clinical experience, we believe that the totality of the clinical data will establish a risk-benefit profile for SGT-001 that will be meaningful to patients with Duchenne. Today, Dr. Joel Schneider will share an update on our preclinical pipeline, which includes the nomination of SGT-003 program as our next development candidate and an update on our ongoing collaboration with Ultragenyx. SGT-003 will combine a novel capsid and our proprietary microdystrophin construct to enable a next-generation gene therapy for Duchenne with enhanced delivery to muscle cells. I’m pleased with our progress on all these fronts as we continue to generate additional evidence to support the long-term potential of SGT-001 while expanding our pipeline of differentiated gene therapies. I’ll now turn the call over to Cathryn who will briefly review our clinical update and the steps we are taking as we progress the SGT-001 program.

Thank you, Ilan. As we reported in March, we resumed enrollment in IGNITE DMD and subsequently dosed two patients under our amended clinical protocol. As a reminder, we’re working closely with our Data Safety Monitoring Board or DSMB to carefully review all the data generated with a built-in waiting period of 45 days minimum between each dosing. We also previously reported that Patient 7 dosed at the 2E14 vg/kg was dosed uneventfully and continues to do well. As we do with all patients, we are continuing to monitor this patient and we’ll be collecting additional data throughout the year. Today, we’re sharing that Patient 8 experienced an inflammatory response, which was classified as a serious adverse event and considered by the investigator to be drug related. This event is described in our investigator's brochure and is not considered unexpected. As of the patient’s 30-day follow-up visit, laboratory values had either returned to normal or continued to trend towards normal. We shared the data related to this SAE with the FDA and also the IGNITE DSMB and are working closely both internally, as well as with external experts to further our understanding of the outcome of this dosing and how it may impact our clinical strategy moving forward. While we already had a minimum built-in waiting period of 45 days between dosing Patients 8 and 9, the complexity of this event requires us to carefully analyze all the data before continuing to dose additional patients in IGNITE DMD. This will allow us to determine what, if any changes we might make to the clinical protocol to further enhance patient safety, which is always our top priority. I’ll now turn the call over to Carl who will review the long-term biopsy data from Patients 4 to 6, which we believe supports the potential of SGT-001 to provide benefit to patients with Duchenne.

Thank you, Cathryn. Today, I’m excited to share our analysis of the long-term biopsy data from Patients 4 to 6, which provide compelling evidence that a single dose of SGT-001 at the 2E14 vg/kg dose leads to sustained expression of the proprietary microdystrophin construct containing the neuronal Nitric Oxide Synthase or nNOS binding domain for up to 24 months post dosing. The muscle biopsies were collected from patients 4 to 6 and taken at 24, 18 and 12 months, respectively post dosing of SGT-001. For each patient, the baseline and the last biopsies were taken from the right quadriceps, while the day 90 sample was acquired from the left quadricep muscle. Over the next few slides, I will share with you immunofluorescence and Western Blot data from the long-term biopsies that demonstrate microdystrophin expression remains comparable to the levels observed in the day-90 biopsies for all three patients at this high dose. I will then walk you through results highlighting microdystrophin protein function, through the co-localization of a dystrophin associated protein beta-sarcoglycan, as well as nNOS. Finally, we’ll look at some morphological analysis of the muscle biopsies that demonstrate overall only minimal muscle deterioration since the day-90 time points with mild active destructive pathology observed in the long-term biopsies. Collectively, these data are potentially supportive of the positive trends in the clinical biomarker and functional data that we shared in March. The results support the potential for SGT-001 to provide a meaningful benefit to patients with Duchenne. As Ilan noted at the start of the call, I’ll be presenting these data at 1:45 p.m. today at the ASGCT Conference, and my full presentation will be posted to the Solid Biosciences website once my talk is complete. Now, I’ll turn it over to Joel for an update on the preclinical pipeline.

Thanks, Carl. The growing body of evidence supporting the potential for SGT-001 to provide benefit to patients with Duchenne is very encouraging, and we look forward to generating more data for this program. As we dose additional patients in IGNITE DMD, advancing SGT-001 remains our priority. We continue to explore new and innovative ways to improve outcomes for patients with Duchenne and to potentially address the needs of patients with other musculoskeletal disorders. Toward that end, we have been actively evaluating a library of novel rationally designed AAV9 based capsids. Today we are announcing our next generation Duchenne microdystrophin gene transfer program called SGT-003. This program is an internally developed preclinical asset that leverages our broad expertise in gene therapy and muscle biology. Data presented at the ASGCT Meeting by Dr. Jennifer Green demonstrate that we have successfully developed a library of novel capsids with increased muscle tropism that correlates with decreases in liver by distribution and drives improved efficiency compared with AAV9 in various in vitro and in vivo models. SGT-003 is a preclinical candidate that combines a novel capsid designed to enhance delivery to muscles with our proprietary nNOS containing microdystrophin. We are currently conducting lead optimization for SGT-003 and look forward to sharing additional data with you as this program advances with the potential timeline to the clinic in approximately 18 months. This slide summarizes data from a dose response study, exploring AAV9 alongside capsid candidate SLB101. As you can see, at all doses, our novel capsid led to increased distribution and ultimately microdystrophin expression. We will then provide additional program and pipeline updates as we progress SGT-003 as well as other candidates that leverage our strong internal research capabilities. In addition to our internal research and development efforts, we also have the collaboration with Ultragenyx to explore other next generation opportunities to develop additional Duchenne gene therapies. The companies have been collaborating to optimize candidate vectors that leverage our nNOS containing microdystrophin constructs with an AAV8 light capsid within the Ultragenyx HeLa producer cell line manufacturing approach. I am pleased to share that this is a very productive collaboration that has leveraged each company’s expertise and resources. Ultragenyx is leading efforts around vector construction, optimization and creation of the HeLa producer cell line, and in vitro and in vivo screening of the novel vectors has been expedited by routing expression analytics through Solid’s research team and leveraging our established assets. We expect to provide an update on this program by the end of 2021. As a company committed to improving outcomes for patients with Duchenne, we believe that having multiple ways to deliver our proprietary microdystrophin constructs enhances our ability to make meaningful differences in these patients’ lives. We are excited to expand our pipeline with additional opportunities. I will now turn to our Q1 2021 financials. Earlier today, we filed our Form 10-Q for the quarter ended March 31, 2021, which contains detailed financial results. Although I’m not going to review our detailed results during today’s call, I do want to highlight that during the first quarter of 2021, we closed the public offering, including the full exercise of the overallotment option resulting in gross proceeds of approximately $143.8 million before deducting underwriting discounts, commissions and offering expenses. This financing has further strengthened our balance sheet, and we ended the quarter with $268.5 million in cash and cash equivalents. We expect that our cash and cash equivalents will enable us to fund our operating expenses into the fourth quarter of 2022. I’ll now turn the call back to Ilan for closing remarks.

Thanks, Joel, Carl, and Cathryn. Before we take your questions, I want to take a moment to review our 2021 priorities and anticipated milestones. As previously announced, we successfully achieved our first quarter 2021 milestones, and as Joel just discussed today, we are expanding our pipeline with SGT-003. We remain on track to present additional 90-day biopsy data in the second half of this year from Patients 7 and 8, who were recently dosed. The long-term biopsy results we presented today are encouraging and further increase our confidence in our technologies, our team, and strategies for making gene therapy a reality for patients with Duchenne. I’ll close by reiterating our commitment to the Duchenne community and to working every day to advance therapies that improve their lives and address the challenges of this horrible disease. This commitment, for obvious reasons, is deeply personal for me. What makes Solid such a special company is that every one of our employees is as committed as I am. We see these boys with Duchenne for who they are today: kids who just want to go out and have fun with their friends. We also know what the future holds for them without an effective therapy. What inspires all of us at Solid every day is the prospect of giving them a different future. This commitment is what guides us through the challenges and drives us to build on our successes. We thank the Duchenne community, our employees, and our investors for their continued support and dedication to our shared mission. I look forward to updating you as we continue to make progress in our clinical and preclinical programs. We’ll now take your questions.

Your first question comes from the line of Joseph Schwartz with SVB Leerink.

Everyone congrats on all the progress. My first question is on the longer-term expression data, which it’s encouraging to see those delayed kinetics and it seems like they correspond or correlate most closely to six minute walk in SEC clinical benefits as opposed to NSAA. So I was just wondering, how are you thinking about being able to take advantage of this observation, if you agree with that and try to establish whether these clinical endpoints or a composite of these with or without NSAA might improve the chances to get a microdystrophin gene therapy, such as SGT-001 or three across the goal line with the FDA.

Great question, Joe. Good to hear from you. I think Carl will start and Cathryn will finish.

Yes, pretty good that you picked that up so quickly. Yes. There seems to be an apparent correlation, but it’s an out of three, and you can sort of make any associations you like. I think by being encouraged by the data overall there is variability, expected in these biological assays. We took different muscles from different – at different time points. So, we are quite happy about it. It’s not unexpected that we would see an increase in expression over time. But we need to get more data from all patients to really start trying to look at specific relationships. I’ll turn it over to Cathryn to talk about the clinical trial and how we might be thinking about that.

Sure. Yes. Thanks a lot for the question. We were certainly very encouraged by these long-term results. And I think you asked the question which really gets to the heart of what we’re thinking about as a company in terms of designing our registration trial. How do we, which outcome measures do we use? How can we find the most robust way to measure functional benefit in patients in such a heterogeneous disease? And as Carl said, this is a small data set so far, but we’re encouraged by it. It’s a bit early to start doing correlation analysis, although we’re certainly thinking about that and we look forward to getting the data on our two additional patients and others so that we can make those decisions.

Okay, great, I can appreciate that. And then as far as dosing additional patients in the future, I was just wondering, what does that path look like for you from here? And could you characterize the SAE, which I heard you say was not unexpected, but had some complexity? Was this triggered by lab and or clinical findings? What can you tell us about the last patient to be treated with SGT-001?

Cathryn, you can keep going.

Sure. I’ll just keep going. Yes. So, as I said, the patient had an inflammatory response with elements similar to some of our other patients, which is why it was not unexpected. However, the severity of the events was less severe than patient six. We are still really looking at all the components of it from a causality perspective. The patient course, we’re working both internally and with external experts to fully understand it so that we can move forward in a way that will ensure patient safety. You asked about the path to dose additional patients. We are working, of course, with our DSMB, they reviewed the case, and we’ll be going back to them with the results of our investigation. They will need to approve dosing the next patient. We already built in a minimum of 45 days between Patients 8 and 9. So, while we can’t speculate on exactly when we’ll dose Patient 9, there was going to be a bit of a delay, and we’re working with the FDA as well.

Thank you very much.

And your next question comes from the line of Gena Wang with Barclays.

Thank you for taking my questions. I have three questions. The first one was regarding the Patient 8 inflammatory response. Just wondering, any additional color you can give regarding this patient? You did present at the ASGCT, showing the zero positive AAV9 is related to complement activation. And I think Pfizer also shared some additional color on their safety understanding of the safety. So, if you can give a little bit more color on this patient and what exactly that inflammatory response was and what kind of baseline characteristics from this patient with zero positive also, the platelet count, any other information you can give? That’s the first question. My second question is regarding the SLB101. Did you test in non-human primates? What does the safety look like in non-human primates and also, which backbone was for – was derived for SLB101? My last question is more about the future direction. You do have your own internal SGT-003, but you also a real collaboration, how do you prioritize? Do you see this as an internal competition?

Awesome questions, Gena. I think we’re going to start with Cathryn to talk a little bit about the SAE and then she can hand it over to Carl to finish that off and then talk about SLB101. I’ll talk about the priorities at the end.

Thank you, Gena for the question. So as I mentioned, Patient 8 did have an inflammatory response with elements that were similar to what we had seen in some of the other patients. You asked about complement activation. It’s an interesting complement activation is part of the innate immune response, and we’ve actually seen laboratory evidence of complement activation in all eight of our treated patients. Patient 7 had, as we reported before, some complement activation in the lab, but it was lower than what we had seen in some other patients. We’re still really evaluating the elements of Patient 8. Every patient appears to be somewhat different and we haven’t really identified a common factor with our SAEs, but we’re still examining certain elements of it. Once we complete the results of our investigation, we can provide some additional information.

Yes, and at the ASGCT place there has been is highlighting that’s in the presence of antibodies AAV and it doesn’t matter if it’s AAV9 or AAV8, we will share both can activate the complement system. So, we think this is an effect that will be seen within different programs. I think we’re getting a better handle on it. Other companies are seeing that as well. Regarding SLB101 and SGT-003, the capsid is derived from some rational design that we did internally. Rather than going through a computational analysis, like a number of companies, we sort of went from the other way and looked at using our muscle expertise to think about how best to target muscles specifically. We identified a number of capsids that look promising. It’s very early on in the plan and we’re still in lead optimization right now. We haven’t finalized that candidate, but we plan to be moving into IND-enabling studies as soon as possible. Once we’ve identified a specific capsid and specific transgene as well that we’re using. I’ll pass it back to Ilan.

Gena, thank you very much for those questions.

And your next question comes from the line of Salveen Richter with Goldman Sachs.

Hi, thanks so much for taking our question. This is Sonia on for Salveen. So, I know you’re currently evaluating what caused the inflammation in Patient 8? Do you happen to have any initial hypothesis on why that might’ve happened? And then our second question was just when are we going to see any additional functional data from Patients 7 and 8? Thank you.

Hey, thank you, Sonia. Cathryn?

So thanks very much for the question. So we really, I don’t want to speculate right now on causality because we are looking at several things. As we reported, our principal investigator did deem the event to be drug related. It does have some elements that are similar to our other patients, but was less severe than what we saw in Patient 6. Patient 7, of course, dosed under our new protocol had a very safe dosing. We’re evaluating a number of different factors, and as I said before, we’ll definitely get back to you when we have a better handle on exactly what happened and what some of the causes were. Regarding the functional data, Patient 7 is approaching a 90-day visit. It’ll be a while. We don’t really look at functional data at 90 days or report it because of the steroids still ingrained in the system. So, there’ll be a while before there’ll be additional functional data. We haven’t actually guided on that.

Your next question comes from Gbola Amusa with Chardan.

Hi. Thanks for taking my call. Just wanted to – a couple of questions about the long-term data on Patients 4 to 6. It’s pretty noteworthy stuff. And I know it’s an equals three there’s variability in assays, etc. So, we can’t make easy conclusions. But could you update us on any hypothesis you might have on what factors could be at play that create a difference for what you see in Patient 4 versus Patient 5 and Patient 6? And then is there anything that you can do going forward to encourage results that are more like dosing in Patients 5 and 6? And again, I know it’s early days.

Hey, Gbola, it’s good to have you. This is Carl’s question. I know because I asked him that two days ago.

Yes. We just got these – we just sort of pulled these data in and started analyzing very recently. So it is very early, but we do have confidence in our assays given that we’re seeing good results from all these different sets of assays. It does look – it’s very encouraging. This dose is sort of a good dose and we’re generating improved responses over time. It’s not unexpected if you think about the continued production of time and then finding more spaces to fill in on the membrane and stabilize the overall muscle. So it’s very encouraging. We’ve got to spend time thinking about mechanisms to look at this. Patient 4 started unfortunately, like with all drug trials, you have responders, non-responders, and unfortunately Patient 4 was not as – had lower levels and was below the level of quantitation, still very detectable levels. Patient 4 did see a trend in functional improvements that we presented back in March. Even with less than 5%, there are promising results coming out. The overall set of increase is something that we’re definitely going to be looking into.

I would just add, Gbola – I’ll just add that this notion of long-term durability, we got a little lucky here because it was supposed to all be one year biopsy that ended up being delayed because of COVID. Because clinics were closed, patients couldn’t show up for the one-year visit, and it ends up being a year later, and now we have two-year data. I think when you think about gene therapies, you obviously do all the time, the notion of duration, and the notion of continued or even improved durability is clearly going to feature. And in a disease like Duchenne, that is so hard to measure in functional outcomes. I’d like to hope that such biomarkers are going to provide us with a lot of confidence that this is not something that just disappears after three or six months.

Got it. And just another one really quickly. I think earlier in the call you referred to delayed kinetics and I know we had seen that elsewhere in the AAV space. But the magnitude of change seems greater here for Solid and I know it’s apples to oranges and equals three, etc. But what’s the state of art biological reasons why there might be delayed kinetics, or is there a reason, an explanation that we can sort of latch onto to feel like maybe this isn’t a real phenomenon going forward?

Gbola, I’d love to talk to you for a while about this. But if the muscle becomes more stable, instead of healthier, there may be sort of a more consistent production of protein production. More myonuclei being fused in as the muscle can grow and build. Therefore, every time we get a positive – SGT-001 positive nuclei in there, it could produce more protein. Again, it’s all speculation there. There’s kinetically, we generally see stabilization after about 28 days in our pre-clinical models with continuous very slow increases. We do see a doubling in patients, an apparent doubling in Patient 6 and a threefold in Patient 5, again, apparent. We don’t know that there could be other things happening. Importantly, someone asked about age and could age be a factor, a patient four was older. We really have not seen a specific correlation with age but Patient 4 was about 11 years of age. So that’s something that we really need to be thinking about as we move forward.

And your next question comes from the line of Maneka Mirchandaney with Evercore.

Great. Thanks for taking the question. Based on what you’re seeing for Patient 8, do you think there are any additional potential changes in the protocol that might be able to further decrease the risk of these inflammatory events, like changes in the dose of the immunosuppressive drugs or timing or other factors, and what might that look like? Thanks.

I mean, first, obviously, Cathryn will take it. But I just want to make that, again, we learned so much from every patient. The idea here is to identify a long-term solution to a pretty serious problem. I feel that if things need to be tweaked, that’s a great thing and hopefully alive at a very happy place at the end, and other companies are hopefully doing the same. I’ll have Cathryn out, if she’s got some.

Sure, thanks, Maneka. I mean, it’s such an important question. Safety is really our first concern with these patients. The biggest question we are grappling with right now is to understand the events so that we can potentially modify the risk mitigation profile in a way that we think will optimize safety. We’re still really in the middle of that investigation, including consulting with some external experts who are experts in this area. So, we don’t really have – I can’t really tell you what our hypothesis is at this point because we’re still really exploring different options. But we will certainly share that with you if and when we do decide to make protocol changes, and of course those will need to be approved by our DSMB and shared with the FDA as well. I think you also asked the question about, is that the doses and that is one of the things we’re looking at is dosing but potentially other options.

Thank you. Your next question comes from the line of Anupam Rama with JPMorgan.

Hi guys. Thanks so much for taking the question. Just a clarification question here, has the patient SAE and sort of clinical profile of this patient been shared with the FDA and the DSMB, and what are the timelines for feedback from both of those groups?

Hi, Anupam. Absolutely, we shared with the FDA and with the DSMB and we have ongoing dialogues. We are not really able to project timelines, but have been shared and discussed.

Got it. Thanks so much for taking our questions.

And at this time, there are no further audio questions. Are there any closing remarks?

I mean, look, thanks everybody for dialing in. Have a great weekend. We look forward to talking again soon. Thank you.

Thank you. This concludes today’s conference call. Thank you for your participation. You may now disconnect.