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

Okay. Good morning once again, everyone. My name is Eric Schmidt. I'm one of the cancer analysts. I am delighted to host our next session with Avidity Biosciences. I'm also delighted to welcome 2 of the company's senior executives. We have with us today Sarah Boyce, who's the company's President and CEO; and also Steve Hughes, the company's Chief Medical Officer. I think somewhere in the audience, Kat Lange may be here as well. She's the Chief Business Officer. There she is. So pretty much the whole team and lots and lots to cover. An exciting period of time for Avidity coming off what's been a tremendous run in terms of executing along 3 muscle disease programs.

So Sarah, maybe you could just orient all of us to the highlights of the company right now.

Yes. So maybe I'll start with vision because that really is our guiding star. We're looking to do 2 things: revolutionize the RNA space and make a profound impact in people's lives. It's a very bold vision, we laid it out 6 years ago. This is our guiding star, and that sets us to where we are today, where we have 3 programs in the late stages of development. The first being del-zota for boys and young men amenable to exon 44 skipping. And we are on track and on schedule to file our first BLA as a company at the end of this year and that will be the BLA for del-zota. We then have del-brax for the treatment of FSHD; and del-desiran for the treatment of myotonic dystrophy. The HARBOR study, which is our global Phase III pivotal study in myotonic dystrophy, we completed enrollment on schedule, on track in July. And we're now guiding to data readout in Q2 of next year, first-in-class, best-in-class drug. And for FSHD, we completed enrollment on the FORTITUDE biomarker study in March of this year. And we have also reached alignment with the FDA around cDUX as being the primary endpoint for an accelerated approval. And that study is also reading out in the second quarter of next year. So 3 drugs, 2 of them first-in-class, best-in-class in areas where there is such a high medical need. And then with del-zota, we're looking to really reset the bar as to what is possible in DMD and really looking forward to that data as well. And we're gearing up to globally commercialize our drugs ourselves. They are all synergistic with each other, same core point for myotonic dystrophy and FSHD as well as having a really exciting platform and set of preclinical assets behind it that also will be synergistic with each other.

Okay. And before we get too deep in the weeds, I don't want to lose sight of where all these drugs came from. They all came from the same platform, which enables muscle delivery. Steve, why is it important to deliver nucleotide therapy to the muscle? And how does the platform maybe compare to others in the field?

Great question. So for many years, RNA therapeutics really could only target the liver with systemic delivery. You needed to deliver directly into the cerebrospinal fluid for CNS delivery, for example, and delivery to muscle, cardiac tissue, they were really known to be very poor tissues for delivery of RNA therapeutics. So in order -- but there's a number of neuromuscular diseases that really lend themselves to treatment with RNA-type therapeutics, toxic gain of function diseases, diseases where really exon skipping can make a profound difference to the underlying course of disease. So getting into the muscle was exceedingly important. We've really led the field in doing that and have continued to lead the field over the years in targeting muscle with our antibody oligonucleotide conjugates or AOCs for short. And there, we use a monoclonal antibody that targets the transferrin receptor. Transferrin receptor is very highly expressed on muscles. And we use that antibody and the transferrin receptor to essentially pull the RNA target inside the cell where it can do its work. We now have 3 programs utilizing the same platform, as Sarah said. We get extremely high delivery to muscle. In fact, in comparison with the other targeted delivery mechanisms, we get about a three to fivefold higher delivery to muscle than those platforms. And we've seen that delivery to muscle translate into exceedingly good pharmacodynamic and clinical effects. And we've seen the clinical effects over 2 of our programs, and we're very excited to be sharing the clinical endpoints for the DMD program very shortly.

And then maybe one last macro question. Sarah, I'm going to ask you to comment on the latest rumors, not Taylor Swift, we spoke about that earlier. But there has been rumors of acquisition interest in your company. What, if anything, do you want to share about that?

Yes. Look, I would say we're now entering into an era, not the Taylor Swift pun, we're now entering into an era where we're probably going to have a lot of rumors about us and around interest in Avidity. But we have 3 drugs that we're looking to launch in a 12-month period. Two of those drugs, we believe are multibillion dollar indications. So extremely valuable. And I expect, yes, there's going to be lots of rumors about us. What I will say is for us as a team, we're 100% focused on delivering to patients and getting our drugs to patients as quickly as possible because we believe as does the patient community, the clinical community, and I think starting the investor community now as well, and I know you're a big supporter of, that we have the potential to make a profound impact in tens of thousands of people's lives, and that's what we're focused on.

Okay. The execution has indeed been very crisp over the last couple of years. Of course, we're all about what have you done for us lately. Let's go through each of the programs. And maybe, Steve, you can just briefly recap del-zota, which is, I think, for DMD44, the next updated dataset that we'll be seeing. What have we already learned about del-zota and what do you think we have remaining to learn in the next update?

Okay. Thanks, Eric. So the data that we've shared so far has been really, really exciting and actually groundbreaking in DMD treatment. So we deliver PMO that skips exon 44. So obviously, treatment of exon 44 skip-amenable patients. We shared data from -- the top line data from our EXPLORE44 study earlier this year, where we showed unprecedented levels of dystrophin production. So put that into context, the current generation of exon skippers are really producing 1%, 2%, 3% levels of dystrophin. We saw a 25% increase in dystrophin levels. So that took patients and in DMD44, the kids do produce a little bit of dystrophin. So from a baseline of around 7% to over 30% dystrophin. And putting it again in further context, female carriers of Duchenne have about 50% dystrophin and they have a normal phenotype. So we're getting dystrophin levels that are very close to those that are associated with a normal phenotype. The other thing that we saw, and we looked at markers of muscle damage, so creatine kinase, myoglobin, ALT, AST, those are all extremely elevated in kids with DMD, reflecting the ongoing and severe muscle damage they have whenever they contract their muscle. Those came down to near normal very, very quickly within just a couple of doses. And they stayed down at near-normal levels through the entire duration of follow-up. And at our last update, we had patients that have gone through the 1-year time point, and saw those levels staying down. And what that tells us is that we're protecting the muscles from further damage with the levels of near full-length dystrophin that we're making. Very shortly, we're going to be providing clinical updates. So we're going to be looking at clinical endpoint data in these kids, and we're going to focus on the kids that have gone through at least 1 year of continuous treatment with del-zota. So we're really, really excited to look at what happens when you protect these muscles from damage over a long period of time, exactly the potential that they have to regenerate and for kids to improve on these measures of function.

So you mentioned the genetics of females with DMD44 mutations being near-normal. Should we expect functional gains? Is improvement possible here?

I really believe that improvement is possible. So we -- our hope is that we can see meaningful improvements, not just in one area, but across multiple different functional endpoints in these kids to really give them the fullest potential that they can have.

And what's remaining to be determined in terms of filing for an FDA approval?

So we're on track to file for BLA submission for the accelerated approval by the end of the year, so Q4. There's nothing that's gating to that. Really, we've done everything that we need to do. We need -- the one thing that's left is really just continuing to follow up all of the patients in the studies for a long enough period of time that the safety database is large enough for FDA approval. That's coming up very, very soon. And so we have everything that we need very shortly to file by the end of the year.

Sarah, a lot of turnover at the FDA, maybe even some turmoil at the FDA, put that in perspective with regard to your regulatory discussions, maybe even more broadly than del-zota.

Yes. So -- and it is very much more broadly than del-zota. One of the areas of synergy that we have from 3 programs is that they are all 3 programs in the same division at the agency, which is [indiscernible]. We speak to the same people all the time, similar reviewers across the program. We have seen the division to really do a tremendous job. They are on time with their feedback. They are collaborative, helpful, detailed. And we haven't seen any impact at a division level. Obviously, we all understand sort of the elements of turmoil at a leadership level within the agency, but we haven't seen anything like that from a division level. And I would also say one of the aspects of having multiple programs with the same division is the reviewers also see the consistency from one program to another. And also, we've seen really understand these diseases that we're in and the importance of being able to get drug to patients as quickly as possible. So we found them to be very helpful across every single program.

Okay. So del-zota is going to be your first commercial launch. You also have synergies across the commercial platform. But what are you doing to prepare for that launch? And maybe briefly, could you help us sort of thumbnail size this opportunity?

Yes. So from a commercial launch perspective, we're really very well along. We have our patient services team in place, MSLs in field, our payer engagement team in field, site of care team is being built and some of them are in field as well. So all of that preparation aspect and infrastructure is already in place. If you look from a supply chain perspective, we have that dialed in. We have selected our specialty pharmacy and then working with the site of care team to make sure the boys can get their infusions. So all of that is dialed in also. And this is a platform that will then scale for del-desiran and also del-brax. So our plan is we do this all with the same team. The sales force organization is obviously not in place. Pretty small team. For DMD, it's about 50 specialist centers, and it's super concentrated. It's about 80% of patients are being seen under those specialist centers, although a lot of their care is also outside. So that's a pretty small field force organization. We'll probably increase it a little bit for FSHD in myotonic dystrophy, but not that much. It will be the same. From a physician perspective, they'll speak to the same person at Avidity across all 3 programs. Our patient advocacy team, we've had -- actually, we had someone in patient advocacy before the IPO. We have an outstanding patient advocacy team. We're also building our ex-U.S. team as well. We have a small team, a really small team in Europe. Actually, our Head of Europe just started, her first day was on Monday, thrilled to have her on board. We're currently looking for a GM for Japan as well because it's all the same infrastructure that we'll use, which gives you these incredible economies of scale. What I would say with regards to del-zota around sizing of the opportunity, there's about 900 boys and young men amenable to exon 44 skipping in the U.S., a bit larger in Europe, obviously, a bigger population. And we view that del-zota will be the treatment of choice for families who have boys with DMD44, even based on the data that we've already seen from dystrophin near normalization of creatine kinase, favorable safety and tolerability profile and also we'll build on that further with the functional data that we're looking forward to share. So from that aspect, we would anticipate a pretty quick uptake for del-zota.

Great. Maybe we'll transition del-desiran for...

[indiscernible] the functional data that you mentioned is that going to be coming out with the year end update or is that coming later?

So just for those who are listening to the webcast, there was a question around the timing for the functional data from the EXPLORE open-label extension study. So this is at a 12-month time point. We have been guiding for Q4 for that. We also like to overachieve. So that's actually coming in the next couple of weeks. That is not needed for filing. The filing and the basis of the accelerated approval is on the increase in dystrophin. Obviously, it would be part of the overall filing package, but it's not part of the filing, and we're really looking forward to sharing that data soon.

Okay. Maybe we'll now move to del-desiran and see back to you. Again, remind us of what we've already seen with this program. And this is the second of the 2 clinical updates that you still have yet to deliver in 2025. So benchmark for us what we might be seeing there?

Yes. So we've already shared data over 1 year of follow-up. So 1 year is the duration of our Phase III study. And at the last update, we showed that we saw very rapid improvements in our primary endpoint and our 3 key secondary endpoints that we have in the HARBOR Phase III study. So those improved the measure of myotonia, which is the video hand opening time, that actually was statistically significant in the MARINA study by the 6-week time point. And then the other 3 endpoints really saw meaningful changes within the 3- to 6-month time frame. Those changes were maintained and actually continue to improve a little bit through the follow-up of 12 months compared -- and we compared to the NDM1 natural history data set where we match patients for that 1-year follow-up, and we saw that as compared with natural history, we are actually reversing disease progression in these patients. So that's really encouraging to see. We also had really favorable long-term safety as well. So in the coming update, which is going to come in Q4, we're looking to now look at the 2-year time point for these participants. So these are the participants in the study that have been on continuous treatment at 4 mg per kg ever since the beginning of the MARINA study. They're now out for over 2 years of continuous treatment. And again, we're going to be comparing those patients with natural history. We're getting extremely good feedback from the sites. So we get anecdotal feedback from patients all of the time from the sites, and we also have the exit interviews that we've done from the MARINA-OLE study to guide us as well. And so our expectation is that we're again going to see very consistent data through that 2-year time point, and again, very favorable safety.

And I think most investors are convinced of the impact that you have on myotonia given video hand opening is just a black and white measure. There's probably more debate or discussion about whether this drug is also impacting muscle function. What would you say to that debate to provide us with evidence that there is an impact.

Yes. So I mean, myotonia, of course, is the cardinal symptom of the disease. It's in the name, myotonic dystrophy. But what we aim to do with our other endpoints is to capture the other important elements of the disease, and we also have patient-reported outcomes in the Phase III study as well. Muscle strength is one of our key secondary endpoints. We're looking at multiple muscles in the upper limb and the lower limb there. Overall, that tells us how body strength is improving with the disease. But also, we can look at the individual muscles as well to look for consistency of response. We're looking at hand grip strength as a secondary outcome measure. Hand obviously extremely important in activities of daily living. We all use our hands throughout the day. But hand grip strength is a measure of hand closure, together with the video hand opening time, which looks at hand opening, gives us a gross assessment of hand motor function. And then we're looking at a patient-reported outcome measure, which is the DM1 active which looks at activities of daily living. So that tells us how the improvements that we're seeing in myotonia, how the improvements that we're seeing in muscle strength in hand function are translating into benefits in the ability of the patients to care for themselves and go about their daily activities. So really, we believe that we've captured many of the important elements of the disease with the endpoints that we're looking at. We've already seen very convincing changes that occur in the short term and are maintained and improve a little bit more over the 12-month time frame. Within the HARBOR study, we're cutting the primary endpoint at week 30. All of the endpoints have improved substantially by week 30. And then we have additional follow-up through week 54 primarily for safety. So we believe that we derisked the Phase III study from an endpoint perspective because we've already seen the endpoints improve and be maintained over the duration of time that we conduct in Phase III. We already have safety data through well beyond 1 year of follow-up is extremely favorable. So we believe we're derisked from a safety perspective. And we've got alignment with global regulators, so FDA, EMA, PMDA, other global regulators as well, and the design of the Phase III study supports global full approval.

And how would you argue that your therapy is not just first-in-class, but best-in-class?

Okay. Obviously, we've been leading the field in delivery to muscle for quite some time now. So I don't think there's any debate about us being first-in-class here. On best-in-class, as I already mentioned, we get extremely good delivery to muscle, three to fivefold higher than the other targeted delivery mechanisms. With RNA therapeutics, it's all about delivery. Everything is about delivery. The more RNA you can get in, the more improvement that you can see. But also specific to DM1, where del-desiran is the first drug to show improvements in splicing, not just across the 22 gene panel, but across hundreds of different genes. In fact, well over 1,000 different genes we've shown improvements in splicing. That's important because myotonic dystrophy is a global splicing dysregulation. There's not just a narrow subset of genes that are misspliced, just about every gene is misspliced. So showing across such a wide range of genes that we're improving splicing is incredibly important. We're also the -- del-desiran is the only drug to have also shown dose-dependent increases in muscle blind. And remember, it's sequestration of muscleblind-like mutant DMPK that causes this global missplicing. So by freeing up muscle blind in a dose-dependent fashion, that translates into the very convincing clinical endpoints that I just mentioned as well. And of course, we now have long-term safety out through more than 2.5 years, in fact, of patients continuously on drug that's looking incredibly favorable as well. So we really have the industry-leading safety database. So many, many, many different things...

We'll give you a break and come on to the commercial opportunity in DM1 and Lucera. Just to frame this opportunity for us, how many of these patients in the U.S. are identified and maybe who's most or which type of patients are most appropriate for therapy?

Yes. Thank you. So myotonic dystrophy is a pretty big orphan disease. So estimated at the lower end, 40,000 patients living with myotonic dystrophy in the U.S. If you do an ICD-10 database search, which, of course, we have in a lot of detail, you'll find at a surface level about 15,000 people already diagnosed genetically concerned with myotonic dystrophy in the U.S. you do cleanup for duplications and it's actually that number is around about 10,000. So these are people already identified. Of the ones who are already identified, the majority are under the curve of a specialist center, although people are not seeing their specialists that often. So typically would be once a year, if not once every 3 years. I say and this is important because it's also part of that commercial setup to get people back into the specialist centers so they can start to get appropriate treatment. From a label perspective, the HARBOR study is designed to support an indication for the treatment of myotonic dystrophy. We're 16 and above in the study. And also when we design our studies, we actually do our payer research first in making sure that we have a study design that also supports rapid pricing and reimbursement at our target price. So that's something that we put a lot of prework in there. And it's this aspect of we believe our lead has really only expanded in the U.S. And obviously, we're the only company that has a study designed for global reimbursement and approval, and we'll look to file for approval in Europe and Japan in pretty short order after the U.S. approval as well. Very -- there is a very high level of unmet need in myotonic dystrophy. People who are living with myotonic dystrophy have simply had absolutely nothing. And it's a disease that impacts families. You'll see it go through generations and you'll meet who talk about this is our family thing, and it's like cousins, it's uncles, it's brothers, it's sisters, it's kids. And from that aspect around for us, the importance of getting out the gate really strong from when it comes to launch. One of the things we've also done is -- actually filed an 8-K around it is, we have secured and signed a global commercial supply agreement with Lonza, who is the primary -- our primary manufacturer and manufactures the antibody and does the conjugation. And we're also in the process right now of building our inventory from that aspect to make sure that we have sufficient drug with regards to potential demand. So really far along from that aspect. And del-desiran first-in-class, best-in-class. And best-in-class is about 2 things. It's about efficacy and it's about safety. And you've already seen the remarkable consistency in the data that we've shown on a broad range of functional measures literally every way we looked at it. At one point, we looked at 16 different measures and then also a very favorable and consistent safety and tolerability profile as well.

Okay. Let's transition to FSHD and del-brax, where, again, you're first-in-class really only in class for the time being. Steve, just tell us a little bit about what gives you confidence that we're having an impact on this disease with del-brax.

Great question. Thanks, Eric. We did a disclosure related to del-brax very, very recently from the dose escalation cohorts in the FORTITUDE study. And in that data set, we saw very, very clear improvements in our circulating biomarker's data, and that's really game-changing for the field because it allows us to look at DUX4 suppression over time and also integrates what's going on in all of the muscles in the body so we can move away from muscle biopsies. We saw reductions in creatine kinase as well that correlated very highly with the changes in cDUX, that tells us that we're improving muscle health and preventing muscle damage. And we looked at a number of different clinical endpoints. So we looked at 10-meter walk run, QMT, timed up and go. We looked at reachable workspace on the clinical side and compared with placebo over a 12-month period. We saw very clear improvements across all of those measures. And then we also looked at a number of different patient-reported outcomes where we also saw very clear improvements in the patients as compared with placebo as well. So across whichever way you looked at it on the clinical side, we saw improvements relative to placebo for the del-brax-treated participants. And on the biomarker side, we've really joined up all of the dots from giving the drug to the patient through target pathway engagement all the way through to clinical outcome measures and patient-reported outcomes. In terms of the accelerated approval, we've got full alignment with FDA now about exactly what we need to use our circulating biomarker as the primary endpoint for accelerated approval and CK as a key secondary endpoint, and we're executing on that now. Some of the things that we've already done. So we know that cDUX is DUX4 regulated, it has DUX4 binding sites in the promoter region. We've shown that it's elevated in patients, both in the FORTITUDE study and in the ReSolve natural history study. It's about six to ninefold elevated over normal people. In normal people, it's barely detectable or detected only at low abundance. We've shown in natural history that high levels of cDUXs correlate both with more severe disease and with more rapid progression on multiple different measures. And within the FORTITUDE study, we've shown that improvements in cDUXs correlate with improvements in quantitative muscle testing, so improvements in muscle strength. So we've already built a very, very strong database to support the burden that you need to show for getting an accelerated approval, which is that changes in the biomarker are reasonably be likely to predict clinical benefit. So now we're just building on that. But the biomarker cohort will have an additional 49 patients worth of data that we can look at to do the correlations. And also, we're exploring these correlations in other natural history data sets as well to strengthen the overall package.

I think you anticipated all my clinical questions with one swoop. Maybe quickly, Sarah, in just the last few minutes here, the opportunity in FSHD, size that for us? And how do you go after it without having maybe functional data at launch, but just an accelerated approval?

So at a very simple level because we're tight on time. FSHD looks very much like myotonic dystrophy from a patient population size, diagnosed patients, patient distribution, level of unmet need. I'd say the FSHD community is extraordinarily well organized from that aspect. And very much -- these are 2 launches that we'll be looking to execute pretty much back to back. Both of the Phase II -- both of the data is reading out in Q2 next year, and we're guiding for planned regulatory filings for a BLA for FSHD and myotonic dystrophy in the second half of next year. So I would look at FSHD as being similar to, if not bigger, than myotonic dystrophy from a potential opportunity size.

Sarah, Steve, thank you very much for a wonderful session, and good luck with the upcoming readouts.

Thanks, Eric.

Thank you.