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

Second day of the BofA Healthcare Conference. My name is Geoff Meacham I'm the senior biopharma analyst here at BofA. We're thrilled to have Avidity Biosciences with us on stage. And so with me, Sarah Boyce, President and CEO; Mike Flanagan, Chief Scientific and Technical Officer; and Steve Hughes, Chief Medical Officer. So thank you.

Thank you for inviting us. Love to be here.

So Sarah, maybe talk a little -- just to give us, like set the stage, give us kind of the 5-minute background for those on the webcast, figure that may not be as familiar, and then we'll get into some questions.

Sure. So at Avidity Biosciences, we are the leaders of RNA delivery. If you look at the vision of the company and what we're trying to do, it is 2 things. Firstly, we set out to revolutionize the RNA space by cracking what's been one of the fundamental challenges in the space, which is that of delivery 2,000 tissues outside of the liver. We've done that. And then the second aspect is also to look to make a profound impact in people's lives. That aspect of the profound impact really directs where we direct our technology, and that is typically in rare diseases, where we lead fields, where we're in spaces where there's been no other drugs approved or not being specifically approved for that indication. And in many cases, we're carving the way in regulatory pathways and looking to make a profound impact in people's lives. The way we deliver is through our Antibody Oligonucleotide-Conjugate technology or AOCs. So the antibody, as we all know well, antibodies are wonderful targeting receptors on the surface of cells. We use a transferrin antibody to get our RNA to where it needs to be. As we sit today, we have 3 programs in the clinic. Our lead program, del-desiran, is for myotonic dystrophy. We are on the cusp of initiating our first Phase III study, which is the HARBOR study. We received breakthrough designation last week. Was it last week? It was last week, time goes so fast. So we were thrilled to have received breakthrough designation last week. And we'll also, this year, we have readouts on our 2 other clinical programs, this quarter on FSHD with AOC 1020, and in the second half of the year for our first DMD program, targeting boys and young men amenable to Exon 44 skipping and that program is called AOC 1044.

So let's -- before we get into the pipeline, talk a little bit more about the platform. What have been some of the technical challenges and what -- maybe give us kind of the history of the AOC platform and how you guys came to develop it?

So we have Mike with us, he is scientific and technical officer. So that is a great question for Mike.

No. We've been working on this technology for over 10 years. So -- and really looking at every aspect of it from the siRNA or the morpholino oligo that we deliver for skipping to the linker, whether we use a cleavable linker, noncleaveable linker looking at the antibody and different antibody formats. So every piece of the AOC technology, whether we're targeting transferrin or a different receptor, we really use this kind of 10 years of learnings to really hone in on what we think is the best drug candidate. And so that's how we've done it. Along the way, of course, we've developed a lot of inventions and have a good grasp of how each different part of the technology works.

That's exciting. Yes. I think when you're looking at the indications, I mean, obviously, you guys have an orphan focus. But for some of the larger orphan indications, talk about being able to scale up using the AOC platform as you move from kind of Phase I to Phase III and then beyond?

Yes, that's a -- we don't get that many questions kind of on manufacturing. So yes, it's -- so we've been able to do that. It's one of the reasons why we really like full-length monoclonal antibodies. There's over 100 monoclonal antibodies approved to date. There's tremendous amount of ability to make monoclonal antibodies across the world. So that's -- and they generally give you very high titers. So being able to scale up from a Phase I kind of clinical trial where not treating that many patients to being able to treat thousands of patients, I think that is really a key thing to be able to scale that. And then along with the siRNAs now, interestingly, there's a lot of nucleic acid firms out there that can make as siRNAs. So we've been able to tap into those. So the technology and the ability to have multiple sources of where you get products has really helped us to be able to go from those hundreds of patients to thousands of patients.

Right. Makes sense. And so let's talk about sort of the DM1 patients. So maybe catch up where we are today and then we can talk about Phase III in the market, et cetera.

Yes. So as I said, we're on the cusp of initiating the HARBOR study. We -- on Monday, the study went up on clinicaltrials.gov. As we speak, we are initiating multiple sites, so that initiation of the study is very imminent. From an aspect of maybe just pulling back and talking a little bit about myotonic dystrophy, and Steve, it'd be great if you could expand on it as well. Myotonic dystrophy is a devastating rare disease. It's actually -- it's orphan. We have orphan drug status as well as breakthrough and fast track. And there's estimation to be about 50,000 people living in the U.S. with myotonic dystrophy today and the same in Europe. There is no treatments available, and we were the first people ever to start a Phase III program. So we're leading the field, and we were also able to have very successful discussions with the regulators around the world to get alignment on the Phase III design for the HARBOR study. But maybe, Steve, if you want to talk a little bit more around the disease to give people context.

Yes, sure. So myotonic dystrophy is a relentlessly progressive disease. It actually doesn't just affect muscle, it's a multisystem disease. It's caused by a trinucleotide expansion and the RNA, that's a consequence of that expansion in the DNA sequesters muscle blind, which is an essential splicing factor. And so thousands of different RNAs and subsequent proteins end up being abnormal, and that causes multiple different difficulties for the patient. So from a muscular perspective, they have progressive weakness over time. They also have a symptom called myotonia, which is an inability to relax the muscles and that's one of the cardinal symptoms of the disease. It's in the name myotonic dystrophy comes from the myotonia that they experience. And that myotonia can affect just about every muscle in the body. So it doesn't just affect day-to-day activities and can affect breathing. It affects mobility. So significant symptoms. It's not some dominant disease, which means that multiple members of the same family are affected, and it also has something called anticipation where successive generations can have a longer and longer and longer trinucleotide repeat track, which makes the disease more severe. So you can find that parents are looking after affected children as well as looking after their own parents within a single family. So really is a disease with a huge potential impact on families as a whole. As I said, we're the first people to really be able to demonstrate in the clinic that we have a therapy that's potentially able to make a profound difference to these patients' lives. We shared data earlier this year from our MARINA program, which is Phase I/II study. We've been following patients in that study for a long period of time now. Most patients have had at least 18 months of continuous treatment, many patients with more than 2 years of continuous treatment. We showed really great long-term safety and tolerability, which is great for the patients, but also we were able to show that we had very -- quite remarkable improvements in myotonia that occurred very early on in these patients. We showed improvements in muscle strength across multiple different measures and also improvements in the patient-reported outcome measure for activities of daily living. All of those endpoints that we were able to show improvements in the MARINA program are actually the key endpoints in the HARBOR study, our Phase III study. So we really think that we've essentially derisked that. And one of the comparisons that we did was with the END-DM1 [ natural history ] dataset which is a contemporary [ natural history ] dataset. We were able to match patients to the patients in our study and show that not only compared with placebo where we're seeing improvements, but also compared with the natural history, and we are really essentially reversing the course of the disease for those patients, which is great news.

Well, let me follow up on that because if you -- the longer a patient goes on, do you see a broader sort of breadth of and depth of clinical benefit? I know, obviously, the primary endpoint you have the hand test. But beyond that, though, if you look out 6 months, 18 months, do you expect to see a broader, more robust benefit?

Yes, it's a great question. So the data that we presented recently was followed was a year of follow-up group for the patients, and we saw that in the natural history data set patients relentlessly decline for most of the end points. And we showed improvement for all of the endpoints that are going to be the key endpoints in our Phase III study. But perhaps most importantly for the patients, those improvements occurred really, really early, with a lot of the improvement just occurring within weeks for the myotonia and within a few months for the muscle strength endpoints. And they did continue to improve out from the 6-month to 1-year time point as well. So it does seem that we are able to show continuous improvement over time for patients as compared with the natural history, which is great.

And was that captured in the HARBOR design? I guess the question is what new elements of HARBOR can you introduce to show the totality of the benefit?

So as I mentioned, though, the endpoints that we've already shown improvements on are the ones that we're testing statistically in HARBOR. What that means is that we've been able to do really robust panel calculations, and we actually have a lot of power for our primary endpoint and our key secondaries. We are looking at other endpoints as well in order to capture the many different facets of the disease. We just haven't disclosed the other endpoints within the study, but we are looking at a number of things. The clinical trial is a year long, as a year of follow-up. But because we see improvements in patients very early, we're able to cut the primary end point before the 1-year time point. So we're actually doing the primary endpoint at 30 weeks, and our goal would be to file with that 30-week data and provide the final data from the study during the review period.

If anything it's a really simple study. From a Phase III perspective, primary end point, we have 3 key secondaries. We've already seen that we can hit those in the MARINA and the MARINA open-label extension study. And we designed it to be a really patient-friendly study as well. So there's no muscle biopsies. And we're also very aware that getting a drug approved and getting a drug reimbursed, they are often 2 different things. So we've made sure there's that quality of life endpoint in the study, and this study is also designed to really optimize the market access strategy as well.

And Sarah, as you have progressed to Phase III, talk a little bit about the investments you're going to have to make now from a commercial reimbursement access perspective. I imagine that, that was incremental previously, right, in the Phase I/II, but now it's a different evolution, right?

Yes. So as a leadership team at Avidity, we all have deep experience in developing and launching rare disease drugs. So it has been our intent from the very beginning from when we IPO-ed in the rare disease space, commercialize our drugs ourselves. So a lot of that work has already started quite a long time ago. We've had patient advocacy established now for almost 5 years within the company. We brought market access on early, medical at first. And some of those key functions that you need from a marketing aspect. We recently had one of our Board members who joined us as our Chief Strategy Officer. He has deep commercial experience. And sort of now you'll see where we start -- we have MSLs in the field now. So we're really locked and loaded from that aspect of launch preparation work. And that starts very early and then you continue to build and grow. It's really about you establish the piping work in the company and establish the work patterns, the matrix patents, and then from there, you build out. So -- and we're about to actually have our first person in Europe as well. So also building out around the world.

Well, let me ask you that. Yes. So when you think about the market and the opportunity. Help us with kind of the geographic kind of rollout because I know for a lot of rare diseases, by the patient in the U.S., maybe you have better, more seamless reimbursement, but the real patients by numbers are outside the U.S.

Yes. Yes, you're exactly right. In many ways, it is the inequities that happen in the rare disease space is one of those aspects that we're really looking to do our best to -- we're developing this drug globally. We have -- we're looking to recruit -- have 40 sites in the study. And by having a global study to set the foundations in those key markets for ultimately your launch in those markets. And a big part of it is building out strategically. And also, it also really helps when you have a transformational drug like del-desiran on your hands as well. So don't get me wrong from that perspective. But it's always been our intent from the very beginning around to look a bit from a global aspect.

Right. Right. And so Europe, you said just started, but have you built out MSLs and patient identification, type of specialists in other geographies?

Yes. Some of that is really starting now. So we have been in discussions with multiple global regulations, and that includes U.S. and Europe as well as multiple other countries as well. And a lot of that work is starting now from an aspect of really understanding the nuances of those different countries.

And last question, when you think about the HARBOR study. Because you're blazing sort of a new trail, you'll have somewhat of a -- you have to build the execution of the study. You have to train the physicians, and again, around the world. How do you see that playing out? It's also your first drug. So there's a lot of firsts, right, that you have going on. But I mean, as you said, I mean, at least you have a drug that's unequivocally effective. So that makes things easier, I guess.

Yes. Yes. Look, I mean, this is what we hope the first of many. And sort of clinical operations team for the HARBOR study, they got this. It's interesting. There's a very kind of calm confidence. They know what they're doing. They've got that plan. They know how to execute. They're often loaded.

All right. Sounds good. All right. So let's turn to DMD. So when you look at biomarker data, I mean, this has been a bit of a tough indication for many companies across the board. So kind of help us with kind of the your biomarker data, the level of sort of confidence as you progress?

Yes. I would say that we demonstrated earlier or earlier this year that it's unsurpassed delivery in healthy volunteers. And that delivery matters because the amount of morpholine oligo that you can get into cells that then allows skipping is really a key driver. And we just have unsurpassed levels and that's led to statistical difference in exon skipping in healthy volunteers. That generally don't skip that well because they're healthy patients. But what others have seen is that with high levels of PMO into cells, they even then translates into better disease skipping, exon and then dystrophin production. I mean we're like Sarah said, we're making profound differences in patients' lives. So we're not looking for like incremental changes of like 1% dystrophin to 2%. We're in a differences that are above 5%. We're hoping to get to kind of Becker's type of phenotype or beyond. So we're really trying to make a big difference.

Makes sense. And the -- when you progress to Phase 1, so just walk us through kind of the -- what are the steps from here? What should investors focus on the DMD program as you go through the clinic?

Steve, do you want to take that one?

Yes. Thanks, Mike. So at this point, we've completed the healthy volunteer portion of the study. We're well into the patient, portion of the study. We'll be disclosing data from the first patient cohort in the second half of this year, which will focus on muscle delivery safety, but more importantly, dystrophin levels in the patients. And then all of the patients that are in this first study have the opportunity to progress on to an extension study where they'll continue to receive active treatment. And then as part of that process, we'll be having conversations with the regulators as to next steps to move towards approval in the United States. And as you know, the United States is an accelerated approval market, so you can get approval just on the dystrophin levels. And then as we move further forward with the development program, initiating a confirmatory study looking at clinical endpoints. So all of those things will play out over the next couple of years.

What does success look like? You mentioned you're not looking to incrementally add dystrophin, are you looking to meaningfully show performance better than standards of care, which are suboptimal already? Or is it sort of transferrin -- I mean, is there sort of an outcome that you're looking for that would really be highly confident to go into registration?

So as Mike mentioned, we're really looking to significantly improve over the current generation of exon skippers which have really had fairly mediocre levels of dystrophin production and push patients into the Becker's range or hopefully even higher. That will be the initial bar to getting approval in the United States. And then as we are able to treat a broader range of patients in a confirmatory study, we really see meaningful differences slowing down the rate of decline over time or perhaps even improving some patients. So that's really our goal.

I think it all -- what you hear is how it all comes back from being consistent with our vision around we're looking to make profound differences. When you have a technology like ours and we have been able to open up new spaces, when we go after, we're typically going after for our own programs, diseases where there's nothing approved. There's nothing available or why we think we can make a big difference. And if we can't, then that's not something we'll do. We find that we can't, then -- but we've seen real reproducibility and consistency in the platform from a delivery perspective. But bottom line, we're looking to be able to make a profound improvement.

Given the AOC platform, is there anything that you're thinking about as you look to a registration study that you can capture that's novel that could maybe expand the breadth of the benefit. I guess, progression to Becker's could be maybe a more -- a more novel end point, yes, but I wasn't sure if you think of any other?

So the transferrin receptor antibodies don't just deliver to skeletal muscle. We have really good delivery to cardiac muscle as well. And of course, myotonic dystrophy and Duchenne muscular dystrophy as well as being skeletal muscle diseases also cardiac muscle diseases. So we would hope that we would see improvements in that aspect of those diseases as well. Even though those aren't the end points that we're looking at in our pivotal trials. And there's great potential to benefit patients in that respect as well.

And similar to the myotonic dystrophy indication, can you pretty rapidly advance to a Phase III, like what breadth, I guess, of Phase I experience -- Phase I/II experience do you want to have before you go into a Phase III bigger population and maybe FDA is a little bit more experienced in Duchenne. So I wasn't sure if that factored into the development plans.

Yes. So for the accelerated approval, our Phase III confirmatory study needs to be ongoing prior to getting your registration. So our development plan kind of factor that in, in terms of timing of the next study. We'll have a very good idea of how we're performing in patients later this year when we do our first readout. And of course, we've already shown unsurpassed delivery to muscles. And as Mike mentioned, the exon skipping and dystrophin production is really a game of numbers, the more PMO you put in, the better the results that you would anticipate, and we know that PMOs work.

Makes sense. Okay. So FSHD, maybe we'll start off with kind of the market opportunity. And it's been -- we haven't had a lot in development, but it has been 0. So I just wanted to compare and contrast, right, the AOC platform.

Yes. So this is, again, we're leading the field of RNA delivery. And we're doing things for the first time. So for FSHD, we're the first program in AOC 1020 as the first drug ever looking to precisely target the underlying cause of the disease, which is the aberrant expression of DUX4. We know we can deliver to muscle cells. We've shown that twice now. Obviously, we'll be looking to see reproducibility of that. But it's really an aspect for FSHD where it's again, it is a devastating rear disease. Today, there's nothing approved and available for people living with FSHD. It's a large orphan disease. It's not that dissimilar in size from myotonic dystrophy. So it also presents an opportunity, we hope, to be able to make a profound impact in a lot of people's lives. And maybe, Steve, do you want to set a little bit of context for the disease for everyone again.

Yes. So FSHD, again, is a devastating disease, another genetic disease, multiple members of family is affected. Also, unlike with myotonic dystrophy, about 1/3 of cases, the de novo cases with no family history at all. It can take patients, particularly the de novo cases quite a long time to get diagnosed, and tend to bounce around before they get an accurate diagnosis. The muscles that has a bit of action for kind of in the name again, it's facio-scapulo-humeral disease often starts in the face. It affects the muscles that stabilize the shoulder blade and it affects the muscles of the upper arm early on. And what patients experience has built difficulty in raising their arms above the head and that can cause a lot of difficulties with self-care, for example, just doing simple things like brushing your teeth, washing your hair, putting on a shirt, all of those kind of things. And that progresses over time and then more muscles become affected and the muscles are the lower limb as well. About 20% of patients end up requiring a wheelchair over time. Some patients have onset in childhood as well and progress very, very quickly. So significant levels of disability even in their late teens and early 20s. So really a devastating disease. There is a voice of the patient that's been put out within the past few years that really gives a very nice overview, people would like to read it from the patient perspective of how the disease affects them already would encourage people to read that to get a great idea of how significant this disease is.

Can you talk about data -- initial data disclosure and maybe what, again, success looks like there?

Yes. So in terms of we're really looking forward to reading out, this is a [ first ] like data from the FORTITUDE study, which is our Phase I/II study this quarter. So coming soon. From an aspect in terms of bad look, it's an early time point. So it's the foremost time point. And what we have said is we'll -- where we have a full cohort, we will read out a full cohort. So obviously, at a minimum, people can look forward to the 2-milligram cohort. And a big part of this and maybe Mike, if you want to talk about it, is around looking at the biomarkers, and this aspect of what happens when you directly target DUX4?

Yes. So we -- FSHD is a perfect disease for siRNA technology. And that's because you have to think of the disease as a prevention disease for siRNA. So we're going to deliver siRNA to the muscle. And then whenever DUX4 is apparently expressed, siRNAs are going to be on board and we'll just destroy the DUX4 RNA. So really, because DUX4 is sporadically expressed in a few muscle cells, but causes damage across a wide variety of muscle cells, probably due to inflammation and other things, if we can suppress that signal, which siRNA technology is perfect for, AOC technology is perfect for because of the delivery that we know that we can do to muscle, it's a perfect type of disease or indication for our technology. Then -- so having that as a background, then what we expect is that by knocking down DUX4, we should see a change in the downstream gene signature. Realize that DUX4 is intractable to measuring biopsies. So we won't be measuring DUX4 specifically. That's due to its low expression and sporadic expression. But what you can do is measure the downstream gene signature. DUX4 is a transcription factor. So it turns on hundreds or even thousands of different genes downstream, that we can easily measure with QPCR, RNA seq data and the like. So we're expecting to look at a gene signature that we've chosen. We have a specific biomarker panel that partially overlaps Fulcrum's biomarker panel and is consistent with the academic panels that have been used. So we really like those downstream gene signature. And then, of course, just like DM1, we're also going to look at RNA seq data, and that gives you a broader view of that. And then we're also doing some exploratory biomarker work to see if we can get a circulating biomarker. So there is this technical challenge of a fine needle biopsy in your leg to be able to capture DUX4. So we would like to look broader if we can with like a circulating biomarker. So we'll be looking at all those different aspects and expect that our technology -- because of the unsurpassed delivery to muscle that we should have an effect on the disease and hopefully, a benefit to patients.

Perfect. And just the minute that we have left, so these are orphan diseases, muscular diseases. Looking forward, what's the -- is there -- is this an area that you want to evolve into other indications. The AOC platform, obviously, could work not just in muscle diseases, but pretty broadly.

Yes. So when I talk about being the leaders in RNA delivery that expands way beyond muscle. So we have a precision cardiology portfolio. We have a partnership with BMS. They have 5 targets. We also have our own targets. And that's where you potentially see some of the expansion into the larger indications. You'll probably see us do that with a partner. And when it's rare and orphan, that's the sort of thing we're going to look to develop and commercialize ourselves. We can also deliver to immune cells and a whole range of other cell types as well. But probably the next kind of franchise you'll see us build will be in the precision cardiology space.

Perfect. Okay. Thank you.

Thank you.

Thank you.

That's you.