Voyager Therapeutics, Inc. Q3 FY2023 Earnings Call

Good afternoon, and welcome to the Voyager Therapeutics Third Quarter 2023 Conference Call. All participants are now in a listen-only mode. There will be a question-and-answer session at the end of this call. Please be advised that this call is being recorded at the Company's request. A replay of today’s call will be available on the Investors section of the company’s website approximately two hours after the completion of this call. I would now like to turn the call over to Pete Pfreundschuh, Chief Financial Officer. You may begin.

Thank you, and good afternoon. Joining me on the call today is Dr. Al Sandrock, our CEO, and joining us for Q&A is Dr. Todd Carter, our Chief Scientific Officer. We issued our Q3 2023 financial results press release this afternoon. The press release and 10-Q are available on our website. In a moment, I will turn the call over to Al. Before I do this, I want to remind everyone that during the call, Voyager representatives may make forward-looking statements as noted in slide 2 of today's deck. These forward-looking statements include future expectations, prospects, and plans. All forward-looking statements are inherently uncertain and are subject to risks and uncertainties that may cause actual results to differ materially from those indicated by these forward-looking statements. You are encouraged to review and understand the various material risks and uncertainties facing the Company as described in the Company's most recent annual report on Form 10-K filed with the SEC. As of the filing of today's quarterly report on Form 10-Q, there have been no material changes to the risk factors described in our annual report. All SEC filings are available on our company's website. Now, it is my pleasure to turn the call over to Al.

Thank you, Pete, and good afternoon, everyone. Please turn to slide 3. I'd like to start by briefly reviewing Voyager's investment rationale, platform, pipeline, partnerships, and potential. First, the platform: The delivery of gene therapies into the central nervous system, or CNS, has historically proven challenging. Voyager is working to solve this delivery challenge with our TRACER capsid discovery platform. We have generated multiple families of novel capsids with robust CNS tropism following IV delivery. We believe our capsids are best-in-class because we have demonstrated high transduction in multiple brain areas at relatively low doses with the targeting of the liver and dorsal root ganglia neurons. We have also shown the ability to target neurons and glial cells, blood-brain barrier or BBB penetrants across multiple species and an identified receptor that is also expressed in humans. Second, our pipeline: We are advancing two wholly owned and two partnered CNS programs through late-stage research and towards IND filings. The most advanced is our anti-tau antibody program for Alzheimer's disease, for which we anticipate an IND filing in the first half of 2024. We were encouraged by the data presented by some of our peers at the recent clinical trials on Alzheimer's disease meeting, which provided for the first time early clinical evidence showing that tau targeting therapies slowed cognitive decline. These data strengthen our conviction in the value of tau as an important therapeutic target for Alzheimer's disease. Behind our anti-tau antibody, we have multiple opportunities to advance gene therapies enabled by our novel TRACER capsids into the clinic in 2025, including potentially our wholly owned SOD1 program for amyotrophic lateral sclerosis, or ALS. Third, partnerships: Voyager has generated more than $200 million this year alone in non-dilutive partnering revenue. We currently have 11 partnered programs, which provide opportunities to achieve milestone and/or royalty revenue to generate data with our capsids and, most importantly, to help patients. Finally, potential: Specifically the potential to expand from gene therapy into other approaches of neurogenetic medicine. We have identified multiple receptors associated with our capsid families. We are exploring the potential to leverage one of these, which we call Receptor X, to shuttle non-viral genetic medicines across the blood-brain barrier. I am increasingly excited about the potential here to expand the reach of our technology into other approaches of neurogenetic medicine. Moving to slide 4. As you can see, Voyager is advancing quite a robust pipeline. However, we are doing so efficiently. The wholly-owned programs at the top of this slide that are noted in orange are the only programs we fund. The rest of our pipeline is funded by our partners. During Q3, Voyager focused on advancing our prioritized pipeline programs toward the clinic. We initiated GLP toxicology studies with VY-TAU01, our humanized anti-tau antibody for Alzheimer's disease. This program is on track for an IND filing in the first half of 2024. We also continue to advance our SOD1 gene therapy program for ALS. This program is on track for a development candidate selection before the end of this year to support an IND in mid-2025. As we move forward towards the clinic, we are thoughtfully building clinical expertise within the Voyager team, including in regulatory affairs, toxicology, and development operations. I will make one more note before we leave this slide. In September, Alexion, AstraZeneca Rare Disease, announced it had completed a definitive purchase and license agreement for a portfolio of preclinical rare disease gene therapies and enabling technologies from Pfizer. The portfolio includes the license for a novel capsid generated from our TRACER platform to enable a potential gene therapy program exclusively for an undisclosed rare neurologic disease target. The assignment does not impact the terms of the licensing agreement. We are thrilled to have them as a partner on this program, particularly given their public commitment to advancing next-generation genomic medicines. Turning to slide 5. As you can see, Voyager continues to execute on our milestones. So far this year, we secured partnerships with Neurocrine, Novartis, and Sangamo. The Company is well capitalized with approximately $253 million in cash on our balance sheet as of the close of Q3 2023. We expect our cash, cash equivalents, and marketable securities, along with expected reimbursements under the Neurocrine collaborations and interest income to provide runway into mid-2025. We selected a development candidate and initiated GLP toxicology studies for our anti-tau antibody program for Alzheimer's disease, and we launched three early-stage gene therapy programs, one for Huntington's disease and two for Alzheimer's disease. Looking forward, we continue our work to advance neurogenetic medicines. We expect to identify a lead candidate for our wholly-owned SOD1 ALS gene therapy program by the end of this year. As we look towards 2024 and 2025, we anticipate the potential for multiple IND filings across our wholly owned and collaborative and/or licensed programs. This translates into multiple opportunities to earn milestone payments and, even more importantly, once clinical trials begin, several opportunities to establish human proof of concept for our TRACER capsids. Furthermore, there is potential to see early biomarker-based evidence of disease impact in some of these very difficult CNS indications. We continue to engage in active discussions with potential partners regarding collaboration and licensing arrangements around our platform and pipeline. In summary, Voyager continues to advance our lead programs towards the clinic while maintaining our robust platform and early pipeline programs. We look forward to continued execution this year and next. I'd like to thank the wonderful employees at Voyager for their hard work to keep everything moving forward. With that, we're happy to take any questions you may have.

Now, the first question comes from Joon Lee with Truist Securities.

Congrats on the progress. As you consider nominating your genetic medicine candidates, you can either do so with the capsids that you have or choose to use the so-called Receptor X that you discovered. What are some considerations as you decide which route to go and which strategies to use? Is it disease-specific or something else? And I have a follow-up.

Thanks, Joon. I'll start, and I'm sure Todd would want to add some comments. So, look, gene therapy remains our core technology. And we're so excited by our capsids that that's going to be the first thing we think about, right? But look, genetic medicines I think are best done with multiple modalities. And we are, as we speak, doing this experiment where we're going to test whether we could shuttle other modalities into the brain using a ligand against Receptor X. And if those experiments are successful, then we're going to have more options available to us. I view it very much as a toolbox where we can choose the right modality for the right disease for the right mode of action that we're seeking. And I think we're headed to the point where you will have multiple options. Todd?

I think that what you're keying in on is the need for delivery and whatever the modality is, the need for delivery at a safe and tolerable dose to achieve efficacy. One of the things that we're showing with our current generation capsids is that we can deliver broadly throughout the CNS at relatively low doses. I think there could be advantages to different modalities, gene therapy has the advantage of a single dose and with those of novel capsids that allow us to deliver and target various targets, but the other modalities that we're starting to explore have their different advantages as well.

Great. And in your cash runway guidance into mid-2025, what's included in that assumption? And are you able to provide any guidance on what milestones we can expect over the next 12 months from any of your 11 partnered programs?

So, Joon, thanks for the question. I think, first and foremost, I would say that we continue to be very diligent in our cash resources that are on our balance sheet. And I think what we did for you guys today is we just updated the guidance to be a bit more precise as to runway guidance for the business. As you know, our guidance is based upon only the cash that we have physically sitting on the balance sheet. It does not include any additional potential milestones that we would receive from the 11 partnered programs that Al alluded to earlier, so that potentially could extend that guidance and runway as well as some further business development as Al alluded to earlier as well. We continue to be very thoughtful and are looking potentially to do some further collaborations and deals from a licensing perspective. So that's kind of the guidance with regards to the runway. It does take us into the middle of, we said mid-2025. In terms of inflection points and milestones, obviously, some big milestones and inflection points that we talked about. We mentioned as part of this earnings call, we plan on getting into the clinic in the first half of next year, specifically with regards to the tau program. So, that would be filing the IND and getting into the clinic. And then obviously, the SOD1 program we talked about for 2025 with regards to filing IND and advancing that program. That does not include the milestones associated with some of our partner programs, which as we've referenced in the past, we do have some partnerships, both Sangamo as with regards to Neurocrine, they alluded to also advancing two programs for Neurocrine and Sangamo one program to IND in 2025. So, those are additional milestones that we're looking forward to down the road. Hopefully that helps with regards to guidance and also provide you with some context around milestones during that time period.

And our next question coming from the line of Jack Allen with Baird.

Congratulations to the team on the progress. Maybe the first one on the timing of some of these updates. You mentioned that the studies are ongoing as it relates to the shuttle program. I was wondering when those preclinical studies might read out and when we could get a disclosure surrounding that. And then similarly, for the SOD1 candidate selection expected by the end of the year, how should we think about disclosures going forward as you select that candidate? And then I have a quick follow-up as well.

So I'll ask Todd to answer the first question, and I'll let him attempt to answer the second one.

Sure. So the shuttle program, that's in early stages of discovery right now. At its early stage, we haven't really given any guidance as to the timeline. We're looking forward to being able to update you in the future, but we don't have specific dates yet.

As far as the SOD1 program, we expect to announce when and if we've identified a development candidate; we'll let you know. And also, we'll let you know when we start our GLP toxicology studies, and generally speaking, we'll let you know whether or not we're on track for the IND in mid-2025.

Great. And then, shifting gears to the tau program. I know we just had CTAD recently. Al, I was wondering if you could speak to some of the evidence from the meeting that provides you additional support as you look to move forward with this tau antibody. And then I know one of the questions around the meeting was taking antibodies and giving them via IV or more rapid injections as well. What are your thoughts as it relates to the initial formulation for the tau program as you look to bring this into the clinic?

Well, I think the meeting continues to validate that tau is a very exciting target for Alzheimer's disease, potentially the next target after the anti-amyloid treatments that will hopefully produce new medicines for patients. I think by that, I'm referring to the fact that we've already seen that certainly the knockdown approach will affect the spread of tau by tau-PET imaging. And now we saw at this most recent meeting that it seems to lead to a slowing of clinical decline. Small numbers, still early days, but I think I would look at the data as encouraging. I think it's also interesting that the anti-amyloid antibodies really work best in people with a low tau burden, right? And that's predictable, I believe, because many of us believe that beta-amyloid plaques or the formation of plaques seems to somehow trigger the spread of tau. So, and in fact, tau appearing in certain parts of the brain in the medial temporal lobe is actually part of normal aging. But it's only when you have the presence of amyloid plaques in the brain that you start to see it spread into other areas of the brain, which is actually pathological. So, we continue to be excited by tau as a target, and that's why we have two programs in it, the lead one being an antibody that we have seen block the spread of tau in animals quite well, actually, quite robustly. And then, we have the tau vectorized tau, a knockdown approach, a vectorized siRNA, which in some ways could mirror the efficacy seen. We hope that we will mirror the efficacy seen with the antisense oligonucleotide approaches but also knock down expression of tau.

And our next question coming from the line of Jay Olson with Oppenheimer.

Just a follow-up on BIIB080 data at CTAD. Can you just talk about how your anti-tau antibody will be clinically differentiated from other antibodies and also other modalities like anti-tau ASOs?

Yes. So, our vectorized siRNA will knock down the expression of all forms of tau. And so, in some ways, it mirrors what BIIB080, the antisense against tau does. The mechanism is different, but the end result, we think, will be pretty similar. Of course, we will be differentiated from BIIB080 in that it’s a one-time treatment using our proprietary TRACER-derived capsids. So, we'll deliver an IV and we'll be able to get transduction across multiple brain regions, pretty much across the CNS, which I think is a big advantage. That's a very different approach from the anti-tau antibody, which will not address intracellular tau, for example. We don't believe the antibody will bind to the extracellular forms of tau. And what we hope to do with that antibody is to block the spread of tau. So, two very different approaches and we'll see which one works the best. It could be that both work, which would be great.

And I had a follow-up question, if I could. Assuming your first IND will be for your anti-tau antibody, what's the cadence of subsequent INDs and which are the next most likely candidates for filing INDs? And then, maybe a financial question since you'll be in the clinic next year. Can you just talk about how you plan to finance those clinical trials?

So, let me start with your first question. So, after the IND that we anticipate for the VY-TAU01 antibody in 2024, the next IND for a wholly-owned program will be the SOD1 gene therapy program for ALS, which we anticipate we will file an IND in 2025. In addition, our partners at Neurocrine have indicated that they plan to select and move two gene therapy programs into IND by 2025. I assume that means the Parkinson's and Friedreich's ataxia program since they are the most advanced. But you'll have to ask them which two programs they mean. And then, Sangamo has indicated that they plan to move the Prion program into an IND in 2025 as well. And those are the ones we know of. I mean some of our other partners that are pure capsid licenses, for all I know, they're planning to file INDs in 2025 as well. But we don't know that for certain because we don't know their timelines. But yes, so I hope to see a steady stream of INDs for the foreseeable future at Voyager with or without our partners.

Great. Super helpful. And then maybe, Pete, if you could please comment on the financial plans for funding the clinical trials next year.

Yes. So, Jack, with regards to the wholly-owned programs that Al just mentioned, so those are our tau antibody program and then also the ALS program. We're building those programs on a wholly-owned basis where we're funding and financing those as we're advancing those both to IND as well as towards the clinic. So, it is our assumption and we've modeled that as part of our cash runway guidance that we provided to you and updated today. So, that's clearly our idea to fund and finance those and advance those along. Of course, as we get to various milestones as we move forward in the future, we'll always be thoughtful about the next step and maybe partnerships around those programs, if we decide to do that. But as of right now, those are modeled into our cash guidance and runway. With regards to the partner programs that Al alluded to where we have milestones that could come up over the next couple of years, specifically in 2025 with regards to Neurocrine and Sangamo, the beauty of those programs is those are financed off our balance sheet. And so, that's not part of our overall financing and funding runway. I think the one thing I would add to that is, specifically on Neurocrine, Neurocrine is becoming from a pass-through R&D expense perspective, a bigger piece of our overall research and development expense on a quarterly as well as year-to-date basis. And so, to that note, we've actually added some non-GAAP guidance information at the back of the earnings release that hopefully helps you guys understand kind of how much really doesn't sit on our balance sheet, when you look at our research and development expense growing on a quarterly basis or on a full year basis. So I think that provides a lot of kind of look-through with regards to the pass-through that's associated with that partnership. And again, that does not sit on our balance sheet. So hopefully, that helps, Jack.

And our next question coming from the line of Laura Chico with Wedbush.

I guess, I just wanted to circle back with respect to CTAD. And there was also some data showing some novel tau biomarkers at the meeting. Just out of curiosity, as you're thinking about preliminary clinical studies, just curious if something along those lines would be used, or how are you thinking about kind of categorizing patients in terms of their tau load at entry?

Thank you, Laura. There is indeed a lot happening in the field of tau. Currently, we are considering aligning our patient selection with the approach taken for BIIB080, which involves starting with individuals in the early stages of Alzheimer's disease, including those with mild cognitive impairment and the initial stages of dementia. We will likely require a specific tau burden, as our goal with the antibody program is to prevent the spread of tau. Essentially, we want to focus on a specific area of interest, using the primary endpoint to assess the spread of tau. Consequently, we will target participants who are at one of the early block stages, probably stage 2, which can be identified using tau PET imaging to determine if we can inhibit the spread of tau. That's our current strategy. Additionally, there are many new fluid-based tau biomarkers emerging, particularly various types of ptau biomarkers that I find quite promising. We will likely consider these in our tau programs as well. However, PET imaging remains the best method for evaluating the spread of tau, which is what we aim to address with the anti-tau antibody.

And then just beyond that, I guess, is to spreading just the primary criteria you're going to be evaluating for advancement or kind of the threshold. And is there a specific degree or magnitude of effect that you're kind of hoping to see? Thanks very much.

We observed about a 70% reduction in tau spreading from one side of the hippocampus to the other in our animal models. For the human trials, I'd be pleased to see a statistically significant decrease in tau spreading as a preliminary outcome of a relatively small study. Hopefully, by that time, we will understand the clinical importance of these findings. It is likely that someone will have established the link between tau spreading or reduction in a specific brain area and its clinical implications. In this regard, not being the first to enter the clinic can sometimes be advantageous, as we can learn from the experiences of others who have gone before us.

Our next question coming from the line of Yanan Zhu with Wells Fargo.

A couple of questions on tau. And I too wanted to ask about the CTAD presentation for tau ASL. Al, I was wondering if you can share your assessment about the magnitude of the signal of benefit on cognitive function and also on the time point at which these signals were achieved or observed and whether these signals of benefit in your mind are consistent with more of a reduction of the tau in existing neurons that have these neurofibrillary tangles or could it be also consistent with the spreading during this time frame. I just want to understand a little better the contribution of those two separate compartments to this potential clinical benefit that was observed.

In terms of understanding the magnitude, it feels premature since we have a small sample size of only 16 to 20 patients per group. It's challenging to draw conclusions, especially considering this is the first attempt at patient selection. Additionally, there are multiple endpoints to consider. The positive aspect is that results were consistent across these various endpoints. Instead of focusing on the magnitude, I’ve been concentrating on the consistency of effects seen across multiple measurements. Regarding timing, it's common to observe an effect on tau through PET imaging followed by a delay in clinical outcomes. This pattern has been noted repeatedly in neurodegenerative diseases, where we see target engagement and biological effects occur before clinical outcomes are evident. A similar trend can be observed in ALS as well. Your question points to something intriguing: the actual reduction in the tau PET signal in neurons or specific regions, which surprises me because I had previously thought neurofibrillary tangles were highly aggregated. The ability to reduce the tau PET signal indicates that perhaps these tangles are not entirely end-stage; there may be a possibility for reversible aggregation or removal. I don’t believe it's phagocytosis; these aggregates could be more dynamic and potentially reversible than we previously assumed. As for what drives the efficacy observed—whether it's the reduction of tau in cells or a blockage of spreading—both effects are seen with BIIB080, making it difficult to determine which is responsible, at least from my perspective. Todd, do you have any additional insights on this?

I think you've covered it. I think it's overall, it's early data. I think it's extremely exciting. We still have a lot to learn.

Got it. Very helpful. And then, I was wondering, obviously, the SOD1 program will be the first gene therapy program, your internal program to enter the clinic, hopefully, in 2025. But I was also wondering for the tau silencing gene therapy program, how can the component leverage the first in clinic gene therapy SOD1 program?

So I'm not sure I fully understood your question, Yanan. But Todd, did you understand it because if you did, why don’t you go ahead.

Yes. I believe the key question is whether we can apply the insights gained from the SOD1 program to expedite the tau knockdown initiative. The answer is fundamentally yes, although there are various elements to consider. We are learning significantly about our innovative capsids through our ongoing projects, and this will continue as we progress. We may choose to use the same capsid for the tau knockdown as we do for SOD1, but that decision will depend on their specific characteristics. For SOD1, our goal is to target the spinal cord, specifically the motor neurons and possibly astrocytes, along with motor neurons in the brainstem and potentially the cortex. In contrast, for tau, we aim for broader delivery throughout the cortex, with less focus on the spinal cord. Thus, our requirements for capsids differ in this scenario. For the payload, both are vectorized siRNA payloads. We have substantial experience with siRNA vectorization at Voyager, which we are applying to the tau knockdown as well as the SOD1 program. While the sequences will differ due to targeting distinct genes, there are overlaps in our understanding of off-target effects and similar aspects. We also have the chance to use various promoters based on the specific cell types we aim to target. Overall, we are gaining valuable insights about our capsids and payloads, and much of it will be applicable, although some will be tailored to specific diseases and targets.

Thank you, Todd. Now I understand the question. Yes, I want to clarify that for tau, our focus isn't primarily on reducing levels in astrocytes but rather in neurons. However, Todd is correct that both are vectorized siRNA. We expect to gain significant insights from the first program that we can apply to subsequent programs.

Great. That's super helpful. And lastly, I was wondering if I can ask a quick question, the Receptor X efforts. I'm mainly interested in at what stage do you think this will be an asset that is ready to pursue a partnership interest. Is there a particular milestone in terms of preclinical evidence, or could the interest come in at any time and you're ready to discuss it at any time?

I'm always open to discussing potential partnerships with solid collaborators. What I'm looking for is in vivo evidence that we can transport macromolecules, like nucleic acids or proteins, across the blood-brain barrier and achieve the desired effect in the brain. If we can demonstrate that, I’ll be even more excited. Then we can consider what we want to transport and which targets to go after. That proof of concept is crucial; if we can utilize Receptor X to move things across the blood-brain barrier and produce a biological effect in the brain, it will lead to various opportunities, including potential partnership discussions.

And our next question is from Sumant Kulkarni with Canaccord.

Thanks for taking my questions. Both are on the TAU01 antibody. You alluded to this a little bit, but was more related to the potential outcomes of a trial. But at this stage, how are you conceptualizing any tau-based or tau burden-based cutoff to recruit patients into your clinical trials?

Yes. I was thinking that we would probably want to enroll patients who are at Braak stage 2, and maybe also those at Braak stage 3. Right now, I'm focusing on Braak stage 2, which can be identified through tau PET imaging, to enroll those patients and then determine if we can prevent progression to stages 3 and 4. That's our current approach. We are still contemplating this and consulting with experts and investigators, but that's the concept we have at this stage. Is that what you were asking? Does that answer your question, Sumant?

Yes, somewhat. But a little bit of a follow-up to that is, do you think blood-based biomarkers will evolve enough to be helpful to you in your trial inclusion program?

I believe that identifying blood-based biomarkers that correspond with Braak stage 2 could be beneficial. One approach we could consider is initiating patient screening through a blood test using these biomarkers. For those who qualify based on the test results, we would then perform tau PET imaging to confirm that they are at the appropriate stage. This could create a sequential screening process that starts with simpler and more cost-effective blood tests before progressing to the more intricate and expensive tau PET imaging to identify the right patients.

Got it. And then given what you know so far about your antibody, are there any special considerations we should be aware of on your GLP tox studies, or are these relatively conventional ones?

Let me start by mentioning that we had a discussion with the FDA earlier this year. I would note that the term conventional is somewhat tricky because one of the advantages of our antibody is its specificity for pathological forms of tau. This means it does not bind to the normal tau present in our bodies and in all animals. Thus, assessing on-target toxicity in a wild-type animal, which is usually used for toxicity studies, is somewhat more complex. This makes it different from standard toxicology studies. However, we have considered all these factors, we interacted with the FDA, and we believe we are on track for an IND, as we noted for the first half of next year.

Our next question coming from the line of Divya Rao with TD Cowen.

Most of my questions have been answered, but you have mentioned potential partnerships and ongoing discussions about them. Moving forward, will the focus be on generating proof of concept during early stage trials before starting discussions with partners for larger later-stage trials, or should we still consider it as out-licensing programs identified through the TRACER platform? I also have a follow-up question.

Yes. Right now, we have established various partnerships, including straightforward capsid licensing agreements and collaborations on specific programs like the GBA1 program. We are open to both types of partnerships. Regarding your question about whether we will increasingly aim to reach proof of concept before partnering, as we gain more financial resources, we might decide to pursue proof of concept. However, I'm open to all possibilities. We are willing to engage with any partner about any deal that is viable for us, our shareholders, and, most importantly, the patients. We are aware that progressing further in development creates more value, but it also introduces greater risks as we reach proof of concept. Therefore, we continuously consider factors like value and risk.

That's helpful. And then, on the tau program, with the toxicology studies done, I guess what else needs to be done before the IND is ready to be submitted? Is it mostly just compiling everything and putting it all together?

We have already chosen a development candidate and have initiated the GLP toxicology studies. We have begun manufacturing sufficient material for these studies. To start clinical trials soon after we submit an IND in the first half of next year, we need enough product for the first human clinical studies, and we are on track for that. Does that answer your question?

Thank you. And I see no further questions in the queue at this time. I will now turn the call back over to Dr. Al Sandrock for any closing remarks.

Thank you to everyone for joining us today. And please feel free to follow up with us directly if you have any further questions. Thanks again.

Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect.