Wave Life Sciences Ltd. Q3 FY2023 Earnings Call

Good morning and welcome to Wave Life Sciences Third Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this call is being recorded and webcast. Now I'll turn the call over to Kate Rausch, Vice President, Investor Relations and Corporate Affairs. Please go ahead.

Thank you, operator. Good morning and thank you for joining us today to discuss our recent business progress and review the third quarter 2023 financial results. Joining me today are Dr. Paul Bolno, President and Chief Executive Officer; Kyle Moran, Chief Financial Officer; Anne-Marie Li-Kwai-Cheung, Chief Development Officer; Dr. Ginnie Yang, SVP Translational Medicine; and Dr. Chandra Vargeese, Chief Technology Officer. The press release issued this morning is available on the Investors Section of our website www.wavelifesciences.com. Before we begin, I would like to remind you that discussions during this conference call will include forward-looking statements. These statements are subject to several risks and uncertainties that could cause our actual results to differ materially from those described in these forward-looking statements. The factors that could cause actual results to differ are discussed in the press release issued today and in our SEC filings including our annual report on Form 10-K for the year ended December 31, 2022, and our quarterly report on Form 10-Q for the quarter ended September 30, 2023. We undertake no obligation to update or revise any forward-looking statement for any reason. I'd now like to turn the call over to Paul.

Thanks, Kate. Good morning and thank you all for joining us on today's call. I will begin with opening remarks. Next, Anne-Marie will provide an update on our clinical trials, and finally, Kyle will review our financials. We will then open up the call for questions. Chandra and Ginnie will also be available for questions. In the third quarter, our team made tremendous progress advancing our pipeline of novel RNA medicine. Since our last update, we have brought our first-in-class RNA editing therapeutic program WVE-006 for AATD into the clinic. We outlined our strategy for growth at our Annual R&D Day, including announcing a new wholly-owned siRNA program targeting INHBE for metabolic disorders, including obesity, and we continue to advance our clinical trials in DMD and HD. Looking ahead to 2024, we are approaching a transformative year for Wave where we will deliver key data sets for all three of our clinical programs and SELECT and INHBE clinical candidate. Starting with WVE-006, today we are announcing the approval of multiple clinical trial applications or CTAs and the initiation of our restoration program, which will investigate WVE-006, the industry's first-ever clinical RNA editing candidate for alpha-1 antitrypsin deficiency or AATD. This is another significant milestone for Wave, patients, and the field of nucleic acids. We remain on track to begin dosing healthy volunteers this quarter, and as Anne-Marie will describe in more detail later, the restoration program is designed to enable a highly efficient path to prove the mechanism. Our excitement for WVE-006 is grounded in the strong preclinical profile we have observed to date. We have achieved remarkable potency and durability of editing with convenient subcutaneous dosing in our preclinical studies because of our unique fully chemically modified oligonucleotides and their ability to effectively recruit necessary enzymes. WVE-006 precisely corrects the PiZ mutation on the transcript with no bystander editing. In contrast, genome editing technologies rely on hyperactive exogenously delivered artificial enzymes that can result in significant and irreversible collateral bystander editing with DNA, yielding not only the potential for permanent off-target edits to DNA but also isoforms of protein with differential function. WVE-006 contains a GalNAc conjugate, a highly specific and elegant delivery tool that is well validated through multiple approved silencing therapeutics on the market. For AATD, it is a significant advantage to have a stable and optimized candidate that can leverage GalNAc and avoid lipid nanoparticles, which have their own challenges and require intravenous dosing. With current therapies largely confined to treating either pulmonary or, in the future, hepatic manifestations of the disease, the unmet need in AATD remains high. Even with the limitations of available therapies, the pharmaceutical market for AATD is substantial, with augmentation therapy alone accounting for over $1 billion in sales per year. Our partner GSK has a long history and clear leadership in respiratory medicine, development, and commercialization, and together with WVE-006's differentiated profile, we believe this program is in a strong position, and we look forward to delivering proof of mechanism data next year. As a reminder, under the terms of our collaboration, Wave is also eligible to receive meaningful near-term clinical milestones starting this year, which have the potential to add substantially to our balance sheet. Clinical proof of mechanism with WVE-006 would serve to meaningfully de-risk this novel modality and will continue to unlock value for our emerging pipeline of RNA editing programs. As we shared at our R&D Day, we are actively building a pipeline of wholly-owned therapeutic candidates designed to either correct or upregulate mRNA across a range of high-impact targets. We presented both in vivo and in vitro data on several of these targets, which all offer an efficient path to clinical proof of concept and represent meaningful commercial opportunities for both rare and common disease indications. We look forward to continuing to share data on these exciting programs over the course of 2024. Beyond WVE-006, our strategic collaboration with GSK continues to make meaningful progress. The Wave and GSK teams continue to work to advance multiple targets, and as our partner shared during our R&D Day, this work spans multiple modalities beyond RNA editing, including silencing using siRNA. As a reminder, GSK pays 100% of the costs related to target validation of these partner programs, and Wave is eligible for up to $2.8 billion in milestones not inclusive of WVE-006, and additional tier royalty payments. At R&D Day, we also announced our first wholly-owned program to emerge from the collaboration, a GalNAc conjugated siRNA program targeting INHBE to treat metabolic disorders including obesity. INHBE is a particularly exciting target given its strong supporting genetic evidence. INHBE loss-of-function heterozygous carriers exhibit a healthy metabolic profile, including reduced hip-to-waist ratio, improved lipid profile, reduced odds of coronary artery disease, and type two diabetes. GLP-1 therapeutics have established a substantial market opportunity for weight loss therapeutics. We estimate there are more than 47 million people in the United States and Europe with metabolic disorders, including obesity. While GLP-1s are becoming standard of care for weight loss, they come with several drawbacks, including loss of muscle mass, suppression of the general reward system, and poor tolerability. With discontinuation rates as high as 70%, there is a need for more therapeutic options including long-term maintenance. We believe a therapeutic approach for obesity that improves metabolism, increases fat loss while maintaining muscle mass, and offers the potential for infrequent dosing without affecting the general reward system would be ideal. This is what we aim to achieve with our INHBE Program. At R&D Day, we presented the first in vivo data supporting preclinical proof of concept for this target. We achieved INHBE silencing well beyond the 50% therapeutic threshold, leading to a substantial reduction in body weight and visceral fat in diet-induced obesity mice compared to the control. These are the first in vivo data to demonstrate INHBE silencing and are consistent with the phenotype of heterozygous loss-of-function carriers. Since R&D Day, we have identified potent and highly specific leads using our new chemistry format and are rapidly advancing towards our goal of selecting an INHBE clinical candidate by the fourth quarter of 2024. Notably, because the levels of INHBE protein and other relevant clinical biomarkers can be readily measured in serum, we believe the path to assessing target engagement and clinical efficacy can be straightforward and achieved in a relatively short period of time. Our collaboration allows us to leverage GSK's genetically validated targets to advance at least three programs, meaning we have an additional two slots open for new wholly-owned programs beyond the individual. Turning to WVE-N531 and WVE-003, we continue to advance our clinical DMD and HD programs and are on track to deliver key data from both programs in 2024. For DMD with WVE-N531, we aim to provide a treatment option that delivers convenient, safe production of endogenous functional effector-like dystrophin and ultimately meaningful clinical benefit for all patients amenable to exon 53 skipping. There remain significant questions around the functional benefit of micro- or mini-dystrophin and we recognize the urgency to deliver more therapeutic options to these patients. We look forward to evaluating the translation of our best-in-class exon skipping to functional dystrophin protein in 2024. In Huntington's disease, we believe WVE-003 is the most promising asset in the field. To date, we have demonstrated a successful translation of our compelling preclinical data to the clinic with the reduction of mutant huntingtin and preservation of wild-type huntingtin after a single dose in humans. We have robust evidence from multiple preclinical studies, including non-human primate studies, that support the ability of our oligonucleotide to achieve significant exposure levels throughout the CNS. As we look ahead to the first multi-dose data from our SELECT-HD clinical trial next year, we anticipate potent and durable knockdown of mutant huntingtin while sparing wild-type protein, similar to what we observed in poly(GP) reduction in our WVE-004 program when we transitioned from single to multi-dose. Anne-Marie will speak more on SELECT-HD and our other clinical development programs. And I'd now like to turn the call over to her.

Thank you, Paul. It's a really exciting time to be at Wave as we are continuing to validate the translation of our platform in the clinic. I'll begin with WVE-006, our GalNAc conjugated AIMer or RNA editing oligonucleotide for AATD. We have now received approval for multiple clinical trial applications or CTAs. This accomplishment affirms that RNA editing oligonucleotide can leverage established regulatory pathways and WVE-006 has officially become the first RNA editing oligonucleotide to enter the clinical trial. Today, we are announcing the initiation of our RestorAATion clinical program, which is comprised of two interconnected portions: RestorAATion-1 for healthy volunteers and RestorAATion-2 for individuals with AATD who have the homozygous PiZZ mutation. The healthy volunteer cohorts, along with our pharmacodynamic modeling, can inform doses that can rapidly enable initiation in patients at the level expected to engage targets, thereby enabling efficient delivery of proof-of-mechanism as defined by detection of additive protein in serum. In RestorAATion-2, patients will have multiple assessments of serum M-AAT throughout the low, medium, and high dose cohorts, meaning it is possible to achieve proof-of-mechanism before completion of the whole trial and potentially prior to completion of the first cohort. RestorAATion-1 is now underway, and we can expect to initiate dosing in healthy volunteers this quarter and delivery of proof-of-mechanism data in patients with AATD in 2024. Moving on to DMD, I'll start with a quick reminder of the clinical data that drives our excitement in this program. In patient muscle biopsies collected from our proof-of-concept study, we observed a mean 53% exon skipping at six weeks following three doses of WVE-N531 every other week. Since exon skipping results in dystrophin production, we expect significant nonlinear increases in dystrophin given the amount of exon skipping we see. This non-linear relationship between exon skipping and dystrophin production has been observed with other skippers. Furthermore, high tissue concentrations of WVE-N531 observed at myoblasts and especially in satellite cells speak to the promise of achieving best-in-class dystrophin protein expression. We are advancing FORWARD-53, our potentially registrational Phase 2 trial of N531. This open-label trial is evaluating 10 mg per kg doses of N531 limited to every other week and is powered to assess functional, indulgent dystrophin expression after 24 and 48 weeks of treatment, which will be the trial's primary endpoint. The trial will also evaluate safety and tolerability, pharmacokinetics, and digital and functional endpoints. We remain on track to deliver dystrophin protein data in 2024, which would support our plans to file for accelerated approval in the US. This data would also accelerate our clinical development plan to build a wholly-owned multi-exon DMD franchise beyond exon 53. We have generated in vitro dystrophin restoration data for follow-on exon skipping compounds that together would address up to 40% of the DMD population. These follow-on compounds are all defined with PN chemistry and have demonstrated high levels of exon skipping and dystrophin production restoration in in vitro studies. Turning to WVE-003, our first-in-class allele-selective candidate for Huntington's disease or HD. Phase 3 is a devastating disease and where 003 offers an optimal treatment approach, reducing the toxic mutant huntingtin protein while preserving the healthy wild-type huntingtin protein. As a reminder, this program is part of an active collaboration with Takeda. In the third quarter, we achieved a milestone from this collaboration, which pertained to the positive results from a non-clinical study of 003 in non-human primates. This study showed significant tissue exposure levels of 003 in the deep brain regions, including the striatum, and bolstered our existing data sets that confirm the ability of our oligonucleotides to distribute to the areas of the CNS important for HD. Coupled with the already demonstrated mean mutant Huntington's CSF single-dose reduction of approximately 35% compared to placebo, these new non-human primate results further reinforce our confidence in this program. I'm excited to share that we've now completed enrollment for the 30-milligram multi-dose Q8 week cohort comprised of 24 HD patients. Having enrolled patients from the single-dose cohorts and fully enrolled the multi-dose cohort, which is critical to inform further decisions on this program, we will now evaluate the completed single-dose and multi-dose cohorts simultaneously. We expect to report the 30-milligram multi-dose data with extended follow-up along with all single-dose data in the second quarter of 2024. We also expect these data to enable decision-making on the program and support our option package for Takeda. In summary, I'm proud of our team's accomplishments this year and truly look forward to the year ahead during which we will have high-impact data readouts across all three of our clinical trials. And with that, I'd like to turn the call over to our CFO, Kyle Moran to provide an update on our financials.

Thanks, Anne-Marie. We recorded $7.3 million of net income for the third quarter of 2023 compared to a net loss of $39.0 million in the prior year quarter. This year-over-year change was primarily driven by increased revenue under both our GSK and Takeda collaborations. Under the Takeda collaboration, we earned $7.0 million for the achievement of a non-clinical milestone for WVE-003. Additionally, we recognized $28.0 million from Takeda related to the discontinuation of WVE-004 and $14.3 million under the GSK collaboration. Research and development expenses in the third quarter of 2023 were $31.6 million compared to $27.6 million in the prior year quarter. This increase was primarily driven by increased external expenses related to all three of our clinical programs. SG&A expenses in the third quarter were $13.1 million compared to $11.6 million in the prior year quarter, primarily due to increased spending on professional and consulting expenses. We ended the third quarter with $139.9 million in cash and cash equivalents. Subsequent to the end of the quarter, we received $7.0 million for the achievement of the previously discussed milestone. We expect that our cash and cash equivalents will be sufficient to fund operations into 2025. As a reminder, we do not include any future milestones in our cash forecasts, but we do have the potential to receive meaningful near-term milestone payments this year and beyond, including clinical development milestones related to WVE-006. I'll turn the call back over to Paul.

Thank you, Kyle. With the most versatile RNA medicine platform in the industry, best-in-class chemistry, and a pipeline of transformative medicines, Wave is approaching an exciting inflection point. As we approach 2024, I'd like to recap the many near-term milestones we expect to deliver next year. We expect to deliver and share the first-ever clinical proof of mechanism data for RNA editing with WVE-006. We expect to deliver dystrophin data from our potentially registrational FORWARD-53 clinical trial, and we expect to deliver data from the multi-dose SELECT-HD cohort with extended follow-up, along with all single-dose data. We also expect to select a clinical candidate for INHBE by the fourth quarter of 2024, thereby supporting our goal of selecting five new clinical candidates by year-end 2025. Together, we are reimagining what's possible with RNA medicines, and we look forward to continuing to share our progress with you. And with that, we'll turn it over to the operator for Q&A.

Certainly. Our first question comes from the line of Steve Seedhouse from Raymond James. Your question, please.

Good morning. Thank you for the opportunity to ask questions. I would like to first inquire about the satellite cell histology that you discussed and presented at R&D Day regarding the 531 program. I'm interested to know if it is possible to directly examine dystrophin protein in those cells using IHC or similar methods. Would this be something you would incorporate in the ongoing Phase 2 clinical study? Finally, do you believe that DMD experts or regulators would consider this a significant clinical biomarker at this stage, or is it still largely theoretical and uncertain regarding its implications?

Thank you for the question. So I think if we think about the importance of the satellite cell data, we do think it helps to drive dystrophin production along the full muscle. So muscles are composed of the myoblasts but also the satellite cells which repopulate those muscle cells. So if we do think about looking for dystrophin in terms of assessing immunohistochemistry staining for dystrophin, that will obviously be something we look for in the next study. However, the most important meaningful biomarker for us will be Western blot dystrophin, and we can quantitatively assess against our peers. I think in totality, the treatment, and I think this is what's really important about the satellite cell production is with newborn screening growing in the US, we now know newborn screening is growing in Europe. If you think about screening patients much earlier in the disease process or before the loss of ambulation and before the point before the disease would historically have been diagnosed, anyone who treats those boys earlier and gives exposure to the repopulating cells in the body, we think is a critical part of the treatment paradigm. So I think it's an exciting piece because it demonstrates the potential of our N531 and PN chemistry to distribute broadly in the muscle, not just the select cells. We think long-term it treats the totality of the treatment of the disease. But it will obviously be something that will be assessed in the subsequent study. And I think it was also identified in all three boys. So this wasn't a unique finding in a particular boy in the original study. I think it's going to be compelling as we look at it in the FORWARD-53 study.

Okay. That's great. And I want to ask separately also about the alpha-1 antitrypsin program. Just to preface the question, I noticed the development of their knockout approach targeting liver phenotype, they're advancing their lung phenotype program only. And then, of course, the RNAi approach is focused on liver. So it seems like there's an opportunity here for Wave and for RNA editing to really demonstrate that you can hit two birds with one stone, so to speak, and treat both lung and liver phenotype, maybe even within the same patient. So I'm curious if that's a focus of maybe the initial patients you would enroll, if that's even possible to sort of enrich for that? And really in general thinking about the market, how many patients kind of fit into this category where they could benefit from a therapy that addresses both lung and liver phenotypes at once?

No, it's a phenomenal question. Obviously, an interesting update today. I think the other interesting nuance that we're also trying to expect from that and then the announcement today of our regulatory filings where we can say actually we think RNA editing is being treated very similarly to other oligonucleotide with a shift from an IND filing to a CTA filing for lung. So I think there's a lot of questions still around DNA editing versus RNA editing. But to your point on liver versus lung, I think we agree from the beginning your important point that it's about the totality of treatment for AATD. We don't want to exclude patients that have particularly AATD, patients who have both manifestations of the disease. So obviously, there’s a protein expression threshold. So again, hitting two birds with the same hand, being able to elevate that restored protein function lets us protect the lung. Obviously, as we've shown over time too that wild-type protein allows the Z protein to come out of the liver and improve liver function. The other thing we've seen, and I think this is an important point again for the repeat dosing that comes with RNA editing is we have shown that cells get healthier. So visibility when you repeat dose that you don't have to try to capture all of the cells on that single infusion and watch the other hepatocytes necrose as they're injured. You get to restore healthy hepatocytes over time, which continues to allow for more protein production and improvement over time as well. So I think if we think about the totality of the treatment for this important disease, there are around 100,000 patients in the US and Europe. Having a treatment that singularly treats both liver and lung and we're going after I think is a really exciting promise for these patients.

Thanks so much.

Thank you. One moment for our next question. And our next question comes from the line of Salim Syed from Mizuho. Your question, please.

Great. Good morning, Paul. Thanks for the update and the question. A little one for me on DMD since it's an important year for you next year 2024 in this space. Just curious to get your views on the DMD space as a whole, just given everything that we've seen lately with – if you can talk about – to the time you talked about the Sarepta compound, I leave it as the accelerated approval, we had a controversial AdCom, and it failed to hit on the primary embark, and then it does $70 million in sales in quarter one, right? Just curious, any implications there or nuances to your updated thoughts on either regulatory or commercial as it relates to the space?

I mean, I think this is an important point you bring up, which is that patients need new treatment, whether or not that was gene therapy coming to market I think over the existing skippers, I think patients need new treatments and recognized that they are underserved. We had very interesting discussions with the DMD patient community, and I think there is a hunger for improved functional dystrophin. So I think as we look at the space, I obviously can't comment on Sarepta's individual regulatory discussions. But what I can say is we are resolutely focused on driving as much functional dystrophin protein as possible and seeing that translate to functional benefit for these boys, not just in the US. And I think that's another thing we routinely hear is the frustration outside the United States where we're engaged with the patient community, who watched in the US as these accelerated approvals from medicines, as you point out, are getting on to market. But because they haven't finished the complete study, are not going to treat patients outside the United States. So as we think about the totality of our program, both a US strategy, but ultimately delivering functional protein so that we can see that translation to boys globally—not just those that are amenable to exon 53—but again our thesis of being able to expand that beyond 53 across 40% of DMD. I think that's our core focus. So we've seen that with the initial data. We're excited about FORWARD-53 in terms of delivering protein data and really providing substantial opportunities for these boys with DMD.

Go it. Thanks, Paul.

Thank you. One moment for our next question. And our next question comes from the line of Joon Lee from Truist Securities. Your question please.

Good morning. This is someone on for Joon. Thank you for taking my question. I'm curious if you plan to analyze the guide molecules for Cas12a or Cas9 using your platform now that you've made progress in ASOs, RNAi, and RNA editing. Also, regarding INHBE, the timeline is unclear. Do you think you could have made faster progress with an ASO? Thank you.

So can you repeat the second question? I just want to make sure.

Oh, yeah. I'm just wondering if you could just elaborate a little bit on if you think you could progress faster within Antisense Oligonucleotide as opposed to an RNAi approach for the INHBE program? Thank you.

Oh, okay. Sorry, I'll take the last one. I just want to make sure for INHBE, because it was not clear with AATD or INHBE. So, you're saying could we have gone faster for an ASO? No, I think actually our experience in siRNA and as we shared earlier in our collaboration, we've been working in double-strand siRNA for a while now with our format. So, I don't think that there is any speed disadvantage by pursuing siRNA for the INHBE program. In fact, I think we're quite on track and I think competitive in the field right now in siRNA and I think as we've always said, having multiple modalities lets us really evaluate what is the best modality for treating this given disease. What we've seen in not just potency but durability the GalNAc in hepatocytes on silencing, I think we actually have the best modality and format frankly to treat this where we can think about potential for biannual or annual dosing. So I think we've got a competitive program here. I think our goal is to stay ahead in the space and we'll continue to watch it. As to your first question, it's an interesting one because as we think about the power of guide trends and we have discussed with numerous companies around our GMP manufacturing capability and process development, I do think we have the ability to work in these spaces. What I don't want that to be translated to on this call is that Wave is going to work on RNA-controlled guide strands for CRISPR right now. But I think the capability we have in collaboration to apply our chemistry and apply our manufacturing know-how and our process development across multiple formats in Oligonucleotides is definitely translatable. Our focus right now is RNA editing, in the case as we shared earlier has a lot of advantages. But the approach we're taking with our chemical modifications, again, proprietary, are definitely transferable across other oligonucleotides in the space.

Thank you. And then just one more. So I noticed that the single dose data was that originally you were going to get it this quarter. And now, it's going to come out with the multi-dose data in the second quarter of 2024. If you could just elaborate a little bit on that? Thank you.

I'm happy to. Anne-Marie?

Yeah. Sure. So the single dose data are not informative for our next step. And as we've rolled over the single dose data into the multi-dose cohort and fully enrolled multi-dose cohort, we're reading them out together because these are the important data enabling decision-making.

Yeah. I mean, just to follow up on that. I mean, the single dose is complete. When we cut data, and I think this has been discussed before, it is critical when you do assessments of data, particularly on studies as they go to evaluate all patients simultaneously to avoid any discrepancies across the assay in comparison. And so with that complete, to Anne-Marie's point, with those patients having rolled over into a fully enrolled 30-milligram repeat dose cohort, those repeat dose data, as we shared earlier on prior calls, are going to be critical in informing the next step of the program.

Thank you very much, Paul.

Thank you. One moment for our next question. And our next question comes from the line of Joseph Schwartz from Leerink Partners. Your question, please.

Thanks very much. So given what we recently saw from EMBARK, I was wondering if we could get your opinion on the merit of NSAA as a functional assessment. And what other endpoints do you think could be more informative, if any? And what functional assessments will you be focusing on now in the FORWARD-53 study? And what is the bar for success on each? And then I have a follow-up. Thank you.

I appreciate your question, Joe. When we analyze the data initially, we consider that the development of functional dystrophin should lead to functional benefits. This was a key question raised during the advisory committee meeting, particularly regarding whether micro-dystrophin would yield functional advantages. The general agreement among reviewers seems to be that it does not. Therefore, we do not see this as an opportunity to enhance the North Star metric; instead, our emphasis is on improving the protein itself, specifically by creating functional protein. Our position remains that we are not altering our functional endpoints; we will continue to evaluate North Star along with other digital metrics and various functional endpoints. This approach is grounded in the fundamental biology of the disease. Our goal in developing exon skipping oligonucleotides for DMD is based on the principle of producing Becker-like functional protein that possesses all necessary characteristics. Thus, our objective is to successfully deliver that protein and subsequently assess its translation into functional outcomes.

And when you do your muscle histology biopsy analysis, do you think there's any potential to see evidence of a differentiated profile from having more activity in the satellite cells on the muscle cell architecture given what you said about the actual protein that could be produced as a result?

That's a really interesting question. We obviously have a longer duration for the FORWARD-53 study compared to the three doses at six weeks, which is a more static time point. This allows us to observe the evolution of satellite cells and the localization of dystrophin. The critical aspect is the quantitative functional protein and looking at endpoints beyond that. There are engaging discussions in muscle biology regarding the population and translation of satellite cells, as well as how dystrophin affects myoblasts and how we can expand dystrophin coverage in these cells. Much of this research is currently academic, but achieving these goals should enable us to examine dystrophin architecture over time. These ongoing academic experiments will help us think about the relationship between this biology and function. Ultimately, our primary focus should be on the quantity of dystrophin we produce and its functional translation, as achieving this opens up many opportunities to further investigate and understand dystrophin biology.

Excellent. Thanks for taking my questions.

Thank you. One moment for our next question. And our next question comes from the line of Eun Yang from Jefferies. Your question, please.

Thank you. Another question on DMD. So, when you produce dystrophin protein and obviously it's close to full length versus a micro-dystrophin. I mean, you mentioned there are academic testing to assess the functionality of a protein itself. But when you measure the protein levels, do you assume that the protein is all functional?

Yes. When dystrophin protein is translated to the outside of the cell, that’s when it becomes functional. This process takes time, both to produce the protein and for it to be located on the cell's exterior. This is an important aspect to consider over time. Regarding the academic research, it focuses on how that distribution occurs over time. As we conduct our studies, we will have longitudinal opportunities at both 24 and 48 weeks to evaluate progress, not just in quantity but also in distribution. These points are crucial for assessment over time. The key metric for potential accelerated approval will focus on the quantitative aspects, following our long-term plan regarding the protein. However, the functionality of the protein is also important, and we will examine its distribution within the cell.

I would just add just from a logical point of view you would expect that a protein which is as close as possible to the native dystrophin in length is most likely to be functional. And I think with these data, we can see the EMBARK data really significant questions as to whether micro-dystrophin has the ability to deliver function benefit.

Thank you. And then you mentioned that obviously there is the need for new treatment for DMD patients. So, given what's out there, what we are seeing, what level of the dystrophin levels do you think you would need in order to file for approval to be differentiated commercially?

To be differentiated commercially, I think there are several ways to be differentiated. Obviously one for Exon 53, which is the immediate commercial space we’d be entering. We are powering the study to show that we can deliver greater than 5%, that's the commercial threshold within the Exon 53. We believe based on our levels of transcript and the time and duration we’re treating that we should be able to see that level of protein above that current threshold. As we talk to patients and physicians, there are other areas of points of differentiation even amongst the current programs. So, we're already less frequent in terms of dosing administration as we talk to these patients about impact on their life in terms of travel, transit costs, having weekly IV infusions versus whether it's biweekly, and as we saw in our data from Part A, 25-day half-life means the potential for monthly or less frequent treatment. That in and of itself as we talk to families is a huge advantage. So we see that in the profile of the stability of our drug. We have a profile in terms of safety, too, at least in the early pieces that tells us that we shouldn't look differently than the existing standard of care. So, we can provide these patients an opportunity to switch with less frequent administration and substantially more protein, which we are powered to see, and the ability to get the satellite cells and the fact that we see higher levels, and I think you need to go back to remember that data 53% transcript was seen in skeletal muscle. We've shared data that shows that we see substantially higher transcript production in both our non-human primates and in our double knockout mice in heart and diaphragm. So, we think about the overall profile, differentiated profile from the existing standard. And what's going to be important to patients is high levels of cardiac distribution and muscle dystrophin protein, high levels of diaphragmatic protein expression that treat the underlying respiratory and cardiopulmonary complications that these patients suffer from in addition to the high levels of skeletal muscle concentration. So, the totality of the profile, and I know people tend to think about all exon skipping as being the same. The profile and the reason we started this program after our prior experience this year is not just because of the quantity of dystrophin but the localization, the exposure, the profile, it’s differentiated from the existing exon skipping therapies without the need for conjugates and other modalities that potentially impact liabilities on those molecules compared to standard-of-care.

Thank you. And then last question is on AATD RNA. So when you deliver a proof of mechanism data sometime in 2024, can you kind of talk about the level of data we see in terms of the number of patients? What kind of data we would see in order to determine proof of mechanism? Thank you.

I'll let Anne-Marie define it. I think it's important that we benchmark proof of mechanism. There will obviously be many more updates to your other questions regarding numbers and design as the study progresses. Would you like to discuss that?

Sure. So proof of mechanism is detection of additive protein in serum. And that will be a very significant milestone because it will be the first evidence that ADAR editing can translate into humans. In our study, we have multiple assessments of M AAT throughout the cohorts, low, medium, and high, so we can achieve proof of mechanism as soon as we detect it, and that's before the completion of the trial and potentially prior to completion of the first cohort.

Thank you.

Thank you. One moment for our next question. Our next question comes from Luca Issi from RBC. Please go ahead with your question.

Great. Thanks for taking the question. This is Lisa on for Luca. Just a couple on A1AT. You mentioned that multiple CTAs have been accepted. Just wondering if you can share which geographies you have cleared the CTAs. And on the SAD data, I know you're expecting to dose healthy volunteers soon. Given there's no mutation to correct in healthy volunteers, what clinical information are you hoping to gain from these subjects? And what will help inform further treatment in A1AT patients? Thanks.

Sure. Well, the first clinical trial sites are Australia and the UK with more coming. And to your question about what we expect to get from the volunteer study? Well, the volunteer study has been designed to enable us to most rapidly achieve doses in patients that we would expect to see target engagement. And so, it's really designed for efficiency and speed. So, the healthy volunteer study will inform progress in the patient study and also, of course, safety and tolerability.

If you think about it, the goal is to get very quickly to the first low-dose cohort in the patient arm, which is where we modeled to anticipate initially engaging target. So there's a combination of how quickly we can enroll and establish both safety and PK, and tie that over to our preclinical modeling on PD, which is translated across multiple clinical programs to date. The team has done a really elegant job of bringing those pieces together to expedite getting to that proof of mechanism as quickly as possible.

Thanks. One more, if I may. Just on the milestones. Can you give us a sense of the cadence of the milestone payments from GSK for the A1AT program? Thanks.

Sure. I mean, I think obviously, we can't break it down. But we can say is, as we've said publicly, we have milestones for the program as we move through the clinic. Some of these are execution milestones, and some of these are data inflection milestones. We anticipate milestone payments in 2023 and then 2024 and beyond. So that's the most I can say. But given the progress the team is making, I think it's pretty clear to see a path to how we're going to move through that cadence of potential milestones.

Okay. Thanks for taking our questions.

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Dr. Paul Bolno for any further remarks.

Thank you all for joining the call this morning. I also want to thank our employees for their efforts towards delivering life-changing treatments for people battling devastating diseases. We have an exciting year on the horizon, and we look forward to keeping you all updated on our progress. Have a great day.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.