Voyager Therapeutics, Inc.
Q3 2016 Earnings Call Transcript

Published: 10 Nov 2016

[Operator:]

Good morning and welcome to the Voyager Therapeutics third 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 for your questions. 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. Good morning and welcome to Voyager Therapeutics third quarter 2016 financial and operating results conference call. This morning, we issued a press release which outlines these results. The release is available at voyagertherapeutics.com. Today, on our call, Dr. Steve Paul, Voyager’s President and CEO, will discuss the program highlights. Jeff Goater, Voyager’s CFO, will review the financial results and then we’ll open up the call for your questions. Dr. Bernard Ravina, Voyager’s VP of Clinical Development, will 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 represent the company’s view as of today, November 10, 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 Steve.

[Steven Paul:]

Thank you, Matt. And good morning, everyone. The third quarter for Voyager was a very productive one as we continued to advance our lead program for advanced Parkinson's disease, moved our earlier-stage programs closer to the clinic and completed a licensing deal for a group of novel AAV capsids that should increase our ability to deliver genes more efficiently to the brain and spinal cord. This creates strong momentum for the company as we begin to report preliminary clinical data for our lead program in early December and into 2017 and begin to move our second program towards the clinic. Let’s turn first to our lead program, VY-AADC01 for the treatment of advanced Parkinson's disease. As you know, our goal with this treatment is to turn back the clock on the treatment of motor symptoms for the estimated 100,000 plus patients in the US alone who suffer from the advanced stages of the disease and to allow them to now respond levodopa the way they initially did during the earlier stages of their disease. Levodopa is the most efficacious treatment for Parkinson's disease and gets converted in neurons in the brain to dopamine by an enzyme called aromatic L-amino acid decarboxylase or AADC. But as the disease progresses, patients lose their ability to convert levodopa to dopamine as neurons in the mid-brain that contain AADC die. These later-stage patients have erratic short-lived responses to levodopa and related drugs and subsequently experience worsening and debilitating symptoms of immobility, such as rigidity, falling, difficulty with speech and swallowing, with patients often requiring the daily assistance of a caregiver. Consequently, these advanced patients require higher and more frequent doses of levodopa, but it’s often difficult to find a medication schedule that provides consistent relief of their motor systems symptoms throughout the day. And levodopa side effects, such as dyskinesia or involuntary movements and non-motor behavioral symptoms such as psychosis and hallucinations, can increase with the higher doses of levodopa. The goal will VY-AADC01 is to bypass the brain region where neurons are dying and, with a single infusion, deliver the gene that encodes AADC directly to the putamen, a brain region where intrinsic neurons remain intact and alive, to create a new reservoir of dopamine in response to orally administered levodopa. This approach could provide advanced patients with more reliable control of their motor symptoms in response to levodopa dosing, essentially setting the clock back to a time when they were less symptomatic and more responsive to levodopa. With this in mind, the goals of the current Phase Ib trial are straightforward, to assess the safety, biomarker activity, and relevant clinical measures across ascending doses of VY-AADC01 as well as to optimize vector delivery, and we're in the midst of optimizing both dose and delivery. During the quarter, we successfully dosed the first patient in Cohort 3. We plan to complete enrollment by early next year and we remain on track to report six-month data from this cohort in mid-2017. By increasing the concentration of vector, patients in this cohort will receive up to a threefold higher total dose of VY-AADC01 than Cohort 2. Cohort 1 and 3 address the dose escalation portion of the program and employ a transfrontal or top-of-the-head trajectory of vector delivery into the putamen. Soon, we will start a preplanned study using a posterior trajectory that aligns the infusion of our vector more closely with the anatomical structure of the putamen. This could result in a much higher total volume of coverage of the putamen and also a higher total dose of our AADC vector, up to 9.4×1012 vector genomes representing a twofold higher total dose than patients in Cohort 3 and a six-fold higher total dose than patients in Cohort 2. We're excited to begin activating clinical trial sites this quarter and to dose the first patient with this trajectory in the first quarter of 2017. Although our Phase Ib study is technically a dose-ranging safety study, our biomarkers should give us a good estimate of whether we are increasing sensitivity of levodopa and adequately delivering the gene for AADC. Next month, in early December, we will provide topline results from patients in Cohort 1 and Cohort 2. Data from this interim analysis and longer-term follow-up next year as well as data from Cohort 3 and data from the posterior trajectory patients will help inform the design of the next trial, a placebo-controlled trial, with sham surgery, that we expect to begin during the fourth quarter of 2017. So, that covers our lead program for Parkinson's. Now, turning to our robust pipeline, which if we project out over the next 18 to 24 months will deliver multiple programs in clinical development, targeting devastating diseases of the CNS. During the quarter, we have made substantial progress towards selection of lead clinical candidates with the goal of filing an IND application VY-SOD101 for a monogenic form of amyotrophic lateral sclerosis, or ALS, in the fourth quarter of 2017. Now, creating and selecting lead candidates requires capsid optimization and selection, design of the vector genome, and delivery of the vector – and in the case of our programs – to either the brain or spinal cord, which are all core competencies at Voyager, as is producing and manufacturing these vectors at scale. We’re excited with the recent progress of lead candidate selections for VY-SOD101 for ALS, VY-HTT01 for Huntington's disease, VY-FXN01 for Friedreich’s ataxia, as well as the development of our tau antibody and NAV1.7 programs for frontotemporal dementia and Alzheimer’s disease and severe chronic pain respectively. As you know, the gene therapy field is rapidly evolving after many years of steady under-the-radar work by a number of primarily academic labs. The recent clinical success of several gene therapy programs is very encouraging to the entire field and, more importantly, provides tremendous hope for the patients and their families affected by these debilitating, life-threatening diseases. We keep a careful eye on the evolving competitive landscape, particularly as we select in advance our own programs. This thoughtful approach has resulted in us de-prioritizing our SMA program, so that we can allocate our time and resources towards progressing are other preclinical programs to the clinic. We believe this is a prudent decision and really is a testament to, and a result of, the exciting progress of our other pipeline programs. We remain, however, in a position to rapidly initiate IND-enabling efforts for our SMA program, depending on the progress or outcome of competitive programs that are already in clinical development. Now, turning to other activities, we are impressed with the incredible pace at which the field of AAV gene therapy is evolving. To maintain our position as a leader in AAV gene therapy for CNS disorders, our scientists frequently collaborate with other scientists and leaders of the field. Recently, we entered into a licensing agreement with the California Institute of Technology, which expanded our existing portfolio of over 150 AAV capsids to now include a group of novel synthetic capsids from the lab of Dr. Ben Deverman at Caltech. The worldwide co-exclusive license agreement covers all fields of use and includes novel AAV capsids that have demonstrated up to 90-fold enhanced blood-brain barrier penetration than AAV9 in mice. These novel capsids could be used for delivering genes to the CNS following systemic IV administration. We're also excited to be collaborating with Dr. Ben Deverman and Professor Viviana Gradinaru and will keep you updated on the progress of these novel capsids and work with these Caltech scientists. So, in summary, we generated a lot of momentum in the third quarter and look forward to keeping you updated as the programs and business progresses. And with that, I’ll pass the call over to Jeff who can walk you through our financials in more detail before we take your questions. Jeff?

[Jeff Goater:]

Thanks, Steve. The company exited the third quarter with a strong balance sheet and continued to execute on all aspects of the business, as Steve just discussed. In this morning's press release, we reported a GAAP net loss for the third quarter of 2016 of approximately $9 million or $0.35 per share compared to a net loss of $6.9 million or $5.25 per share for the same period in 2015. R&D expenses for the third quarter of 2016 were approximately $10.3 million compared to $6.5 million for the same period in 2015. The increase in expenditures was primarily due to R&D, manufacturing and personnel costs associated with Voyager pipeline progress. G&A expenses were approximately $3.4 million for the third quarter of 2016 compared to $2.5 million for the same period in 2015. The increase was largely due to G&A personnel associated with the growth of the company, as well as expenses related to operating as a public company. We reported cash, cash equivalents, and marketable securities totaling approximately $191 million as of September 30, 2016, compared to approximately $204 million at the end of the second quarter of 2016. Voyager now expects to end 2016 with cash, cash equivalents and marketable securities of approximately $170 million to $175 million, modestly above our previous year-end projected cash balance of approximately $160 million. The adjustment to our year-end cash guidance is primarily due to decreased spending related to pipeline prioritization activities for VY-SMN101 and the timing of certain payments for planned R&D expenses and facilities expansion. Voyager continues to project that its cash, cash equivalents and marketable securities will be sufficient to fund operating expenses and capital expenditure requirement into 2019. With that, we would now like to open the call up for questions. Operator?

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Phil Nadeau with Cowen & Company. Your line is open.

[Phil Nadeau:]

Good morning. Thanks for taking my questions. I guess, first one on the posterior trajectory study or cohort, a skeptic would say that maybe you haven’t seen what you wanted from the first patients in cohort 2 and that’s why you feel you need to go to a higher dose or at least aren’t concerned about going to a higher dosing coverage in terms of side effects. How would you dissuade a skeptic of that notion?

[Bernard Ravina:]

Hi. Thanks, Phil. This is Bernard. Good question. Just to take a step back, so we’ve made tremendous progress in terms of delivery. So, the data that we’ve released for Cohort 2 with 34% coverage, that’s probably five to seven-fold better coverage than has been achieved in any previous gene therapy trial. And we went from 21% in the first cohort to 34% in that second cohort. So, we feel very good about the progress we’ve made on delivery. And as you know, we’ll be putting out topline clinical data from those first two cohorts with six months of follow-up in December. In terms of the posterior trajectory study, really, the goal there is to make the delivery even more efficient than we’ve done already. So, what we do with that posterior delivery [Audio Gap] the cannula, better with the long access of the putamen, which is sort of an overall structure. So, what we think we’ll be able to accomplish there is fill the putamen perhaps even more, but do it more efficiently with the fewer capsids of the cannula. So, really, what we're looking to is to sort of optimize the delivery approach to put us in the best possible position for efficient surgeries across several sites that we would use to start the next clinical trial.

[Steven Paul:]

Phil, this is Steve. Let me just add. This posterior trajectory study was actually preplanned. We had planned this awhile back. And as Bernard said, our goal is really to – in this summer – next summer, to get to the point where we've said, look, this is the dose and this is the surgical protocol or trajectory that we’re going to use in our pivotal trial. And so, we want to spend as much time as we can from now till then optimizing it, but in no way, shape or form are we doing that study because we've seen data that's discouraging at this point in time. Obviously, we can’t talk of what that data is. We will in a matter of few weeks, if you will. But it's not anything due to that. Anything we can do to optimize things before we pull the trigger on a sham controlled or placebo controlled trial, all the better from our standpoint. So, we're working really in parallel, not in series at this point.

[Phil Nadeau:]

That’s clear. And maybe one follow-up on the comments that this will be more efficient. I take that to mean maybe the patient could be immobilized for less time. Do you have a sense or a guess as to how for the average patient this could decrease the time that they are undergoing a procedure?

[Bernard Ravina:]

Certainly, the idea is it could make it a shorter surgery and we will just have to see how it goes to see how much time we take off. But that's really the general idea, is make it more efficient and have it as optimized as we possibly can by the time we start that randomized trial.

[Steven Paul:]

And let me just say that the current protocol may be the one that we ultimately use, but we really do – we’re excited by some of the data that we've seen on this posterior trajectory and we really do want to explore it before we make a final decision, as to which exact protocol we go with.

[Phil Nadeau:]

Okay, perfect. And then one follow-up on the Caltech licensing activity, do you plan to or – maybe is it possible that you could use some of those vectors in the next pipeline programs? So, could SOD101, for example, use one of the Caltech vectors?

[Steven Paul:]

Yeah. I think that we’ll probably – further along with our SOD1 program as far as the first-generation vectors go in terms what we will ultimately use, and as we've said I think already, intrathecal administration probably makes the most sense there. We are very encouraged by our ability to deliver genes to the spinal cord motor neurons to sensory neurons in the dorsal root ganglia at least in mice, Phil. And my guess is that we could switch over if we see encouraging data in non-human primates pretty quickly because I think we're all feeling better about liver exposure for some of these vectors. And I can tell you that in mice the data on delivery to those central sites in the spinal cord and brain are really spectacular, to be honest, so compared to current vectors like AAV9. So, we’re quite encouraged about those vectors and we’ll just have to see how that plays out for other programs and when to basically move forward with one of those capsids.

[Phil Nadeau:]

Got it. Thanks for taking my questions. And congratulations on the progress.

[Steven Paul:]

Thanks.

[Operator:]

Our next question comes from Jim Birchenough with Wells Fargo. Your line is open.

[Unidentified Analyst:]

Hi. Thanks for taking our questions. This is Yunnan Yin [ph] for Jim today. A couple of questions on the posterior trajectory method. Does this method – could it increase the coverage of the posterior putamen, which is the reason I think was highlighted before to be more important for the disease pathology?

[Bernard Ravina:]

Yeah, it’s a very good question. It certainly could. Like, we mentioned in response to Phil’s question, we’re very pleased with the coverage we’ve gotten so far and we’re certainly getting coverage within the target range that we intended of about a third of the putamen or greater. But it absolutely could enhance our ability to cover the posterior putamen, which is where a lot of the motor fibers do kind of run through. And the reason for that is because the angle of entry really passes directly through that posterior putamen. So, the overall goal, as we said, is to make it a more efficient surgery that would be able to roll out to several sites. We could use the current approach, but there's potential for greater coverage and greater coverage in the posterior putamen.

[Steven Paul:]

Let me just add that if we see good data with the parietal, top-of-the-head sort of approach, we get more like 50%, 60% coverage with the posterior occipital approach and good safety in just a few patients. That would be a very encouraging sign as far as moving forward. So, we don't look at it as in any way, shape or form influencing what we've done so far, but really saying, ‘okay, well, maybe for the pivotal trial. Now, we’re going to go in this posterior, particularly if it does reduce surgical time and also enhance coverage.’ So, I think it's a very prudent and important thing for us to be doing and could put us in a great position, say, in the middle of 2017 as we continue to design and implement and eventually initiate that Phase II/III study.

[Bernard Ravina:]

And it’s worth mentioning that this route for passive entry is one that surgeons already use for other surgical procedures. So, there’s quite a bit of experience with it and there’s quite a bit of experience with this same posterior approach in the real-time MRI guided surgeries. So, same hardware, same software has been used with this surgical trajectory. So, we feel very confident about it.

[Unidentified Analyst:]

Got it. So, you’ve kind of touched upon my second question already, but just to clarify. So this trajectory, is it more challenging to administer? And also, for the site that you selected, is it the same site, i.e. UCSF and Pittsburgh, or is it being started at some different site?

[Bernard Ravina:]

Good question. So, as we finish this current Cohort 3 – a very good question. So, just to take those consecutively, you asked if it was more challenging, no, it's really the same overall thinking and overall surgical procedure. The reason we started with that sort of top-of-the-head approach is that it’s one that was used for deep brain stimulation. So, there is experience with that comfort level, but this is a natural progression to move to the posterior trajectory. And people use that posterior trajectory for certain epilepsy surgeries, for which they also use the real-time MRI. In terms of the surgical sites, so, yes, we will continue with our two sites in this posterior trajectory, Pittsburgh and UCSF. And we’re adding two additional sites in the US, both very experienced with the real-time MRI and with experience with this posterior trajectory as well. So, we feel this will fit in very well with those sites and with the kinds of surgeries they’ve been doing. Was there another question in there?

[Unidentified Analyst:]

No, no. Just one last question from us regarding the data readout in December, do we still expect – could we still expect three-month efficacy from at least one patient or perhaps more from Cohort 3?

[Bernard Ravina:]

So, we’re going to focus the readout on Cohort 1 and Cohort 2. We really want to make sure that anything we present, there’s enough of it to be interpretable. So, that'll be the focus. Cohort 3, we’ve made excellent progress on. So, we started Cohort 3 in August. We expect to finish Cohort 3 no later than early next year. So, in terms of the pace of enrollment and surgery, that's going extremely well. But in terms of understanding clinical readouts, it’s just too soon to present that.

[Steven Paul:]

Yeah. We’re looking towards six-month data on those patients sort of towards the middle of next year. And I think as Bernard says, we could talk about one or two patients, but that could be misleading either way. We really think we need a good five patients to really make a strong statement as to what we’re seeing, both on the safety side, but also on the efficacy side of it.

[Unidentified Analyst:]

Yeah, got it. Thank you very much. That’s very helpful.

[Operator:]

[Operator Instructions]. Our next question comes from Katherine Breedis with Stifel. Your line is open.

[Katherine Breedis:]

Great. Thank you very much for taking my questions. Just to clarify again about Cohort 3, you had, as you know, previously mentioned that you will be showing potentially data from one to two patients of Cohort 3 in connection with the proof of concept readout that we’re now expecting in early December. Has anything changed your mind about why you may not show that data that would perhaps change your confidence in what that data may readout because, obviously, you’ve dosed a couple of them by now and would have some indication of how that may look on a comparative basis?

[Steven Paul:]

Yeah. Katherine, Steve here. No, nothing’s changed our mind. We’re going to have a lot of data on the first two cohorts. And as I said earlier, it's better for us, I think, to have all five patients dosed in that third cohort and to be able to make a more definitive statement. We’re excited about the fact that we’re going to be able to have that data and that we continue going up on the dose-response curve. Again, the goal here is that by the middle of next year, with both that data and posterior trajectory data, we should be in a good position to make the call as to what will the design of the sham-controlled, placebo-controlled trial look like. And that’s the whole purpose of what we're doing here. But we think we’re going to have enough data here on the first ten subjects, Cohort 1 and 2, to keep everybody busy, if you will, early in December.

[Bernard Ravina:]

Yeah. Also, we’re in the fortunate position, Katherine, of having a very data rich study of biomarkers around head skin [ph] and levodopa dosing that can really assess whether or not the mechanism and the pharmacology is active or number of clinical end points. And so, you need enough numbers per cohort to interpret those. And we’ll certainly speak to the observed safety in Cohort 3 to date. And we’ll let everybody know if we get any safety signals.

[Steven Paul:]

Yeah. If we saw some significant safety issue in Cohort 3, we’d have to make a statement about that. So, rest assured, that would occur, if it occurred. So, we will probably give you some understanding, if you will, of the safety on Cohort 3 too, along with the safety data on Cohort 1 and 2.

[Katherine Breedis:]

That’s great. Well, then two quick follow-up questions. Could you provide us some thoughts on how many patients you expect to enroll in the Phase I posterior trajectory trial? And secondly, could you also please provide us an update on your manufacturing of commercial-ready material in the event the shame-controlled study starting in the fourth quarter of 2017 could qualify for pivotal study?

[Bernard Ravina:]

So, we expect to – we have an upper limit in that posterior trajectory study of 16. I think within a cohort’s worth of subject. So, let’s say, approximately five subjects, we’ll have a good understanding of what kind of coverage and how the surgical procedure goes. So, that’s something that we hope to speak to by the middle of next year. I think we’ll be able to comment with good understanding on that. With that, we want to keep the sites while we get the rest of the data in, the six-month data from Cohort 3 in this study. We want to – and prepare for the start of the randomized controlled trial. We will keep our surgical teams operating to get more safety experience and get more overall experience with doing the surgeries. So, I would expect by the end of next year, we’d have somewhere between eight to ten subjects with that posterior delivery.

[Steven Paul:]

And, Katherine, on production, we’re making good progress. We don't anticipate any delays in having clinical trial material or commercial material for this program moving forward. As you know, we’re using a Sf9 process. We think this is a competitive advantage for the company and we’re very mindful of making sure that we can produce high quality GMP vector for all of our programs beginning with our Parkinson’s program.

[Katherine Breedis:]

And will that material be used in the – in any other patients prior to the fourth quarter start of the sham-controlled study or is that when it would first be applied?

[Bernard Ravina:]

Yes. We intend to use that in some of the posterior trajectory subjects.

[Katherine Breedis:]

Excellent. Great. Thank you very much.

[Operator:]

And I’m showing no further questions. I’ll now turn the call back over to Steve Paul for closing remarks.

[Steven Paul:]

That concludes our call. We want to thank everyone for attending this morning and for your very thoughtful questions. We look forward to updating you on our progress in the very near future. Thanks to everyone.

[Operator:]

Thank you, ladies and gentlemen. That does conclude today’s conference. You may all disconnect. And, everyone, have a great day.