enGene Holdings Inc. (ENGN) Earnings Call Transcript & Summary

Welcome to the session of the Morgan Stanley Global Healthcare Conference. I'm Judah Frommer, one of the SMiD biotech analysts. We're excited to have enGene joining us. And let me just go through a quick disclosure before welcoming Ron. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. So again, thank you for being here. Maybe we just start out for those less familiar with the enGene story. Can you provide a brief introduction to the company and your lead asset?

Well, first of all, thanks very much for the opportunity to be here. We really appreciate it. So enGene is a company that has nonviral gene therapy. And that is unique, unique. So when you first of all, when you think about gene therapies, you think about some of the shortcomings of gene therapies. But in fact, by delivering gene therapy through the mucosa using our Special DDX platform, we've been actually able to solve some of those issues. So first of all, we're able to give a big genetic cargo. We're not limited by cargo. Our products are redoseable, and we can use them over and over again as needed. And because it's nonviral, our manufacturing is a lot simpler, right? So our cost of goods should be competitive, which allows us to get to many more diseases. So I think we sort of cracked the code in some of the challenges of gene therapy. Now from our platform, which we call the DDX platform, our lead asset is a product called detalimogene. We're developing that for non-muscle invasive bladder cancer with cysts that are BCG resistant. That product is currently in a pivotal study. And we are delighted to announce this very recently that we actually hit our target enrollment for detalimogene. So it's a pretty exciting time for our company.

Excellent. So maybe you mentioned the indication for detalimogene. Maybe we start with unmet need in bladder cancer and how detalimogene might address that unmet need.

Well, first of all, bladder cancer is a pretty common cancer. It's a 6-month common cancer. It's about in the U.S., around 730,000 patients and about 83,000 patients each year. It's a growing population that's associated with the agent, right? And the current treatments, the base treatment is BCG, product that's been in a chronic backorder. And then patients have a few other approved agents, but they often land up having their bladder removed, radical cystectomy. So it's a big population, unmet need, pretty high.

Okay. Great. Here's sort of a high-level question with some subparts, so bear with me. There are a number of competing programs in late-stage development for BCG-unresponsive NMIBC. So if each of these competing programs, and we know one, we'll get to market, where does detalimogene fit? And maybe within the answer, can you help us think about the safety and efficacy profile generated to date, how it stacks up and then the streamlined administration process for detalimogene and how that could impact here?

Well, I guess, first of all, let's -- let's talk about the needs of the urologists. First of all, where are these patients? These patients are predominantly in the community. 70% to 80% of urologists are practicing. So their needs are different. What we've done is we've designed detalimogene for the urologists, right? So based on our September data of last year, we demonstrated really good efficacy, 71% CR rate in time, great tolerability. And you pointed to the last point, ease of administration equals beneficial practice economics in these busy practices, right? So based on that profile, we really believe detalimogene is the product that community urologists will reach to first for all of those reasons. So now how does that compare to some of the other agents? Well, first of all, if you look at these studies that are being conducted, these studies are not very big studies. They're 100-patient studies, heterogeneous protocols, heterogeneous populations, right? The current products, they have a CR rate between about 20% to 40% of approval. Frankly, I don't know how different that really is, right, in such a small population. When you actually see these drugs being used in real life, you actually see better efficacy over time. So I would say efficacy seems to be similar for these products. We seem to all be in the same range. So then what about tolerability? We demonstrated in our September 24 data that most of our treatment-related AEs are associated with catheterization grade 1 or 2, very well tolerated. Some of the other agents are also similarly well tolerated, but some of the other agents do have some more serious side effects that can occur. They're rare, but they can occur. So there's a risk benefit for some of the other products. So I would say we have a very competitive tolerability check. So the third part of the triangle is the ease of administration, which really equals practice economics, right? So let's think about these busy community urology practices. Many of them are owned by private equity. Many of these practices are focused in on how they turn patients -- patients through. If you compare detalimogene to the other products, there's no [ prewashes ]. There's no special handling requirements. There is no co-medications required. There is no after usage bleaching -- effectively, the patient goes in, gets the administration at home. And the number of administration is relatively low as well. So I really believe I'm excited about where we are with NMIBC because I think all the agents that are there now and the new agents all will have a place, right? And hopefully, that will mean that less patients have their bladders removed. But quite frankly, when you look at sort of the efficacy profile was demonstrated in September of last year, tolerability profile and ease of use and practice economics, it really lends itself to enGene being the product that urologists will reach to first.

Okay. And I think one of the competitors have kind of made the point that if your practice is set up to handle BCG, you'd be set up to handle the competing product. I guess, how -- what's your reaction to hearing that? How many community docs would kind of make the differentiation between detalimogene and handling BCG or a competing product?

These are very different products, right? So BCG is a bacteria. It's an older product that people know and the risk that goes with that. Some of the newer products, which are very potent replicating viruses strike, I don't think it's the same. It's the opposite. Now we'll obviously have to wait to see what the labeling says. But for a potent replicating virus, in general, you need BSL-2 handling. So you need a hood, you need a nurse that's willing to deal with the virus. You -- after you administer that, you need the patient to stay and collect the urine, bleach that urine and you'll instruct that patient when they go home to bleach the toilet after they void as well. If you look at the recently approved product that's chemo, they're asking for similar types of things even for a chemo agent. So I can imagine it's hard for me to say what the FDA is going to say, but a very potent replicating virus is going to require probably some different handling procedures.

Okay. That's helpful. Moving on to your LEGEND study. You did recently implement some protocol changes there. Can you walk us through those changes, why you made them and what they could mean for future readouts?

So from our data of September last year, as I said, we were pretty pleased about both efficacy and the tolerability. At the same time, we did it with arm behind our back, right? We were not following AUA guidelines and standard -- and standard of care for these patients, right? So we implemented 3 important protocol amendments. And we believe that, that will help efficacy. We left some efficacy on the table. The first one being is the most serious patients are T1 patients, right? And before, we've allowed patients with T1 disease to have 1 resection and they'd go automatically into the study. Now standard of care says you really should do 2 TURBTs, right, make sure it's not there. And then the big difference for us is if there is still T1, the patient will not be enrolled. And if they have had their T1 removed, it's been proven that, that second TURBT is therapeutic in nature. So what should be the net? We had 14% of our patients that were T1 before. Our competitor, the other companies that are low single digits will probably be low single digits. We'll probably be in low single digits and probably patients with a better profile. So that's one thing that should make a meaningful difference for us. The second is after 3 months, we -- if there was a little growth, the Ta, a papillary or some sort, we said to the doctors, you have to take the patient out. And the doctor said, well, everything else looks great. We just cut those things out. And in fact, so now we're allowing resection of Ta and allowing those patients to be reinduced. And that for other companies has made a pretty significant difference in efficacy as well. And the third thing is that previously, when the doctor suspected that there was progression, they looked in the bladder and says, well, that looks red, looks like it's progressing. We would allow them to have them read the study. Standard of care says you require a biopsy, right? So we believe those 3 improvements, limiting the number of T1 patients for making sure we have the right T1 patients and allowing resection of Tas and reinduction and ensuring that there's a biopsy to remove the patients from the study, get us to standard of care and should theoretically at least help us from an efficacy perspective.

Okay. Great. And you will be reporting additional LEGEND data later in the year. What can we expect in terms of the number of patients and follow-up? What are you hoping to see in the context of your own prior data and also kind of as you outlined in the context of competitor data. And the question we get all the time from investors, which CR rate is the right one to think about?

I think I love that last question [indiscernible]. Yes. So I would say so, first of all, based on what I just talked about the protocol changes, I think the #1 thing people are saying to us is, okay, will they make a difference? And that's where we're really focusing our energies on. Now given that we made those protocol changes at the end of last year, we'd like to have a big enough cohort of patients 3 to 6 months where people think, okay, yes, this looks like a difference, right? And so given that enrollment has sort of ramped up sort of at the end of the year, early next year, what we anticipate is sharing of 3 and 6 months, that will be the real focus of what we're trying to. We're waiting for that point where we have a good sized number of patients where people say, I get it, right? That's where we're focused. Now where should investors be focusing on? But to be honest, I think it's where the doctors focus, right? So if I call the community urologists, right, and ask them about the approved agents, what their 12-month CR rate would be, with no disrespect to them, I'm pretty sure they don't know what that number is in no disrespect, because it's not a focal point. What do they focus on? Does the product work or not, right? And that's CR any time, right? So from my perspective, I look from a customer perspective, they're looking at, does this product work or not, right? CR any time is probably the best proxy for that.

Okay. That makes sense. And a question that I think applies to you guys is not necessarily specific to you, but with some changes at FDA and some surprised CRLs in the space, single-arm trials in oncology have been called out from time to time. And I guess there are some investors that are uneasy. So how are you viewing registrational path for detalimogene currently versus maybe in the prior administration? And any color you can share around just registrational path and confidence?

We have a high level of confidence. You might have seen recently that we received RMAT designation based on our September data. That to me suggests that the FDA sees the unmet medical need that I talked about previously. So they're engaged. I also look at the proxies for our engagement and they've only been very supportive in engaging with us. And then I look at the draft guidance. Draft guidance came out in 2018. They reiterated the draft guidance in the summer of '24. So -- and the FDA doesn't issue guidance lightly, right? They only do that after they really think it through and that there's a huge unmet medical need. So based on that and based on recent approvals, I think we feel pretty good about where we are.

Okay. Great. And I think you said you're on track for BLA filing mid next year. You've talked about some key leadership additions as you approach potential launch. Can you help us a bit with go-to-market strategy, commercial readiness, manufacturing, things that we should be thinking about as you kind of prepare to launch the product?

Yes. So we are getting ready. We are -- we've already made changes to get ready. I think, first of all, we're in the process already of [ ready ] many of the modules. So we will be ready to just submit as soon as we get the data. In terms of market preparation, you might have seen some recent announcement where we've added 3 Board members that are involved -- have been involved in commercial launches. We added -- we were able to attract a Chief Global Commercialization Officer who's launched dozens of products successfully around the world. We started to really dig in into the market research and getting understanding of the different physicians because what's really interesting is this a bit of a paradox here, right? So this is a disease that sits predominantly with community urologists. Community urologists are busy seeing patients, right? They're also not really tracking the new medicines, right? And so when people do surveys and they talk to key opinion leaders, their needs are different. First of all, they don't have as many patients. They're also seeing patients that are 3, 4, 5 lines of therapy, where these community doctors have seen de novo patients, right? So what we've been starting to do is trying to quantify and understand their needs. And so some of the early work that we've done, the profile of detalimogene based on our September data, efficacy, tolerability and that's the ease of use and positive impact on practice economics really makes it attractive. So we look forward to sharing some of that data over time.

Okay. Great. We'll look forward to that. And the LEGEND trial also has some other cohorts that are enrolling patients with other types of NMIBC. Can you tell us about how you think about those cohorts, how they fit into the development plan for the drug and maybe any data we should be looking toward in the relatively near future?

Yes. So we have 3 other cohorts -- in addition to the pivotal cohort, which I said, we've reached our enrollment target. We have a cohort that has BCG naive patients. We have another cohort where they are obesity exposed and the fourth cohort are patients -- the others have cysts -- fourth cohort, no cyst than just papillary. And I think our thinking there is we're really trying to meet the needs of urologists, trying to provide you as much insight in different patient populations, so they understand the totality of the value of detalimogene. There is some precedent for some of these populations to receive some NCCN guidelines as well, right, which is also useful for the prescribing community. And we provided guidance to say we'll provide an update on those later this year or early next year. But some of that, quite frankly, the priority is in Cohort 1 and enrolling that. So we'll provide more insight on that as time goes on.

Okay. Great. And is there any reason to think that commercial dynamics could differ materially in some of these subsequent populations versus the lead indication in terms of standard -- competing with standard of care or competing with other clinical players in the space?

Yes. I think there is some differences, right? So particularly, like we'll get an indication, and we'll obviously be promoting within the indication for the BCG-resisted with [ Cis ] patients. However, BCG naive patients, there's a lot of logic to the profile of the product would have. And in a country where there is a problem of access to BCG, it becomes a viable alternative theoretically, right? So providing information on that could be interest of different dynamic, right? Obviously, the price point for BCG is quite different. So the unmet needs are different in those spaces. The competitive sets are a little bit different, but we'll really focus on promoting the BCG-resistant patients, right?

Okay. Makes sense. And then just on the DDX platform more generally, where might there be opportunity for enGene outside of bladder cancer? What can you share with us in terms of thinking beyond bladder cancer? Or is that just where you're focused on it right now?

We are focused, right? But below the line, we're doing a lot of work, right? So our team invented this platform. We continue to do work on the platform. And I think what we think about is using the platform, number one, detalimogene, we believe, is a really interesting product, but we always want to life cycle manage that, right? So how can we make it even more convenient? How can we make it even more potent. So there's some thoughts that we have on that. Secondarily is, could we take it to some other cancers, other forms of cancers. And certainly, there's a range of GO cancers where a profile of that product makes a lot of sense. And then third, we cracked the code for delivering nonviral gene therapy through mucosa, think about it in your body where there's mucosa where we could have good dwell time. And there's some logic for a product like ours or a product from our DDX platform. So detalimogene is the beginning of the story. We continue some really good work that I'm pretty excited about. And then over time, hopefully, as that matures, we'll be able to share more details.

Okay. Great. And then can you just remind us of cash runway and what that runway will fund in terms of clinical catalysts or maybe as we head toward commercialization?

Yes. So the guidance that we've given is we provide a data update in Q4 of this year. We expect to file in the second half of next year, and we potentially will have an approval in '27, right? So that's what's ahead of us. So we're kind of in an exciting period. The nice thing is that we're well capitalized. We have a little over $250 million of cash. And based on our current plans, that gets us into 2027. So we feel pretty good about our cash position. We feel pretty good about where we are from a development perspective, detalimogene.

Okay. Makes a lot of sense. And then maybe just last company-specific question before I get into a survey we're asking all of our management teams. Anything we didn't discuss that you'd highlight around the enGene story?

Well, I think there's one point that we did not talk about, right? So when we think about these products and getting them launched, right, manufacturing has been an issue for these products in general, particularly the ones just viral products in general. And I think it's a place where I think we can reassure folks. In that we've been manufacturing at scale for quite some time. The other nice thing about detalimogene is, really 4 ingredients, right, new ingredients that are readily available. And with those 4 readily available ingredients, in fact, we're already manufacturing at scale, we will have a pretty competitive cost of goods, right, which allows us probably to do more and to go to other areas. Currently, we are in the middle of our PPP campaigns, right? And they are looking very good. So I think we feel really confident in our ability. And there's always work to be done. So it's some caveats. You never know exactly. But I think we feel pretty good about wrapping up our CMC module even before the clinical data comes, right? So that when the clinical data comes in putting together our filing package should be pretty straightforward. So we're making a lot of progress in that area as well.

Okay. That's helpful color. As I mentioned, we do have a sort of a mini survey we're asking all of the biotech teams at the conference trying to get kind of an overall view of 3 thematic topics. So the first one is on China. So with China's rise in biotech innovation, how are you thinking about your competitive position here? And will this influence your R&D or business development strategy?

Well, I think, first of all, the proliferation of new agents acknowledged from China is a good thing because more good drugs is good for patients overall. I think we sit in a unique position. Our DDX platform is proprietary and it's taken a long time actually to build that. So I don't feel very -- not that concerned about that. And then, of course, from a China perspective, as we go forward from this development perspective, it's interesting for us as well, too. So I think it's a real opportunity for us.

Okay. Great. And then AI is the next theme. How is enGene leveraging AI or thinking about AI's future disruption potential, either on the positive or negative side of drug development?

Well, I, in general, think that AI is really going to be a boom for our industry, right? So if you look at the various different stages, I think the discovery folks have probably been using a form of AI for quite some time actually, right? And it's just gotten better and better. When we get into the development stage of things, not as far along as discovery, but starting to really get into things, particularly biomarkers. I think we're going to be able to do our clinical studies even better by using AI. From a commercial perspective, I'd say they're probably at the same stage as the development folks starting to dabble into things around the edges that are improving our commercialization. And then I think the last part of the G&A functions, particularly in working with our vendors, this is going to be an opportunity to reduce costs actually. And so I think as we go -- and we already see that, right? We're not a commercial, but I can see some of the things that traditionally that we would pay a lot of money for, AI will replace. So that will actually help us with our commercialization. So overall, I think AI is going to have a pretty big impact on the totality of our industry, and I'm looking forward to seeing in sort of these latter stages and how it begins to help us.

Okay. Great. And the last topic that's been most relevant to most of our SMid-cap biotech companies on the regulatory side of things, and we did touch on this specific to enGene, but changes at FDA, MFN pricing, tariffs, is there anything on the regulatory side of the equation that's generating significant internal conversations at enGene?

I guess the most important one for us is regulatory, right? Because we're at sort of the sharp end [indiscernible] now as we contemplate filing and we already talked about the fact that we have RMAT, the fact that there's already guidance. But to me the most important -- what do I look at from a regulatory perspective? I look at, number one, how responsive is the FDA? And number two, do we have consistency with individuals. Those are the soft parameters. We have the same project manager and that project manager has been really engaged. And number two, the FDA has been just terrific. They've been right on time or early on things have been very unresponsive to us. So I think from a regulatory perspective, I think we feel pretty good, and we're actually grateful for the support from the FDA. On the other [indiscernible] being a pre-commercial company, there may be things down the line to think about, but they're not really impact issues for us right now.

Okay. Really helpful. I think if there are no questions in the room, we will leave it there, and thank you again for the participation.

Really appreciate it. Pleasure to be here. Thank you.