Avidity Biosciences, Inc. (RNAM) Earnings Call Transcript & Summary

Good afternoon, everyone, and thank you for joining us. My name is [ Caitlin ], and I'm a member of the healthcare investment banking team here at JPMorgan. It's our great pleasure to have Avidity presenting here today. [Operator Instructions] And with that, I'd like to introduce Sarah Boyce, President and CEO of Avidity. Sarah?

Thanks very much, [ Cat ], and thank you to the JPMorgan team for inviting us to present at your annual meeting. 2020 was an incredible year for Avidity as a company. We advanced our Antibody Oligonucleotide Conjugate technology, and we also became a public company, and I'm very thankful for the team that made that happen. Moving into 2021, I'm really excited and looking forward to being able to move and bring the first of a new class of RNA therapeutics into the clinic. During the course of this presentation, I will be making forward-looking statements. Moving to Slide 3. Our mission as a company is to improve the lives of people affected by serious diseases by advancing a new class of RNA therapeutics, which is our Antibody Oligonucleotide Conjugate technology, or AOC. If we move to Slide 4, our goal is around really being able to disrupt the RNA space by being able to take oligonucleotides and RNA therapy into a whole new range of previously undruggable and unaccessible tissues and cell types and really looking to harness that power of the position of an oligonucleotide therapy to address underlying causes of, in many cases, genetic diseases. We're looking to advance our therapies into a broad range of cells and tissue types, and it's that aim, which is around the disruption of the RNA therapeutic space. People build companies, and we're looking to build an extraordinary organization with a singular goal around improving and building better lives for patients and their families living with these diseases. It's about the right team at the right time with the right technology coming together really well. Now as I talk about different tissues and cell types, our starting point was looking at muscle. So if we move to Slide 5, what you'll see here is our pipeline in rare muscle diseases. There's a couple of things that are important to note here. First off, in each case, we're conjugating the relevant sequence -- or the relevant oligonucleotide to the same monoclonal antibody, which is an antibody targeting the transferrin 1 receptor. So the antibody is the same, the linker is the same. And then obviously, our sort of RNA therapeutic that we're attaching to that is different. Building on the same backbone with the antibody and the linker in the case of our siRNA programs allows a great deal of synergy from one program to another. The other thing you'll see on this slide is where we list out the targets. This is one of the benefits and one of the beauties of RNA therapeutics is that you can very precisely hit a genetic target. Our lead program is AOC 1001 for myotonic dystrophy. And we're thrilled to be able to say that we're looking forward to getting into the clinic in the second half of this year, and that program has remained on track. The other programs here are all looking at a whole range of rare muscle diseases, our FHSD (sic) [ FSHD ] program we announced on Friday that the team was also able to bring this program forward, and we're looking into entering to the clinic in 2022. Our DMD programs consist of 3 different drugs looking at targeting 3 different Exons, Exon 44, 51 and 45 are leading our program, looking at Exon 44. And again, we're looking into entering the clinic in 2022. Now when I talk about people, it's my privilege, and if we move to Slide 6, to introduce our leadership team to you. I'm surrounded by a group of people who are really expert in our fields. And across the board, we have coupled both deep therapeutic -- deep experience in the RNA therapeutics field alongside deep experience in rare disease. We partner with a terrific Board of Directors who also have deep expertise in their respective areas. And it really was a thrill on Monday to announce our 2 new members of the Board and Jean Kim joined us and Tamar Thompson joined us as part of our Board of Directors, and we're delighted to have them. So as we look at this team and what our goals are, first off is locking around our pipeline. So what I'm going to do now is switch gears a little bit and talk about our AOC platform, and what AOCs are all about as well as giving you a sense of the breadth and scope of the technology. So if you move to Slide 8, what you see as a cartoon of what an AOC is. It's simply as described. It's an Antibody Oligonucleotide Conjugate. After years of engineering, we very precisely chose to work with monoclonal antibodies, building on decades of experience of that therapeutic class. And we know that monoclonal antibodies can allow you to very specifically target certain cells. We conjugate the relevant oligo to that monoclonal antibody. We're often asked, what's the secret sauce around this? How were you able to do this when others weren't? And the answer is pretty simple and that there isn't really a secret sauce around this. Every aspect of this technology matters and every aspect was engineered in-house by the team here at Avidity. Now looking towards the potential breadth you can get from the technology. And let's first, focusing on the oligo. So what you see on Slide 9 is the fact that we're not limited to the type of oligonucleotide approach that we're using. For our DMD program, for example, where we're looking to achieve Exon skipping, we're conjugating a PMO to the antibody. In all other cases, we're using an siRNA and conjugating the relevant siRNA to the monoclonal antibody. We're using siRNA simply because we believe that they are the better choice and the better class as you look at oligonucleotide therapies. So first off, you're not limited by the type -- we're not limited by the type of oligo that we can use. Now if we move to Slide 10, what I'll give you is a lock into what we can do with 1 antibody. And this is the antibody targeting the transferrin 1 receptor. It's this antibody that we used to target skeletal muscle and has enabled our pipeline there. We can also use the transferrin 1 antibody to look at -- to target other cells as well, in particular, looking at the heart, where we have some early-stage programs, and also on Friday, announced a collaboration with MyoKardia, looking at a novel target and looking at how we can address various genetic diseases in the heart through the use of our technology. The other aspect that you also see here as well is being able to use the transferrin antibody to deliver oligonucleotides to activated B cells and CD8 TIL. So that's what we can do with 1 antibody. Now if we move to Slide 11, this then gives you a further view of the potential scope of our technology. What you see here is a range of different antibodies in the [ centris ] of cells that we're looking to target using the transferrin antibody. But of course, you also see where we use different antibodies as well. For example, if we look at macrophages, where, in this case, we're using an antibody that very specifically addresses a receptor that is exclusively expressed on macrophages, and that allows us to be able to deliver a sequence to those cells to deliver an RNA therapeutic to those cells in a very precise fashion. If we move to Slide 12, this gives you sort of like the overview from the potential scope. So first off, and around the company goal and that disruption of the RNA therapeutic space is expanding the scope of diseases that we can look at beyond the liver. Secondly, is around that selection of the most potent oligo type, and, in most cases, using an siRNA. We're able to achieve ED50s in the nanomolar concentration. One of the other factors is also around being able to enable pretty infrequent dosing. We can deliver a single -- an AOC conjugate and still see reduction in our target in nonhuman primates 12 weeks out after a single dose. And then the fourth element around that is also the reproducibility and scalability of the technology, building on decades of experience of the manufacturing of monoclonal antibodies and conjugation and then also, with regards to siRNAs. I'm now going to switch gears a little bit and look at our lead program, which is AOC 1001, which is for a disease called myotonic dystrophy. Myotonic dystrophy is a rare genetic disease for which there are no approved therapies. It's estimated that there are about 40,000 people in the U.S. living with myotonic dystrophy. In many cases, this disease is ideal for an RNA therapeutic. But up until this point, no one's been able to successfully deliver the oligo to muscle cells. The disease is devastating. And the quote on this slide is from Karin, who is living in DM1, as she describes the lack of shear energy to be able to take a single step and the daily struggles that she has. So we're lacking at the target of the disease is knocking down the mutated DMPK gene. If we move to Slide 14, this is in nonhuman primate, where we're able to show after a single dose of our AOC, were's able to achieve knockdown of greater than 75%. And that knockdown goes out past 12 weeks. So you can get a very effective knockdown with 1 dose and get a really good durability of action out past 12 weeks, which is the typical type of thing that we see with siRNAs, where the siRNA when it's loaded into that risk complex becomes very stable. So this durability wasn't so much of a surprise for us knowing from our understanding of siRNA therapeutics. Now let's also go a bit deeper. So if we move to Slide 15, this is looking at targeting both cardiac and diaphragm. It's really important in myotonic dystrophy to be able to knock down the DMPK gene in the heart and diaphragm. 70% of the causes of morbidity and mortality are cardiac or pulmonary related. And what you see here is pretty much a reproduction of the picture that you saw earlier, very effective knockdown in the 75% range, and you get single dose and you also get that durability even 12 weeks out after that dose. Now going deeper again and going -- moving to Slide 16. So Slide 16, this is looking at a whole range of different muscle types. It's an aspect of, "Okay, can we reproduce this in a whole range of different muscles?" It's the same picture as what you saw before, being able to achieve knockdowns in the 80% range after a single dose. So you get a [ consistent ] knockdown across a whole range of your various muscles, and, importantly, also including the cardiac and the diaphragm. Now moving to Slide 17, one of the other advantages of the siRNA approach is the fact that the risk mechanism exists in the nucleus and in the cytoplasm. And what we looked at here, what you see is, again, looking at that knockdown based on a cytoplasmic fraction and a nuclear fraction. Again, no surprises here. This is working. This is building off the data from many others, people like David Corey at UT Southwestern, who very much shown that you can knock down a genetic target in the nucleus with the use of an siRNA approach. We're really excited to be able to take this program into the clinic in the second half of this year. It's very much what we've been able to show is a reduction of that messenger RNA in relevant disease models, really long duration of action in the nonhuman primates. And we know, from others, that nonhuman primates are very predictive as you look towards humans. We also have a very well-established and set of scalable methods for our manufacturing. Now finishing up, I'm going to move on to -- move on to our FHSD program (sic) [ FSHD ], which is on Slide '19. FHSD (sic) [ FSHD ] is, again, a rare disease, for which there are no approved treatments. The lady in this slide, Amy, she is a passionate patient advocate. She's pictured in front of paintings. She's actually a very talented painter, but because of her disease, she can no longer hold a paintbrush. One of the even sadder facts is that Amy took up painting because her first love golf, she was no longer able to swing a golf club without falling over. It just gives you a sense of how devastating a disease is for the people impacted and living with FHSD (sic) [ FSHD ] today. And as I said at the beginning of the presentation, one of the things we were really excited about to announce this year was that our scientists have been able to bring this program forward, and we're now looking to get into the clinic in 2022. If you move to Slide 20, FHSD (sic) [ FSHD ] is actually one of the most common forms of muscular dystrophy, and it's typically characterized by a progressive loss of skeletal muscle. And while the initial signs appear in the face, shoulder, arms and trunk, it actually impacts the whole body. And again, we very precisely know our target, which is locking at the DUX4 gene. And this disease is caused by an inappropriate expression of that gene. If we move to Slide 21. Slide 21 looks at the overall program, so we know our target, which is looking at DUX4. We're also able to use a mouse model with the human DUX4 gene. And we've been able to show that our AOC in FHSD, (sic) [ FSHD ] we've been able to reduce the expression of DUX4 and also those biomarkers. We are also planning this year to initiate a natural history study. So this is where you also see a part of the benefit of having a team that has that deep experience in rare disease, we'll be looking at starting that natural history work even before we get into the clinic. And as I said earlier, we're looking at initiating the clinical trials of this program in 2022. Now switching to DMD. So if you move to Slide 23 -- actually stay on 22 just for a moment. So we're advancing 3 programs here towards the clinic, looking at targeting Exon 44, 45 and 51. One of the things that we know about DMD is that these boys simply deserve therapy and they need either better therapies than they have today or, in some cases, like in our DMD Exon 44 program, where there are no available therapies. If we look at what gets us so excited around our potential in DMD, it's that aspect of being able to deliver an oligonucleotide very precisely to the muscle. What you see here is using the MDX mouse model of the DMD. And you'll see in the chart the very kind of thin blue bar at the bottom, that's essentially a mouse version of the Sarepta drug. And this is a comparison to our AOC, we were able to get a fiftyfold skipping, fiftyfold increase in that skipping. So it's pretty clear around the differences that you can get when you're conjugating your oligo to an antibody like a transferrin antibody that allows us to be able to access muscle cells. Moving to Slide 24. So in summary for our DMD program, we have a range of programs looking at different exons. And we've also seen that long duration of action and that very effective delivery of the PMO. And again, here, we're building on well-established and scalable methods of manufacturing. We're really excited to be able to looking for -- and looking forward to initiating our clinical program in DMD in 2022. Now switching gears again, as we go to Slide 25, looking at the platform expansion. So if you recall earlier in the presentation, I showed you the slide looking at knockdown in different cells and tissue types and also with using different antibodies. If we move to Slide 26, we've outlined some of the strategic partnerships that we have. So we're partnered with Lilly in the immunology space. It is a collaboration where they have 6 targets, which they have all selected. And that's really enabled us to be able to work with a company like Lilly, but also accelerate our own programs in immunology as well. And on Friday of last week, we announced a research collaboration with MyoKardia, looking at targeting the heart. Again, it's a single novel target in that collaboration, allows us to learn about targeting the heart and also accelerate our technology into that therapeutic area as well. Moving to Slide 27, Slide 27, looking at our third quarter financial results. If we go to Slide 28, we are very well capitalized as a company with over $340 million in cash. So we have the cash to do and to be able to do what we need to do to meet our goals. Moving to Slide 29. From an aspect, what I've been able to share with you is some of our excitement around what we're doing here at Avidity, that aspect of being able to power the -- to harness the power of an Antibody Oligonucleotide Conjugate to address a broad range of diseases as well as that aspect of how we're building the company to really build an extraordinary company to deliver these therapies to patients. Our pipeline is progressing on track, we're very excited to take AOC 1001 into the clinic in the second half of this year. Our scientists did a terrific job last year in being able to accelerate our FHSD (sic) [ FSHD ] program and bringing that into the clinic in 2022, and also our DMD programs in 2022. Overall, our goal, as a team, and if we move to Slide 30, is to -- and our mission is to be able to improve the lives of people affected by serious diseases by advancing what we believe is a new and really exciting class of RNA therapeutics. And looking to be able to change the lives of people like Luke, who is, today, living with myotonic dystrophy so living with DM1, and doesn't have any approved therapies available to him. With that, [ Cat ], why don't we get into the Q&A?

Fantastic. Thank you, Sarah. And I think we'll also bring out the members of your team on the screen. So do you want to do a quick introduction of who are joining you here?

Absolutely. Just waiting for the last one to arrive. And there he is. So I am joined by Jae Kim, who is our Chief Medical Officer; Mike MacLean, our Chief Financial Officer; and the brains of the operation Art Levin, our Chief Scientific Officer, also he's shaking his head with me.

[Operator Instructions] But maybe Sarah and team, just to start off, can you give us some guidance around which medical conferences or other symposia we might see more data at this year, both around the platform as well as some of the individual programs?

Yes. As you can see, [ Cat ], we've got a pretty busy year and a rich pipeline. So absolutely, one of our goals, as it always has been, is to make sure that we publish and be presenting at key scientific meetings. That's very much our plan for this year. And as we get nearer to those events, we'll give guidance and releases around those timing. But really looking forward to being able to share some of that -- some of our data much more broadly.

And then for the most advanced programs, the myotonic dystrophy, what are some of the key ongoing preclinical activities and sort of gating items to getting the IND submitted and first patients enrolled?

Yes. So we're currently in GLP talks, and the team is very actively working on preparing for the clinic. And what I'm going to do is ask Jae to elaborate a bit more on that and the work that he and his team have been doing. So Jae, over to you.

Thank you, Sarah. As Sarah had mentioned, we are on track to do DM1 patient to the second half of this year. In support, we are well along in our IND-enabling toxicology studies and CMC activities. With the absence of approved therapies for DM1, we appreciate just how important it is to get this therapeutic to patients as quickly as possible, and we are gearing our efforts with that in mind. We are talking with patients, caregivers, disease experts and health authorities and collaborating with the end DM1 natural history study. Also, we are building a world-class development team experienced in rare disease to execute on our program as we look forward to transitioning into a clinical phase company later this year.

Excellent. So let's maybe switch topics to DMD, which I know is sort of top of everybody's mind right now. So let's move and start with the biggest topic, the Sarepta news last week. How does that change your view of the competitive landscape and your development strategy for the Exons you've already identified as well as any others you might want to look at?

Yes. I think, first off, it's important to say that it was really sad news for those boys with DMD, in particular, for -- given the fact that they were doing that trial despite the pandemic and doing those clinic visits. So it was -- first off, it was really sad news for patients. From us and how we look at our DMD program, really our excitement around the program has remained the same as to what it was before in terms of we very much are looking forward to being able to deliver AOCs to those patients. And maybe, Art, if you want to talk a little bit more around that and the whole work that you and the team are doing? Art?

Sarah, good job, by the way. Look, the boys at DMD remain in need of transformative therapies. It's very clear that the existing therapies, while -- have showing some activity with biomarkers, really have not progressed to the point where there are massive functional changes that can be attributed to treatment. And of course, with a technology like ours, with the AOC technology, as you saw in the data slide that Sarah presented, the data that we've been able to generate in animals really are indicative of the fact that we're getting an order of magnitude leap in potency over some of the existing therapies. And we think, with that kind of change in activity, of course, the greater the activity that you have with any given therapeutic agent, the less dependent you are on biomarkers or less dependent you are on small changes within population sizes. So we are looking forward to being able to actually demonstrate clearly in our DMD clinical trials the fact that we have actually changed the nature of splice skipping oligos to 1, which is much more potent than the existing therapies. And really, we believe that our programs can be used as primary therapeutics or in conjunction with gene therapy, but really, the bottom line is, this is a patient population I know well, because we really need to get this deserving patient population a therapeutic agent.

That's very helpful. And just how did you think about the Exon selection so far? And how would you sort of take that strategy forward in terms of selecting other Exons where you might want to develop an AOC therapy?

Yes. So we have 3 programs within DMD, 44, 45 and 51. That aspect of selection of Exon 44, it is really -- it's important because it's around how we guide as when we look at starting potential programs. For the boys with Exon 44, there's no therapies available. So for us, that was very much a larger call -- first place to start. And there's a great deal of synergy from one program to the other as it's the same antibody, same linker. And then in this case, where we're doing -- where we're conjugating a PMO to it.

Great. So we do have an audience question here. So can you contrast the merits or limitations of AOC with the various competitive methods of muscle delivery of genetic material such as peptide conjugates, lipid, CET-mediated or virus-mediated? And what gives you confidence in AOC over these 3 other methods?

Yes. So I'm going to let Art answer this in terms of -- and one of the aspects I'm building on is around our AOC technology, as I said in the presentation, was developed entirely in-house and was developed after very specific years of engineering. So, Art, maybe you want to talk around that approach and why we went down the AOC approach as well?

Exactly. Thanks, Sarah. So in fact, Sarah raises the perfect point and that is, when we were designing this therapeutic modality, we've looked at multiple options for delivering oligonucleotide therapeutics to other cell and tissue types, including muscle. And the answer that we came up with time and time again was to leverage the experience that we have in industry delivering safe monoclonal antibodies, the fact that there are dozens of manufacturers of monoclonal antibodies and monoclonal antibodies tend to have placebo like safety now that we've learned how to design them, and we've certainly taken all the lessons that we could from them. So our goal here has always been to take the most well-defined technology and use that as a means of delivering the oligonucleotide therapeutic to muscle. The other technologies, of course, all have potential, but I don't think any one of them, in totality, has the same -- all of the same great attributes that a monoclonal antibody has. Eons of evolutionary selection have created antibody structure the way they are. And so we -- with that technology, we don't have to worry about filtrations. So we get better pharmacokinetic profiles. That, combined with industry experience, really made that the right way to talk -- in our minds, and the data that we collected suggested that, that was the most efficient way to deliver the oligonucleotide therapeutic to muscle.

Great. So we've got another audience question, which I think tagged on to this question quite nicely. So speaking of the improvements you mentioned using your technology, do you believe that is a function of the oligo, the delivery or both?

So I think that -- I'll pass that question to Art. I can see him smiling because he's itching to answer it.

Well, I think actually Sarah actually already answered that question way back into about Slide 5, and the answer is that everything mattered. Clearly, each one of those components, including the linker, which the questioner didn't address, each one of those components and the way that the molecules were arranged 3 dimensionally in space made a difference. So it's really going back to this great team that we have behind us, you're not seeing us -- that you're not seeing here is we have a lot of really serious bioengineers that are -- that really want to push the envelope in various ways. And we really did push the envelope to come up with this technology. So yes, it turned out that everything -- like any good engineer, they would tell you that everything mattered. There was -- there were no easy spots.

Great. So then with the FSHD program, which is one of the things that you were able to accelerate, that's something that people are really excited about. So you pulled forward into 2022 in terms of first patient in. Would you mind just discussing what are sort of, again, the ongoing preclinical activities and some of the gating factors to get an IND submitted and first patient enrolled?

Yes. So maybe I'll start, and I'll pass to Art as well. One of -- because I would like to say first, how -- being able to bring forward the FHSD (sic) [ FSHD ] program was a result of 2 things. One in terms of our very successful IPO and being able to have those cash resources to say, "Okay, how can we do this quicker." And then also very much the dedication from our scientific team who've been working in the lab through the pandemic and have been very engaged with the patient community and really understanding the importance of being able to get a therapeutic for these patients. And maybe, Art, if you want to talk a little bit around the work that's ongoing there right now.

Sure. So between now and 2022, we have the typical activities that you'd expect for IND-enabling activities, things like Tox DK, CMC activities. In the meantime, we're working with key opinion leaders, we're working with patients, as you saw from the slides, we're in contact with the patient community in hopes of helping -- using their input to design better clinical trials. And really, we're taking this time to really take advantage of the fact that we've gained some time, remarkably enough, as Sarah said, the team did a spectacular job during the pandemic, finding odd hours of the day that they can get in the lab when the lab wasn't crowded. And between our activities in the laboratory and our work with the community and, again, the key opinion leaders, it's really giving us a much better understanding of how to move forward with our clinical trial designs and what really matters for the patients.

Yes. That's great. Well done to the whole team that's not on the screen here. So you also just announced the MyoKardia collaboration, which is obviously a very exciting advancement of the platform into other tissue types. Would you just mind reminding us what is included in that collaboration? Who is responsible for what? And when we might see the first data or programs advancing out of that collaboration?

Yes. Look, firstly, we're thrilled to be working with MyoKardia. They are, I think, as everybody knows, expert in being able to target the heart. And it's very much the type of collaboration that we've talked about that we'd look to do to expand the technology. Working with an expert in a -- working with a company with that deep expertise in a specific field, so we can partner with them, learn from them as well as having programs with that partner also develop our own as well. So MyoKardia is working on a novel target. It's a single target collaboration, so we still have the ability to target the rest of the heart and really have the opportunity to work with an industry leader. It will take a while from an aspect of news coming out from that program because this is a research collaboration. So I wouldn't expect anything sort of coming anytime soon. But the work is certainly very much -- we're really excited to work with the MyoKardia team and really excited to get going with that collaboration.

Yes, fantastic. Great. So we had another audience question come in. Could you comment further on the use of siRNAs versus other oligo types?

Yes. So look Art has spent a large part of his career, I won't say how long, Art, because obviously Art's only 30. So he started when he was -- literally spent 30 years towards in the oligo space. Art, if you want to talk about the different oligo types?

Absolutely. So yes, so I have worked with all the different oligo types actually in my whatever years in the field. And what we've learned over the past couple of decades is that being able to take advantage of the RNA inducible silencing complex and using an siRNA modality compared to an antisense modality has a number of different benefits and significant benefits. The siRNA platform is taking advantage of a process, which has actually evolved to display the oligonucleotide that's loaded into risk to the gene to messenger RNAs as they're being transcribed. And so we're using actually the molecular mechanism there to perform a function for which it evolved. In the case of antisense molecules, you have highly chemically modified compounds with lots of sulfurs in them, which tend to have some toxicities associated with them, which I focused on extensively. But there, you're highjacking a different mechanism of action. You're highjacking an enzyme, which is present or actually degrading products during replication. So you're taking one set of enzymes and are using it for the purpose for which it be evolved and another one you're really trying to highjack it and get to do something that it's not doing. What does that mean in practical terms? Sorry, I went on a little bit long on this one. What does that mean in practical terms? In practical terms, it means that we have activity, as Sarah mentioned, with nanomolar concentrations or even picomolar concentrations, whereas in an antisense molecule, you may need micromolar concentrations. So that's a couple of orders of magnitude, at least difference in potencies, we're being -- we're taking advantage of that.

I'm very much -- no, I'd add as well, Jae on our team, he joined Avidity from Alnylam so has a lot of experience working with siRNAs in the clinic as well. So it's matching that sort of research expertise with that clinical expertise offer.

Great. So I see no other questions in the portal. So with that, I would like to thank you, guys. Congratulations on all the progress since the IPO, and we're very excited about what lays ahead for Avidity in the next year.

Yes. Thanks so much, [ Cat ]. Take care. Bye.