Voyager Therapeutics, Inc.
Q2 2016 Earnings Call Transcript

Published: 11 Aug 2016

[Operator:]

Good morning, and welcome to the Voyager Therapeutics Second Quarter 2016 Financial and Operating Results Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks we will open up the call up for Q&A. Please be advised that this call is being recorded at the Company’s request. At this time, I’d like to turn the call over to Matt Osborne, Voyager’s Head of Investor Relations and Corporate Communications. Please proceed.

[Matt Osborne:]

Thank you, operator. Good morning and welcome to the Voyager Therapeutics second quarter 2016 financial and operating results conference call. This morning we issued a press release which outlines these results and provides a business update that we plan to discuss today. The release is available at our Web site at www.voyagertherapeutics.com. Today on our call, Dr. Steve Paul, Voyager’s President & CEO will discuss the program highlights; Jeff Goater, Voyager’s CFO will review the financial results and then we will open up the call for your questions. Dr. Bernard Ravina, Voyager’s VP of Clinical Development would join us on the call for the Q&A period. Before we begin just a reminder that the estimates and other forward-looking statements included in this call represents the Company's view as of today August 11, 2016. 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 let me pass the call over to the Steve.

[Dr. Steve Paul:]

Thank you, Matt and good morning everyone. As you know Voyager’s goal our mission is to become the leading gene therapy company focused on developing manufacturing and commercializing gene therapy medicines for serious diseases of the central nervous system and we have made strong progress towards achieving this goal during the past quarter as I will discuss. But first I want to briefly highlight the solid foundation we have built in just over a two short years since the company was founded. We have assembled a highly skilled research and development team with deep and relevant expertise in the areas of drug discovery and development. The team has pioneered significant advances in AAV gene therapy, neuroscience, CNS drug discovery and importantly has extensive expertise not only in drug development but also in AAV vector manufacturing. We also have deep technical expertise in the way that we are targeting these diseases, either through gene replacement, gene knockdown or silencing or newer approach that we announced at our R&D Day in April where we used AAV vectors to deliver therapeutic proteins such as monoclonal antibodies. Through the efforts and dedication of the Voyager team we have generated a robust pipeline of programs that have the potential to improve the lives of patients suffering from devastating diseases of the CNS. And if we project out over the next 18 to 24 months we plan to have multiple programs in clinical development targeting these diseases. And we also have a very productive strategic collaboration with Sanofi Genzyme, a committed and early pioneer in the field of gene therapy. I'll spend the next few minutes describing the progress of our lead program VY-AADC01 for the treatment of advanced Parkinson’s disease and the key milestones we expect to deliver later this year and in 2017 before describing the progress we have made with our other preclinical programs. The Parkinson's disease program represents a very compelling opportunity to make a meaningful impact on the motor functions or symptoms of patients living with the advanced stages of this disease, while most patient symptoms are reasonably well controlled by medications most notably Ldopa or levodopa in the early stages of the disease many patients that have had the disease long enough will reach a point in the progression of their disease where they no longer respond adequately to their oral medication. These advanced patients have slow or complete loss of motor movements, postural instability, significant difficulty with speech and swallowing and often require the daily assistance of a caregiver even while taking high doses of medication. As you know the goal of our program is to turn back the clock on the treatment of these motor symptoms for the estimated 100,000 patients in the U.S. alone who suffer from the advanced stages of the disease, allowing them to now respond to their medication the way they initially did during their earlier stages of the disease. The approach we are taking is based on the highly validated pharmacology of the enzyme aromatic L-amino acid decarboxylase or AADC, the enzyme responsible for converting Ldopa to dopamine. Our strategy is to bypass lesions of the brain where dopamine neurons are already dead or are dying and as a result dopamine levels are low and to deliver the AADC gene to a region called the putamen where the neurons remain intact and where building is required to control the motor symptoms of the disease. Delivering the AADC gene to neurons in the putamen enables the conversion of Ldopa to dopamine and this creates a new reservoir of dopamine that can potentially lead to clinically meaningful and endurable improvements in motor functions following a single administration of VY-AADC01. Our goal since the beginning of the program is to optimize the surgical delivery and to increase the total dose to maximize the coverage of the putamen and hopefully the clinical benefit. And we are well on our way towards achieving this goal. In June at the international congress of Parkinson's disease and movement disorders in Berlin. We presented interim surgical results from patients in cohorts 1 and 2 of the ongoing open label Phase 1b study. The use of real time intra-operative MRI guided deliveries allows the surgical teams to visualize the delivery of VY-AADC01, administer higher infusion volumes, and achieve greater coverage of the overall putamen in Cohort 2 compared to Cohort 1 and to achieve substantially greater coverage of the putamen that has been achieved in all previous gene therapy trials using a similar vector. Earlier this week, we announced that we successfully dosed the first patient in Cohort 3. In this Cohort by increasing the concentration of vector administered patients will receive up to a threefold higher total dose of VY-AADC01 than Cohort 2. The surgery has now been successfully replicated at more than one site and we’re in the process of initiating more clinical trial sites yet this year. As a reminder, a single patient treated with VY-AADC01 in Cohort 2 demonstrated meaningful improvements in motor symptoms while decreasing their daily use of levodopa at three months post treatment. We remain on track to provide six month data on safety, motor function and biomarkers from patients in Cohort 1 and 2 as well as primarily data from some patients in Cohort 3 by the end of this year. And we will continue to follow patients particularly in Cohort 3 as they reach the six month threshold expected during the first half of 2017. Importantly the top-line interim results from this ongoing Phase 1b study beginning in the fourth quarter of this year and during the first half of next year will help inform the design of our next study, which will be a placebo controlled study with sham surgery that we expect to initiate during the second half of 2017. Now the Parkinson's program is the most advanced in our pipeline and is a tremendous focus of the Company. But we also remain focused and just this excited about our other program that also targets devastating diseases of the CNS. Here I’m pleased to report that we’re making solid progress on the very important step of creating lead candidates for our multiple pipeline programs. To those of you not familiar with the actual process of gene therapy development the creation and selection of lead candidates is paramount as is producing and manufacturing these vectors at scale. We acquire expertise in vector engineering and optimization to develop AAV vectors that are best suited for a particular disease. We have chosen pipeline programs where the genetic cause of the disease is clear and the disease manifestations are severe or often fatal. The challenge and really the opportunity is to design a potent and specific vector to effectively deliver that vector and to be able to manufacture it at scale all of which are core competencies at Voyager and which we believe sets us apart from most of our competition. Now to select lead candidates we need to optimize three key elements, first the capsid. Members of our team have co-discovered many of the known naturally occurring AV-capsids which includes the outer viral protein shells that enclose the target gene for microRNA to set and we have also created promising genetically engineered capsids. For example we have efforts underway to genetically engineer capsids to yield vectors with improved properties such as enhanced tissue specificity and improved delivery of genes to the brain and spinal cord. Next is the design of the vector genome or payload that we intend to deliver to replace a gene as in the case of Friedreich's ataxia or to silence or knockdown a gene as in the case of ALS and Huntington's disease. Third indentifying the optimal route of administration and delivery parameters such as the infusion volume, flow rate, vector concentration in dose and formulation for a specific disease are absolutely critical to achieving safe and effective levels of gene expression in the targeted regions of the CNS. For our current pipeline programs we are either pursuing a surgical approach for direct injection into a targeted region of the brain, coupled with real time MRI imaging as in the case of our Parkinson's and Huntington's disease program for injection into the cerebrospinal fluid or CSF for broader delivery to the cells within and surrounding the spinal cord i.e. for ALS and Friedreich's ataxia. And finally the ability to produce and manufacture high quality AAV vectors at scale is a critical success factor in AAV gene therapy. Several members of our current production team invented and developed the baculovirus AAV production system, a technology for producing AAV vectors at scale in insect-derived cells which we use and have continued to improve. This system has a number of attributes such as high yields, high purity and scalability. We are building a state-of-the-art process research and development production facility for manufacturing research grade AAV vectors on-site at our headquarters in Cambridge, Massachusetts and a GMP commercial scale AAV manufacturing capability through our collaboration with MassBiologics in Fall River. So, with all of this ongoing work we are pleased to announce that we are on track to select lead clinical candidates during late 2016 or early 2017 for our multiple pipeline programs. Following candidate selection we will then carry out the required toxicology and other IND enabling activities during 2017 to support investigational new drug application. With the goal of filing an IND for VY-SOD-101 to treat a monogenic form of ALS in the fourth quarter of 2017. But we have not stopped here, as a reminder at our R&D Day in New York City in April, we announced two new preclinical programs focused on the molecular targets Tau and Nav1.7 which has the potential to be important treatments for the severe CNS disorders frontotemporal dementia and Alzheimer's disease and severe chronic pain respectively, and we retain worldwide rights to each of these programs. Based on preclinical data we believe our gene therapy approach could achieve significantly higher levels of the therapeutic anti-Tau antibody in the CNS when compared to systemic administration of the same antibody. This also has important implications in our ability to potentially deliver other types of antibodies and therapeutic proteins to the CNS and to achieve simultaneously durable clinical benefits following a single treatment. Our VY-NAV01 program also leverages our extensive experience designing novel microRNA gene silencing cassettes and delivering that using AAV vectors. So in summary the Company is operating from an incredible foundation with a team that is focused on driving exciting gene therapy programs forward all focused on severe diseases of the CNS. And with that I will pass the call over to Jeff, who can walk you through our financials in more detail.

[Jeff Goater:]

Thank you, Steve. Voyager continues to maintain a strong balance sheet with efficient use of capital applied for its generating value-added progress with our pipeline. In this morning’s press release we reported a GAAP net loss for the second quarter of 2016 of $9.3 million or $0.37 per share compared to a net loss of $6.7 million or $5.94 per share for the same period in 2015. R&D expenses for the second quarter of 2016 were approximately $10.5 million compared to $6.5 million for the same period in 2015. R&D expenditures for the quarter relate primarily due to R&D manufactured and personnel cost associated with Voyager’s pipeline progress as Steve described in detail. G&A expenses were $2.9 million for the second quarter of 2016 compared to $2.4 million for the same period in 2015. The increase was largely due to expenditures in G&A personnel associated with the growth of the Company including expenses related to operating as a public Company. We reported cash, cash equivalents and marketable securities totaling approximately $204 million as of June 30, 2016 compared to approximately $214 million on March 31, 2016. This morning we’re reiterating the financial guidance that we initially provided on March 17, 2016. Based on our current operating plan, we expect to end 2016 with cash, cash equivalents and marketable securities of approximately $160 million and we project that our existing cash, cash equivalents and marketable securities will be sufficient to fund operating expenses and capital expenditure requirements into 2019. With that we would now like to open up the call for questions, operator?

[Operator:]

[Operator Instructions] Our first question comes from line of Jim Birchenough of Wells Fargo. Your line is now open.

[Yanan Zhu:]

This is Yanan Zhu in for Jim. Two questions, the first is on a few questions on duration of follow-up, wondering if we could see longer duration than six months for Cohort 1, because that Cohort was started earlier than Cohort 2, and additionally also on that point of duration follow-up, what might be the appropriate duration of follow-up in the future pivotal trial? Thanks.

[Dr. Steve Paul:]

Go ahead.

[Dr. Bernard Ravina:]

Yes. Hi it’s Bernard Yanan, very good question and just a thing I will take you backup to remind you where we’re a little bit. So we are in the midst of a very rigorous those escalation study, where we are systematically increasing concentration as well as volume for coverage and containment. So, Cohort 1 of that study yes we have subjects who are now out to two years and for Cohort 2 of that study we have subjects who will by the end of this year have completed six months to one year of follow-up. Then for next year as we mentioned we just initiated Cohort 3 so we will be seeing six month data from that cohort in the first half or early second half of next year so that's sort of where we are in terms of that overall picture. In terms of your specific question about what duration is appropriate I think we have to see how the data evolves and how the treatment effects evolve overtime, but we suspect that approximately six months out to one year would be an appropriate time point or spectrum to see the effects evolve as well as to be able to demonstrate that those effects are durable.

[Yanan Zhu:]

Right. And if I may ask a follow-up on that that is for any potential placebo effect due to the surgical procedure alone what would the expectation be for that placebo effect to last? Is there a consensus on that? Thanks.

[Dr. Bernard Ravina:]

Yes it's a very good question. And so we are absolutely cognoscente of the placebo effects and as we've discussed towards the second half of next year we expect to be initiating a placebo or sham surgery controlled randomized study. In terms of the duration and the effect of that it really varies as you look at prior studies or prior gene therapy studies but the key is simply to have a placebo or sham surgery group in there that you can compare to the actively treated group at six months and at 12 months and that really fully accounts for the placebo effect, so it's not so much a question of duration of that it is just making sure you have the appropriate placebo or sham surgery comparative.

[Yanan Zhu:]

Thanks. Last question and I'll jump back in the queue. Is this because I think Cohort 3 and 4 are expected to have the same volume of injection. So is this the correct expectation that a coverage will be the same as Cohort 2? And if I also may ask Cohort 1 and Cohort 2 when we compare we see increasing both dose and coverage or actually due to volume. Do you have a sense of the benefit seen in Cohort 2 how much of that benefit i.e. in patient number six is that due to the volume increase and how much is due to the dose increase just to anticipation of the Cohort 3 data? Thanks.

[Dr. Bernard Ravina:]

Yes, so good questions. So right we are systematically varying volume we increased the volume in Cohort 2 keeping the concentration the same. Cohorts 3 will have a threefold increase in concentration and the first patient in that cohort was just reasonably dosed. Cohort 4 will also increase concentration approximately another twofold so systematic varying of volume, coverage of the putamen as well as concentration and that’s really the goal of the study is to understand the dose-related or dose-dependent effects of increasing concentration, as well as increasing coverage of the putamen. So, we will report out Cohort 2 as well as Cohort 1 at the end of the year so we will get initial understanding of that and into next year, we will have further disclosures of Cohort 3, and see how the concentration related changes effect the outcomes of interest.

[Dr. Steve Paul:]

Yes. As we have said, this is Steve Paul. We have only limited non-human primate dose response data, but we can gain from that, is that we believe we need about a 30% coverage now that could be plus or minus a few percentage points if you will. And we don’t know exactly what the completely optimal concentration of the vector is. We know we’re on the low-end of the dose response curve we have seen very good safety, so there is no reason not to explore higher doses, which is exactly what we’re doing right now. We don’t have the data yet completed in Cohort 2, so we can't be absolutely certain that the dose we used in volume in Cohort 2 is not adequate. But we feel we need to go up and not wait for those data in order to continue to optimize this whole protocol.

[Dr. Bernard Ravina:]

And your question about coverage for the subsequent Cohort 3 and 4, correct, we’re keeping the volume the same, so we expect similar overall coverage of the putamen. However, as the surgeons gain experience there may be incremental improvements in coverage both in the putamen overall as well as in specific regions like the posterior putamen.

[Dr. Steve Paul:]

The other good news here is that the variability between patients in each of these Cohorts is really rather low, which is really good news.

[Operator:]

Thank you. And our next question comes from Phillip Nadeau of Cowen & Company. Your line is now open.

[Phillip Nadeau:]

Steve, one for you on a comment you just made and what did you really base your decision to go into Cohort 3, was it safety data that you're seeing real-time, due to some anecdotal efficacy data or was this just simply the default pathway unless there actually had been a problem in Cohort 2?

[Dr. Steve Paul:]

So a couple of factors Phil, one is from the non-human primate data that we have and again I want to say it's not complete dose response data. We know we're on the lower end of the dose response curve, still affected in the monkeys put on the lower end. The fact that we are seeing good safety no vector related issues whatsoever at this point in time and the fact that we have already on hand formulated vector to go up at least six-fold from Cohort 2 we are going up threefold in Cohort 3. All leads us to the conclusion that we just need to explore higher doses and higher concentrations and not wait until we have the complete six month data in-hand on Cohort 2.

[Dr. Bernard Ravina:]

And really the perspective is that fully exploring the dose range will really put us in a good position to select a concentration as well as target coverage for subsequent randomized sham controlled studies.

[Phillip Nadeau:]

And in most gene therapy trials before you move to the new cohort DSMB looks at the safety data and kind of gives you green light can we assume that that happened here that you weren’t seeing a lot of side effects from Cohort 2 in order to be able to move on to Cohort 3?

[Dr. Steve Paul:]

Yes.

[Dr. Bernard Ravina:]

That's correct.

[Phillip Nadeau:]

Okay, great. Then similar question I guess on Cohort 4 when is that decision going to be made is that going to be made after you see that six month data from cohorts 1 and 2 or could that decision actually be made before we even see that data?

[Dr. Bernard Ravina:]

So that decision will be made after we've completed dosing in Cohort 3 and as you suggested it really depends on the safety in Cohort 3.

[Phillip Nadeau:]

Go it, okay. And then one more clinical question, can you help us frame the data at the end of the year. What do you hope to see in terms of efficacy from Cohort 2 to qualify as formal proof of concept? And as a follow-up to one of the prior questions there is no placebo here so what quality of efficacy would give you very strong sense that it's not just placebo effect that you are seeing real efficacy from transferring?

[Dr. Bernard Ravina:]

Yes, it is a really important question so again just back to the picture this is an interim look, and we are in the midst of this dose escalation study so with that in mind it's not any particular single end-point in a given patient at a given point in time that way you would expect to see in a Phase 2 or a Phase 3 trial. So what we really are looking for here is, is the totality of the data and to make sure that multiple end-points that kind of affirm that we are hitting the mechanism and see that those are moving in the right direction. So with that in mind there are of course particularly important clinical end-points in this population that is the Parkinson's diary data looking at their off time as well as their molecular motor examiner or motor severity of the unified Parkinson's rating scale. So those are the important clinical end-points but what we want to see is that the patients’ PET scans measuring their expression of AADC as well as their responsiveness to Levodopa measured by how much Levodopa they need and their response to IV levodopa all move in the right direction. So it's really that coherence of data in addition to the magnitude of the effects that will give us confidence that we are moving in the right direction in an unblinded trial like this.

[Phillip Nadeau:]

Got it, that's very helpful. And just one last question for you, can you remind or can you tell us what the current share count is?

[Dr. Steve Paul:]

Sure. It's right around 27 million fully diluted.

[Phillip Nadeau:]

27 million, perfect. Thank you. Thanks for taking my questions and congratulations on the progress.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from the line of Katherine Breedis of Stifel. Your line is now open.

[Katherine Breedis:]

Just getting back to the dosing for Cohort 3 to understand that a little bit better we know the dosing for Cohort 2 converts to about 900 microliters per putamen by volume so, and we know also that I guess Cohort 3 dosing is roughly three times or more than that. Could you provide the conversion volume for Cohort 3 how we should think about that? Secondly if we know that Cohort 2 achieved approximately call it 36% to 38% coverage per putamen. Is it possible that Cohort 3 could potentially achieve 100% putamen coverage? And then lastly it sounds like if Cohort 3 provides the dataset that you are looking for and you are contemplating a placebo controlled Phase 2 studies starting the second half of 2017, the dose that we're testing in Cohort 3 could indeed be the next dose that you take forward into Phase 2, is that correct? Thank you.

[Dr. Bernard Ravina:]

So good question, and just to come back on the dosing there is always a little bit of a point of confusion, so the total dose of vector is the concentration on to the volume that we infuse. So for Cohort 2, it was 900 microliters of volume. For Cohort 3, we're keeping the volume the same but the concentration goes up approximately threefold so the total dose goes up approximately threefold. And then to the second half of your question we are doing this stepwise increasing concentration as well as coverage to understand what the appropriate dose is both in terms of safety and efficacy that we should select for our future study. So we really need to see how the data evolves this Q4 look end of the year will be the first interim discussion of cohorts 1 and 2 and then we'll how Cohort 3 evolves from there.

[Dr. Steve Paul:]

So Katherine this is Steve Paul. The actual volume that's going to be administered in Cohort 3 is going to be same roughly, roughly as Cohort 2. And we're going to increase the concentration 3x so given equivalent volume the dose is going to go up about threefold. But we don't anticipate more coverage in Cohort 3 relative to Cohort 2, we just believe that we'll get more transduction more expression of the enzyme given that we are increasing the concentration of the vector. And having said that one thing that I think is worth pointing out and underscoring is that, we're getting better and better as we do more of these procedures that are actually just delivering this vector, so the surgeons may actually increase beyond 30%, 35% if you will even with the same volume. So there is a sort of a surgical protocol procedure variable here that we want to emphasize and just like DBS in the beginning, it was a longer more conversant procedure and then got pretty reutilized we are seeing sort of the same thing evolve with our procedure as well. So we may actually achieve greater coverage than Cohort 2 which by the way averaged 34% in Cohort 3 on top of the increase in the concentration and thus the increase in total dose. But let me also underscore that we don't know yet whether Cohort 2 is not an adequate dose, if we see roughly-roughly the same equivalent efficacy in Cohort 3, as we do in Cohort 2, we may elect to go with Cohort 2 so we're just not sure until we actually see the data.

[Katherine Breedis:]

Well in terms of the Cohort 3 patients you mentioned that we could see data from some patients in the fourth quarter and you described it as preliminary data, could you characterize what we should expect to see in that dataset, will it just be surgical coverage, is there -- are there any biomarkers of efficacy that could readout at that time? And how many patients do you think you may have enrolled by the end of year in Cohort 3?

[Dr. Steve Paul:]

So as you know a lot of the key efficacy outcomes as well as the repeat PET and things like the levodopa infusions occur at six months, so we'll only have those for Cohort 1 and Cohort 2 for Cohort 3 we dosed the initial subject, we're hopeful that we by the end of the year we'll have an additional one or two subjects but we can comment on. We will certainly know their coverage data at that point and we may have some initial clinical data but again the key endpoints occur at six months.

[Katherine Breedis:]

Okay.

[Dr. Bernard Ravina:]

And the clinical data is also collected at three months and if we may have one or two patients at three months just like patient number six, which should be again diary off UPDRS off etcetera.

[Katherine Breedis:]

That's great. And then in terms of the clinical trial sites you mentioned that you are going to begin adding additional sites which is great news, do you think they will be added to the Phase 1b protocol or you are really thinking ahead for the start of your Phase 2 study in the second half of 2017?

[Dr. Bernard Ravina:]

Really both, so what we wanted to is make sure that we get these sites onboard and that they have experience with the delivery as part of our Phase 1 studies and as Steve mentioned as the surgeons do this they get technically more confident and so there is potential to optimize the coverage even more so we would like to have those surgical sites onboard with most of them having completed since surgeries and prior to the start of that randomized study.

[Katherine Breedis:]

Yes.

[Dr. Steve Paul:]

So these are all sites this is Steve again, that do a lot of Stereotactic surgery mostly for DBS and what we plan to do obviously is use these sites not only for further clinical development i.e. in a pivotal trial but also eventually for commercialization purposes as well.

[Operator:]

Thank you. And our next question comes from the line of David Nierengarten of Wedbush. Your line is now open.

[David Nierengarten:]

Most of my questions have been asked, but I had a maybe a little bit of a patient disposition question, do -- the patients -- do you know if the patients are coming in and recommended for the trail were they otherwise going to go for deep brain stimulation or were they just advanced Parkinson's patients and asking their physician for whatever they could provide if you could have a little bit of detail on that I would appreciate it? Thanks.

[Dr. Steve Paul:]

Yes, it's a good question so really the question is how are these patients identified, where they come from, it's a mix so some of these are people who their physician has simply identified that they have advanced PD and they are poorly controlled. Others were identified as potential DBS candidates and this is really a very similar group of patients to those who would be DBS candidates so that's what is a natural point of referral.

[Operator:]

Thank you. And I'm showing no further questions at this time. I'd like to turn the cal back over to management for closing remarks.

[Dr. Steve Paul:]

Okay, well this is Steve Paul, CEO. Thanks to everyone for their interest in Voyager Therapeutics and we look forward to future updates as the year progresses. Thanks so much.

[Operator:]

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