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

Thanks for joining us at the Bank of America Healthcare Conference. I'm Tazeen Ahmad. I'm one of the senior SMid biotech analysts here at the firm. It's my pleasure to have our next presenting company, Avidity Biosciences. Sitting up here with me are two members from the management team. Those include Sarah Boyce, who is, of course, Chief Executive Officer and President; as well as Steve Hughes, who is the Chief Medical Officer. Sarah and Steve, thanks for joining us.

Thank you so much, and thank you for inviting us. It's great to be here.

So I've been starting off with macro questions from my companies. I think the one that might be most applicable for Avidity at this stage is how have, if at all, your interactions with FDA changed, let's say, in the last eight weeks, just given changes that have been happening over there with staffing and the like? And any kind of color you can provide on that would be helpful.

Yes. So maybe I'll start with our experience, and then I'll talk a little bit to the macro. So we sit with in Neuro Division 1 within the agency. We have seen no changes to the people that we have worked with and worked with consistently now over several years of -- on three different programs. We've found them to be incredibly thoughtful, scientific and collaborative as well as having a really good perspective on the patient need and the patient perspective. We have also found the division that we're working in consistently has hit every time line. And we have had that experience for a long time with them. So from that aspect, we have not seen any impact at all from any of the changes from a macro perspective within the agency. What I would say from an overall climate perspective for our industry, clearly, the changes that took place at the FDA are concerning. And clearly, there is the need for people to have their voices made and to be advocates for our ecosystem that is biotech and for how important American biotech is and how important it is that FDA has been the premier review agency in the world. It is the gold standard, and we need that to maintain and we need that to grow. And I would certainly -- I've been very much an advocate for our industry and our ecosystem on the hill, and I would very much encourage others to do the same. The time to do that is now. But from an Avidity perspective, we have seen no impact.

And thinking a bit ahead, can you just talk to us about where your IP resides?

Yes, our IP is domiciled in the U.S., and we have extensive IP around all three of our drugs and actually some of our drugs that are yet to be in the clinic as well as all aspects of our technology. Probably the next question is around where we manufacture. So why don't I do that one? We do manufacture drug in the U.S. We also manufacture in other countries as well. We have built our supply chain to eliminate redundancies in the system. Overall, our long-term strategy, and this has always been our plan, but clearly, it's very important now is to manufacture drug in the U.S. for the U.S., European drug in Europe for Europe and then Asia and drug supply through Asia, through a hub in Asia as well. So that's ultimately where we're moving to from a supply chain perspective. I would say we're not entirely there yet, but we do manufacture a lot of drug in the U.S. We do not manufacture in China. And we work with very well-established CDMOs that are very experienced in manufacturing antibody and the conjugation process and doing that at scale as well as the same on the SI.

So enough for the macro stuff on to Avidity. So can you just give us a quick overview of the company and some of the key highlights to be thinking about over the next six to 12 months?

Yes. So at Avidity, our vision is to revolutionize the RNA space and make a profound impact in people's lives. That's a vision statement that we laid out five years ago -- actually six years ago before we IPO-ed. And in terms of -- it's been incredible to see how that has come to life, both in terms of where we have been leading the field, both in delivery to skeletal muscle cells and now also to cardiac cells as well, but also where we're leading the field in each of the disease areas that we're in, both in terms of in myotonic dystrophy, in FSHD and in exon skipping in boys and young men amenable to Exon 44. We are now in very much late-stage development for all three of our programs. We announced at the beginning of the year that we are on track to file our first of three, our first BLA at the end of this year, which is del-zota for boys and young men amenable to exon skipping. And then also the HARBOR study, our Phase III study in myotonic dystrophy. The design of that study has been fully negotiated with both the FDA and regulatory authorities around the world. That enrollment is enrolling beautifully, and we are on track and on schedule to complete that enrollment in the middle of this year to plan. And then one of the things that is coming up this quarter is around FSHD. FSHD like myotonic dystrophy is a disease where there are no approved drugs for FSHD, there are no approved treatments for FSHD. We are the only drug and the closest are years behind us. And this is where we are in the midst of ongoing discussions with the agency around the accelerated approval pathway and what that looks like for FSHD as well as concluding discussions on global Phase III study for full approval as well as also providing an update from the FORTITUDE study. So a lot happening. And I think it's where you see just this reproducibility and consistency we see from our programs one after the other with regards to delivery, engagement of target, functional changes and now where we're getting ready to bring drugs to patients on a large scale.

So the indication set that you're working on are clearly areas of undermet need. But in recent years, they've become quite popular.

Yes.

Why do you think that is?

I think in many ways, we led the field. We have carved out the path. And we were the first people ever to crack delivery of RNA to skeletal muscle cells. Part of that discovery was through transferrin and targeting the transferrin receptor. And one of the things when you make huge breakthroughs like that, others follow. We always knew that was going to happen. It's also why we have a whole strategy around maintaining our leadership and already working on our next-gen technologies that we talked about at the end of last year. I would also say for FSHD and myotonic dystrophy, these are very large rare disease indications. Each on its own is about the same size as cystic fibrosis. So clearly, they are very attractive potential disease areas as well, and they've attracted a lot of attention.

So maybe let's focus on FSHD first and then we go to the rest of the programs. Can you just give us an overview of the program and where you are right now? You're talking to the agency, as you mentioned, about potentially accelerating your path forward. But can you just take us through the data to date?

Yes, sure. Steve, do you want to take that one?

Yes, sure. So we've got an update coming very soon, which will be the top line data for the first two cohorts in the FORTITUDE study, so the dose-ranging cohorts, cohorts A and B. And there, we'll be looking at data through the full one year of the study, placebo-controlled data, looking at functional endpoints, circulating biomarker, impact of changes in circulating biomarker on creatine kinase and also the remaining muscle biopsy data from the 4 mgs per kg cohort. You'll remember, we gave an update in the middle of last year, where we shared data from the 2 mgs per kg cohort. And there, we basically joined all the dots. We showed unprecedented delivery into the muscle. We showed that we were getting large reductions in the DUX4 regulated genes on muscle biopsy. So greater than 50% reductions in DUX4 regulated genes on a 4-gene panel, a 6-gene panel, a 41-gene panel. It didn't matter whether we used RNA-seq or whether we used qPCR. We still saw the big differences. When we looked at the circulating biomarker, we saw greater than 25% change in circulating biomarker, and that was accompanied by changes in creatine kinase, a marker for muscle damage. And then we also saw trends towards functional improvement across several different functional endpoint measures, including reachable workspace a composite of upper and lower body muscles on the quantitative muscle testing and several patient and clinician reported outcomes. We had another disclosure for FSHD later in the year when we selected the dose to move forward with. And so the dose for accelerated approval and for our full approval cohorts, I guess the full approval is going to be a separate Phase III study. That's 2 mgs per kg every six weeks. And we really leaned heavily into data from the circulating biomarker at 2 and 4, where we saw that at the 2 mgs per kg dose and the 4 mg per kg dose, we saw exactly the same. They basically sat on top of each other for the circulating biomarker, which tells us that we're really knocking down DUX4 hard at 2 mgs per kg, we're right at the top of the dose response curve. And that was mirrored by changes again in creatine kinase, where the 2 mgs per kg and the 4 mgs per kg dose sat right on top of each other, showing us that the changes or the profound reductions in DUX4 activation were leading to improvements in muscle health, reductions in muscle damage, et cetera.

So there's a lot of information there.

Yes.

The 4 mgs per kg has gotten a lot of attention, I think, because people were anticipating at the time that you would show more details. But can you just remind us about why it's going to take until now to see the additional details of the dose that you're actually now moving forward with?

Essentially, this is the end of the study for those patients. So Cohort C, which is the cohort that's targeting the accelerated approval, that's now fully enrolled and is ongoing. But the dose-ranging cohort patients have now reached the end of the study. It's time to give a meaningful update. We've got complete data on all of those patients through the entire study. It's placebo-controlled. And so now we're sharing the additional data that we weren't able to share earlier on.

Now with your decision to choose the 2 mg per kg versus the 4, you've been clear about what you saw and being able to compare the two. Is safety at all part of the discussion?

No. The drug is really clean. It's been when we disclosed safety data last year. And actually, we did disclose safety data at both 2 mgs per kg and 4 mgs per kg when we gave the update onto the dose selection. There hadn't been any serious adverse events. There hadn't been any severe adverse events, all of the adverse events mild or moderate, really, really clean safety. And we haven't had any dropouts either. All of the patients that have gone into the study have stayed on the study. So it's been very well tolerated.

I think in terms of in drug development, when you see two doses that basically sit on top of each other, you pick the lower dose. We did choose to shorten the dose interval and to move forward with 2 milligrams every six weeks. And that was really around -- clearly, we have -- as Steve said, the safety data looks great. So we're able to do so. But also around if you think about FSHD DUX4 when it switches on is bad. You need DUX4 to always be off. The way you make sure it is always off is that the siRNA is always there. And that was the reason around dosing 2 milligrams every six weeks to make sure the siRNA is always on board and is always ready to block if there is any expression. And of course, as Steve has already said, we were able to do so.

So you mentioned DUX4, and I wanted to ask you about that. How does the agency feel about it because there has been use of it -- attempted use of it before in FSHD by Fulcrum and that left more questions than answers, it seems. So how important is DUX4 for your program? And what have the discussions with the agency been like around that particular topic?

Yes. Maybe if I start and then maybe, Steve, you can add. In terms of -- so when del-zota entered the clinic, it was the first ever drug to enter the clinic for FSHD that directly targeted the singular cause of this disease, which is aberrant expression of DUX4. Previously, that had not been possible. In many ways, FSHD is perfect for an siRNA approach. It's just no one could deliver an siRNA before until we were able to do that. So very much, there is a direct positive line from aberrant expression to DUX4 to FSHD. I would say in terms of -- and obviously, we're on track with our guidance to provide an update on our discussions with the agency this quarter. We don't nor have we ever as a company, commented on ongoing discussions. We don't really feel that actually helps anyone. Once we have reached conclusion, we'll then provide a fulsome update around that and around those discussions, and we're tracking to do that this quarter. What I would say is that we have found consistently in all of our discussions with this division and with FSHD that our reviewers have always been very well prepared, understand the disease. They're actually very familiar with FSHD in part because of the Fulcrum experience and the urgency and the need for a treatment. And then also part of our job with in making an accelerated approval case is to be very rigorous as to how we outline that direct cause of the disease being singular, being DUX4 and then also around our ability to measure it through a biomarker. And in this case, we can do it in two ways. It's through the muscle biopsies and then also the discovery we made of a circulating biomarker that we can track in serum in FSHD patients, which really is game-changing for the community. So we're really looking forward to being able to provide that update coming soon because it's actually mid-May already.

Yes. Time is flying. So are you waiting for the -- have the discussions with FDA concluded and you're waiting for the minutes before you say anything? Or are they still ongoing and you need just clarity from them before you say anything publicly?

Yes. Once we have had conclusion and we've completed those discussions, we'll then provide an update. And it's in two parts. It's actually we have had a two-part process. First of all, we have had discussions and engagement around the design for our study to support full approval and global approval. We wanted to do that first and actually separate them. We wanted to do that first for two reasons. One, the full approval and actually getting an agreement on that study design was gating to starting the study. And then secondly, in having had the discussion around that, which we then have the discussion with subsequent regulatory authorities, we could also use that as an opportunity to ask some questions about accelerated approval to then guide our second discussion, which is very specifically in a lot of depth around the accelerated approval pathway. So it's a pretty complete discussion set with the agency that is more than one discussion and more than one engagement.

When you talk to physicians, what would they tell you the undermet need is? Because there are certain diseases that don't have any real treatments for which there may not be this urgent need to have something now where the agency might say, go through the full process. But there are other diseases where the consequences of not having anything can be quite dire for patients. So where on that spectrum are doctors landing on that topic?

Yes. I mean for FSHD, it is a truly devastating disease where there is a very high met -- very high level of unmet medical need. This is what the accelerated approval pathway is for. This is what it's for. I would say -- and Steve, I'd ask you to provide some color on this. The FSHD Society actually had a scientific session with the agency on Friday of last week. And then part of that was around discussions of the patient experience of FSHD. They also discussed biomarkers, potential functional measures as well. But maybe, Steve, if you want to give just a little bit more color on the disease and how it impacts people's lives and the lives of families.

Yes. So it really is a severe and high unmet need disease. We talk to patients all the time. We have a patient advisory council that advises us on our clinical trial design about how to think about the disease. We've all met with patients that have very profound diseases. One 23-, 24-year-old girl, she diagnosed with FSHD 12, now completely wheelchair dependent, reliant on her family members to even eat to be able to hold the cutlery in order to eat, chop up her food. Another one of our patient advisers that we speak to, not quite as severely affected as that yet, but living in fear every single day because when DUX4 becomes expressed, that can cause deterioration of a muscle group, the muscle that is expressed in very, very quickly. She tells us that she's fighting to go on a plane. She goes on a long-haul flight. She does not know that she will be able to get out of the seat and get off the plane because during the course of the flight, she could have experienced a deterioration of FSHD. And patients live in that fear every day at the FSHD Society interaction with the FDA last week. It was a very eloquent patient that was speaking and several of her family members are affected and affected much more than she is, but she talked about the things that she values about her life now, the things that she really looks forward to and being really scared about not being able to do those things in a year and not knowing which of the things she's not going to be able to do. So when you speak to patients, the thing that they value the most is stability. They want to know that you can actually prevent their disease from getting worse over time. They're coping today. They're in getting by, they've made adaptations to their life in order to live as they are today. But they want to know that they can continue to be doing the same things in one year, two years, five years that they can, now that affects lifestyle choices, it affects career choices, et cetera. So incredibly important to have a drug that will target the root cause of the disease and give them the hope of stability over the long term. And that's another one of the reasons why we really needed to make sure that DUX4 was completely suppressed throughout the entire dose interval so that these patients have the best hope for a long-term meaningful treatment.

So everything you say makes sense. So would you be surprised if you didn't get an accelerated path?

I think the -- with all of the discussions that we have had, they have been very productive, very collaborative. And we're actually going into a lot of detail around things around -- we have the circulating biomarker as well as the muscle biopsies. The study, the way we designed Cohort C was there's a lot of flexibility in there for us to negotiate with the agency. So that includes the ability around what becomes our primary. It also includes discussions about duration of follow-up. And our confidence is completely unchanged from where it was going in and if anything, has only increased as we have had a series of discussions around not just the ability to say the accelerated approval path is open. But it's also around this is what it looks like. We know what we need to do and that this is dialed in and dialed in as far as we can. Obviously, for del-zota, it was a little different because for del-zota, we actually had data around dystrophin and in our meeting with the agency about -- around del-zota. We agreed there were no more need for any more muscle biopsies. We had met the hurdle for dystrophin. So it's not going to be like that because this Cohort C is ongoing. But we're trying to be as robust and complete as we can be in those discussions. And also understanding the work we'll need to do to validate the circulating biomarker as an example. We can measure it two different ways. The validation process around that is also part of this package.

So let's move on to your lead program, which is DM1. You're in a Phase III program now. So can you talk to us about that journey to getting to this point and when the next catalyst for that program will be?

Yes. So maybe if I start at the end and then we'll look back. So I think for our myotonic dystrophy program for del-desiran, Q4 of this year, we're looking forward to providing an update from the open-label extension study. This is where people have now been on drug for a long period of time. All 37 of 37 participants remain in the open-label extension study. Obviously, the thing that we will all be paying a lot of attention to and are very excited around is around the HARBOR study and the readout of that Phase III study. We -- enrollment is going beautifully, and we are on track, on schedule. That study is designed for full global approval and our endpoints were looking at 30 weeks. So that is 30 weeks on all of the functional measures. So that's something that is very much on track for next year. And in terms of looking at two things, best-in-class, first-in-class, carving the field in myotonic dystrophy and really leading the space as we have done from the very beginning. Maybe, Steve, if you want to talk to the data that we have seen and around that aspect of seeing when you see functional changes so quickly, like we have done and so consistently with del-desiran across a range of different measures, that's where you are then actually able to do a study straight out the gate for full approval, but also to do it very quickly because you see changes very quickly. So maybe, Steve, if you want to talk a little bit to that data.

Yes, sure. So the MARINA study was our first-in-human study. It went directly into patients. Again, we dose ranged from 1 mg per kg all the way up through to 4 mgs per kg. And we saw -- and in that study, we did biopsies. We saw improvements in splicing. We saw improvements in splicing on the 22-gene panel. We saw knockdown of DMPK. We looked with RNA-seq across well over 1,000 different genes. We saw improvements in splicing in all of those genes. We saw dose-dependent increases in muscle blind, which is sequestration of muscle blind is the underlying cause of the spliceopathy in the diseases, and we were able to show that at 1, 2 and 4, we got progressively increasing levels of muscle blind as inferred from the RNA-seq work that we did. And then as we looked at the functional changes, we saw very early improvements. So vHOT, which is a measure of myotonia, that's the primary endpoint in the HARBOR study. That -- we saw that. That was statistically significant at the first time point, six weeks and statistically significant at every single time point after that. We looked at QMT composite, which is a quantitative muscle testing of the upper and lower limbs put together in a composite score. There, we saw statistical significance by six months in the QMT. QMT is a secondary endpoint for this study, key secondary, along with hand grip strength and DM1 active, which is a patient-reported outcome measure. Later in the year, we showed data from patients as they rolled over into the open-label extension study. So this was patients out through one year of continuous dosing at 4 mg per kg, which is our go-forward dose. And actually, in the Phase III study, we're dosing every eight weeks, whereas in the MARINA study, we dosed every 13 weeks. With every 13 weeks dosing, we saw that the improvements we've seen in the MARINA study, those very early improvements actually were maintained out through the one-year time point and actually continue to improve a little bit more for all of our key endpoints, the vHOT primary endpoint, hand grip strength, QMT and the DM1 active key secondary endpoints, which really, for us, derisks the program. We're measuring the key endpoints at week 30. If you remember, they improve very, very quickly. And by week 30, they really reached quite a profound improvement. And then they're maintained out through that one-year period. We got great safety data out through the one-year period as well. And then the other piece is that we've aligned with global regulators, FDA, EMA, PMDA around the study design and that it has the potential to support an approval. So we've derisked from the efficacy side, the safety side and from the regulatory side for the DM1 program.

And I would also add as well. One of the things we do when we design our Phase III studies is several of us have background in commercializing drugs, including myself. Getting a drug approved is one thing, getting a drug reimbursed is something separate. And in making sure that when we do our Phase III designs, we also seek reimbursement feedback as well that the study designs support reimbursement. And we've done that both in terms of with the HARBOR study and then also with our global Phase III study in FSHD with del-brax to make sure that sort of the endpoints that we have are both acceptable from a regulatory perspective, but also facilitate that rapid reimbursement from a payer perspective. The other thing I would also say about the HARBOR study and around this, how we view it being fully derisked. It's a large study. It's 150 patients. Steve talked about what we were able to see with 12 patients. We also do a 1:1 randomization. You do see some placebo effect and having that 1:1 randomization minimizes that. And then also having a large study allows you to -- if there are to make sure that you minimize imbalances between your on drug and placebo group, in particular around vHOT time upon entry to the study. So a very rigorous, very detailed Phase III study. And really, we couldn't be more excited. When you look at -- when we hear patient stories from people who are in the open-label extension study and have now been on drug for a long time, I mean, del-desiran is game changing. I mean we saw a reversal of disease progression. That's incredible. That's incredible for people living with myotonic dystrophy. And our goal is to get del-desiran to as many patients as quickly as possible. And that's why we are also -- all systems go on our commercial organization build and our medical affairs organization build to be lined up ready to do that.

Last question is about the competitive landscape. You have a competitor that probably has an update of their own that they're going to be releasing it as it relates to DM1 and seemingly the potential for them to have an accelerated path. So I wanted to get your thoughts about, I don't know, general feasibility because you would know about that more than any other company. And how would that change the dynamic if there were two products launching maybe around the same time?

Yes. So I think in terms of -- we're very rigorous and detailed in our approaches around drug development. And we look to design Phase III studies where we essentially look to derisk. And that's what we did around the design of the HARBOR study as well as looking across a range of messages that matter to patients that matter to regulators and that matter to payers. We have had many conversations with the division that enabled us to get to the design that we did. And one of the aspects, and this is the same with anyone around the world, why do people use a drug? Because you believe there's going to be functional changes. We showed that early and that negated the need or actually the attractiveness of a biomarker approach. And also when it comes to payers, they want to see it functional. If there is a situation where there are potential choices, this is a large rare disease. And where you have functional changes and a full approval, that's really important to payers as well.

With that, we are out of time. So thank you for spending the last 30 minutes with us, and thanks, everybody, for joining the fireside. We'll talk to you soon.

Thank you.