Eloxx Pharmaceuticals, Inc.
Q1 2019 Earnings Call Transcript

Published: 10 May 2019

[Operator:]

Good morning, everyone, and welcome to Eloxx Pharmaceuticals' First Quarter 2019 Earnings Webcast and Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Barbara Ryan, Eloxx' Investor Relations Officer. Please begin.

[Barbara Ryan:]

Thank you, Liz. Welcome, and thank you for joining us this morning for a review of Eloxx Pharmaceuticals' first quarter 2019 financial results and business update. Joining me this morning are Robert Ward, Chairman and Chief Executive Officer; Dr. Greg Williams, our Chief Operating Officer; David Snow, Chief Business Officer; Dr. Susan Schneider, Senior Vice President, Clinical Development in Ophthalmology; and Greg Weaver, our Chief Financial Officer. Before we begin, I'd like to remind you that any statements made during this call that are not historical are considered to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the risk factors section in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission and our other reports filed with the SEC. Any forward-looking statements represent our views as of today May 9, 2019, only. A replay of this call will be available on the company's website, www.eloxxpharma.com. It is now my great pleasure to turn the call over to Robert Ward, Chairman and Chief Executive Officer of Eloxx Pharmaceuticals.

[Robert Ward:]

Thank you, Barbara, and welcome to Eloxx' First Quarter 2019 Earnings Webcast and Conference Call. 2019 is an exciting year for Eloxx as we expect to report top line Phase 2 data for our lead investigational compound ELX-02 in both cystic fibrosis and cystinosis. We're pleased to have an experienced leadership team to ensure that we advance these programs as well as our new inherited retinal disease program on time and on budget. We continue to report broad progress in cystic fibrosis and look forward to the June European Cystic Fibrosis Annual Meeting in Liverpool, where Eloxx will be presenting new data from our clinical technical studies. As you may recall in March at the European Cystic Fibrosis Basic Science Meeting, we shared the data showing significant increases in CFTR protein expression and localization organoids derived from cystic fibrosis patients bearing CFTR nonsense mutations. These results were consistent with our study showing functional responses to ELX-02, including increases in messenger RNA half-life. And Dr. Greg Williams, our Chief Operating Officer, will share more of these results with you in a few moments and also provide an update on our clinical programs on cystic fibrosis and cystinosis. We expect to initiate a Phase 2 clinical trial in no more than 24 cystic fibrosis patients carrying G542X on one or both alleles of the CFTR gene. G542X is the second most common gene globally and accounts for about 5% of the total cystic fibrosis population. We are on track to report top line data from this trial in 2019. We believe that the cystic fibrosis patient-derived organoid translational research model provides key insights for both clinical trial design and for personalized medicine. And the data we've generated substantially derisks our Phase 2 program. Eloxx was pleased to have participated in the U.s. Cystic Fibrosis Foundation sponsored read-through workshop that brought together scientific leaders from around the world to discuss potential solutions for developing treatments for patients with nonsense mutations. We are the most advanced company tackling the great challenge of potential new therapies for nonsense mutations. We're actively engaging with the Cystic Fibrosis Foundation here in The U.S., and we plan to advance ELX-02 in both Europe and here in North America. We're also pleased to be participating in HIT-CF, a European Union funded preclinical and clinical research program valuating the efficacy and safety of several disease-modifying drug candidates in cystic fibrosis patients with rare genetic mutations. The goal of the HIT-CF European project is to investigate whether positive responses to therapies in patient-derived organoids can be predictive of clinical response in a controlled trial. We believe this project will expand the use response of organoid response data to the drug approval, label expansion, treatment and reimbursement decision-making processes. We also continue to progress our ocular program under the leadership of Dr. Susan Schneider, our SVP of Clinical Development in Ophthalmology. There is a high unmet medical need and prevalence of nonsense mutations across inherited retinal diseases in general. We have been advancing several new investigational product candidates from our library into IND-enabling studies in ophthalmology, and we're very pleased with the emerging profile. A number of these candidates are appropriate for intravitreal administration with an encouraging pharmacokinetic profile demonstrating both retinal exposure and acceptable tolerability at high doses in sensitive species. On April 26, Dr. Matt Goddeeris, our Director of Research, presented a review of our read-through therapeutic approach to nonsense mutation-based inherited retinal dystrophies at the Sixth Annual Retinal Cell and Gene Therapy Conference at the invitation of Foundation Fighting Blindness. The presentation was well received and has generated interest from key opinion leaders in the field. Just last week, on May 2, we presented new data from our inherited retinal dystrophy program at the Association for Research in Vision and Ophthalmology, or ARVO, at the annual meeting. Later in this call, Dr. Susan Schneider will review this presentation and highlight the important interactions we've had across a large number of key opinion leaders, investigators and members of the Foundation Fighting Blindness. There is a growing awareness and enthusiasm for inherited retinal disease program, where our initial development efforts are focused on nonsense mutation mediated Usher syndrome, which affects an estimated 4,000 individuals here in the U.S. alone. We believe that intravitreal administration on a frequency similar to that established for Lucentis or Eylea may allow an Eloxx Therapeutic agent to address a wide range of nonsense mutation mediated inherited retinal disorders. We ended the first quarter of 2019 with $53.5 million in cash and cash equivalents. We're well funded to advance our clinical programs and deliver top line data in both cystic fibrosis and cystinosis in 2019 as well as advancing our IND-enabling studies in ophthalmology. Our talented and highly experienced team has committed to our mission of bringing safe and effective medicines to patients who need them as rapidly as possible. You should expect that we will continue to attract and add key talent to assure that we deliver on our clinical and corporate milestones. We're very pleased to have added to our advocacy team as we continue to expand our patient advocacy work across our key program areas. We also continue to be actively engaged in business development discussions focusing on expanding opportunities for our library of molecules in multiple areas of unmet need where nonsense mutations play an important role. I would now like to turn the call over to Dr. Greg Williams, our Chief Operating Officer, who will provide you with an update on our clinical program and review the recent data presentation at the European Cystic Fibrosis Basic Science Meeting in March.

[Greg Williams:]

Thank you, Bob. On March 27, we presented positive new data at the European Cystic Fibrosis Basic Science Meeting in Croatia that demonstrated for the first time that ELX-02 significantly increases CFTR protein expression and localization on apical surface in organoids derived from patients with nonsense mutations. Consistent with increased CFTR activity observed in the organoid swelling assay, ELX-02 mediates significant restoration of CFTR protein expression as measured via a capillary-based immunoassay approach in multiple G542X and W1282X nonsense mutation carrying organoids. G542X organoids treated with the ELX-02 demonstrate proper cell surface CFTR localization on the apical surface, which is consistent with increased CFTR, mRNA and CFTR function in the swelling assay. While ELX-02 mediated protein increases have been previously demonstrated, this is the first demonstration reported in cystic fibrosis patient organoids. With this translational CF organoid model, ELX-02 dose responsive increases in CFTR mRNA stability and function to now be extended to the demonstration of accompanying increases of CFTR protein. We believe these organoid groundbreaking new data establish a solid basis for understanding the active ELX-02 and its potential for development in the treatment of the high unmet medical need cystic fibrosis patients with nonsense mutations. The consistency of the data demonstrating ELX-02 mediated increases in CFTR mRNA function in animal models and organoids, and now the new protein data establish a solid scientific data set demonstrating the ability of ELX-02 to read through premature stop codons in patient organoids with nonsense mutations to restore essential functional proteins. In identifying patient populations for clinical trial activity, organoids enable us to screen a variety of genotypes for ELX-02 responsiveness. We are preparing a manuscript that compiles our expanding organoid data set. These data follow the organoid response to ELX-02 from a growing number of patient-derived organoids with the top five nonsense mutations in CF population, which covers 75% of the nonsense-bearing CF patients. We believe that the patient-derived organoids represent the translational model best correlated to clinical response. In fact, a recent publication in cell reports authored by the HUB in collaboration with leading academic experts in organoid technology demonstrate the high correlation of patient-derived organoid FIS responses to both the sweat chloride and FEV1 change observed in the same cystic fibrosis patients treated in a variety of pivotal trials. This data set included trials improved CF drugs such as the potentiator ivacaftor alone or in combination with the corrector lumacaftor as well as Genistein and Curcumin. In the study, the authors demonstrate that a positive FIS response in organoids above 2,000 significantly correlates to why the organoid model system is actively being used to evaluate compound response across a wide landscape of CF genotypes in order to pair the right patient for us with the best potential therapy for their genotype. When we consider the experimental results of the ELX-02 across a variety of nonsense-bearing organoids, we are encouraged by the reproducible and concentration dependent FIS response above 2,000 for a majority of the organoid data points collected and an FIS response above 4,000 for nearly half of the data set. These data support potential for ELX-02 to provide a meaningful change sweat chloride and FEV1. We believe that the totality of this data and the substantial response observed in G542X cystic fibrosis patient organoids derisk our Phase 2 clinical trial design, which focuses on patients with G542X mutations and supports our expectation that additional CF nonsense genotypes beyond G542X will be responsive to ELX-02. We are pleased that three of our abstracts, two oral and one poster, have been accepted for presentation at the European Cystic Fibrosis Society Meeting in June. I'd now like to provide you an update on our development programs for ELX-02 and our pipeline. As previously reported, the results of our completed Phase 1 SAD study were published in the Journal of Clinical Pharmacology and Drug Development in January, and the emerging profile supports our continuing development program. We previously announced that we were adding additional cohorts to the MAD study to evaluate different drug concentrations. I'm pleased to report that we've initiated the seventh and final cohort of the MAD study in the U.S. and expect to complete the study within the next two weeks. We'll then submit the results for scientific presentation or publication in 2019. Following completion of the MAD study, we plan to initiate a Phase 2 clinical trial in cystic fibrosis and reach top line data this year. Our clinical trial application has been approved by the Federal Agency for Medicines and Health Products in Belgium and the clinical trial network of the European Cystic Fibrosis Society has given our Phase 2 clinical trial a high-priority rating. ELX-02 has been granted orphan designation for CF by the European Medicines Agency. We expect to extend our CF clinical and regulatory activities to allow us to conduct our work in the U.S. as well as Europe and will update you on our progress as we move through the upcoming quarter. In our Phase 2 CF trial, we will be evaluating changes in sweat chloride at multiple ascending doses of ELX-02, which is consistent with other successful Phase 2 programs for approved drugs as the traditional biomarker measuring CFTR activity. Our planned Phase 2 clinical trial in cystic fibrosis will enroll no more than 24 patients with the most prevalent nonsense CFTR mutation, G542X, on at least one allele. The protocol calls for multiple increasing doses of ELX-02 in order to identify an optimal dose to carry out and the study will be posted on clinicaltrials.gov. We expect to report Phase 2 top line clinical results in cystic fibrosis in 2019. While the patient safety is the primary endpoint in Phase 2, we will include endpoints for changes in sweat chloride and FEV1 in the trial. The changes in sweat chloride was the primary biomarker for dose selection to advance into pivotal trials. We are often asked about expectations for Phase 2 results, and we believe that the Kalydeco development program can serve as a guide. Please recall that Kalydeco was able to normalize patients sweat chloride levels and that sweat chloride responses in Phase 2 results have shown a strong correlation to Phase 3 FEV1 findings. To support our full Phase 2 clinical trial program, we have completed the manufacturing of our lyophilized clinical drug product. We've also identified a commercial manufacturer and has completed key process development work supporting Phase 3 clinical development. Similarly, in cystinosis, our IND in the U.S. is now open and the FDA has granted ELX-02 orphan drug designation for cystinosis. We are very pleased to have aligned with the FDA on a focused Phase 2 clinical trial enrolling six patients. In this study, we will be measuring the dose-dependent effect of ELX-02 on cystine levels in white blood cells, the biomarker used in the development of the most recently approved drugs for cystinosis. Cystine levels in white blood cells inform on the total cystine burden in the body, and a decrease in these levels may be considered as a surrogate marker likely to predict clinical benefit. We expect to report top line data from our Phase 2 study in cystinosis this year. As you know, cystinosis is a genetic metabolic disease typically diagnosed by the age of 2. The disease is progressive with low-life expectancy and most patients will have kidney transplant by the age of 20. In support of the cystinosis program, where many patients have impaired renal function, we have initiated a renal impairment study with ELX-02. We are pleased to announce that the cohorts of subjects with mild and moderate renal for impairment have been successfully completed. To date, the pharmacokinetic results are as expected with no adverse events. In cystinosis, they have been previously reported at the World Symposium by Dr. Paul Goodyer, which showed that ELX-02 decreases the cystine content in cellular and animal models. He has continued his work and extended his findings to include combination use with stamen. This data were presented in March at the Cystinosis Research Foundation Day of Hope Meeting in Irvine, California. Regarding our pipeline, we have a library of compounds and have completed screening on three of the most active read-through agents in this series. Eloxx holds global rights and has the extensive patent portfolio with long life on composition of matter and used for all these compounds. We believe there are multiple opportunities to expand our pipeline by advancing these and novel molecules in new routes of administration and are addressing new therapeutic indications. As Bob mentioned, in the ocular program, focusing on intravitreal administration, we currently have multiple compounds progressing to IND-enabling studies. And our data demonstrated positive activity on nonsense mutations in inherited retinal disorders on a favorable emerging safety profile. It's important to note that data for six different molecules from our library have been published by academic labs and show activity in a variety of ocular disorders, and we are intending to focus initially on Usher syndrome. Dr. Susan Schneider will review our ocular program and very recent presentations at ARVO and the Sixth Annual Retinal Cell and Gene Therapy Meetings. I look forward to keeping you apprised of our continued progress this year as we complete the MAD and renal studies, conduct both our Phase 2 clinical trials in cystic fibrosis and cystinosis and advance our ocular programs. We expect to report top line results from both of our Phase 2 studies for ELX-02 this year. I'd now like to turn the call back over to Bob.

[Robert Ward:]

Thank you, Greg. I'd like to ask Dr. Susan Schneider to review our progress in the ocular programs.

[Susan Schneider:]

Thank you, Bob. I'm very pleased to be at Eloxx at this exciting time as we build our ocular team and advance our programs. As Greg mentioned, we continue to expand our ophthalmology team and to rapidly progress our IND-enabling studies. I am pleased with the emerging pharmacokinetic and tolerability profile of the Eloxx investigational agents we are studying. We believe that our compounds are appropriate for intravitreal injection as we have demonstrated that we reach the target retina tissue with this route of administration. This is important as this is a routine outpatient procedure that is both safe and well tolerated. Once established as appropriate for intravitreal administration, this can serve as a basis for potentially addressing a wide range of nonsense mutation mediated inherited retinal disorders. We have also demonstrated that our compounds preserve the electroretinogram or ERG waveforms and retinal histology at concentrations where aminoglycosides commonly show ERG wave attenuation or ablation. We have studied these compounds at high doses in sensitive species. The ERG measuring electrical activity associated with nerve function within the retina and preservation of the ERG waveform is an important safety consideration. We plan to focus our initial efforts on Usher syndrome beginning with USH2A, where there is a high prevalence of nonsense mutation. We have demonstrated dose responsive read-through of Usher syndrome nonsense mutations as measured by protein production. We have just returned from a series of meetings with Foundation Fighting Blindness, or FFB, during the Innovation Summit, the Sixth Annual Retinal Cell and Gene Therapy Conference where at their invitation, Dr. Matt Goddeeris, our Director of research made a presentation on Friday, April 26, with our read-through program in inherited retinal dystrophies. Matt's presentation was extremely well received and the interest in inherited retinal disorders is expanding. The meeting was filled out with standing room only session. There is a high unmet medical need. Investigators are aware of the need for new robust data, and there are clearly accelerated paths for clinical development, which are acceptable for registration. We continue to build our strong and collaborative partnership with FFB. They are highly supportive of our efforts and working with us on our planned studies and regulatory interactions. FFB currently has 30 sites in their consortium. The company also made its first presentation at the Association for Research in Vision and Ophthalmology, or ARVO, Annual Meeting on May 2 in Vancouver, which was also very well received. While at ARVO, we had the opportunity to meet with retinal key opinion leaders as well as researchers and consultants with expertise in our areas of interest, and there is a high level of interest in our programs. Our primary focus remains on addressing the unmet medical need of developing therapies to treat blindness in patients with inherited retinal dystrophies, and I look forward to continuing to update you on our progress. I would now like to return the call back to Bob.

[Robert Ward:]

Thank you, Susan. Our first quarter has been really a successful one for the company. And I'd now like to ask Greg Weaver, our Chief Financial Officer, to provide you with a review of our financial results for the first quarter of 2019.

[Greg Weaver:]

Thanks, Bob. As of March 31, 2019, the company had cash, cash equivalents and marketable securities totaling $53.5 million, which we believe will fund the company's operations through top line data in cystic fibrosis and cystinosis in 2019 and into the second quarter of 2020, based upon our current operating plans. For the quarter ended March 31, 2019, the company incurred a net loss of $11.9 million or $0.33 a share as compared to a net loss of $8.6 million or $0.31 a share for the same period in 2018. The $3.3 million increase in quarter-to-quarter net loss was driven largely by the effect of noncash stock-based compensation expense of $2.7 million in Q1 of 2019, of which $2.1 million was recorded to G&A and $500,000 to R&D. And for your modeling purposes, total shares outstanding at the end of the quarter was 35.9 million. First quarter 2019, R&D expense totaled $6 million compared to $4.4 million for the same period in 2018. Quarter-to-quarter R&D expense fluctuations primarily due to growth in our clinical and preclinical operations. And G&A expense for the first quarter 2019 was $6 million as compared to $3.4 million for the same period in 2018. The quarter-on-quarter increase, again, due largely to the $2.1 million in noncash stock compensation, along with increased salary-related costs and other G&A professional fees. This concludes our financial covenants. I'll turn the call back to Bob.

[Robert Ward:]

Thank you, Greg. In 2018, we successfully built the foundation necessary for a strong growth trajectory for the company in 2019 and beyond. This year, we'll accelerate our clinical development efforts and plan to conduct our Phase 2 clinical trials in cystic fibrosis in both the U.S. and Europe and reach top line data this year. Our Phase 2 clinical trial in cystinosis will also begin with the support of genome in Canada, and we expect to report top line data on that trial this year as well. We're pleased that our clinical trial application in Belgium for cystic fibrosis is approved and that ELX-02 has been granted an orphan drug designation by the European Medicines Agency. We're extremely encouraged by the breadth and consistency of the data we've generated for ELX-02 and by the advanced scientific understanding of the basis of mechanism of action. ELX-02 is the first and only read-through agent to have demonstrated changes in CFTR messenger RNA, increase in CFTR protein, expression and substantial FIS activity in cystic fibrosis patient-derived organoids bearing nonsense mutations. The recent cell report publication from the HUB demonstrates the high correlation between the FIS swelling assay and organoids and increases in both sweat chloride and FEV1, showing clinical trials for drugs currently approved for use in the treatment of CF. We believe that the consistency of the ELX-02 data meaningfully derisks our planned Phase 2 cystic fibrosis study. We're on track to report top line data from our planned studies in both cystic fibrosis and cystinosis in the second half of this year. We're pleased to have initiated a new program focusing on inherited retinal dystrophies and with the emerging favorable tolerability profile demonstrated by several compounds from our libraries. As Dr. Schneider discussed, we're currently conducting IND-enabling studies with an initial focus on Usher syndrome in the U.S., and we intend to build a complete team supporting expansion of our inherited retinal disorders program. We're gratified to have attracted industry experts to lead the acceleration of these efforts and to partner with the Foundation Fighting Blindness as we advance a novel molecule towards ocular clinical development. We've increased our efforts in patient efficacy in cystic fibrosis and inherited retinal diseases, and I'm very pleased with our engagements with the U.S. Cystic Fibrosis Foundation and the Foundation Fighting Blindness. Last week, at the FFB Sixth Annual Retinal Cell and Gene Therapy Innovation Summit, our ocular team had an opportunity to introduce our program to the scientific community and received very positive response. We also continue to be very active in the business development across our portfolio as a variety of new indications and/or geographies may become increasingly accessible to us. Next week, we'll be participating in the Bank of America Merrill Lynch Conference on May 16 in Las Vegas. And in early June, we're looking forward to our three scientific presentations on ELX-02 at the European Cystic Fibrosis Society Meeting in Liverpool. Thank you for joining us for our first quarter 2019 earnings call. We look forward to continuing to update you on our progress. Operator, you may now open up the call for questions.

[Operator:]

[Operator Instructions] Our first question comes from the line of Joel Beatty with Citi. Your line is now open.

[Joel Beatty:]

Hi. Thanks for taking the questions. The first one is on multiple ascending dose study. Now that you've reached the final cohort, could you just discuss how dosing amount play this final cohort was selected? And are you able to give a sense of how you expect it might compared to the respective dose and some of the therapeutic areas?

[Robert Ward:]

Yes. Joe, I believe when we discuss the MAD study previously, remember now, this is a longer exposure across different doses for patient – I'm sorry, for healthy volunteers. And the purpose of the study is to establish a safety range that allows us to dose escalate the patient population. Remember, when we start Phase 1 with safety paramount in mind, often a dose lower than that expected to be efficacious is used. Once we move to Phase 2, one of the asks from the FDA and regulatory agencies is that the first dose is one that should be expected to have a potential for patient benefit and then we dose escalate up from there to identify the optimal dose to take into Phase 3. And Dr. Williams, do you want to talk about the range of doses that we've covered in the MAD study, and how that bridges to what we anticipate will be the effective range we look at in Phase 2.

[Greg Williams:]

Sure. Thank you, Bob. So for the SAD study, which provided the original range of doses to export. We explored single doses up to 7.5 milligrams per kilogram. That provided kind of a framework for what we were doing in the MAD study with multiple doses. We've – our final cohort is up to 5 milligrams per kilogram administered twice weekly. That's a 10 milligram per kilogram per week total dose. This range is consistent with the dose range that we think should be efficacious based on our animal models thus far.

[Robert Ward:]

And then, Greg, for the Phase 2, that same dose range will be explored in both the cystinosis and cystic fibrosis patient populations, and we anticipate that the same dose range would be covered in both Phase 2 trials, is that correct?

[Greg Williams:]

Yes. Absolutely, Bob. And as you mentioned with healthy volunteers, we didn't push the dose perhaps as high we might in patients, because healthy volunteers don't have any potential to benefit. So we could look at a further dose escalation in patients as we're exploring that full safety and efficacy range.

[Joel Beatty:]

Got it. And then a question on the organoid models you've been using for cystic fibrosis. Could you discuss how – are there – as organoid models are being used for other drugs for cystic fibrosis and the implication of what that means for your agent?

[Robert Ward:]

Yes, Joel, I think it's really important to think about the fact that it's about personalized medicine. So we know that in the Netherlands today, there are individuals who because they've donated organoids that they're screened in the laboratory and then the payers are reimbursing off label use of currently approved drugs based on the organoid response that they see. So that's already happening in the marketplace. At a more sophisticated level with HIT-CF, while we have a collaboration that's funded by the European Union. It's in collaboration with Amaya and the HUB, and this is to now conduct studies and laboratory test at organoids to expand into a clinical program. And David Snow, could you just provide an overview of how we see that program moving forward, and what will be the future implications for that in the regulatory environment potentially?

[David Snow:]

Bob, there's a number of important programs we're looking at, primary ciliary dyskinesia. We're looking at and also in the kidney effect of polycystic kidney disease. Both of these are highly prevalent diseases in the U.S., I think. For PKD, there is probably 140,000 to 350,000 patients in the U.S. who have that. There is a substantial component for nonsense – yes?

[Robert Ward:]

I was thinking more of the organoid implication within the confines of HIT-CF. So with HIT-CF. Go ahead.

[David Snow:]

Sorry. HIT-CF is very important program in Europe. We've joined, as of last year, they are going to identify rare mutations in CF with a plan to do a clinical trial within the next couple of years to confirm the effective organoids in those patients. They'll collect between 500 and 700 organoid patients. So it will be a very robust database. And we expect that they will collect a large number of nonsense mutations in that. It will be a good database for us as we'll participate and be able to get that, collect that data and then have really good information related to potential regulatory path by which we could use organoids as a biomarker with the plan to work with EMEA to use this as a way to get patients on therapy.

[Robert Ward:]

Thanks, David. And Joel, you're right. Organoids have applications in other indications, as David was mentioning. And in the eye, it's more likely that we would be using eyecups, which is a similar type of approach, but it grows cells into a different structure. It's not to reflect the ability to use eye cups as translational model in the ocular application. But we think organoids are – to the early part of development. I know the HUB has a very high interest of expanding organoids for applications in oncology. It's outside of our interest. But we do think it's a translational model, but it will continue to add value for personalized medicine and in cystic fibrosis increasingly, we believe, genotype will matter. And that means, if I have a mutation on one allele and a different mutation on a second allele, the specific footprint of those two alleles would be my genotype and by enabling the ability to figure out for that genotype, which drug are they most likely to be responsive to cystic fibrosis is likely to be an area where we'll see the personalized medicine approach taking hold earlier than perhaps other areas. And a lot of is due because of the fantastic work Vertex did in both establishing and collaborating with the HUB on organoids, but also in enabling cystic fibrosis to be thought of as a molecular disease where most patients know their sequence and physicians are used to selecting drugs based on patients' underlying genetic information. So it's really a terrific opportunity for us to take advantage of these platforms.

[Joel Beatty:]

Great. And then may be one last question on the Phase 2 trials that are planned for cystic fibrosis and cystinosis. Is there an opportunity to measure mRNA and protein reduction in those studies? Or is it more a focus that needs to be down the road and different markers of efficacy that specific to the disease areas?

[Robert Ward:]

No, you're correct, Joel. When you think about scientific information and then the development path, right? So the regulators are focused on ensuring

[Joel Beatty:]

Makes sense. Great. Thank you.

[Operator:]

Our next question comes from the line of Ted Tenthoff with Piper Jaffray. Your line is now open.

[Ted Tenthoff:]

Great. Thank you very much and thanks for the update. A lot of really great progress taking place here. I want to get a little bit better color on what you're thinking is now that the MAD is wrapping up with respect to Phase 2 data release. Is this something that we could see by NACF? Or is it more likely this would be kind of a press release presentation around year-end? And then I have a quick follow-up question, if I may.

[Robert Ward:]

No. You're right, Ted. One of the advantages is that the European meeting is in June, but the North American Cystic Fibrosis Meeting is later this year. And the deadline for late-breaking abstracts is also later this year as well. So as you know, with clinical trials, we planned for execution that will be as rapidly as possible and prefer whenever possible to share data in the context of a scientific meeting so that the audience has ability to see the data during the context of that meeting. So that would definitely be our preference, and it comes down basically to timing, but we're certainly looking for opportunities to continue to engage on the scientific level.

[Ted Tenthoff:]

Yes, I think that would be really well received. And then if I may, just on the ocular program, it really sounds like this is becoming a much bigger effort for the company, which, I think, makes a lot of sense. Can you give us a sense beyond Usher syndrome where you see other potential for read-through therapy?

[Robert Ward:]

Ted, when we think about the ability to achieve read-through in a generalized way, we feel that if we have the right concentration of drug, right tissue, for the right period of time, we should be able to achieve read-through on many premature stop codons. Now remember there is a variation in read-through depending on where the premature stop codon is in context with the Exxon junction because we share the data around nonsense-mediated decay. And the position of the premature stop codon, it does make a difference in terms of nonsense-mediated decay. And there is some other sequence-related pieces that change read-through level. But if we said, in general, the right concentration of drug and the issue for the right period of time gives us the potential to achieve read-through. Well, for intravitreal administration, successfully achieving the right concentration in the retina or in the choroid there is a cluster of 300 different inherited retinal dystrophies that occur in those tissues. So whether it's the retinal pigment epithelial cells, the photoreceptors or the various nerves that make up the signal processing components of the retina. There is numerous cell types where single protein changes can make a difference in function. But as we think about the proteins in the eye, not every protein is functional. So remember for Spark with RPE65, they are restoring an enzyme that allows synthesis of visual pigment. So we believe that it's a functional protein, which yesterday there was insufficient protein available to perform the function and tomorrow protein levels are restored back to normal physiologic range or a range that restores function, that's something that can be measured in the clinic. So we really want to focus our efforts on functional proteins. And then Susan Schneider, Susan, as you think of other disease areas that would be of high unmet medical need of the choroid or the retinal pigment epithelial cells or the retina itself, perhaps you could explain a little bit about retinitis pigmentosa, Usher syndrome, choroideremia?

[Susan Schneider:]

Yes. Thank you, Bob. And you hit the nail on the head. We're looking to enable the production of these full-length proteins in genetic diseases that are caused by nonsense mutations. So there are a host of diseases in the inherent retinal disorders space that we could look at, including retinitis pigmentosa, Leber's congenital amaurosis and choroideremia. I would say, though, that Usher and RPE account for about half of the blindness in the U.S. that's related to these inherited retinal disorders, in general, with approximately 200,000 patients in total. And in that way, we're looking at more specifically the photoreceptor layer of the neurosensory retina to target the cells there, too, as Bob was saying, enhance a functional output from there that would be clinically meaningful that could move forward within clinical development. In the other spaces that are more focused on the macula, we're also looking at levels that, through an intravitreal injection, our drug can get not only into the retina down to the level of the photoreceptors, but also into the retinal pigment epithelium. And in that way, I think, our intravitreal approach is really quite exciting. We had great feedback on that at the Innovation Summit or Foundation Fighting Blindness. And also in a multitude of KOL meetings that we had during ARVO where the feedback from retina specialists across the board was quite exciting, and we think that approach is really a good, safe, well-tolerated, accepted approach to treating patients with these inherited retinal disorders.

[Robert Ward:]

That's a very good point. Ted, one thing to remember. The Cystic Fibrosis Foundation here in the U.S. and in many cases working with Vertex really established a basic science framework that enables research. So patient sequences are widely available. The Foundation Fighting Blindness right now is leading the development of a similar database called My Retinal Tracker, which is an opportunity for individuals with inherited retinal diseases to donate sequences. So that when we talk about understanding the molecular complexity, there is enough sequences available to understand where are there clinical development population that would allow us to conduct clinical trials and where might there be sequences that because of their frequency, eyecups or organoids or translational models might be the best way to address those. So eye research right now is a little bit earlier than cystic fibrosis, but certainly Foundation Fighting Blindness is really helping to catalyze collection of those sequences.

[Ted Tenthoff:]

That's really great. Super helpful. Thanks for all the additional color.

[Operator:]

Our next question comes from the line of Edward Nash with SunTrust Robinson Humphrey. Your line is now open.

[Fang-Ke:]

Good morning. This is Fang-Ke on for Edward. So the first question is, when we look back to the Phase 1 SAD study you published earlier this year, you mentioned that those ranges from 0.3 and 7.5. And then also, I think, in the paper, you mentioned that the active dose pharmacologically is about 2.5. So clearly in the MAD study, you are including – your range is including the 2.5, but I just want to ask what other signals that make you decide to remove the 7.5 milligram per kilogram dose? And then you decided to only include the highest 5.0 milligram per kilogram dose?

[Robert Ward:]

Well, I think, in our Phase 2 study designs, I think we're confident that we'll recover the range across, which we expect to demonstrate first biologic activity. So for example, if we were thinking of the Kalydeco program, there was 10 millimoles change in sweat chloride, that would be viewed as an example, of biologic activity, but as Kalydeco dose was increased, there was a 55 millimole change in sweat chloride, which will be normalizing sweat chloride and would be an example of why one might select that higher dose to take into pivotal trials. So when we designed the Phase 2 trials, we want to make sure that we're beginning with a dose that there is reasons to believe and evidence to support that has the potential benefit for patients. And then as we dose escalate, we're looking for a dose that optimizes clinical benefit. Now remember, if two doses look the same from the regulatory perspective, they prefer that we use the minimal effect of dose. And so we would select a lower dose is a typical approach. Dr. Williams, additional comments?

[Greg Williams:]

Yes, sure. Thanks, Bob. So thank you. That's a great question. And there were no safety signals at the 7.5 milligram per kilogram dose that cause us any concern. It was well tolerated. We just didn't think that there was any reason to expose healthy volunteers to 28-day dosing in the MAD study

[Fang-Ke:]

Great. It makes perfect sense. And then for the abstract that you're going to present in June, there's two – just really from – they are going to be from healthy volunteers, are you going to present any of the MAD study there? Or is it only going to be including the SAD study?

[Greg Williams:]

Yes. We will include both SAD and MAD data in our two papers that reference some of the healthy volunteer data.

[Robert Ward:]

I think you're referring to on June 6, the presentation as the administration of the ELX-02 to healthy volunteers demonstrates dose linearity and proportionality as well as low inter-subject variability. And then there's also a poster that will be on the pharmacokinetic profile. Those will, as Greg had shared, be the opportunity to provide those updates.

[Fang-Ke:]

Great. And then lastly, I think, you mentioned that you ran a PK study of ELX-02 in renal impaired patients for cystinosis, right? And then can you just give us more detail a bit more what that the data you have been identified? As I think you mentioned that in mild or moderate renal impaired patient, the PK still looked consist with healthy volunteers, if I remember correctly. Is that the case?

[Robert Ward:]

Well, I believe that when you think of a drug that's renally cleared as renal impairment occurs, it's the question is the increase predictable was Dr. William's comment. Greg, do you want to go ahead and just comment on mild, moderate renal study and what our observations are today?

[Greg Williams:]

So we have a lot of data on the 1 milligram per kilogram dose in healthy volunteers. We've used that dose in the SAD study. We've seen it in the MAD study with prolonged exposure. We saw a very consistent results over time. We thought that, that was a good dose to use in evaluation of the potential impact of renal impairment on pharmacokinetics exposure. And as predicted, we've seen some slight increases in exposure, some slight increases in half-life with mild and then the moderate renal impaired patients, but it was exactly what we would have anticipated. We're going to continue the study into severe. So far, no adverse events. Again, predictable pharmacokinetics. So it's very comforting from that perspective, and it really gives us a good idea of what renal-impaired patients would experience.

[Fang-Ke:]

Great. Thank you for the details. I appreciate you taking our questions

[Robert Ward:]

Absolutely

[Operator:]

And we're showing no further questions in queue at this time. I'd like to turn the call back to Mr. Ward for closing remarks.

[Robert Ward:]

Well, thanks, everyone, for joining us for our first quarter call. We'll look forward to updating you next quarter on our progress and are hopeful that for those of you have the opportunity to participate in the Bank of America Merrill Lynch Conference next week in Las Vegas, we're happy to host one-on-one there. We will be webcasting that presentation and look forward to continuing to update you on our programs as we progress through the year. That will conclude our call for today.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, and you may now disconnect. Everyone, have a great day.