CRISPR Therapeutics AG (CRSP) Earnings Call Transcript & Summary

All right. Great. Welcome, everyone. I'm Yigal Nochomovitz, one of the biotech analysts here at Citi. This is the second day of our Virtual Oncology Leadership Summit. So it's my pleasure to introduce the CEO of CRISPR Therapeutics, Sam Kulkarni, Sam, welcome. Thank you so much for taking a few minutes to chat in your, of course, very busy schedule.

Thank you very much.

Obviously you just reported the quarter last night. So it's a great timing. Maybe just -- if you could just hit maybe a few highlights from the release last night and, while you're doing that, just give a quick overview of the company's pipeline and strategy. Obviously, most people are very familiar but would help just to set the scene a little bit.

Yes, happy to do that. I think at a very high level, I think we're exploiting what's fundamentally one of the biggest advancements in biomedical research in the CRISPR/Cas9 technology. And this is the biggest breakthrough we've seen in the last 40 to 45 years. The strategy for the company, I mean, I think we have grand visions of what we can make with this technology and how we can impact medicine. We'd like to be $100 billion company in the next 5 to 7 years on the back of medicines that can truly transform the lives of patients with serious diseases. We have 4 platforms. One is hemoglobinopathies, and we'll talk about sickle cell disease and beta thalassemia, where we're on the cusp of getting to market, hopefully, in the next period of time and not-too-distant future, and that could be a very impactful medicine for these patients. We have our immuno-oncology platform, which we'll talk about a lot today. And again, there, we're making good advances. We also now have a regen med platform where we are going after type 1 diabetes, and this is with pluripotent stem cells that are differentiated into islet cells to create organs off the shelf. And finally, I think we announced in our earnings yesterday that we'll be entering the clinic this year with our in vivo program targeted towards ANGPTL3, a key marker in cardiovascular risk reduction. So we're moving forward across a number of platforms or pillars as we call it, which diversifies us from a risk standpoint but at the same time, expands the aperture in terms of the opportunity for treating not just a few but tens of diseases over the next several years. So that's a very high-level overview.

All right. Perfect. Well, let's start with exa-cel for beta thal and sickle cell. So the EU filing is in, and the BLA, you've indicated, will be finished by the end of the quarter. So just give us a quick update in terms of what's left to do on the BLA. And what are your expectations for the time lines for approval, as well as your vision of what the what the label would look like, hopefully?

Yes, I think we're -- everything is on course with the BLA filing. I think we're proud to have completed the European submissions and the applications where submissions were validated by both the EMA and the MHRA recently, which we disclosed, both our partners -- our partner, Vertex and us disclosed. On the BLA, I think we're marching forward. As you know, with these BLAs that we have for medicines complexes, the one we're developing, it's going to be a pretty extensive file and there's a lot of work being done to complete the filing. But I wouldn't point to anything in particular that's outstanding. I think it's just routine course where we need to finish and complete to get to a complete BLA filing. So we hope to do that through the course of this quarter and we don't have that much time left in this quarter. And I think at the same time, I think we're -- we continue to think about how the franchise can expand. In our earnings release yesterday, we talked about a conditioning agent, a gentler conditioning agent that could expand the population that's treatable with exa-cel tremendously. So all in all, we're very committed to sickle cell and thalassemia. We're in pole position as the leading gene edited or gene-modified therapy that's going to get to patients with sickle cell disease. Obviously, there's other players in the space as well. But for gene-edited product would be the first, and we have a significant lead over other players. And I think this product can be very transformative for patients but also transformative for the company from a runway standpoint and sustainability standpoint.

Okay. We'll talk about the conditioning agent in a moment. But just in terms of where your partner is with regard to the commercial efforts, can you just give a quick update there with regard to manufacturing, availability of the product and also in terms of what you've learned from your competitors with the launch of Zynteglo, how do you see -- how do you see that aspect in terms of preparing yourselves most effectively for commercial?

Yes. I think we're pleased to have Vertex as a partner, leading the commercialization efforts. They have tremendous experience with rare diseases -- given what they've done with cystic fibrosis. They have a global presence. They have capabilities spanning all commercial functions. And this is a top priority for them. And I think the preparations for launch or commercial preparations are going really well. I think the key part of the success here is to make sure that the centers that are going to do the transplants are well qualified, they're well trained and ready to accept patients and provide them our medicine. That's no easy task, but I think that's something we're on top of in terms of establishing teams that are dedicated to these centers, both in the U.S. and Europe. There's very encouraging discussions across the board with payers. I do think there is support from the -- politically, there's a lot of support around providing a medicine for sickle cell disease. And I think, all in all, all these things need to come together to successfully launch what would be the first -- potentially be the first approved CRISPR therapy in the world. But I think so far, we're very encouraged by all the developments. In terms of Bluebird and the Zynteglo launch, I think it's a -- there are some learnings there, but I wouldn't superimpose too much. I think it's a different situation, a different type of product. Although it's a cell-based product, I think it's using a different technology. It doesn't have all the tailwinds that a CRISPR-based therapy would have from a visibility standpoint. And from the standpoint of the data, that's very strong. I mean our data we presented at EHA and ASH are remarkable for these patients. So we feel very good about how everything is coming together. Vertex will talk more about what they're doing on the commercial front in the coming months. But needless to say, I think this is a top priority for both companies.

And in terms of the commercial strategy in the United States versus Europe, are those fairly similar? Are there some notable differences? And then when you think about the launch, people are wondering in terms of whether it's more of a bolus effect or you think it will be more of a measured launch initially?

Well, I think the -- obviously, there are some nuances that are very different about U.S. and EU markets, particularly from a payer standpoint. But ultimately, from having qualified centers to treat the patients and how we bring the patients in, how we schedule the manufacturing, how we supply, all that is very similar. And I think we have a redundant manufacturing network with manufacturing capacity, both in the U.S. and Europe that would be able to meet all the needs and demands of the patients as they come into the program. So we're not -- while we haven't scaled to thousands of patients yet on manufacturing, we're at a sufficient scale just to meet all the demand as we anticipated. In terms of how we bring it all together at the center, again, I think it depends on how we train the centers, how we are -- support all the patients that come into the program, et cetera. So all that's in a good place.

Okay. And then let's talk about the Kit ADC. So obviously, that's very interesting in terms of spanning the addressable population and moving away from the busulfan. So can you just expand on that and why that's so important to the strategy.

Yes. I mean you asked the question about the bolus. It's hard to say, but I think what I would say generally is, the demand for this therapy is likely to be far greater than a lot of people anticipate right now. I think personally, having been involved in discussions at various forums in D.C. and other organizations that support patients suffering from these diseases, these patients are tired of living with sickle cell, and they will take -- they want to have some option that would restore normalcy to their lives. So it's hard to differentiate whether it's a bolus demand or if it's just a start of something that could be a lot larger. But I do think the demand equation is going to be pretty strong. Now you look at 25,000 patients or so with severe sickle cell in the U.S., it's hard to say which patients come forward first. I think those that, obviously, have a lot of VOCs every year, those that live with chronic pain, those are the ones likely to raise their hands first and opt for a therapy like this. But if you have a gentler conditioning agent, I think you're talking about an addressable population that's triple the size. But more importantly, the launch trajectory becomes a lot steeper because you'll see more patients come through early on. So again, our conditioning agent is in early stages. So it's not like it's -- we're going to have that approved tomorrow. But both Vertex and us are putting a lot of effort into developing a gentler conditioning agent, which may come into play 3, 4 years after initial launch, and that will provide real tailwinds around the addressable market but also how quickly the trajectory changes upward.

So how would that work in terms of the -- you would need to seek a separate approval for the ADC presumably. Just how did that -- does that work from a regulatory perspective?

Yes. I think again it's early days. Right now, I think you would need a separate approval. I think there are indications where you can get approval very quickly for an ADC that's conditioning based. Take the example of rare SCID indications, for instance, where if you can show that you can use a conditioning agent and do a allo transplant successfully and get sufficient chimerism, you could get approval for a conditioning agent at the same time while you're establishing that agent in the context of sickle cell and thalassemia. So you have to have a two-pronged approach to, one, get the agent approved but then also show that it has benefit and indicating with exa-cel. And so all those -- we can talk more about that once we get to an IND or get into the clinic, but there are strategies to fast track a conditioning agent.

And I don't know if you can comment on pricing at all at this point. If not, that's fine. If you can provide any general comments relative to the competition in Zynteglo, that will be great.

Yes. I mean it's early to say. I think -- but what we're seeing from the agencies that have a say in pricing, for instance, ICER or other bodies, it's -- all the analysis is coming out pretty favorable in terms of the ability to price in a certain range. Now the Zynteglo price will have an anchoring effect to a certain degree. But overall, we live in a regime where I think the pharmacoeconomic benefits alone, not to mention the value to the patient overall, justify a reasonably high price. And again, it's a price even at that price that Zynteglo has, the benefits of the system far outweigh what any payer would pay for that drug. So more to come on pricing. Again, Vertex will lead the charge in disclosing the pricing strategy and will come out on launch. But again, I think what I'm encouraged by is the support from various payer bodies around such a pricing model.

And then with regard to the labels for Europe and the U.S., I mean, I assume that they're basically going to be similar, if not identical. Are there any notable differences that we should be aware of in terms of the way the labels will be structured in the 2 regions?

We don't think there should be any difference in the label, but I think that we have to just go through the process with each agency to see if there's any small differences that may be there between how they interpret the data. But by and large, our trials were global trials that enrolled patients across both the U.S. and Europe and beyond. And I think the data are kind of the same for all these patients. So we don't anticipate major differences.

Okay. Unless you want to make any other comments on exa-cel, let me know, otherwise, we can move on and talk about the IO and CAR-T franchise.

I think the only comment I'll make Yigal is, which is, we've created a franchise, I think from a business standpoint as well, we've navigated this really well in terms of where you need to spend to launch it. And ultimately, I think how do you create a profitable franchise that can then help us expand our portfolio efforts even beyond hemoglobinopathies. And a situation where I think there are a number of competitors who want to go after sickle cell with cell therapies, and I think it's going to be very hard for them to catch up to us. And that's because we've moved very fast between Vertex and us in a responsible fashion but moved much faster than other companies have been able to move. And I think we look forward to additional updates on the program, but we feel good about the pole position we're in.

And do you want to just briefly touch on the, I believe, somewhat slight restructuring of the agreement with Vertex that was favorable to you, I believe, for the long term?

Yes. No, it wasn't a restructuring per se, but one thing we -- I think the key decision we made along the journey of the program, it started as a 50-50 program, but I think it made sense for one party to take the lead commercially globally given it's one similar product and it's a similar launch, and we converted that arrangement to a 60-40 arrangement with Vertex last year. And that came as a significant upfront payment to the company. But also, I think there are some advantages in terms of how the costs are recognized and some costs that we're able to defer until later for when we're profitable. So that restructuring, I think, was very helpful for us in managing our own burn rate and our own sort of sustainability as a company.

Okay. Perfect. All right. So let's talk about -- start with the CTX110. I believe there's going to be another update later this year. Can you talk about that? And as far as the filing strategy for that asset, where do you stand?

Yes. I think we feel very good about competing in the CD19 franchise. I think the conventional wisdom out there right now is CD19 is too crowded. And it kind of reminds me of the -- Yigal, they're saying that restaurant is too crowded no one goes there anymore. It's a market where there's significant unmet need. I mean there's -- even with where Yescarta is with the autologous CAR-Ts, there are a lot of patients who don't get autologous CAR-T for various reasons. Bispecifics data have been good, but I think they're still going to face some challenges in moving to the community setting, particularly as you think about 9 or 10 courses of treatment, and the infections that go with it, the CRS and ICANS that potentially you could still have. And allogeneic CAR-T has been shown to be very safe. It's a single course of treatment, either 1 or 2 doses. And I think you could have major debulking of the tumor and get CRs -- durable CRs at that from a single dose. So what we showed with CTX110 was the -- was data that shows that about 1 in 5 patients get to a durable 6-month CR, 19%, 20% 6-month CR rate. And now we have a follow-up where these patients have gone close to 2 years with a single dose of CTX110. And these are patients that had -- didn't respond to 4 or 5 lines of therapy, and it's absolutely remarkable. And what we're now doing is a consolidation dose, second dose, which in all likelihood is going to make that data even better. If we end up at say 1 in 4 patients that have 6-month durable CRs or long-term durable CRs, that's getting very close to autologous, which in the real world is somewhere in the 30% range of durable CRs from an intent-to-treat population standpoint. And so the benefits -- I don't have to talk about the benefits of an off-the-shelf. And the fact that you can do this in community settings, you can do this without having all the costs of CRS and ICANs gives us tremendous benefit. So I think CTX110 in its current form with the consolidation dose can be a competitive product. I wouldn't be surprised if it could be -- if the data holds out that it could be $1 billion product in the not-too-distant future. Now what we're doing is, we obviously started our pivotal trial. We've designed a interim analysis or interim checkpoint on the trial. It's hard to say based on enrollment speed, et cetera, that interim analysis point could be at different points. It is really gated by enrollment speed and what the data look like, but we'll provide an update. And the strategy is to is to file off of a single-arm study. And it will have to be followed up with randomized controlled trials, et cetera, but at least you can get to market with a single-arm study, given the data as we see it today. So that's our plan for 110 (sic) [ CTX110 ]. Now we do have a next-gen version of our CAR-T called CTX112, that -- where the IND is approved, and we're going to start dosing patients in short order. And that program, I think, can be even more potent. And we believe that program can be better than auto CAR-Ts in terms of getting -- in terms of efficacy, in terms of durable CRs. Now we have to do the work in those patients and see where the data come out and make sure that it continues to remain safe, but we feel very good about that program as well in the CD19 space.

Well. Just can you kind of go through the differences with 112 (sic) [ CTX112 ] versus 110 and why you believe that one has a higher potential.

Yes. In this world of AI and machine learning and everybody talking about how that's going to change the face of biotech, we did a very simple set of experiments in a robust fashion, which is to take thousands of different edits without any bias and do pairwise edits to see what's going to increase the potency of our CAR-Ts and we came up on this particular pair of edits. One of them is TGFBRII, which is a well-known sort of marker in cancer and the other one is Regnase-1. Regnase-1 is a novel edit, I'd say it's a RNA binding protein that is a transcriptional regulator of cytokines, and they generally restricts a proinflammatory environment with the CAR-Ts. But if you knock out Regnase, you get a more inflammatory environment. So it's a combo of various strategies like a cytokine backpack or other edits that release the -- make it a more pro-inflammatory environment like Ox40, et cetera. So that combination of edits in preclinical testing, is at least tenfold better, if not more, from -- in mouse models of tumors, not just the first one, but upon rechallenge as well. And in our manufacturing process, I think the expansion of these cells is a lot greater. And we've also seen with flow experiment that we retain a greater proportion of central memory genotype CAR-Ts. Now when we start dosing patients, we'll know very quickly what the PK/PD profile looks like for CTX112 and CTX131. And if the expansion at dose level 1, let's say, is tenfold higher for these CAR-Ts, we know they're going to be more potent and they're going to work better. So in the next 6 to 8 months, whether we disclose the data or not, we'll have an indication of how these CAR-Ts are performing.

Okay. And then just the difference in the CTX131, just so that everyone is clear, is the CD70 CAR-T that also has these 2 edits that you referenced. Correct?

Absolutely, yes. And there, it's even more important. The potency is really more important. What we saw is the first evidence of a complete response in a solid tumor setting with our COBALT-RCC trial. With 1 dose of an allogeneic CAR-T CTX130, what we saw was a complete response in an RCC patient that had failed multiple lines of therapy. So that gives us a lot of confidence that the target is working. And not only that, we saw a number of patients that had stable disease that went on for a long time. So there is disease control in these patients. We saw a competitor present data as well, and they had PRs, or partial responses with the same target in RCC, which all leads us to believe that CD70 is a very good target in RCC. And -- but we need to turbocharge the cells because in a solid tumor setting, the tumor microenvironment is a -- secretes various vectors that dampen the response of the CAR-Ts and also exhaust these CAR-Ts. So if you can add some gasoline to the fire on the CAR-Ts, I think you're going to see a lot more encouraging data. And something like 131 (sic) [ CTX131 ] in RCC, in late line RCC -- third line RCC, if that starts working, that's going to completely change the trajectory of our company.

So you referenced the efficacy boost, I think, around 10x to go -- in moving from 110 to 112 with these novel edits. Is it a similar situation on the RCC side of the equation with the CTX130 versus the original one?

Absolutely, the same effect. And in fact, the expansion candidates are even better in the RCC context, as you see more antigen in those solid tumors in a localized fashion. So I think we're very encouraged by the increased potency. We do want to make sure that therapy is safe. So we're going to work through the dose levels as we dose patients. But again, these days, I think our investigators and all the doctors have figured out how to manage the safety profile of these CAR-Ts, even if they're more potent.

So in terms of managing the strategy for these next-generation constructs, I mean, obviously, for 110, you're very far along the road. So I get -- I'm assuming that you're going to launch that product, but -- and then follow with 112 eventually. But for RCC, is it different where 131 might just eclipse the older one, the 120 (sic) [ CTX120 ], and then you take the 131 forward and not the 120? Is that a fair way to characterize it?

Yes, I think 130, I think what we've done is we had 130 -- CTX130, we had a trial in T-cell lymphomas and in RCC. And what was intriguing is -- we saw responses across both, but what's intriguing is, in T-cell lymphomas where the cancer spread out, it's in the skin, et cetera, I think what we saw was the CAR-Ts were doing their work and they weren't easily getting exhausted. And part of that has to do with the CD70 knockout in that construct. But in the solid tumor setting, what we saw was while the CAR-Ts were around for a month, they were getting exhausted around day 12, day 13, day 14 as we measured it. And so what we've decided is, we're going to continue developing CTX130 in T-cell lymphomas. And by the way, that product in itself could be $1 billion product and shift over to CTX131 in RCC. The T-cell lymphoma, the comment I made is, it reminds me a lot of what happened with CD10 in the early days with CD30. Everyone thought this was going to be a tiny product, didn't know what the prospects were. And more and more patients started emerging, coming out of the woodwork as the therapy is available. And now it's a relatively attractive commercial product. And CD70 in T-cell lymphomas could be something akin to that given there is over 3,000 patients that suffer from T-cell lymphomas in the U.S. alone per year.

Yes. And just going back -- quickly, just going back to 110. With respect to the consolidation dosing, is that -- when are we going to actually get that data? And I think you sort of referenced to 1 in 4 durable CRs would be the bogey or the goal. I mean is that something that you expect to get in the initial label for the product or would that come later?

Well, I think call it bogey or anything but what I said is we do think that the current data, which is this one -- 20% 6-month CR rate, we do think the product is approvable based on the discussions we've had and the data based -- and it's a competitive profile based on the market research we've done. Anything that's better than that makes it even more competitive. So if, for instance, we move from 20% to something higher, let's say, 25% on the 6-month CR rate, we're dramatically increasing the competitiveness of that program. And so that's the data we're watching. We don't have that data in hand because for durability, you really need to follow the patients for a longer period of time. But what we're encouraged by, and we said that at ASH last year, was the second dose -- with the second consolidation dose we do see conversions of PRs to CRs, right? So if you're converting a partial response into a CR, you're just increasing the number of patients that are in response and that have the potential to have a durable CR. So I do think it does give you a bit of an efficacy boost, and the safety profile remains the same.

Okay. Very good. You want to move on and talk a little bit about the regen medicine franchise. So you have several programs there for diabetes, 210 (sic) [ VCTX210 ], 211 (sic) [ VCTX211 ], and 212 (sic) [ VCTX212 ]. Just for the purposes of reminding everyone of the differences, if you could just clarify how they're different and what the plan is to share the updates. I think you're going to share the updates for the 210 soon, that's completed dosing.

Yes. I think -- overall, I think we're going to be talking about organs off the shelf quite a bit in the next few years. I bet if we're sitting here 5 years from now, doing this fireside chat, Yigal, we'll be talking about not just diabetes but several indications where you can use organs off the shelf. I was looking at the data for kidney donors the other day, and there's like 95,000 patients waiting for a kidney donor, and it takes years to get one. Why are we not moving forward with artificial or organs off the shelf in a more meaningful way? And I think this is a first step in that direction. We're taking pluripotent stem cells and directing their fate to generate islet cells or islet cell precursors, and we're implanting that into the patient. Now this concept works because the Edmonton protocol, which was developed 22 years ago now, has patients that have had meaningful diabetes control over years with the implantation of cadaveric islet cells. The only downside is you have to put these patients on heavy immunosuppression, so the cells don't get rejected. Now with CRISPR, you can make these cells stealth so you don't need the heavy immunosuppression to make these cells stealth. And that's something that's going to be a really important concept, the use of CRISPR to make these organs stealth so you can mass produce organs off the shelf. We started with diabetes where we have VCTX. This is in partnership with ViaCyte, VCTX210, VCTX211 and versions beyond. And the notion was, let's iterate very quickly given we have -- we're working with the pluripotent stem cell, and we can make edits consecutively to show the value. So VCTX210 was designed primarily as a safety run-in. This has edits to the beta2M, for instance. We made edits to incorporate HLAE and insert PD-L1. But we wanted to make sure that there is -- that this therapy is safe in terms of implanting into patients. So in partnership with the regulatory authorities, we designed the study in a way where we use a relatively low dose of these cells and did a run-in, safety run-in with patients to make sure the procedure is safe and that you can actually put edited cells inside the body and not have any adverse consequences. So that data -- I think that trial or that safety run-in is complete, which leads us to VCTX211, which is a more optimized dose and an optimized clone with additional edits as well that increase the cell fitness. And these are 2 additional edits, not obvious edits, by the way, A20 and MANF are the genes which came out of large empirical screens to improve the cell fitness for this next clone. And that trial is dosing as we speak, and we announced that yesterday in our quarterly release, our 10-K. And we said that we've begun dosing patients with VCTX211, and we should have that data this year. I think we're going to discuss with Vertex who acquired ViaCyte as to the right paradigm for data disclosure, but we're very bullish on that program. And then 212 [indiscernible] that's beyond 211. We continue to experiment with different edits, whether it's to control fibrosis within these cells to prevent immune rejection in other forms, whether it's NK cells or anything else. So we continue to add edits. And that just shows you the power of editing in a pluripotent stem cell. We can progressively make these cells more sophisticated and better as we bring them to patients.

Okay. And for 210, what should be the expectation from investors with respect to the type of information that you've shared there? I mean, I think the focus is obviously on safety, but everyone will, of course, be interested in some of the potential signals of efficacy in terms of glucose control and things of that nature, insulin dependency. Is that something that we should expect or no?

It wasn't designed for glucose control or insulin independence. The number of cells we put in, I think the -- you want to get at least half of 0.5 nanogram per or picomoles per milliliter of C-peptide production. C-peptide is the best marker for insulin production because these patients are endogenous -- are taking insulin, right? So how do you differentiate insulin that's produced by these cells from the insulin they're injecting themselves? And so that's because -- that's by measuring C-peptide. The insulin that's produced by these cells is in the form of proinsulin that gets cleaved to produce insulin. And byproduct is C-peptide, you measure that. But I think what we're watching for in VCTX210 was, one, the safety of the procedure, safety of the cells, but also to see if the cells are getting rejected right away, which would be the -- in the case of immuno-oncology, for instance, we put our CAR-Ts in within about a month, they're rejected, right, or they're eliminated by the endogenous -- by the patient's own immune system. So we wanted to make sure that's not happening. But that's all-around safety and immune evasion, which gave us confidence to move into 211. And 211 is designed such that the clone is optimized, but also the number of cells are optimized to produce a level of insulin that's meaningful from a glucose control perspective in these patients.

And tell us a little bit more about the way they're delivered. I mean it's -- these cells are in a matrix. I'm not sure if using the same device is the right word, but it's in a matrix. So is the idea that this would be a one and done? Or would there be some requirement for "recharging" of the cells over time? Or those are questions, which I guess maybe we don't know yet.

Yes. I mean, ultimately, we want to get to one and done. But even if we get to a profile where you can recharge every 2 years, that's an acceptable profile from a market competitive standpoint. These are very simple subcu devices or it's not -- it's a device that has -- that's -- can harbor the cells inside them. It's a relatively flat device that's half the size of credit card, and they can be removed and a new one inserted in the same space under the skin. So it's relatively easy to do. So even if you get a 2- to 3-year life on these devices with cells, that's a pretty attractive profile.

So the 211, which you just announced during the clinic, that's -- if I'm correct, that's in Canada. Are you thinking about a U.S. study there as well or not necessarily right now?

Yes. Ultimately we want to do that in the U.S. as well. I think Canada has become a Center of Excellence around these cell therapies in diabetes because the Edmonton protocol was discovered there or elucidated there in the early days. There are a number of investigators that are quite the experts in the field, and that's why Canada makes sense to start, and then we'll bring it to the U.S. as well.

I mean -- and then to the concept of walk before you can run, I mean, this is type 1. So we want to prove everything. Do you have visions of broader -- to go into type 2? Or what are you thinking of that?

Absolutely. I mean if it works in type 1, there's no reason it shouldn't work in type 2. And I think that will be very interesting in type 2. Obviously, you start with the very severe patients versus the patients that are moderate diabetes. But eventually, as you get longer and longer life from these devices, you could imagine artificial pancreas for type 2 diabetes. And once we get to that point, by the way, it's even more scalable because -- if you figured out how to make these cells in a stealth fashion and remain in the body, you can express other vectors in these cells. Take an example, you could express GLP-1 in these cells, in patients under endogenous regulation. Right now, all the GLP-1 drugs are -- there's a lot of excitement about it, but these patients still have a lot of nausea. It's not an easy drug to take forever. But if you're doing under endogenous regulation that's controlled, that's based on glucose levels, that's a very attractive profile.

Yes, let's talk about in vivo where you've just announced that you're about to start a Phase I for the ANGPTL3. So tell us a little bit more about that target. You're going into a new vertical in cardiovascular disease. I think this was initially announced, if I recall, back in last summer at the Innovation Day. So talk about that and what is the design of this study.

Yes. So we're -- we'll be in the clinic this year with ANGPTL3, which is our first target in cardiovascular disease. And the whole notion is, what are some of the key markers of cardiovascular risk reduction. ANGPTL3, LPA and PCSK9 or the most -- are the most notorious ones, I would say, in terms of being proven markers of cardiovascular risk reduction. We decided to go with ANGPTL3 first. This is a target which directly impacts the lipoprotein lipase. And you generally see with ANGPTL3 knock down, close to 60% reduction in triglycerides and anywhere from 40% to 50% reduction in LDL. And there is an antibody that's approved that targets ANGPTL3 from Regeneron. But the reason we're going for ANGPTL3 first is it's a more straightforward development path. There are patient populations that have very high triglycerides that can be good candidates for treatment. And so you get both the triglyceride reduction and the LDL reduction. And there are surrogate markers like pancreatitis which can be measured in these patients to know whether the drug is working or not. And so I think with smaller population or smaller trials, we could get on label with this target. LPA is a very interesting target. A number of pharma companies are going after as well and sRNA companies. I do think it's going to be a major target in cardiovascular medicine. We'll have data coming out this year and next year around some of the sRNA trials. And I do think a one-and-done approach, though, compared to sRNA is still much more favorable, not just from a convenience standpoint but from a disease prevention standpoint because you don't have the ups and downs of LDL levels as you go from one dose to the next. You have a continuous and consistent reduction in these cardiovascular risk factors.

And what -- in terms of the delivery, can you talk about that for in vivo? What strategy are you adopting for the ANGPTL3 for delivery?

Yes, we're using a lipid nanoparticle, LNP strategy that's now with the -- over the last 3 years with the COVID vaccines and all the work that's been done on lipid nanoparticles has largely been derisked or delivered to the liver. So we're using a lipid nanoparticle that we have access to or delivery to the liver, and we show that this LNP in NHPs can give you significantly higher editing rates in the 60% to 80% range of hepatocytes. And that shows that it's working well. So that's the delivery vehicle for liver targeting.

And are you going to use AAV for anything else? Or...

We are using AAV with our neuromuscular programs. Now recall that we have a partnership with Capsida where we're working on ALS and Friedreich's Ataxia where we have capsids that are optimized for neural delivery. We did have a partner -- we have a partnership with Vertex on DMD and DM1. And those programs in DMD and DM1, we have -- we're making good progress where we have capsids that are [indiscernible] to the muscle. So I think for liver targeting where it's -- LNP is the best approach right now. I think for other organ systems, we're attempting both [indiscernible] .

Okay. And then just going back to the ANGPTL3 for a moment. For that study, you mentioned the Regeneron antibody. Are you specifying that those patients that are enrolled need to have tried and not succeeded with that antibody or not necessarily?

Not necessarily. I don't think we need to go after a piece of failures. I mean, a lot of patients that don't take -- don't have the antibody or the benefit of the antibody right now don't have control on disease. I don't think you would need to show that given it's still early stages in that disease indication as opposed to something like a PCSK9, where there's going to be approved agents that are around for a while.

Okay. So if you achieve early success with the Phase I for ANGPTL3, obviously, you're going to be thinking about the bigger picture in the large development. As you know, those are potentially very costly programs to do large Phase III studies in cardiovascular. How are you thinking about that aspect in terms of managing the spend for what could be obviously substantial cost on that front?

Yes, I think that's right. ANGPTL3 and LPA, I don't think they're going to be very expensive trials. In LPA, may be slightly more expensive than ANGPTL3. But outcomes trials do take a while, and we have to support those. We can easily partner with pharma. I think there's a lot of interest from pharma right now around these targets. There's a major resurgence in interest in cardiovascular and diabetes, among pharma companies, so we're well positioned around that. So we can always partner in terms of do the trials, but we wouldn't do an Ionis type model where we give up the upside. I think we do want to take some of the risk ourselves and support that development. One, to participate in the upside, but the other to make sure we have control on these assets, and we can develop them in the appropriate way with a nimble and flexible approach. And so I do think -- and we have the ability for that. We have a very strong balance sheet, close to $2 billion. Hemoglobinopathies franchises, in a way already kind of profitable for us because we have a large milestone payment that covers any remaining expenses we have. That's going to be a profitable franchise. I think our IO franchise will be a profitable franchise in the next 4 to 5 years. And I think that's our goal, is to have a new franchise, get it towards a path where we get to on file and get to profitability and then expand into new franchises. So I'm confident that we can find a way to finance these medicines and actually continue to move aggressively when a lot of other people are slowing down right now.

And then I just -- I wanted to give you a chance just to comment on the IP. I mean when I first started covering you guys a long time ago, obviously, there was a lot more controversy on that front, which is -- it seems to have pretty much waned. Is there anything left on that aspect to be concerned about? Or just how are you feeling now about your IP positioning relative to some of the other competitors in the CRISPR space?

Well, yes, I think several million dollars spent later from all the different parties involved in the IP battle, I think what's clear is there's no clear winner. I think there's going to be IP that we have that's going to be important and foundational. There's claims to other IP from other parties that is still standing. And so eventually, I think -- I don't think any of this is going to get in the way of medicines being commercialized. And there will be a way to settle this and in many ways, I think the economic institutions are not as fast moving with settling these types of disputes and matters, but I'm sure the companies will find a way eventually. So I don't think it's going to be a major issue. But I do think that people don't do kind of forget that all this foundational IP is necessary for all the next-gen gene editing that's out there. Whether you're doing RT-based editing, reverse transcriptase editing or base editing or whatever else, you're going to need foundational access to CRISPR/Cas9. And so there is significant value to sustain even beyond what's visible right now in the pipeline. And by the way, gives us a big trading chip as we access new technologies. A lot of my effort right now is on our group called CRISPR-X, where we are doing all forms of next-gen editing well beyond base editing, for instance. I think we're going to -- there's indications ex vivo and certain in vivo indications where CRISPR/Cas9 in its classical form is going to be most effective, and we're going to pursue that. There are going to be some indications for short corrections or long gene insertions where we're going to the next-gen gene editing systems, and we have some of our own proprietary systems. And that's all going to come into play, and that's all going to need IP that we have, which is the foundational IP.

And you want to talk a little bit about manufacturing and how you're thinking about investing on that front? That's something which would be, obviously, important as you expand the pipeline and you bring more products to the market?

Absolutely. I think we've established our internal manufacturing system, I think contrary to a lot of typical moves that biotech companies make, we didn't pick Puerto Rico or some of the far-off place to do our manufacturing. It's literally right here in our backyard in Framingham, Massachusetts. So we have a manufacturing facility that can do cell therapies, can manufacture, in short we'll be able to manufacture mRNAs, lipid nanoparticles, et cetera, the whole spectrum. And obviously, you asked about our CapEx trends and everything else, those are all onetime spend items that we did in -- during the pandemic in the '21, '22 time frame, and we're past that now. But I think it gives us tremendous leverage from a efficiency standpoint but also tremendous flexibility from a speed standpoint as we move forward. So we're eventually going to have a full-service manufacturing setup that can do cell therapies, mRNA, LNPs and potentially AAVs as well.

And Sam, you mentioned, obviously, a very, very strong balance sheet, I believe, close to $2 billion. So how much dry powder do you have in terms of continuing to expand the footprint, expand the portfolio, bring new assets into the clinic to maximize your leverage on development?

Absolutely. I think we're pedal to the metal right now, but in a responsible fashion. If you look at our -- we've tried to keep everything very efficient as well. If you look at what we're doing, we're doing all of what Bluebird's doing in sickle cell and thalassemia. We're doing all of what a company like Allogene or [indiscernible] are doing in IO. We're doing all of what some of the in vivo companies are doing and doing regen med, all with the burn rate that's not dramatic, I think less than $0.5 billion a year. Plus, we have a number of milestones that are coming in the future that are going to reduce our net burn going forward. In fact, this current interest rate environment helps us a lot on that as well. So we don't have a dilution risk, and we have dry powder to do business development deals if we see assets that are -- that can be attractive and adjacent to our core strategy. So we're busier than ever at CRISPR right now, and we continue to move nimbly, and we want to move smarter than others so that we can further expand our lead in the space and carve out our preeminence.

All right. Perfect. Unless you want to add anything else to close out, this is great. Thank you so much. I really appreciate the time.

Thank you, Yigal. Appreciate it.

Welcome.