Q3 2017 Earnings Call Transcript

Published: 9 Nov 2017

[Operator:]

Good day, ladies and gentlemen, and welcome to the REGENXBIO Third Quarter 2017 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 follow at that time. [Operator Instructions] I would now like to turn the conference over to Patrick Christmas, General Counsel. 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, and Vit Vasista, our Chief Financial Officer. Earlier this afternoon, REGENXBIO released financial and operating results for the three months ended September 30, 2017. The press release reporting our financial results is available on our website at www.regenxbio.com. Today's conference call will include forward-looking statements regarding our financial outlook in addition to regulatory and product development plans. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted and can be identified by words such as expect, plan, may, anticipate, believe, should, intend and other words of similar meaning. Any such forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties. These risks are described in the risk factors section and the Management’s Discussion and Analysis section of REGENXBIO's quarterly report on Form 10-Q for the quarter ended September 30, 2017, which is on file with the Securities and Exchange Commission and available on the SEC's website. Any information we provide on this conference call is provided only as of the date of this call, November 8, 2017. And we undertake no obligation to update any forward-looking statements we may make on this call on account of new information, future events or otherwise. Please be advised that today's call is being recorded and webcast. In addition, any unaudited or pro forma financial information that may be provided is preliminary and does not purport to project financial positions or operating results of the Company. Actual results may differ materially. I would now like to turn the call over to Ken Mills, President and Chief Executive Officer of REGENXBIO.

[Ken Mills:]

Thank you, Patrick, and good afternoon everyone. Thanks for joining us. On today's conference call, we'll provide a recap of our recent progress and update on our product candidates and financial results for the third quarter of 2017. We will also review anticipated upcoming milestones for REGENXBIO. And then, open up the call for any questions. At REGENXBIO, our mission is to improve the lives through the curative potential of gene therapy based on our proprietary NAV Technology Platform. As a reminder, our AAV gene therapy product candidates are designed to deliver genes to cells to address genetic defects or to enable cells in the body to produce therapeutic proteins that are intended to impact disease. Through a single administration, our AAV gene therapy product candidates are designed to provide long-lasting effects, potentially significantly altering the course of disease and delivering improved patient outcomes. We are currently advancing an internal pipeline of product candidates that employ our proprietary NAV Technology Platform within three disease areas

[Vit Vasista:]

Thank you, Mr. Mills. REGENXBIO ended the quarter on September 30, 2017, with cash, cash equivalents and marketable securities totaling $191 million compared to $159 million as of December 31, 2016, an increase of $32.1 million. Research and development expenses were $12.5 million for the three months ended September 30, 2017 compared to $12.6 million during the same period in 2016. General and administrative expenses were $9.4 million for the three months ended September 30, 2017 compared to $6.2 million during the same period in 2016. This increase was primarily due to professional services cost incurred in connection with the proposed merger with Dimension. In October, 2017, the merger agreement with Dimension was terminated, and we received $2.9 million termination fee, which will be netted against our costs incurred related to the transaction. Our net loss was $20.7 million or $0.67 per basic and diluted common share for the three months ended September 30, 2017 compared to a net loss of $18.2 million or $0.69 per basic and diluted common share for the three months ended September 30, 2016. As of November 3, 2017, we had 31.1 million common shares outstanding. REGENXBIO continues to expect full year 2017 cash burn to be between $75 million and $80 million, which will support the continued development of its lead product candidate programs. Full year 2017 cash burn guidance excludes the effect of REGENXBIO's previously announced underwritten public offering of common stock in March 2017, which resulted in aggregate net proceeds through REGENXBIO of approximately $81.5 million after deducting underwriting discounts and commissions and offering expenses. With that, I will turn the call back to Mr. Mills to review our upcoming 2017 milestones.

[Ken Mills:]

Thanks, Vit. So 2017 continues to be a pivotal year for both the growth of the clinical advancement of our internal product candidates. But as well our partner pipeline and overall for the validation of the NAV Technology Platform. As we complete 2017, we think the significant progress in the Phase I clinical trial of RGX-314 and wet AMD, advancement of the Phase I/II to trial of RGX-501 for HoFH, we're looking forward to further details regarding each trial in our year-end 2017 corporate update scheduled to be released the first week of January, 2018. We look forward to executing on these upcoming milestones and providing you with further updates. And with that, I will open up the call to questions. Operator?

[Operator:]

Thank you. [Operator Instructions] The first question is from Gbolahan Amusa of Chardon. Your line is open.

[Gbolahan Amusa:]

Hi, thanks for taking my call. I have some questions on your upcoming data due for RGX-314 and wet AMD and RGX-501 and HoFH. So on 314, just based on when you plan to capture the data for the upcoming January 2018 presentation. What would be the theoretical maximum treatment duration that could be reported for safety or efficacy at that time? And then I have a follow-up on 501.

[Ken Mills:]

Hi, Gbolahan, it’s Ken. And thanks for the question. So we reported for the 314 study that the first patient was dosed in May 2017. And obviously, we continue to accrue data in terms of safety and tolerability as well as secondary endpoints since that time. When we look to report updates in the beginning of 2018 based on end-of-year measures, we should have approximately then six months of information about that patient.

[Gbolahan Amusa:]

Great, thanks. And then for 501, I've a question about the animal data that motivated the program. Could you remind us how quickly LDL levels were normalized in that model and whether such a response could invariably expected in humans over a similar time frame?

[Ken Mills:]

Sure, certainly on the front part of that question, the data that was part of our filings associated with RGX-501 study were conducted at Penn in a model that showed normalization could occur, I think, in a range of maybe three to four weeks up to six to eight weeks. And I think the experience that the field has with respect to this translational models is that, that's roughly the same range that we've seen normalization of both expression and markers that kind of resemble when we hit steady-state for AAV. So we think there is similar expectation there.

[Gbolahan Amusa:]

Great, that’s helpful. Thanks Ken.

[Operator:]

Thank you. The next question is from Reni Benjamin of Raymond James. Your line is open.

[Bin Lu:]

Hi, this is Bin Lu on behalf of Ren. Can you hear me okay?

[Ken Mills:]

Yes, Bin, we can. Thanks.

[Bin Lu:]

Great, thanks. My first – congrats on the progress made in the quarter, really a lot of progress here, its very impressive. First question I have is, can you provide a more color regarding the interim updates you will have on the wet AMD program like, specifically, are you gone through the data from all 12 patients? And also, the data on the primary as well as the secondary measures? And then we have a follow-up. Thanks.

[Ken Mills:]

Great, thanks Bin for the question. So as we reported, we just completed the dosing of the second cohort in RGX-314 study. And we were really pleased with respect to the progress of that enrollment in the second cohort where we were able to capture the last five patients in that cohort over seven days. It's November right now. And so before the end of the year, we're going to have patients who have been administered the RGX-314 treatment as part of that cohort out about 30 days, not more than 60 days. And so over that period of time, we have the opportunity to accrue some of the early data, but not as much as we're going to be able to have accrued on the basis of the first cohort where patients were enrolled. As I mentioned in response to Gbola, the first patient was enrolled in May, and we had patients enrolling subsequently all the way through when we reported finalizing the first cohort in September. So this point, most of the patients that we have enrolled in this study are still at an early stage. We're getting very preliminary looks at safety and tolerability and we've been very encouraged by that. The accrual of that data will continue between now and the end of the year and what we're aiming to report on in the beginning of January is the time point that we have at the end of the year when we can accrue and compile all of that data on both safety, tolerability and information about – hopefully, the feedback that we have from the Data Safety Monitoring Board with respect to the second cohort in terms of supporting the progression to the third cohort in the first quarter of 2018.

[Bin Lu:]

Great, that's very helpful. Just a follow-up question on the wet AMD program. Can you clarify has the first safety review finished for the first dosing cohort? And when do you think the second AMD review will be finished?

[Ken Mills:]

That's right. So by reporting that we initiated and completed the second dose cohort, we basically are acknowledging that the data safety monitoring board has reviewed the preliminary data from the safety and tolerability for the first dose cohort and given us that go ahead. So we've initiated that dose escalation. We are right now compiling all of the data for submission to the DSMB, again, on the basis of the second cohort and expect to be able to initiate the third dosing – third cohort dosing by the first quarter of 2018.

[Bin Lu:]

Great, thanks for the clarity. And good luck going forward.

[Ken Mills:]

Thanks Bin.

[Operator:]

Thank you. The next question is from Josh Schimmer of Evercore ISI. Your line is open.

[Josh Schimmer:]

Great, thanks for taking the question. Ken, how are you thinking about preparing for the next wave of programs? And how far along are you in identifying what next indications you might choose to pursue? And what are you looking for from the initial clinical efforts across your four programs that you've already identified to then decide, which of that next wave to really prioritize? Thanks.

[Ken Mills:]

Hey, Josh. Thanks a lot, a great question. Since the beginning of the year, the objectives of the company have been to basically get the lead product candidate before lead product candidates to a point where they are in the clinic and enrolling patients or set up to begin enrollments in 2018 and as we reported here today, notwithstanding the RGX-212, IND which we're expecting to file between now and the IND, we feel that we've met those objectives and are reporting on some even encouraging recent progress with respect to enrollment and something like the 314 study. Also, since the beginning of the year, we had Olivier join us and started to have some influence in both how we're thinking about next steps with respect to the pipeline, feed that into sort of the precommercial and commercial planning group. And also, start to be influenced by how we're going to think about data that's coming out of the programs, which we would expect in 2018. I think that as demonstrated by the exercise that we went through with Dimension Therapeutics, first-order interest on our part is to think about the pipeline against the franchise areas that we're focused on right now basically the metabolic franchise, retinal franchise and the CNS franchise because those are the areas we feel are some of the most derisked with respect to the NAV Technology Platform and areas where we think that we're going to accrue additional data to inform really smart decisions about how to add. So that's been our initial focus. But we're also influenced by the science and sort of the world around us and, I think, we have a unique opportunity to take inventory of things, of course, that are happening in our NAV Technology universe even in areas that might be adjacent to retinal, metabolic and CNS. And so 2018, I think, is going to be a time point where we'll look to take advantage of the data from our internal programs, the influence of external, kind of communications with the NAV Technology licensees and data reported there and start to think about how to shape the next generation of programs in the REGENXBIO pipeline.

[Josh Schimmer:]

Have you articulated or do you have strategy for number of new INDs per year or is it little early to start going down that path?

[Ken Mills:]

We haven't given guidance on that at this point, and I think so far sort of the metronome of the first four has been one or two programs entering the clinic per year, at least starting with enrollment if we look at 501 and 314 starting this year and 111 and 121 starting next year. So in terms of how we've been designing in building the capabilities at the company, that sort of cadence feels right.

[Josh Schimmer:]

Okay, thanks so much.

[Ken Mills:]

Thanks.

[Operator:]

Thank you. [Operator Instructions] The next question is from Ying Huang of Bank of America Merrill Lynch. Your line is open.

[Ying Huang:]

Hi, thanks for taking the questions. Maybe Ken, can you confirm that for each dose cohort for higher dose, you have to go back to DSMB for review for each of the clinical program? And then on the 501, we understand that many patients are already on PCSK9. So shall we expect additional LDL lowering and is that expectation from the data release in the beginning of 2018? Thank you.

[Ken Mills:]

Thanks, Ying. So that's right to baseline us, so these are all first-in-human studies and in these dose escalation studies first-in-human with gene therapy, the recommendations and support from the regulators at FDA as well as the institutions that we're working with are that we're doing data safety monitoring reviews in between each dose cohort. And so that's true and how we've applied that thinking to the RGX-501, the RGX-314 and also, I would expect it for the first-in-human studies that we'll be initiating next year with respect to RGX-111 and 121. And I think that's a great exercise that we are able to report on because it means objectively an outside party is looking at safety and tolerability and data that we've accrued and sort of acknowledging its support for moving forward. And so that's why we we're happy to report on that progress both 314 and 501. Turning attention to the second part of your question with respect to PCSK9 inhibition, yes this is something that, I think, we talked about in the past. The emergence of PCSK9 inhibitors while we've been – in the midst of launching a gene therapy study in HoFH has been one that we have been very much in communication with both the investigators as well as the physicians, who are referring patients into this study. We don't have complete information right now in terms of how the accrual is going with respect to patients on or off PCSK9 inhibition, but it is something that is allowed under the study. In fact, it's actually allowed for people to receive RGX-501 treatment and then even at some point, go on PCSK9 perhaps to sort of evaluate the interplay between the two treatments. And having just completed the first dose cohort, I don't think that we would have enough data to sort of report on anything about that type of interaction or basically information around PCSK9 and RGX-501. But that's something that we're keeping an eye on and something that's on our mind as the program progresses and something I would expect for RGX-501 is relevant as we get towards later stages of this first-in-human study.

[Ying Huang:]

Thanks Ken. If I may have follow-up, since you already had two cohorts with the AMD program and one cohort for FH program. Have you guys observed any liver enzyme elevation or any other immunogenicity reactions?

[Vit Vasista:]

Hey, Ying. That's a great question and, I think, the preliminary outcomes of these first-in-human studies, I think, we generally have been encouraged by the safety and tolerability and again, that's reflected in the review by the DSMB. And we're also accruing data on the secondary measures. But we'll update more of these details as we've accrued more data even between now and at the end of the year in our press release in January.

[Ying Huang:]

Thank you.

[Vit Vasista:]

Thanks.

[Operator:]

Thank you. There are no further questions at this time. I would like to turn the call back over to Ken Mills for closing remarks.

[Ken Mills:]

Thank you. And thank all of you who joined us today for the call this afternoon. We feel we've made significant progress and that there are some near-term milestones and catalysts that we are pursuing. We look forward to progressing our pipeline and providing you all with further updates. Have a great day.

[Operator:]

Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect. Good day everyone.