Voyager Therapeutics, Inc.
Q3 2017 Earnings Call Transcript

Published: 4 Nov 2017

[Operator:]

Good day, ladies and gentlemen, and welcome to the Voyager Therapeutics Third Quarter 2017 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Matt Osborne, Head of Investor Relations. Sir, you may begin.

[Matt Osborne:]

Thank you. Good afternoon, and welcome to the conference call. This afternoon we issued a press release, which outlines the results and corporate highlights for the third quarter of 2017. The release is available at voyagertherapeutics.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 Parkinson's program; Jane Henderson, Voyager's Chief Financial Officer and Senior VP of Corporate Development, will review the third quarter financials. 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 November 2, 2017. Voyager disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to today's earnings 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 afternoon, everyone. During the third quarter, we made significant progress laying the foundation for our Company and executing on our vision to build the leading AV gene therapy company, focused on discovering, developing and commercializing life-changing treatments for patients with severe neurological diseases. And for us, this begins with our Parkinson's disease program. We now have access to worldwide rights for this one-and-done gene therapy that could address the hundreds of thousands of advanced Parkinson's patients globally who suffer from the debilitating motor symptoms of the disease and who have very limited treatment options. During the third quarter, we provided top line results from our Phase Ib trial, demonstrating durable, dose-dependent improvements in motor function after onetime treatment for advanced Parkinson's disease. The data suggests that higher doses of VY-AADC results in greater AADC activity, restoring the brain's ability to make dopamine and offering patients better control of their motor function in response to lower doses of levodopa therapy, the way they initially did during the earlier stages of their disease. Patients in Cohort 2 at 12 months spent three more hours per day on without troublesome dyskinesia compared to baseline, and four more hours per day on without any dyskinesia compared to baseline. Patient's quality on-time improved, at the same time they were able to reduce their levodopa doses by more than 30%. For placebo, we expect about a one to 1.5-hour improvement in on-time without troublesome dyskinesia. So we're seeing meaningful increases here with more than three hours of improvement. With the onetime administration, no indwelling hardware or invasive catheters that need to be replaced or reprogrammed, very encouraging clinical effects in a surgical procedure that has so far been well tolerated, VY-AADC could be a clear alternative to deep brain stimulation for a motivated patient population, eager to regain mobility during a productive stage of their lives. It is critical that we lead and manage the clinical development of this program ourselves, and importantly retain commercial rights, particularly in the U.S., and that we have done. This was a key step towards realizing part of our vision of establishing a commercial infrastructure that will allow us to deliver not just our first program to patients, but to deliver our other programs that focus on other devastating neurological diseases. Now the before turning it over to Bernard, who will discuss in more detail our latest data with the Parkinson's program, I want to take a moment to discuss our preclinical programs. It's helpful to remind ourselves that simply advancing programs into the clinic is not the goal. Advancing potentially best-in-class programs that have a high probability of success once in the clinic is the goal. And in our case, this starts with choosing and optimizing the AAV capsid, creating the right transgene, and most importantly optimizing delivery to the CNS. At Voyager, we have taken a very systematic and rigorous approach to optimizing delivery as exemplified by our Parkinson's disease program. Our encouraging clinical results in Parkinson's disease are the direct result of optimizing gene delivery. We've, therefore, set a high bar as to how we select and identify our lead clinical candidates and then advance them towards the clinic. In this regard, our ongoing efforts to optimize the capsid, transgene and delivery approaches applies to each of our preclinical programs

[Bernard Ravina:]

Thanks, Steve. Good afternoon, everyone. As Steve mentioned, during the third quarter we made solid progress with our Parkinson's program. In September, we updated you on the three Cohorts from the ongoing Phase Ib trial. Since then, investigators successfully dosed a fourth patient in a separate Phase I trial exploring a posterior or back of the head delivery approach. This approach increased average coverage of the putamen to about 50%, compared with 42% from Cohort 3 and reduced the average surgical time by two to three hours compared with the top-of-the-head approach from Cohorts 1 through 3. Administration of VY-AADC with this posterior approach was well tolerated by all four patients dosed since the start of the trial. No serious adverse events were reported. All patients were discharged from the hospital of the day after surgery. We will continue to enroll additional patients in this trial prior to the start of the pivotal Phase II/III program. Importantly, we remain on track to initiate the global pivotal Phase II/III program later this year. After filing the IND for the baculovirus sf9 material for VY-AADC and gaining clearance of that IND, we can begin initiating sites and screening patients with dosing of the first patient expected in the second quarter of 2018. We've outlined the design of the pivotal program, which will consist of a single Phase II and a single Phase III trial conducted in staggered parallel and focused on key aspects of motor function, measured over sufficient periods of time to detect a meaningful durable benefit over a placebo. The Phase II trial will inform us early on if we properly blinded the study with placebo surgery and if we obtained sufficient coverage of the putamen with the increased number of surgical sites from the Phase I. Achieving both in the Phase II will allow us to begin enrolling the Phase III trial in staggered parallel, while the Phase II continues blinded follow-up. The Phase II trial will enroll about 30 to 42 patients with about 16 sites, including eight surgical sites and eight corresponding patient referral sites. The surgical sites will perform the infusions. The clinical sites are the nearby hospitals and academic institutions, where eligible patients treated by movement disorder specialists will be referred and followed. The primary endpoint of both trials will likely be on-time without troublesome dyskinesia as measured by the patient-reported diary. With up to 42 subjects, the Phase II trial has about 80% power to detect a 2.1-hour improvement from baseline to 12 months compared to placebo. With a larger number of patients, approximately 100 to 120, the Phase III will be powered at 90% to detect a 1.5-hour improvement in diary on-time from baseline to 12 months compared to placebo. In Cohort 2 at 12 months recall, we saw a 3.3-hour improvement in diary on-time without troublesome dyskinesia and nearly a four hour improvement in on-time without any dyskinesia. Based on past gene therapy trials, we expect about an hour to an 1.5 hours placebo effect for diary on-time without troublesome dyskinesia. So the Phase II is within this targeted treatment effect and the Phase III is well within the targeted treatment effect for demonstrating statistical significance. For the Phase II, we expect about 10-to 12-month enrollment period from the time of first patient dose to last patient dose. Following 12 months of blinded treatment, we expect top line data from the Phase II portion of the pivotal program in the second half of 2020. Shortly after dosing patients in the Phase II and receiving their baseline PET images, enrollment can begin in the Phase III trial expected during the first half of 2019. The Phase III trial will continue, it will include approximately 30 trial sites, including about 10 surgical sites and 20 clinical referral sites. Assuming 12 to 15 months to enroll in this trial and a 12-month blinded treatment period, we anticipate top line results during the first half of 2020. Pending discussions with the regulatory authorities and depending on actual enrollment time lines, a large enough treatment effect observed in the Phase II trial could support a BLA submission during the first half of 2021 and the ongoing Phase III trial could then be supportive or confirmatory. Alternatively, a Phase III powered to detect 1.5-hour treatment effect could support a BLA submission in mid-2022. In summary, we are very pleased with the design of the pivotal Phase II/III program, its robustness, optionality and flexibility. The program focuses on key aspects of motor function, measured over a sufficient period of time to detect a meaningful and durable benefit versus placebo. And the design has a number of key features including optionality with respect to timing of the BLA and flexibility with respect to selecting the right endpoint. I'll pass the call over to Jane now who can walk you through our financials.

[Jane Henderson:]

Thanks, Bernard, and good afternoon, everyone. I'll spend the next few moments reviewing the financials and guidance before we move to Q&A. Voyager reported a GAAP net loss of $23.3 million or $0.89 per share for the third quarter ended September 30, 2017 compared to a GAAP net loss of $9 million or $0.35 per share the same period in 2016. Collaboration revenue of $1.1 million for the third quarter of 2017 compared to $3.3 million for the prior year period. Collaboration revenues reflect recognition of payments for R&D services provided by Voyager for various programs under the Sanofi-Genzyme collaboration agreement. These revenues are subject to variability based on quarterly assessments of expected or anticipated efforts under the collaboration. Collaboration revenues decreased during the third quarter of 2017 from the prior year quarter primarily due to a change in the estimated performance period for reaching human proof-of-principle for certain programs. As a result of Sanofi-Genzyme's recent decision not to exercise its options, Voyager expects to recognize the remainder of the upfront agreement consideration allocated to Parkinson's as collaboration revenue in the fourth quarter of 2017. This amount is estimated to be $5.5 million, which will be in addition to the normal quarterly collaboration revenue. Research and development expenses were $19.6 million for the third quarter of 2017 compared to $10.3 million for the same period in 2016. The increase in R&D expenses was primarily due to the development and advancement of our pipeline and related increases in personnel and facility costs. G&A expenses of $4.9 million for the third quarter of this year compared to $3.4 million for the same period in 2016. This increase was primarily related to personnel and facility costs to support Voyager's growth and patent-related costs. Voyager ended the third quarter with total cash, cash equivalents and marketable debt securities of $125.6 million. The company has no long-term debt. In terms of guidance, we continue to expect to end 2017 with total cash of approximately $90 million to $100 million. We continue to project that our existing total cash will be sufficient to fund operating expenses and capital expenditure requirements into 2019. The cash runway into 2019 is based on our current operating plan and does not include potential BD transactions. We remain committed to pursuing business development opportunities around some of our unpartnered programs and platform capabilities. Our goal, as Steve stated earlier, is to build a company and therefore to retain value while obtaining significant sources of capital. With that, we'd now like to open the call up for questions. Operator?

[Operator:]

[Operator Instructions] And our first question comes from with James Birchenough with Wells Fargo Securities. Your line is now open.

[Yanan Zhu:]

This is actually Yanan in for Jim. Thank you for taking the question. First question on the proposed primary endpoint, which is the on-time without troublesome dyskinesia. Could you give us some background on how you chose that as opposed to on-time without any dyskinesia, as I thought you had a larger increase according to the Phase I data?

[Bernard Ravina:]

Yes. So on-time without troublesome dyskinesia is commonly a secondary endpoint. In a lot of trials off-time is the primary. But we decided to do on-time without troublesome dyskinesia because we not only reduced off-time, we also have seen that we have reduced troublesome dyskinesia. So by capturing that good quality on-time, we really sort of merged both of those treatment benefits. So that's why we got to that. And then your question was specifically around why not on-time without any dyskinesia? And we'll look at both carefully. But really both having no dyskinesia or just mild dyskinesia, both of those are high-quality on-time. So I think those together make clinically the most sense. And we will see from the Phase II and be able to incorporate in the Phase III, if there's really any reason to break those up.

[Yanan Zhu:]

Got it. If I may follow up with a question on the – you went through the powering assumptions, which is very helpful. But in terms of clinical meaningfulness, could you remind us again in a placebo-controlled trial, what would be considered clinic-controlled meaningful result?

[Bernard Ravina:]

Sure. We presented just earlier this week at the Michael J. Fox Foundation and the same question came up. And the moderator, the panels noted that we are well within range or even above the range of what people consider minimally clinically significant. So drugs have been approved with treatment effects in the 45-minute range relative to placebo. So if we are talking treatment effects compared to placebo of an 1.5 hours, two hours or even greater, there is no question in clinicians and patient mind that that's robust.

[Yanan Zhu:]

Got it. I also have a question on the preclinical programs, if I may. Because of the change in the capsid strategy for the SOD program, for the ALS program and for the Friedreich's ataxia program. I was just curious, one is, with the new approach how much burden would that be put on to the manufacturing capability, given it's a systemic administration? And also, secondarily, is there any risk in reducing these target proteins in a periphery?

[Bernard Ravina:]

Yes. Answer to question No. 1 is that this is in fact one of the reasons we have used these new capsids because the baculovirus sf9 process that we employ here at Voyager is very scalable and we can produce a lot of vector which plays to the use of that process for systemic administration of AAV vector. So we're quite excited about not only having this new data and the capsids, but also being able to manufacture them at that scale. And you're absolutely right, whenever you go systemically with one of these vectors, you have to use more vector than if you go intrathecally, or certainly, as we do in our Parkinson's program, intraparenchymally. So that's one of the reasons one of the considerations we made in approaching this systemically. Now also in the case of Friedreich's ataxia to get both the heart, cardiac myocytes and sensory neurons in the dorsal root ganglia, you really have to go systematically. And so that's again one of the features of these capsids that plays well for treating that particular disease. What's the second question? Oh, Dinah you might want to comment on that? This is Dinah Sah, our Chief Scientific Officer.

[Dinah Sah:]

Lowering of SOD1 or Huntington in the periphery we anticipate to be very well tolerated. We anticipate it being able to lower those mutant proteins significantly in peripheral organs and tissues, but we will not be eliminating them completely. But the data and the literature to date suggest that not only will that be safe, but it could contribute to efficacy as well.

[Operator:]

And our next question is with Jeff Chen with Cowen and Company. Your line is now open.

[Jeff Chen:]

Hi good afternoon, thank you for taking my question. Maybe a first question for Bernard. In terms of the Phase II/III program for VY-AADC, how do you go about ensuring the blinding of the sham-controlled patients versus – sham surgery controlled patients versus the patient that will receive the gene therapy?

[Bernard Ravina:]

It's a very important part of getting this right. We have a very detailed blinding plan. And just -- I will outline a couple of key elements. So one is making sure that the surgical procedure that it closely mimics for the placebo patients in that they feel like they actually can't discriminate between real surgery and a placebo surgery. So the placebo patients will get a nick in their scalp and they will get a partial bur hole, but nothing will actually go in the brain. The other key part of that is making sure that the whole surgical team knows to maintain those records confidentially and that any images, right, the real-time imaging, are locked so that other the people don't have access to the surgeries – to the images. And then we have separate raters for the clinical rating scales who are independent of that whole team, and separate study coordinators who are independent of that surgical team. So just the key elements are that the patients can't discriminate what they had, that the surgical team locks up all the records, and that we have an audit trail on that, and that there is an independent team of raters who perform all the clinical assessments. And it's also important to mention there is precedent for this in previous gene therapy studies. So while the exact procedural flow may be different, the overall outlines of what regulatory agencies want to see and what clinicians expect there is quite well established.

[Jeff Chen:]

Got it, that's very helpful. Maybe just one more question for me. If I recall correctly, in preclinical studies, putamen coverage of 30% or greater results in clinical benefits for the AADC program. So with – is there an upper threshold sort of to the putamen coverage and clinical benefit, meaning that if you're achieving let's say 50% with the posterior delivery, would one arrive at sort of even better clinical benefits?

[Bernard Ravina:]

Yes. So we're with our 50% coverage of the overall putamen, we are also covering the majority of the posterior putamen where the motor fibers tend to run. So at this point, we don't think that increasing coverage will change motor function responses that much. There may be room to pursue other aspects of Parkinson's related to cognitive function if we cover more anterior parts of the putamen. But I think this approximately 50% coverage is the right place for us to be, and it is getting most of those motor fibers.

[Steve Paul:]

And the posterior approach, as Bernard mentioned also reducing surgical times, which is very helpful. So we've done four of those subjects so far and will have perhaps more. And that will be at a terrific group to really look at early next year as we get ready for the study.

[Jeff Chen:]

Okay, got it thank you.

[Operator:]

And our next question comes from David Nierengarten with Wedbush Securities.

[David Nierengarten:]

My single question and that is potentially on the Phase II and the Phase III plan. You mentioned potentially filing after Phase II. Is there any other option, if I didn't catch it, on an interim look or a shorter time as you monitor the patients?

[Bernard Ravina:]

Yes. So the Phase II is powered to a pretty large treatment effect and the single-blinded study obviously. So we will monitor it for safety, but we're unlikely to stop that at an interim for efficacy that would potentially lower the power a little bit. So I think we will let that single trial run, get it done well. And I think that could be a very nice demonstration of efficacy, but probably not an interim efficacy analysis.

[Steve Paul:]

And, David, don't forget we will have PET scans on these patients before and after. So we will be able to measure the gene delivery, the gene transfer after the surgery compared to before the surgery. And we think that's going to be a very impactful marker of the fact that we've delivered the gene.

[David Nierengarten:]

I'm sorry, will you be able to report on that before the end point?

[Bernard Ravina:]

We will report out the coverage and PET data. And those will trigger initiation of the Phase III. We will have an update on those, yes.

[David Nierengarten:]

Okay thank you.

[Operator:]

And our next question comes from Tom Shrader with Stifel. Your line is now open.

[Tom Shrader:]

Hi good afternoon, good to talk to you again. Jane, first on the guidance. Your guidance looks like you might spend $35 million this quarter, but then go all next year on $90 million. Is that front-end trial costs that makes that look so funny?

[Jane Henderson:]

We will end the year in the $90 million to $100, million, probably towards the high end of the range. So for total year spend, it will be in the approximate $75 million range, Tom. So does that help you? We are having some initiation of the trial start here in the fourth quarter. But it will really ramp up in the first half of 2018. It will be more nominal in the fourth quarter in 2017.

[Tom Shrader:]

Did you just say 2018 spend is $75 million?

[Jane Henderson:]

No, 2017 spend will be approximately in that range, which meets our guidance of the ending the year with $90 million to $100 million.

[Tom Shrader:]

Okay, perfect. And then on the use of the insect material, there is no bridging trial or anything required. That is no run-in cohort. Just if you could help us, why the FDA have so much confidence in this? I'm a little surprised.

[Steve Paul:]

Well, we met with the FDA, as you know, in the pre-IND meeting to talk about comparability of the vector made in baculovirus sf9 cells versus the material made by triple transfection in mammalian cells, 293 cells. And they laid out, we laid out, a comparability testing scheme and data has been forthcoming. And it requires the traditional toxicology studies, et cetera, but no human studies. We obviously have to show that we're getting potent vector comparable to the vector made in 293 cells. But other than that, and safety. Obviously we have to show comparable safety, et cetera. But other than that, there should be no reason that these vectors are different.

[Tom Shrader:]

Okay, great. Thanks a lot.

[Operator:]

[Operator Instructions] And our next question comes from Reni Benjamin with Raymond James. You line is now open.

[Reni Benjamin:]

Hi, good afternoon guys, thanks for taking the questions. I guess, just one in regards to the delivery approach. Is there – can you talk a little bit about the training involved and whether there is any site-to-site variability? Will there be management at the sites when the pivotal studies have started? And what's the kind of no-go decision regarding the frontal versus posterior approach for the pivotal study?

[Bernard Ravina:]

Yes. So I will take the second part of that first and I'll talk about training. So we have our patients this posterior approach and all of this is different angle for the same surgery. We're really pleased with how those infusions have gone, the coverage, the reduced time. And they are very similar site-to-site, patient-to-patient. So right now it's looking like that will be the default approach for all those reasons. If for some reason a patient can't be in that position or anatomically does not work for them, we know we can always go back to this transfrontal or top-of-the-head approach. And there's more than one way to deliver it effectively, we've shown. So we will get probably another three or four cases in this year. All our surgeons in the study will have experience and then be ready to train the additional four surgical sites. So to the training part of it, we're taking that very, very seriously because delivery is the lynchpin of the whole program. What we've done is had new surgeons and surgical teams go out and see a surgery, and then have experienced surgical teams to be present at new sites when they conduct their first couple of cases. We're going to have our field support team who are as experienced as anybody now, having seen many of these at each case. So that's our approach, that's gone well. And it's kind of surgeon-to-surgeon, team-to-team training. And mind you, all of these surgeons are skilled in stereotactic neurosurgery. They all do DBS, other related procedures. So this is just incorporating kind of an additional aspect that has an infusion. So the baseline skill set, they are already extremely capable.

[Steve Paul:]

I should also add all of this is terrific learning for our Huntington's disease program. So we probably learned more about intraparenchymal drug delivery, vector delivery than any other company over the last couple of years.

[Bernard Ravina:]

One more thing I will mention, we will do this in Parkinson's and Huntington's trials, as we have a surgical core with the field support. And so we can do quality assurance on ongoing basis being present with each case and then reviewing the postop MRI images after each case to know if there are any issues or anything we need to troubleshoot with the given site.

[Reni Benjamin:]

Got it. And then just as a follow-up on the preclinical program. If I heard you right, it's Huntington's and Friedreich's ataxia that would likely be filed in 2019. But ALS wasn't included. So are we just assuming that's likely for 2020 or...

[Bernard Ravina:]

Not. No, no. ALS is what we're saying now is over those three programs, ALS, Huntington's and Friedreich's, two will deliver in 2019. And ALS has made very good progress. There is a bit of a pivot here given what we learned on capsids and delivery, getting all of the cord, the cervical cord, the brainstem. These are very important regions of the brain for this to work clinically. And I remind you that again getting into the clinic is terrific. But getting into the clinic with something that is likely to work is really the goal for us. And lot of companies, other competitors, academic groups et cetera will get in, but they have no reason to believe they will be able to optimize delivery. And given what we've seen in our preclinical work, in nonhuman primates in general, we're very optimistic that when we get in, we will be able to adequately silence, in the case of ALS the SOD1 gene, in the case of Huntington's the Huntington's gene. And rather excitingly from my perspective is to get both sensory neurons and the heart with the same vector intravenously for Friedreich's ataxia. So we're not sort of saying, which one of those, but ALS is right there still at the top.

[Reni Benjamin:]

Got it, thanks for the clarifications.

[Operator:]

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back to Steve Paul for any further remarks.

[Steve Paul:]

Well, let me thank everyone for attending the call this afternoon and for your very thoughtful questions. We look forward to updating you on our progress and hopefully seeing many of you at our R&D Day in New York City on November 16. Thanks so much.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.