Voyager Therapeutics, Inc.
Q2 2017 Earnings Call Transcript

Published: 8 Aug 2017

[Operator:]

Good day, ladies and gentlemen and welcome to the Q2 2017 Voyager Therapeutics Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to introduce your host for today’s conference, Mr. Matt Osborne, Vice President of Investor Relations and Corporate Communications. Sir, you may begin.

[Matt Osborne:]

Thank you, operator. Good morning and welcome to the conference call. This afternoon, we issued a press release, which outlines the results and corporate highlights for the second quarter of 2017. The release is at voyagertherapuetics.com. Today on our call, Steve Paul, Voyager’s President and CEO will briefly discuss our recent corporate, including R&D highlights. Bernard Ravina, Voyager’s Chief Medical Officer will review the pipeline program highlights. Jane Henderson, Voyager’s Chief Financial Officer will review the second quarter financials and other activities and then we will open up the call for your questions. Before we begin just a reminder that the estimates and other forward-looking statements included in this call represent the company’s view as of today, August 8, 2017. Voyager disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to today’s earning’s release as well as Voyager’s filings with the SEC for information concerning risk factors that could cause actual results to differ materially from those expressed or implied by such statements. With that, I will pass the call over to Steve.

[Steve Paul:]

Thank you, Matt and good morning everyone. During the second quarter, we made great progress across all functions of the business and I will briefly describe the highlights before turning the call over to Bernard. For a lead program for advanced Parkinson’s disease, we believe VY-AADC could offer a compelling alternative for the thousands of advanced Parkinson’s disease patients who already elect to undergo deep brain stimulation each year and based on the mechanism could be synergistic with novel non-oral forms of levodopa currently in development. We are pleased we have recently successful dosed our first patient using a posterior trajectory aimed at potentially improving surgical times and increasing coverage of the specific region of the brain we are targeting as Bernard will discuss. We also advanced our ALS candidate targeting the SOD1 mutation closer towards the clinic. We announced selection of a lead candidate for our Huntington’s disease program and our lead candidate optimization efforts continued to progress for our other programs, including our candidate for Friedreich’s ataxia. Underpinning all of this progress requires optimizing multiple parameters in parallel, including selection of the IV AAV vector capsid engineering the transgene payload establishing effective delivery to the CNS and having a manufacturing process in place to produce high-quality vector at scale. All core competencies here at Voyager that continued to differentiate us as leaders in developing gene therapies for severe neurological diseases. Our efforts on one very important aspect of gene therapy development namely AAV capsid optimization also continues to advance. Most recently, exciting work led by doctors, Ben Deverman and Viviana Gradinaru at the California Institute of Technology and recently published in Nature Neuroscience identified novel AAV capsids with a significantly greater ability to cross the blood brain barrier after systemic IV administration than the current historical standard AAV9. In fact, in adult mice one of these unique AAV capsids provided up to 100-fold increase in gene transfer to the central nervous system compared to AAV9 after a single intravenous administration. Obtaining similar from translational studies in non-human primates now underway by Voyager could be transformational as we consider these AAV capsids for our current and future programs and we are thrilled to be partnered with the Gradinaru Laboratory at Caltech to further advance this technology. Bernard will now discuss some of the exciting progress with our programs, including our Parkinson’s disease program.

[Bernard Ravina:]

Thanks, Steve and good morning, everyone. As Steve mentioned the Parkinson’s program continues to progress. We have recently safely completed our first posterior trajectory case. Investigators have identified additional patients and planned to perform more cases in next few months. This approach has potential to shorten the overall surgical time. It could also increase the coverage of the putamen compared to Cohorts 1 through 3 of the Phase 1b trial that used a transfrontal or top of the head approach. We continued to follow patients in three cohort Phase 1b trial. Later this quarter, we plan to report 6-month data from Cohort 3 and longer term data from Cohorts 1 and 2. Cohort 3 will help determine if higher concentrations of vector can add to motor symptom improvement beyond what was observed in Cohort 2. The initial results we reported late last year for Cohort 2 at 12 months were already clinically meaningful and were within the range of our product profile. Replicating these results in Cohort 3 would be further validation of our approach. Lessons from Cohorts 1 through 3 in the Phase 1B trial, as well as from the posterior surgical approach trial will inform the dose selection and the design of our pivotal program. We will initiate that program later this year. We outlined the design of the pivotal program, which will consist of a single Phase 2 and a single Phase 3 trial conducted in staggered parallel. The program focuses on key aspects of motor function measured over a sufficient period of time to detect meaningful and durable benefits compared to placebo. The design of this program has a number of key features. These include optionality with respect to timing of filing of the BLA and flexibility with respect to selecting the right endpoints. The Phase 2 trial will inform us early on if we probably blinded the study with placebo surgery and if we obtained sufficient coverage of the putamen with the increased number of surgical sites that we will have for the Phase 2. Achieving both in the Phase 2 will allow us to begin enrolling the Phase 3 in staggered parallel, while the Phase 2 continues blinded follow-up. Pending discussions with the regulatory authorities a large treatment effect observed in the Phase 2 may support a BLA submission in the ongoing Phase 3 trial would then be supportive or confirmatory. Importantly, anything we may learn about the clinical efficacy endpoints from the Phase 2 trial, we can apply to the Phase 3 before it’s un-blinded. In summary, we are very pleased with the design of pivotal Phase 2/3 program, its robustness, optionality and flexibility. We will provide more details on expected enrollment rates closer toward the start of the program later this year. As Steve mentioned, we also made progress during the quarter on our lead clinical candidate VY-SOD101 from monogenic form of ALS, a single intrathecal injection of VY-SOD101 has the potential to durably reduce the levels of toxic, mutant SOD1 protein in the spinal cord and slow the progression of SOD1 ALS. Slowing the progression of this fatal disease will be a dramatic therapeutic advance. Our IND enabling work on this program continued during the second quarter with preclinical pharmacology testing complete and toxicology studies underway. In terms of our Huntington’s and Friedreich’s ataxia programs, we announced the selection of a lead candidate for Huntington’s where we aimed to suppress the expression of the toxic mutant Huntington protein. And we are making good progress towards selecting the lead candidate for our Friedreich’s ataxia program where we aim to replace missing frataxin. The goal of both programs is to slow or even halt the progression of these devastating neurological diseases with a one-time treatment. I will now pass the call over to Jane who can walk you through our financials in more detail.

[Jane Henderson:]

Thanks Bernard and good morning everyone. I will spend the next few moments reviewing the financials and guidance before we move to Q&A. Voyager reported a GAAP net loss of $18.9 million or $0.73 per share for the second quarter ended June 30, 2017, compared to a GAAP net loss of $9.3 million or $0.37 per share for the same period in ‘16. Collaboration revenues were $1.2 million for the second quarter of ‘17 compared to $3.7 million for the second quarter of ‘16. Collaboration revenues reflect recognition of payments for research and development services provided to Voyager under the Sanofi Genzyme collaboration agreement. These revenues can vary based on quarterly assessments of expected or anticipated efforts under the collaboration. These revenues decreased during the second quarter of ‘17 from the prior year quarter primarily due to ongoing reviews of programs under the collaboration. R&D expenses were $15.3 million for the second quarter compared to $10.5 million for the same period in ‘16. The year-over-year increase in R&D expenses was primarily due to the development of Voyager’s pipeline as well increased personnel and facility cost to support the pipeline advancement. G&A expenses of $4.5 million for the second quarter of this year compared to $2.9 million for the same period in 2016. This increase was primarily due to facility and personnel costs to support Voyager’s growth. Voyager ended the quarter with total cash, cash equivalents and marketable debt securities of $141.3 million. The company has no long-term debt. In terms of guidance, we continue to expect to end 2017 with total cash of approximately $92 million to $100 million. We continue to project that our existing cash will be sufficient to fund operating expenditures and capital expenditures into 2019. As a reminder, the 2017 year end cash and runway guidance does not assume that Sanofi Genzyme opts in three ex-U.S. rights to the Parkinson’s program. For this program if they opt in there is no cash exercise payment from Sanofi Genzyme. However, the cost for this program would be roughly shared between the two companies. The cash runway into 2019 also does not include potential business development transactions. We remain committed to pursuing business development opportunities around some of our un-partnered programs and platform capabilities. Our goal is retaining value for the company and obtaining significant sources of capital. With that we would now like to open the call up for questions. Operator.

[Operator:]

[Operator Instructions] Our first question comes from the line of Phil Nadeau with Cowen and Company. Your line is now open.

[Phil Nadeau:]

Good morning and thanks for taking my questions and congratulations on the progress. First, on the staggered Phase 2, Phase 3 trials for VY-AADC, you mentioned that you will look at the Phase 2 to determine whether the same surgery accurately or adequaltely blinds investigators and patients, can you talk a little bit more about that, what in particular are you going to look for to see if it’s adequately blinded?

[Bernard Ravina:]

Yes. Thanks for the question Phil. This is Bernard. So really what we are looking for there is to make sure that the appropriate blinding procedures were followed, so they are extensive blinding procedures that will articulate further as we get more towards the end of the year. But then involves a surgical team, how the drug is dispensed, how the images during the surgery are handled in-house some of the information about how the procedure lab was handled. We will also do things like have independent raters at the site, so the treating neurologist is different from the rating neurologist. So there will be several steps to ensure the blind. What you really want to do in a situation like this is make sure that you have adequately captured all of those steps and that you also have an audit trail that all of those steps were appropriately followed and nobody sort of access the surgical images who shouldn’t. So there are bunch of things in all of these blinding procedures that will go from the point that the patient arrives for surgery through the completion of that procedure.

[Phil Nadeau:]

Okay, that’s very helpful. And then second, you also mentioned that the Phase 2 could support a filing if there was a robust finding on primary endpoint, can you give us some idea of what would be a robust benefit?

[Bernard Ravina:]

Yes. So we will unpack some of the powering assumptions, again as we get closer towards the end of the year and we initiate this for the Phase 2 I think Cohort 2 at 12 month gives you a reasonable benchmark for what that would look like, so approximately a two hour treatment effect compared to the placebo or sham surgery. So Cohort 2 at 12 months was about a four hour improvement and on-time, if you think that the placebo surgery would be about an hour or at most two hours placebo effect that should put you in the right range.

[Phil Nadeau:]

Great. And on the ALS program do we – in the press release you said IND filing late 2017 or early 2018, when do you think the first patient could enter that trial and when could we get some preliminary data?

[Bernard Ravina:]

Yes. So the startup for these studies if you submit an IND, the startup is in the four months to six months timeframe allowing for IRB reviews and all the other things are happening with the gene therapy start up. So it puts you Q2 of next year for first patient in and then a reasonable point to look for biomarker data of BSF SOD1 measures, things like that would be about six months after dosing.

[Phil Nadeau:]

Great. Thanks for taking my questions and congratulations on the progress.

[Bernard Ravina:]

Thanks Phil.

[Operator:]

Thank you. And our next question comes from the line of Jim Birchenough with Wells Fargo. Your line is now open.

[Jim Birchenough:]

Hi guys. Just a few follow-up questions, just on the posterior approach and the one patient you have dosed so far, if you can’t give specific details, I understand but can you say whether you confirm the thesis of being able to do this in a shorter time and achieve a greater putamen coverage.

[Bernard Ravina:]

Yes. Thanks for the question Jim. Just to sort of familiarize people a little bit, it’s the same drug being administered in overall the same surgical procedure. It’s just different positioning of the patient and the trajectory of which the cannula enters is posterior instead of top of the head. So overall it’s the same surgical procedure, but we think it really offers the opportunity for greater efficiencies, shorter surgery, as well as incrementally better coverage. So we were – we will talk about the coverage in these patients at the end of the quarter with the rest of the clinical data from Cohorts 1 through 3. Overall, we are really pleased with how it went, it was a shorter surgery and again we will talk about coverage in a few weeks.

[Steve Paul:]

Yes. We would like to just get a few more patients under our belt before we publicly disclose what we see and just to make sure what we see is what we see and it’s consistent.

[Jane Henderson:]

We did see this patients leave the next day with just a couple of Tylenol. So confirmed with what we have seen with many other patients in the first three cohorts.

[Jim Birchenough:]

Got it. So just in terms of optimizing the value of the gene therapy over the longer term, you have got some moving pieces where you are seeing improvements and on-time in reducing levodopa dose over the first six months, is there a value to actually increasing the levodopa dose be on that point to really optimize on-time and other measures, I am just trying to get a sense of whether you feel like you fully explored the moving parts of the enzyme and the levodopa dose and whether there is some protocol you might be able to implement to push the levodopa dose back up over a longer term?

[Steve Paul:]

Yes. Thanks for taking my questions the question. So it’s a good question. So there are two parts to make in this where there is the AADC enzyme and there is a substrate levodopa. Generally as you have seen we have had reductions in dose both because the dyskinesias which subsided as people reduce their doses, but also because they didn’t need as much. So what will allow going forward is that what Parkinson’s specialist do routinely, which is to manage that levodopa to optimize on-time, minimize off-time. But so far, what we are seeing is sustained reductions due to the enhanced sensitivity and increasing [indiscernible]. And Jim, although the numbers are small, one of the things we are encouraged by is the fact that the 12 months data really does look a bit better than the six months data, six months data still looks pretty good, but we are seeing progressive affects that we really have encouraged by, saw these in the monkeys as well and from some of the earlier preclinical data. So we are really encouraged by that and that raises the questions about what will happen with the levodopa dose as time progresses.

[Jim Birchenough:]

And maybe just the final question on the ALS program, the SOD1 mutations fairly infrequent, but I believe there is more frequent mutations that affect the ALS progression, are there plans to move beyond SOD1, could this be a gateway to larger mutations and maybe an update on where you might be with other mutations beyond SOD1?

[Steve Paul:]

Yes, absolutely. So the most common mutation for the inherited forms of ALS is C9orf72. It looks like a toxic gain of function mutation and so silencing C9orf72 exactly as we are doing for SOD1 is the strategy and we are well on our way on that program right now.

[Jim Birchenough:]

Great. Thanks for taking the questions guys.

[Operator:]

Thank you. And our next question comes from the line Christopher Marai with Nomura Instinet. Your line is now open.

[Christopher Marai:]

Hi, good morning and thanks for taking the question. Just wondering if you can maybe move towards the SOD1 ALS program, I know you had mentioned that you have got second generation AAV capsid and basically just kind of hundred fold better perhaps CNS penetration in some of AAV9, perhaps you could comment on potential pre-existing imunity to that, specifically. And then two, IP freedom to operate there, how should we look at that, is that something that you have – or you believe [indiscernible] operate with respect to. And then finally, just in terms of manufacturing, when you think about that SOD1 ALS program, would you anticipate having capacity and the process all set and in place prior to going into patients and then with that capacity and process cover everything through commercialization? Thank you.

[Steve Paul:]

Sure. Good questions, Chris. Let me see if I can handle this one at a time. With respect to the Caltech capsids, I believe you have asked about that, what we publicly disclose that these do in our hands work as described in the two publications. They are very effective at delivering genes to the CNS, the brain and spinal cord in preclinical models primarily in mice. And so what we are doing now is very busily attempting to replicate and extend that data to non-human primates, to monkeys which we believe is a better proxy of what will happen in humans. And these studies are moving along in a very quickly and encouragingly. However, until we see those data, we won’t know exactly whether those capsules become ideal for delivering gene silencing genes or delivering genes after IV or systemic administration. As we have said if that does turn out to be the case, the data support that this could be very transformational, because delivering IV is always better when you want to get broad distribution of a particular gene this would not work obviously for our Parkinson’s program, but for diseases that more globally effect the brain or the spinal cord, these capsules would really, really be game changers in our opinion. So those studies are underway and once we see the results of those, we will decide whether they constitute second generation programs let’s say for ALS. Now for the second question on manufacturing, let me comment on the other pre-existing immunity, as you probably know these are AAV9 variants. They were designed as there are seven more inserts into AAV9. So there theoretically is the risk of having the cross reactive neutralizing antibodies to AAV9 that would cross react and potentially neutralize these capsules at some frequency in the population. We are also doing those studies as well to determine what that is, but it would be a similar scenario frankly for – virtually allow the AAV capsules that are being dosed systemically. The advantage of intrathecal dosing, which is where we are right now with our ALS program is that the CSF levels of neutralizing antibodies are by definition about 0.1% of what circulates in the body, in the blood, so the systemic exposures are – the CSF exposures of these antibodies are greatly, greatly reduced. And therefore we don’t anticipate huge problems even if there are some circulating antibodies in the blood. The amount of vector producer there still reasonable, much less than what you need after if you went systemically and we are able to produce that vector quite readily with the process that we have up and running the baculovirus/Sf9 platform. So we don’t anticipate any problems in production or manufacturing as being on the critical path for this program.

[Christopher Marai:]

Great. Thank you.

[Operator:]

Thank you. [Operator Instructions] And our next question comes from the line of Tom Shrader with Stifel. Your line is now open.

[Tom Shrader:]

Good morning. [Indiscernible] back to the posterior surgical front, is there any history here for implants that are delivered one-way and then the delivery is changed, do you need full approval, is there a sense that if you have data and surgeons are used to the surgery that they are going to wait for approval or just your thought on what approval would look like for just simply a different surgical route?

[Steve Paul:]

So the surgeons could take a variety of trajectories and they do that with existing procedures like for epilepsy and for deep brain stimulation. So that – those abstracts unlike the hardware associated whether it is really left at surgeon’s discretion and there is precedent for this posterior delivery approach just the angle and it’s done with the ClearPoint system. So it’s used in temporal lobe ablation for refractory epilepsy. So there has been hundreds of cases done that way using the ClearPoint system for epilepsy. So there is clinical experience. So really that’s why I emphasize, yes for us for the purposes of our program, we think this is going to be a more efficient surgery and for the most part people will want to do posterior trajectory for that reasons. But overall it’s the same surgical procedure with the same hardware.

[Bernard Ravina:]

And Tom, like any drug, we will define with our pivotal trial dose and volume coverage, give some parameters to the surgeons so that they have an idea of what’s safe and efficacious. And that’s what they are in for and we would envision in the future other surgical devices, other surgical approaches, the area of neurosurgery is changing pretty rapidly in terms of robotics and other sorts of things. We will make and – and make the drug available the drug with the data set from the pivotal trial and that will give the surgeons those parameters that they need.

[Steve Paul:]

Exactly there will be the range of coverage with the drug and then surgeons will be able to posterior or if appropriate transfrontal trajectory.

[Tom Shrader:]

So all you need is data?

[Steve Paul:]

Correct.

[Tom Shrader:]

And then I had one other question, I don’t know if you want to re-hash it, but your decision to get out of SMA, I am just a little curious why given the fact that the current routes may not even be able to make the material they need to treat type 2s and any thoughts there, was there more there than that, I mean I know you are behind, but in type 2s with systemic delivery, you maybe not behind at all, so just your thoughts there if you are willing revisit old things?

[Steve Paul:]

Yes. We paused the program Tom, obviously science advances and with new data we will always stay flexible and opportunistic. I will say just one remark and it has nothing to do with SMA, particularly specifically, but these new capsules are really pretty exciting to us and we just want to wait the data set from the monkeys, but this could be game changers earlier.

[Tom Shrader:]

Okay, perfect. Thank you.

[Steve Paul:]

Okay. This concludes our call and I want to thank everybody for attending this morning, for thoughtful questions. So we very much look forward to updating you on our progress in the near future. Thank you.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day.