GenSight Biologics S.A. (SIGHT) Earnings Call Transcript & Summary

Hello, and welcome to the LUMEVOQ manufacturing time line of GenSight Biologics. My name is Courtney, and I'll be your coordinator for today's event. Please note that this call is being recorded. [Operator Instructions] And I will now hand you over to your host, Bernard Gilly, CEO of GenSight Biologics, to begin today's conference. Thank you.

Thank you, and good morning to our friends in the U.S. and good afternoon to those of you in Europe, and thank you for attending our webcast. The focus of today is our announcement that we need to restart the manufacturing for the validation batches later this year. Specifically, the drug substance from the campaign we started in December '21 did not meet the predefined acceptance threshold. This means that we have to begin a new campaign in order to satisfy the regulatory requirements for marketing authorization. Of course, and to start with, I'm thinking of the patients who are hoping for this treatment. And I want here to tell them that our team is working hard to resolve the problem as quickly as possible, while ensuring the highest quality standard. Now regarding the reason why we have to do this restart, let me be very clear from the beginning. The manufacturing process of LUMEVOQ is not the issue, that bears repeating. It is not about the manufacturing process of LUMEVOQ itself. The experts we engaged to investigate what happened have once again confirmed that the process is sound and should, therefore, be expected to deliver LUMEVOQ at the quality and the quantity required. However, we have to acknowledge that the process, although well known in principle is a complex one and can be challenging to execute. But fortunately, the experts were also clear on what to do differently in the next campaign. Bottom line, we need to make some minor procedural adjustments so that the process can be reliably executed by our manufacturing partner. What we need to fix, again, is not the process itself, but the actions safeguarding its sound and reliable execution. Accordingly, with our experts supporting us and our manufacturing partner collaborating closely with us, we have identified where to make those minor but required procedural adjustments. The outcome of such adjustments will be improved process control, and much closer supervision of those steps that are relatively tricky to execute reliably. Although we have clarity about where and how to introduce these minor adjustments, we are going further than this. We will take additional time to test the adjustments by first manufacturing smaller engineering lots. This means, of course, that we have to build in more time for our preparation for the restart of the PPQ campaign, but we are convinced that it will be worth the investment in time and resources. The engineering runs will build greater confidence that we did the right operational fine-tuning. Let me recap all this. We will make some operational adjustments. We will do some pretesting via engineering rounds, and we will resume the PPQ campaign by Q4 of this year. The second thing we will do is equally or maybe more important than doing the fine-tuning. We are bringing in a new Chief Technical Officer, Scott Jeffers. And we are engaging a leading industry expert on biologic manufacturing, Jay Stout to lead the implementation of the adjustments to the process control and supervision. Scott Jeffers who is with us today, will take over the position of CTO of GenSight based in Boston. Scott has been working in gene therapy since '97. He spent several years at the Colorado -- the University of Colorado as well as the Pasteur Institute in Paris. He's been working in the industry in increasing responsibility roles in manufacturing organizations and innovating companies. On his side, Jay Stout has been involved in biologic development and manufacturing for over 30 years for companies like Pfizer, Merck, Amgen, amongst others. And he was a key technical leader in the commercial manufacturing of products such as Enbrel, KEYTRUDA and more recently, in the approval of Trodelvy. Scott and Jay are based in the U.S. Thus, they will also be able to bring their years of experience to work closely with our manufacturing partner at the very site where the LUMEVOQ is produced. And this proximity, of course, will bring a much needed and high level of intensity to our collaboration with our manufacturing partners. Now again, we are quickly aware that this delay comes at high personal costs for the LHON patients who need an effective treatment for their blinding disease. We share their frustration and those are their physicians at the delay in bringing LUMEVOQ to the market. But we also want to reassure them again and again, that we feel strongly that we are on the best path to move forward that we are doubly determined to get things right, and we have not weathered in our commitment to bring them LUMEVOQ in the shortest possible time. In the meantime, our medical and country teams we'll be working with KOL experts with treatment centers and local authorities to make sure that as soon as we have product that has been manufactured at the level of quality we demand, then patients will not have to wait long to get treated. And I'd like to close by highlighting again 4 important points: one, we have confirmed again that the LUMEVOQ manufacturing process is sound and well validated; two, we have a clear view of the personal adjustment that need to be put in place to bring execution, reliability up to the level we need; three, we have the experts on the ground ready to work intensively with our manufacturing partner to deliver these operational corrections; and four, of course, we have also reached out to the representative of the European agency regarding the new manufacturing time line. Once we know more, which is going to be soon, we will, of course, provide an update. Now it's my pleasure to introduce one of the key actor of this process, Scott Jeffers. Scott the floor is yours.

Thank you, Bernard. Good morning, everyone, and good afternoon to those joining us from Europe. My name is Scott Jeffers, and I'm happy to join GenSight as their new Chief Technical Officer. Maybe I can start by giving you a very quick overview of myself and my background. Before GenSight, I worked extensively as a senior executive overseeing CMC operations at a number of pharmaceutical companies, biotechs and contract manufacturers. But now let's focus on what brings us here today, which is the outcome of the latest PPQ campaign at GenSight. First, let me eliminate any doubts of the fundamentals of the manufacturing process of LUMEVOQ. The process is sound and if executed well, will deliver gene therapy at the right concentration and in the right volume. Today, we know more about how to manufacture AAV vectors than we did in the past. And foundationally, LUMEVOQ's process is based on this well-established understanding. Now this does not mean that LUMEVOQ's manufacturing process is not complex, far from it, particularly from the point of view of execution. In fact, there are requirements specific to LUMEVOQ that need special attention and supervision during the manufacturing process. As we investigated what happened with the PPQ batches, it became clear that small adjustments to operational processes such as process control and supervision are very likely to resolve these issues. This is the direction we took in formulating the action plan, and we are confident this will lead to a reliable, solid execution. But just to be extra sure that our proposed adjustments will resolve the issues, we will carry out engineering runs. These are small-scale batches that will tell us quickly whether we need to do some further adjustments or if we can proceed to the scale of the PPQ batches. It's extra insurance that we put things back on track. So to sum up, LUMEVOQ manufacturing process is sound and well validated. Operational refinements like enhanced process control and tube vision, we'll close the loop when it comes to reliable, sound execution of the manufacturing process. Jay Stout, who Bernard mentioned, another CMC expert and I will be on the ground working with our manufacturing partner to ensure that this action plan takes -- plan works. Of course, we immediately took actions to correct our financial position, and I'd like to introduce Thomas Gidoin who will talk about that. Thank you very much.

Thank you, Scott. First, let me give you the headline. This delay has no impact on our cash runway. And we confirm today that we are still financed until early Q1 next year, as it was before. We do recognize that there are 2 aspects in which these delays could have impacted our financial situations. First, through the impact on current cash runway; and second, through the impact on our financing plans beyond this cash runway next year. So delay does introduce additional cost, because we need to implement the identified operational adjustments that Scott just mentioned and executed a couple of engineering rounds necessary to ensure that we fixed what has to be fixed. The delay also reduces our expectations to revenues from the temporary authorization for use, which are called ATUs in France. Given that we have now used the last remaining vials, and we will need to wait for the first PPQ batch, it should be released by the end of the year. These revenues for Q1 will be reported as planned. At the end of April, it's the 21st of April. We had, of course, considered this situation as a possible scenario. And so we have formulated an action plan with a number of adjustments in our spending to reduce the operating cash burn in 2022. Two points to note: first, none of these adjustments will result in a reduction in people. Although we are postponing some of the planned recruitment this year, [indiscernible] in external expenses. Then, and it was an absolute priority. None of these adjustments is likely to jeopardize the upcoming commercial launch of LUMEVOQ. All our teams remain absolutely focused on our #1 priority, which is the launch of LUMEVOQ in Europe next year. This action plan is already being implemented, and we can, therefore, confirm that we are financed until early Q1 next year. Now in line with our financing strategy beyond early next year, and as it was previously shared. We've been assessing several options over the past couple of months, which are as minimally dilutive as possible, and we know this is key. And we have a number of underlying discussions. Again, this is key to understand what is at stake. As far as we have determined, the manufacturing issue is merely a delay. The fundamentals of GenSight investment case are therefore unchanged. The process itself is not at stake, and Scott has made it very clear. The quality of our clinical data remains solid and robust, and therefore, the likelihood of LUMEVOQ being approved in Europe has not changed. For all these reasons, while the exact amount and structure, of course, is not fixed and is still being discussed, we remain absolutely confident in our ability to attract additional funds in the short term. And with this, I will open to questions, first from analysts on the phone if there are any, and remind you that you can ask your questions in writing as well through the webcast.

[Operator Instructions] And I shall turn the call back across to yourself to take any questions that everyone on the phone or do we move to written questions. We do actually have a question that has just come in via the phone lines. And our question comes in from the line of Fred Gomez calling from Pharmium Securities.

You mentioned briefly the ongoing process in Europe. I know that, of course, you will update the market when you have more information on that side. But among the one is you mentioned in the press release the D120, you are supposed to provide answers to the questions asked by the CHMP. Can you submit your answers independently of the issue on the manufacturing because it seems that it's what you are seeing in the press release. So will you put on hold everything and discuss with MAA saying "Okay, until we have the final data from manufacturing, we don't want to provide you any answers." Or is it feasible for you in the meantime to continue at least to keep the line open with the CHMP, providing the D120 answers.

So it's a good question. And yes, indeed. So as we said, we have contacted the representatives of the European Agency. And of course, we'll have additional elements to respond to this, probably next week or the week after. But yes, I think, indeed, we believe that the CAT will continue to look at the data that we provide and the response will be submitted on, I think it's April 13 for the day 120. And we believe and what we are asking for is certainly an additional delay to submit the CMC part of the dossier. But the other parts of the dossier, we have prepared the answers and we hope that they will be able to submit these answers as scheduled on next week. And in fact, as it turns out, we -- and again, I mean, we will know more, of course, but we are targeting Q3 [Technical Difficulty].

It appears that we have lost connection to our speakers. Please stand by once we reestablish this connection.

You've been able to hear my response, but the reference is ...

Just the end.

Okay. So the answer is, yes, we expect that the CAT will accept our clinical references and all the responses we are prepared that are not linked to the CMC and will allow us to submit the CMC information later this year.

Okay. I have 2 more questions, if I may. One on the control of the next campaign because you are really unlucky, but are you planning now to have people from GenSight and those 2 people that you just hired that will be in the manufacturing plant during the key sales because you are not the first company to have troubles with the manufacturing. It can happen to anyone, even big names. So to mitigate the risk at the maximum, are you planning to have people from GenSight spending times, hours and days at the plant during the next campaign?

Yes, that's what we are contemplating. That needs some adjustment to the master service agreement with our partner. But yes, indeed, and we know that they have already accepted the principle that we have an observer within the manufacturing suites where the product is being manufactured. And this observer, of course, we will not be able to execute because this is a responsibility of the manufacturing organization, but it will have the possibility to observe and eventually comment on what it is.

Okay. And my final question is on the cash, you mentioned the fact that you will try to control expenses and reduce the cash burn this year without impacting the number of people. How we should think about the next clinical study that has been required by FDA? Should we consider that you will put some clinical activities on hold or until you have a further better visibility on Europe?

So obviously, to start this new trial, we need products. So that's again the same issue. So what is clear is that we will not be able to start this trial this year. In the meantime, we're still discussing the protocol with the team internally, with the KOLs and ultimately with the FDA. So we still have some work to do, but this is clear that we will not start this trial this year.

We move to the written questions? Is that correct?

That's correct. We have no further questions on the phone lines.

Yes, fantastic. So we'll read the questions and address them to the relevant person. So we have a lot of questions on the same topic, which we can probably just wave now, which is: As per contract, do we plan to ask for compensations? Or are there any sort of actions taken against the manufacturer in the U.S.?

So I don't quite necessarily understand what is meant by actions. But of course, we have discussions between us and our manufacturing partners. And basically, just to make a complex discussion simple, when they -- when it is the definitely proven that they missed the -- they mishandled the execution. I mean, we are indeed able to claims for some compensation. Again, I think, of course, these discussions are ongoing. But for the moment, I think the priority is to get the manufacturing done right. And that's why we have now started to discuss again with -- intensively with the manufacturer, together with our experts with Jay Stout and Scott Jeffers, so that we make this right.

Okay. Thank you. Then we have a lot of questions, and I'm not sure we'll be able to be very specific on this. But could you say -- one of them is, could you say more on the execution issues that generated the problem, and we have a lot around these lines as well.

I think we -- I don't think we need to get into the very details of the operational issues. As Scott mentioned, I mean, there is a need for additional in-process control, additional close supervision of a number of relatively tricky execution steps. It's always the case where devil is in the details and very small adjustment can make a very big difference. Scott, you want to add something here?

Yes, exactly. What I would say is that this is operational and that having people in the suites and observing and proper leadership will fix this.

Okay. Then we have some questions around the testing and the way we measure the viral titer. Is it possible by measurements during the process to detect before completing the process that a batch will have an insufficient viral titer?

So yes, of course, we have put in place, and we are now adding more in process control to indeed control the viral titer. Let me just say a few things here. One, we are -- despite the batch do not meet the required specification, the process allowed to produce the viral vector. It's just not at the quantity level we are expecting, but we do produce it. And again, small adjustments will allow us to very likely to get to this level. So we really are taking the necessary measure to reach this operational excellence. We have the people now working with us, Scott and Jay that are recognized experts in the field working with us. And we are implementing this enhancing process control and supervision procedures in close collaboration with our manufacturing partner. It is important that we also trust each other in this endeavor, and we trust our manufacturing partner that they will be able -- taking into account these necessary adjustments that they will be able to deliver LUMEVOQ at the right quantity and the right quality.

Then there is a number of questions around the difference between these batches and the one we used in clinical trials. Some of these questions are around is the threshold, the specifications are still -- are they the same? And did we see similar issues with the batches that were used in the clinical trials a few years ago?

Well, I think the batches that were used for the clinical trials are not deemed to be commercial batches. Commercial batches is the high level of specification. It's a higher level of consistency. The quality, of course, is the same because it's made to be used for treating patients. But they -- we do not need to go through the consistency steps for using in clinical trials. And that's why, by the way, the regulatory agencies are requesting that the clinical batches are made with the same process that the commercial batches. So again, we know and that's another proof that the process, the manufacturing process of LUMEVOQ is sound because we have been able to produce clinical material for the clinical trials. Now, we have one more step in terms of quality standard. It's a higher quality standard and higher consistency standards for the market approval. And this is where, as Scott put it, it is very important to get a very close supervision and eventually more in process control.

Okay. There's an interesting question. Basically, because the titer is lower than expected, is it still possible to use these failed PPQ batches for ATUs by increasing the volume we inject in the eyes of the patients?

No, we can't because they have not met the specification. Again, once you prepare a batch, you need to say in advance what would be the result. If the result is not consistent then you can't do it.

Still on the ATU. There is a lot of questions around confirming that when we say that we don't have any more product for compassionate use, it includes ATUs. So the answer is yes. ATUs are just the compassionate use in France. There are similar schemes in other countries. But if we don't have product, we don't have product for anyone. So the answer is yes, we do not have any more vials for ATUs until we produce the first PPQ batch. And still along these lines, do you treat patients in Q1 under ATU? The answer is yes. And as I mentioned earlier, we will report the sales number generated on the 21st of April later this month. Well, I am swamped with questions. Is there a possibility -- we have a number of questions around the possibility to change the manufacturing partner.