Q4 2020 Earnings Call Transcript

Published: 1 Mar 2021

[Operator:]

Good afternoon, and welcome to the REGENXBIO Fourth Quarter and Full Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to Mr. Patrick Christmas, Chief Legal Officer for REGENXBIO. You may begin.

[Patrick Christmas:]

Good afternoon, and thank you for joining us today. With us are Ken Mills, REGENXBIO's President and Chief Executive Officer; Dr. Steve Pakola, our Chief Medical Officer; Dr. Olivier Danos, our Chief Scientific Officer and Vit Vasista, our Chief Financial Officer.

[Ken Mills:]

Thank you, Patrick. Good afternoon, everyone, and thanks for joining us. I hope that everyone is staying safe and healthy. On today's conference call, we'll provide a recap of our recent progress, advancing and expanding our NAV technology platform, and discuss expected future milestones for the company. Steve and Olivier have joined us to discuss our pipeline, and Vit will provide an update on financial results for the fourth quarter and the full year 2020. We will then open up the call for questions. Throughout 2020 and already in 2021, I believe we're making great strides towards achieving our goal of realizing the curative potential of gene therapy. We have advanced and broadened our internal pipeline of programs in several important ways. I'll touch on just a few pipeline highlights before turning the call over to the team.

[Steve Pakola:]

Thanks, Ken. I'll begin with our pivotal program, RGX-314 for the treatment of wet AMD, which we announced in January. Our End of Phase 2 meeting with the FDA was primarily focused on establishing the pivotal program design, which we believe will support a potential BLA filing in 2024. The pivotal program is expected to include two randomized, well-controlled clinical trials to evaluate the efficacy and safety of RGX-314, and we expect to enroll approximately 700 patients in total. We have already begun enrolling patients in the first trial named ATMOSPHERE, for RGX-314, using subretinal administration. The key design elements of the trial were informed by data from our Phase 1/2a dose escalation trial of RGX-314. ATMOSPHERE is expected to enroll approximately 300 patients across two RGX-314 dose armed, versus ranibizumab, and we'll evaluate non-inferiority to ranibizumab, based on change from baseline in Best Corrected Visual Acuity at one year. We intend to initiate our second pivotal trial in the second-half of 2021, which is expected to be designed similarly to the ATMOSPHERE.

[Olivier Danos:]

Thank you, Steve. In January of 2021, we announced the development of RGX-202, a one-time gene therapy for the treatment of Duchenne Muscular Dystrophy, DMD. DMD is caused by mutations in the DMD gene, which encodes for dystrophin, a protein involved in muscle cells structure and signaling pathways. Without dystrophin muscle degenerate and becomes weak, eventually leading to loss of movements and independence, required support for breathing, cardiomyopathy and premature death. I've been working in this job for many years, and I'm really proud of the work here at REGENXBIO in pursuit of this program. Our design is based on innovative vector engineering by REGENXBIO Sciences. And it incorporates learning from the Laboratory of George Dickson from the University of London, a pioneering figure in dystrophin research. RGX-202 is designed to deliver a novel micro disrupting transgene, equipped with an extended coding region of the C-terminal domain found in naturally occurring dystrophin, which we believe can bolster key cell signaling pathways and muscle membrane integrity, leading to improved muscle strength and resistance in patients with DMD. RGX-202 is the only known conflict in development to include this C-terminal domain. RGX-202 also has other fundamental improvements including current optimization and reduction of CPG content, which have the potential to improve gene expression, increase translational efficiency, and reduce immunogenicity. RGX-202 uses our NAV AAV8 vector, which has been used in numerous clinical trials and a well-characterized muscle specific promoter to support the delivery and targeted expression of genes through skeletal and heart muscle.

[Ken Mills:]

Thanks, Olivier and Steve, for your updates about the clinical programs and the emergence of our new program for Duchenne Muscular Dystrophy. I wanted to add to Olivier's summary, just to extend that the construction of our new corporate research and cGMP facility here in Rockville, Maryland continues as planned. We expect to move into our new offices in the coming months, and the new production facility is expected to be fully operational next year. The cGMP facility is expected to allow for production of NAV vectors that scales up to 2,000-liters, using our platform suspension cell culture process. We set out to develop a facility that would deliver high quality NAV vectors at a scale to match clinical and commercial demands our entire pipeline, and it's exciting to see the construction progress so far. With that, I'm going to turn the call over to Vit for a review of our financials.

[Vit Vasista:]

Thank you, Ken. REGENXBIO ended the year on December 31, 2020, with cash, cash equivalents and marketable securities totaling $522.5 million, compared to $400 million as of December 31, 2019. The increase was primarily attributable to gross proceeds of $200 million received from the monetization of our Zolgensma royalty rights, and was partially offset by net cash used in operating activities, and the purchase of property and equipment in 2020. Revenues were $154.6 million for the year ended December 31, 2020, compared to $35.2 million in 2019. The increase was primarily attributable to Zolgensma royalty revenue, which increased by $40.8 million in 2020, as compared to 2019. The increase in revenue for the year ended December 31, 2020, also included an $80 million milestone fee, recognized as revenue in the third quarter of 2020, upon the achievement of $1 billion in cumulative net sales of Zolgensma. Research and development expenses were $166.3 million for the year ended December 31, 2020, as compared to $124.2 million in 2019. The increase was primarily attributable to personnel costs, as a result of increased headcount and expenses associated with manufacturing services, and conducting clinical trials for our lead product candidates. General and administrative expenses were $63.8 million for the year ended December 31, compared to $51.8 million in 2019. The increase was primarily attributable to personnel costs as a result of increased headcount and professional fees for advisory and other services. Net loss was $111.3 million for the year ended December 31, 2020, as compared to a net loss of $94.7 million in 2019. As of December 31 2020, we had approximately 37.5 million common shares outstanding. On January 12, 2021, REGENXBIO announced the closing of an underwritten public offering of 4.260 million shares of its common stock at a price to the public of $47 per share, as well as the exercise in full of the underwriters' option to purchase 639,000 additional shares at the public offering price. Including option exercise, the total gross proceeds received by REGENXBIO from the offering were approximately $230.3 million, before deducting the underwriting discounts and commissions and other offering expenses. Based on our current operating plan, we expect the balance in cash, cash equivalents and marketable securities of $522.5 million, as of December 31, 2020, as well as the $230.3 million of gross proceeds received from our follow-on public offering of common stock, completed in January 2021, to fund our operations, including the completion of our internal manufacturing capabilities, and clinical advancement of our product candidates into the second-half of 2023. With that, we look forward to a great 2021, and putting a stake in the dumpster fire that was 2020. Now over to Ken for some final thoughts.

[Ken Mills:]

The progress we've made at REGENXBIO throughout 2020, has been something that's moved us closer to bringing our therapies to patients in need. And we now look to 2021 to further advance the entirety of our internal pipeline, and supporting our capabilities for that mission. I think at this stage, we'll turn the call over to operator for questions.

[Operator:]

Thank you, Presenters. Your first question comes from the line of Geoff Meacham with Bank of America. Your line is open.

[Unidentified Analyst:]

Hey guys. This is Alex on for Jeff, thanks for taking our question. And congrats on the progress in 2020. I have one question on the design of the Phase III study for 314. As we're thinking about the size of the study, empowering assumptions, is there a range of change in visual acuity would expect based on the published studies for the control arms? And would you expect Eylea to maybe perform slightly better than Lucentis in additional patients in the second study? And I guess as a follow-up to that, I appreciate the Phase III submitted in two-week cut off, but I'd be curious to know whether your views have changed at all, following the recent subretinal update? Thanks.

[Ken Mills:]

Thanks, Alex. Steve, I think you can probably best handle the powering question about vision for the Lucentis Eylea control arm.

[Steve Pakola:]

Sure. Great. Hey, Alex. Yes, great question. It's one of the benefits of drug development in this space, where there's such a plethora of historical data, including very well-controlled trials with active control arms, including both Lucentis monthly injection, as well as Eylea every other month dosing after loading dose. So, to answer your first question, we took that into account in terms of thinking of the powering. And basically what we look for there is the variability that you expect to see in terms of change in visual acuity from baseline. And that's also relevant in terms of discussions with the FDA, where there's certainly a very good precedent for how to think of non-inferiority and powering in terms of both of those treatment armed if we use those as a control arm. So, that's why we were, frankly, excited to take this opportunity to in one study use Lucentis, monthly injection and other to use Eylea. What's interesting is, if you think of EA change, they're very close what you see in terms of every other month dosing with Eylea and what you see with monthly dosing with Lucentis. And pretty similar in terms of the variability that you expect to see with those two treatment arms.

[Operator:]

All right. Your next question comes from the line of Matthew Harrison with Morgan Stanley. Your line is open.

[Unidentified Analyst:]

Hello, everyone. This is Kostas on for Matthew. Two questions from us on the RGX-202 program. One is, what do you need to do prior to IND filing in mid-2021? And the second one is around the improvement in the micro dystrophin transgene that you described. Can you please give some color around how do you expect these improvements to differentiate to in clinic versus other investigational treatments? Thank you.

[Ken Mills:]

Thanks, Kostas. Olivier, this sounds like great questions for you.

[Olivier Danos:]

Yes, great question. Thank you. So before we file our IND, we're in the final phase of analyzing the preclinical data package that we have. So far, we have pretty much done everything and finalizing that. We're also in the final phases of designing our clinical trial. But apart from that, it's a lot of pasting together all this in a nice IND package. In terms of the molecule itself, the micro dystrophin. So again, we were having a micro dystrophy, which is slightly - which is actually bigger than the other micro dystrophin is out there being tested in the clinic, because it has an extra domain at the C-terminal. And this extra domain allows for recruiting additional proteins at the membrane. And this is key to the function of the full function of dystrophin. If dystrophin can work without this domain, and it can work as something which is just a simple shock absorber that preserves the integrity of the muscle membrane of bone contraction. But it will lack a number of key functions as - where dystrophin triggers a number of other proteins, including adosynthase , or calcium channel, that are very important in the way the muscle recovers after this repairing distress. So, how does it translate exactly? In animal models, there are ways you can measure force of the muscle that shows you that the muscle that has been treated with such a micro dystrophin is actually more resilient. That is, it breaks down less after being submitted to several strains of stress and contraction. Now, this is something that we will eventually we hope to see in the clinic. And this is also where our clinical design is coming into play, exactly what endpoint we're going to look at. And this will be discussed when we file the IND. But this will be about resistance to - sorry the way patient experience is eventually fatigue after exercise. And that's measuring this amount of fatigue that will be key in differentiating our product from eventually others. Although, we're not going to do that. In this trial, we're not going to compare directly. So I'm talking about a point that will definitely come later in the development of the products.

[Ken Mills:]

Thanks, Olivier.

[Operator:]

Your next question comes from the line of Esther Rajavelu with UBS. Your line is open.

[Esther Rajavelu:]

Hey, guys. Thanks for taking my question. First as a follow up to the angiogenesis data. Can you talk about the BCBA OCT distinctions between Cohort 3 and Cohort 4? It looks like Cohort 3 had better BCBA, but not OCT. So I'm trying to understand that. And then, I also wanted to confirm that the three-year OCT data from Cohort 3 is not available yet.

[Steve Pakola:]

Yes, I can take that one, Steve here. So, yes, at angiogenesis, we were excited to present the latest results we had in terms of 1.5-year follow-up for MC-V, as well as the three-year data for Cohort 3. As you raised a good point of how we look at both visual acuity response but also anatomy in terms of central retinal thickness changes. One of the aspects in trials of this size where you six have 12 patients per arm, as in this study is you can have slightly different baseline levels where there can be less of an ability to have a significant decrease, for example, in CRT, basically a ceiling effect, if you start off with a little drier retina, so to speak. So, that's what we believe explains the distinction between what you see in C3, for example, in terms of the fact that we see almost a three-line improvement in visual acuity, while the anatomy, the central retinal thickness stays relatively stable. The other aspect, there may be the possibility that having stable anatomy, without the typical peak and trough variability that you have with traditional bolus repeat injections may translate into better visual outcomes than what you'd anticipate based on anatomy. But I think that really would need to be borne out in larger trials. The other cohorts that started off with higher baseline CRT levels, central retinal thickness levels, we did see those levels come down over time, and we've seen them continue to be stable at those decreased levels, even with the dramatic reduction in treatment burden. And that's really why we were excited and continue to be excited with the continued maturation of the data with a range of doses from C3 upward in terms of all of the efficacy signals that we've been looking at.

[Operator:]

Thank you. Your next question comes from the line of Gena Wang with Barclays. Your line is open.

[Unidentified Analyst:]

Hi, this is David on for Gena. Thanks for taking my questions. And I want to congrats on your progress in 2020 as well. So, a couple of questions on VEG - on RGX-314 gene therapy subretinal injections. First question is regarding the Phase III trial, could you remind us the retreatment criteria for your Phase III trial design?

[Steve Pakola:]

Sure. So, going into our controlled Phase III program, we felt it was important to have a standardized retreatment criteria across the board. And to do this based on objective measures, and specifically best corrected visual acuity which is done in a mass fashion, and also anatomy central retinal thickness change, which is also done in a mass fashion by central reading center. So, to be very specific, our retreatment criteria for our pivotal study are a worsening and visual acuity of at least five letters compared to the average of the prior two visits, or a decrease of 10 letters compared to the best prior visit. And a similar concept in terms of anatomy, a worsening and retinal thickness of 75 microns compared to the average of the prior two visits, or 100 microns worsening or increase compared to the best prior CRT level prior to that visit. And those measures and those criteria fit somewhat in the mix of what you see across some of the other precedents that are out there, in terms of some of the other programs that are looking at attempting to increase durability of treatment effect. The difference here being that this is an attempt at a one-time treatment option to potentially obviate the need for retreatment.

[Operator:]

Your next question comes from the line of Mani Foroohar with SVB Leerink. Your line is open.

[Unidentified Analyst:]

Hey, good afternoon. This is Rick on line for Mani. Thanks for taking our question. So, my question focused on the DMD program. Since you first announced RGX-202, there was a clinical update from surreptitious gene therapy program. We were wondering if you could comment on any potential learnings from the clinical readout of your competitor. And if it was able to help inform any aspect of trial design for your upcoming trial, such as patient selection, selection of endpoints were goals for the initial dose escalation.

[Ken Mills:]

Yes, Rick. We're not going to comment on data from someone else's study, obviously we wouldn't have that available to us in a way that would meaningful to help interpret compared to what Olivier has already described is really robust preclinical program, as well as work that's gone into preparing for a trial design that we think will be important to illustrate, not only elements of things that have been demonstrated by micro dystrophin as a class, but also differentiation potentially along the program for the advancement of this novel construct using C-terminals domain. And of course, we're using a proprietary manufacturing platform as well. So, there is not much that we're going learn from sort of top-line results from a study that someone else is running.

[Operator:]

Thank you. Your next question comes from the line of Luca Issi with RBC. Your line is open.

[Lisa Walter:]

Oh, great. Thanks for taking my question. This is Lisa Walter on for Luca. Just wanted to ask about your super parietal suprachoroidal program. It looks like for the Phase 2 trial that you are starting at the highest dose ever tested for the subretinal and you are also doubling that dose in Cohort 2. Can you provide any color on why there that is the case? And also maybe more broadly, what some of the key dosing considerations are when switching from subretinal to suprachoroidal. Thanks.

[Steve Pakola:]

Yes. So this really takes advantage of all the learnings that we had from our subretinal program. So, there you'll recall, Lisa, we had the benefit of a full dose ranging where we started super low with a dose where we didn't see anything, and then saw progressively more clear signal as we went up with a plateau from our perspective, once we got to level three onward. This is a new route of administration. However, I think it is important to note that it still achieves the goal of getting the infusae very close to the target tissue of the RPE in the photoreceptors, particularly compared to other routes of administration like . So since we had very good safety and tolerability in the full range of doses with subretinal, we chose to go from a position of equipoise and start with the dose level five that we had from subretinal. And we were pleased that our preclinical package, both our pharmacology studies as well as our GLP package, gave us that opportunity to start from that standpoint. We were also pleased to be able to start with a design where we do not include prophylactic steroids for either of our initial suprachoroidal delivery studies. So, yes, I think a good question. It's always a key aspect when you're thinking of starting dosing where you start. And I think we just had the benefit of a lot of prior experience with subretinal delivery with the same exact transgene, and the same exact AAV factor to take advantage of that to start with a dose to evaluate, not only safety and tolerability, but potential signal.

[Operator:]

Thank you. There are no further questions at this time. I'd like to turn the call back over to Ken for closing remarks. Go ahead, sir.

[Ken Mills:]

Thank you very much. And thanks, everyone, for joining us today. We look forward to providing further updates soon and throughout the year and have a great night.

[Operator:]

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.