PepGen Inc. (PEPG) Earnings Call Transcript & Summary

Good day, everyone, and welcome to the PepGen CONNECT1 Investor Call. Today's conference is being recorded. At this time, I would like to turn the call over to David Borah, Senior Vice President of Investor Relations and Corporate Communications. Please go ahead.

Good afternoon, and thank you for joining us for today's update on our CONNECT1 clinical trial. Before we begin, I'd like to remind everyone that we'll be making forward-looking statements today that are subject to the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent Form 10-Q. These statements represent our views as of today's date, and we disclaim any obligation to update these statements. Joining me on today's call will be Dr. James McArthur, President and CEO of PepGen; Dr. Michelle Mellion, Chief Medical Officer of PepGen; and Dr. Hugh McMillan, Professor the Department of Pediatrics Division of Pediatric Neurology at the Children's Hospital Eastern Ontario and our lead clinical investigator of the CONNECT1 trial. Dr. McArthur will lead off with a discussion of our technology platform and key takeaways from the data. Dr. Mellion will follow with a brief description of the DMD field and the CONNECT1 trial was on. And Dr. Mellion will then review the initial results from the 5 milligrams per kilogram cohort of CONNECT1. He will then hand the call back to Dr. McArthur for closing remarks. Finally, the operator will open up the call for Q&A. At this time, I'd like to hand the call over to James. James?

Thanks, Dave, and thanks to everyone dialing into the call. Here at PepGen, we're dedicated to developing therapies that may one day transform the lives of people living with devastating neuromuscular and neurological diseases. Powered by our EDO platform, we're developing therapies, which we believe can more effectively deliver therapeutic oligonucleotides and other drugs to cells and ultimately the nucleus. We are excited to share the data from the 5 mg per kg cohort of our CONNECT1 trial with you today and provide an update on our progress in the 10 mg per kg cohort. PepGen is applying EDO technology to address the limitations with oligonucleotides therapeutics. As you can see on this slide, naked oligonucleotides do a very poor job of getting into muscle cells with even fewer getting into the nuclei. This has limited the impact of oligonucleotide therapy in DMD. In stark contrast, when we utilize the EDO platform technology in preclinical studies, we see a dramatic increase in both uptake of oligonucleotides into muscle cells as well as into the nuclei, the site of action. We believe the clinical data we are showing today confirms this. Now I'm turning to the key takeaways. We are extremely encouraged by the initial data from our 5 mg per kg cohort, the low-dose study in our CONNECT1 trial. As you will see in our presentation, these results support that our EDO platform works as intended, delivering oligonucleotides to the nucleus of muscle cells, the site of action. Beginning with safety. PGN-EDO51 was well tolerated, the 1 related treatment-emergent adverse event being mild and resolved. All participants have continued into the long-term extension study and are currently dosing at 5 mg per kg. As of July 29, we're an aggregate of 4 doses delivered in 2 patients in our 10 mg per kg. CONNECT2 or CONNECT1, EDO51 has been generally well tolerated. A full update will be provided when we read out the data from the 10 mg per kg cohort. PGN-ED051 has generated the highest level of exon 51-skipping ever reported versus all other exon 51-skipping therapies at doses even twice a time. All participants showed exon skipping and dystrophin production. Furthermore, we believe this high level of exon skipping demonstrates that our therapy is more potent as we achieved this increase in exon skipping with fewer doses and a shorter duration. We believe these data indicate that higher levels of oligonucleotide are being delivered to the nucleus by PGN-ED051. Regarding dystrophin production. With 4 doses and in just 3 months, we achieved 1.49% muscle content adjusted dystrophin and 0.61% total dystrophin, an increase of 0.7% muscle content adjusted dystrophin and an increase of 0.26% total net dystrophin. To put this in context, 5 mg per kg of DYNE-251 studied for 6 months and 6 doses produced an increase of 0.44% muscle content-adjusted dystrophin and an increase of 0.28% total net dystrophin. We had anticipated seeing levels of dystrophin production of 1%, which we did not achieve at the 5 mg per kg level after 3 months of treatment. However, based on the levels of exon skipped transcript reported today in the low-dose cohort of CONNECT1 and the increase in skipping seen in our Phase I study going from 5 mg per kg to 10 mg per kg. We believe we will have the potential to achieve substantially higher dystrophin production with our EDO technology with longer dosing. In this initial data, we were very pleased to achieve high levels of exon skipping in all participants. Higher levels of exon 51 skip transcript over time have been shown to produce higher levels of dystrophin protein production. Based on biochemical and preclinical data and clinical studies with approved drugs, we expect to see a lag in dystrophin production that follows the increase in 51 skipped dystrophin transport. We are confident that higher levels of dystrophin production can be achieved with higher doses of PGN-ED051 over longer treatment periods. It's now my pleasure to hand the call over to Dr. Michelle Mellion, PepGen's Chief Medical Officer, to discuss the DMD landscape and the CONNECT1 trial. Michelle?

Thank you, James. I have had the privilege of leading teams providing comprehensive care for Duchenne Muscular Dystrophy patients and their families, both as a treating neurologist and now in my role at PepGen. Patients and their families consistently demonstrate their resilience in the face of this devastating disease. Everyone at PepGen feels the urgency to develop impactful therapies for this disease. We believe our EDO platform has the potential to transform the lives of people like Mallory, and we are striving to make that happen. Approved exon skipping therapies have not produced clinically meaningful increases in dystrophin levels and have limited impact on clinical outcomes. There is also the issue of convenience, approved exon skipping therapies require weekly administration, which is difficult for patients and families. There are 40,000 patients with Duchenne in the U.S. and Europe. So there are fairly large numbers of people out there who are eagerly awaiting more effective therapies targeting the root cause of the disease. We hope to address the underlying cause of disease in 21% of these patients with our EDO51and EDO53 programs. In addition, another 14% of patients are amenable to exon 45 and 44 skipping approaches that we plan to pursue using our EDO technology. We have previously reported the results from our Phase I single ascending dose clinical study in healthy volunteers. In this study, we saw dose-dependent increases in exon 51 skip transcripts from 5 to 15 mg per kg. These doses were generally well tolerated. Looking back at our Phase I trial, we saw the greatest dose-dependent increases in exon 51 skipping when dose escalating from 5 to 10 mg per kg. After 10 days following dosing, levels of exon 51 skipping increased eightfold. To reiterate, higher levels of exon skipping are expected to lead to high levels of dystrophin protein production over time. CONNECT1 is an open-label, multiple-ascending dose clinical trial to evaluate the safety and tolerability of ED051 in patients age 8 and older who are amenable to exon 51 skipping therapy. Endpoints are safety, tolerability, dystrophin, muscle tissue concentration of EDO51 and exon skipping. This trial was designed to provide ED051's proof of concept and inform the design and conduct of our CONNECT2 Phase II trial. The clinical trial schematic is shown on this slide. The dose levels currently being tested includes 5 and 10 mgs per kg. Following completion of 2 doses in each cohort, the data safety and monitoring board needs to assess the safety data before commencing dosing in the next cohort. Our PGN-ED051 development plan consists of 2 Phase II trials: CONNECT1 to demonstrate proof of concept of our EDO platform and PGN-ED051 and CONNECT 2, which is designed to potentially support an accelerated approval pathway subject to feedback from regulators. As we've always said, CONNECT1 will inform the clinical trial design of CONNECT 2. We intend to leverage the early observations from CONNECT1 presented today to optimize our CONNECT2 Phase II trial. Consistent with the CONNECT1 trial, CONNECT2 participants will be dosed every 4 weeks. CONNECT 2 will be twice as long as CONNECT1, and we expect that participants will show benefit from the longer time on treatment. Now to review our clinical trial results, I am pleased to introduce the lead principal investigator, Dr. Hugh McMillan. Dr. McMillan is a pediatric neurologist specializing in neurophysiology and neuromuscular medicine at the Children's Hospital of Eastern Ontario, where he has been treating DMD patients for over 15 years. He is also a professor in the Department of Pediatrics at the University of Ottawa and the clinical investigator at the Children's Hospital Eastern Ontario Research Institute. Dr. McMillan?

Thanks, Michelle. First, I'll cover a few quick slides regarding the dystrophin gene and exon skipping, One slide on Duchenne Muscular Dystrophy and then discuss the clinical data. This first slide shows a healthy dystrophin gene with all 79 exons or puzzle pieces in place. There's an obvious mutation in this dystrophin gene, shown in this slide, where exon 50 is missing. As a result, the adjacent exon's 49 and 51 cannot be spliced together. Everything is degraded and functional dystrophin is not produced. This is graphically illustrated by the blocks not being able to be fit together in this picture. Now we start to show exon skipping. Here is exon 51 being skipped. And that leads to this next slide. In this patient, for exon 51 is skipped, now the adjacent exons 49 and 52 are able to be spliced or fit together. This representation makes the whole processing much simpler than it is, but it gives a good sense regarding the mechanics of exon skipping. Duchenne Muscular Dystrophy is caused by a mutation in the X-linked dystrophin gene that affects muscle function across several areas of the body, including skeletal muscle, diaphragm and cardiac muscle. Onset is typically early the 4 age 6 and progression is steady leading to the continuous loss of muscle fibers and eventually, loss of independent ambulation by age 11 years old, if no corticosteroids are used or by age 14 years of age if they are. Dilated cardiomyopathy often arises as children get older, and pulmonary function becomes progressively impaired as respiratory muscles are weakened by the dystrophic process. Typically, patients die from cardiorespiratory complications in their late 20s. It's a heartbreaking scenario and the entire Duchenne community is eager for improved therapies. So let's talk about the CONNECT1 5-milligram per kilogram data. Baseline characteristics of the 3 patients are outlined here in this slide. The average age of the boys was 11.7 years old, their body mass index, height and weight were all typical for Duchenne patients at this age. All of the boys were ambulatory and on stable regime of corticosteroids. None had previously received an exon-skipping drug. EDO51 was well tolerated at this dose level. There were no discontinuations, drug pauses or modifications. One of the patients reported mild GI symptoms, which were deemed related to the drug. There were no moderate or severe treatment-emergent adverse events. There was no sustained elevation in kidney biomarkers, no hypomagnesemia, or hypokalemia, no anemia or thrombocytopenia. All patients rolled over to the open-label extension portion of the trial and continue on study at 5 milligrams per kilogram. Data from the 5-milligram per kilogram cohorts of both PGN-ED051 and DYNE-251 are shown here and in the next 2 slides. Although it must be noted that these candidates were not directly compared in head-to-head trials. There were differences in each trial's protocol, study design, dosing regime and patient demographics. Additional safety and efficacy data from the higher dose cohorts will be important in the months ahead. Over EDO 51's 3-month dosing period, it produced mean exon skipping of 2.15% with all patients showing increased dystrophin transcripts. DYNE-251 at 5 milligrams per kilogram produced 0.80% over 6 months. Turning our attention to the muscle adjusted dystrophin. ED0-51 produced a muscle adjusted dystrophin level of 1.49%, an increase of 0.70%, DYNE-251s therapy at the same dose level of 5 milligrams per kilogram produced an increase of 0.44% over a longer time period with more doses. Over the 3-month CONNECT1 study, EDO 51 increased unadjusted dystrophin production by 0.26%, which was roughly comparable to a DYNE-251 therapy produced over 6 months of treatment. ED051 is well-tolerated drug to date that shows a great deal of promise. We are seeing an excellent production of exon 51 skip transcript, and we are starting to see the start of dystrophin production after only 13 weeks of treatment. We expect that as dosing of ED051 increases from 5 to 10 milligrams per kilogram and the treatment period expands from 3 months to 6 months, we should start to see a further increase in dystrophin production. Overall, I am enthusiastic about its potential to improve the lives of patients and look forward to continuing my role as an investigator in this trial. Thank you for your time and attention today. I will be available for the question-and-answer session. And now let me hand the call back over to James for closing remarks. James?

Thank you, Dr. McMillan. This slide gets to the [ heart ] why we are so very encouraged by what we see in the data presented today. The EDO technology very effectively delivered [ oligonu ] muscle on a per dose basis, we delivered the expected levels of PMO to the muscle tissue, 0.092 micrograms per kilogram comparable to levels achieved by DYNE-251 at 5mg per kg, 0.11 micrograms per kilogram. But getting to the muscle is only the first step. EDO technology efficiently delivered oligo to the nucleus, driving higher levels of exon skipping. EDO51 after 4 doses of 5 mg per kg produced an increase in exon 51 skip transcript of 2.15%. In contrast, DYNE-251 at 5mg per kg achieved an increase of 0.8% in exon 51 skip transcripts but with a greater number of doses, even comparing to DYNE-251 at the 10 mg per kg dose. EDO51 was able to generate more exon 51 skip transcript. It's also worth pointing out that in CONNECT1 cohort 1, patients mean age was notably higher than in the [ DYNE ] study in both of their cohorts, 5 and 10 mg per kg. Unfortunately, as patients with DMD age, their functional muscles were placed by connective tissue. We were pleased to see these increases in exon skipping after only 3 months in these patients. In just a few minutes, we'll open up the call for questions. But first, I'd like to briefly revisit the key takeaways from the 5 mg per kg cohort of our CONNECT1 trial, as you've seen during today's call, the results demonstrate the promise of our EDO platform and support its ability to deliver oligonucleotides to the nucleus of muscle cells. PGN-ED051 was well tolerated with all participants demonstrating increased exon skipping and dystrophin production. Overall, we're encouraged by the high level of exon skipping across all participants as higher levels of exon skipping over time have been shown to result in higher levels of dystrophin production. Based on all we reviewed with you today, we are confident that the higher levels of dystrophin can be achieved with higher doses of PGN-EDO51 over longer treatment periods. Our EDO technology is driving PepGen's clinical and preclinical efforts across multiple indications and targets. This includes not only our EDO51 program, but also our EDODM1 program, targeting myotonic dystrophy type 1, where we plan to report initial results later this year. Additionally, earlier this year, we announced EDO53 who's moving into IND-enabling studies, and we anticipate that it will be our third program entering the clinic. Behind this, we're using this platform technology for the delivery of therapeutic oligonucleotides for not only neuromuscular diseases, but also neurologic diseases with tremendous unmet need, where the delivery of therapeutic [ oligonucleotide ] into the nucleus of cells is critically important. We look forward to providing 3-month data from our 10 mg per kg cohort of CONNECT1 in early 2025. CONNECT2 is already opened in the United Kingdom, and the company expects to open the clinical trial in the U.S. by year-end. With respect to our DM1 program, we expect to report an update from our FREEDOM clinical trial in the fourth quarter of this year. As a reminder, FREEDOM is our Phase I placebo-controlled study, assessing safety, tolerability, PK and PD of a single ascending dose of PGN-EDO DM1. We look forward to reporting these initial results and to initiate dosing in FREEDOM 2, our multiple-ascending dose Phase II trial in DM1 in the second half of 2024. The EDO technology's ability to deliver all of nucleotides to the nucleus is especially important in DM1. In closing, we'd like to thank the patients, their families and investigators involved in our trials. It's been a pleasure to share with you our clinical data today, and we look forward to your questions. Operator, I'll turn the call back over to you for question-and-answer session. Thank you.

[Operator Instructions] And our first question is going to come from Paul Matteis from Stifel.

I hope you don't mind if I jump a few questions on here. James and team, as it relates to the day to day, thanks for the way you presented it, and I think it's helpful to look across studies. I'm just curious, taking a step back, based on the preclinical work you did, is this the amount of dystrophin you expected to produce at this dose? Is this increase aligned with your modeling for 5 mg per kg? And then the second 2 questions are just kind of on safety and how you think about therapeutic index going forward. For 10 mg per cape so far, can you share anything that you're observing on the safety side and your level of comfort there? And then just broadly speaking, do you feel like you're going to have the margin to go up to 15 mg per kg, too?

Great. Let me start off with dystrophin. So as we mentioned, this is below what we had expected this dose level. The challenge is there's very little robust patient dystrophin data with skipping drugs at 3 months. We did hit based on our models and based on robust preclinical data in nonhuman primates as well as our data in the healthy volunteer study, our target for delivery of oligo to muscle and most importantly, getting oligo into the nucleus to mediate exon skipping. So this is a disease where essentially in the absence of functional transcript. We don't produce functional dystrophin protein in these patients, and that's the root cause of this disease. We were able to demonstrate here that we achieved levels of exon skipping that exceeded many people's expectations in a very short 3-month period of time. And another study is that level of exon skip transcript, which is identical between these different studies using assays that are very much similar between these studies produced 3% or greater dystrophin. And so we're confident that we are going to be able to see higher levels of dystrophin with both increasing the dose and importantly, with increasing the length of study time. We do know as we go from day 7 to day 28, that the amount of exon 51 skip transcript increases in humans as well as nonhuman primates, and we've shared this data with you. We, therefore, expect that with increasing number of doses, that level of exon 51-skip transcript will also increase. And again, we expect the dystrophin to follow in kind, where actually there is a lag in dystrophin production, which has been observed both in preclinical systems as well as in clinical data with eteplirsen, where you can see a peak in exon skip transcript occurring around 24 weeks in terms of a threefold jump there, but it takes 48 weeks before one begins to see a meaningful increase in dystrophin. So that's what gives us the confidence that going forward, we will see higher and higher levels of dystrophin. The safety that we've shared today is as far as we're going to go in terms of description of what we've seen at 10 mg per kg, and we don't think it's appropriate to share a patient-by-patient, dose-by-dose assessment. To date, the 10 mg per kg safety profile has been generally safe and well tolerated, and we are continuing moving forward with dosing these patients at 10 mg/kg as well as recruiting that cohort, and we anticipate continuing forward at that dose level. We really want to get all of the safety from that 10 mg per kg cohort before we make a decision on dose escalation. That will be a decision that both was made by the internal safety team as well as our investigators with, of course, [ consultation ] with the DSMB.

And our next question is going to come from Tazeen Ahmad from Bank of America.

I might be wanted to start again with safety as well. From your press release, as you described, there was one GI event that you described as mild. How long did that take to resolve? And then secondly, you talked about no sustained elevation in kidney biomarkers. Does that mean that there was some elevation seen initially? And also how long did that take to resolve, if that was the case, it was some elevation.

Yes. So, the adverse events was observed with a GI nature -- gas flatulence and some GI pain was relatively short-lived and result quickly without any intervention, essentially in less than 24 hours. And in terms of kidney biomarkers, there was nothing that stood out. And again, we saw no sustained elevation of these markers. As one can expect, there's always some movement that one sees, but nothing that was cause for concern.

Okay. Great. And then as you think about the 6-month time period, you're going to keep observing patients, can you level set expectations on what level of increase in dystrophin would be an appropriate target to expect a doubling of time observed effectively from what you've shown today.

Yes, we're going to take the data from CONNECT1 and use it to inform on the CONNECT2 study, which is a 6-month study, and that one will have the readout at 6 months. So CONNECT1, where we're now dosing at 10 mg per kg, has a 3-month readout following dosing. And again, what we had observed in the healthy volunteer study in a single ascending dose study is we observed a 4- to 8-fold jump in exon skipping as we went from 5 mg to 10 mg per kg, and we might reasonably expect to see a meaningful jump in the CONNECT1 study in terms of the level of exon skipping as we move from 5 to 10 mg per kg, and that would be expected to produce an increase in dystrophin even at 3 months in time. We also -- when we go and look at other studies and what people have seen in terms of the level of exon skipping and the corresponding level of dystrophin might reasonably expect that even at 5 mg per kg that we will see a further increase in exon skipping beyond the 2.1%, we reported today with an extension into a 6-month study, and we would expect to see a corresponding increase in terms of the dystrophin. To date, what we've seen in a 6-month study with a competing molecule is that just under 2% of exon 51 skip transcript over 6 months, produced up 3% net dystrophin and approximately 7% muscle adjusted dystrophin.

And our next question is going to come from Laura Chico from Wedbush.

I have one question for PepGen and then I have one for Dr. McMillan. For the PepGen team, I just wanted to clarify on the kind of the time line for subsequent milestones and readouts. I understand we will get the 10 mg per kg clinical data readout in early '25. But just to clarify, James, will we get any additional insight from the 5 mg per kg cohort. It doesn't sound like there's additional readouts we have beyond the 3 months, but I just wanted to clarify that. And then Dr. McMillan, you mentioned that the additional safety and efficacy data at higher doses is going to be important to assess these programs. I guess I'm wondering, what will you be most focused on the supplemental updates in terms of evaluating both PepGen and other programs as you're kind of evaluating a role for exon skipping therapies.

Laura, perhaps I'll start and then Dr. McMillan, will be taking your question. So, in terms of additional readouts, there'll be additional analysis that we'll be doing, but we'll also have immunofluorescence data of the tissues and that will be presented in the upcoming meeting. We'll also provide an update in future time in terms of the safety and the long-term extension. Keep in mind that all of the patients have moved on to the 5 mg per kg long-term extension. And to date, they've received a maximum of an additional 4 doses on top of the 4 doses that we reported on today. So we may provide additional updates in terms of the safety. And of course, once we've completed dosing at the 10 mg per kg dose level, we would anticipate that those 5 mg per kg patients would also move on to a long-term extension of 10 mg per kg. And with that, I'll turn it over to Dr. McMillan.

Yes. The rationale behind that comment was, certainly, as a neuromuscular clinician, clinical researcher, I would love to see a higher percentage of dystrophin that is produced in these boys. And as the dose of any therapeutic product is increased, there is a theoretical increased risk of there being on adverse events. So my hope is that as the data from the 10 milligram per kilogram cohort is released and even beyond that, that we'll continue to see a favorable safety profile with this, but that will be the important question, just like any emerging therapeutic product.

Great. And Dr. McMillan, if I could just sneak in one more. Can you just kind of clarify what you see the role of exon skipping therapies now in light of the [indiscernible] and label expansion?

Yes. No, absolutely. And I think there's different ways that question can be answered. I think some people will consider potential alternative therapies to consider. Some people might consider additive therapies if they have an exon skipping amenable mutation where they could receive PepGen's product, for example, and then have [indiscernible] as well. Some families might be interested in that. It will be very interesting, I think, in the longer term to understand because one of the differences that we see with exon skipping therapies is that the dystrophin protein that's produced is much longer than what we might expect to see with some of the micro or the mini dystrophin gene products. We don't know if that longer dystrophin product will translate into having a better therapeutic benefit. It might. But I think one of the really key pieces to that is can we see adequate dystrophin expression in muscle for that more normal appearing longer dystrophin product that is now being generated to potentially achieve those longer-term functional benefits that we certainly hope to see as clinicians who care for these children and young man.

And it appears there are no further questions in the queue at this time. I'd like to turn the conference back over to James McArthur for any additional or closing remarks.

Great. Thank you very much. I'd like to thank everyone for joining us today. We remain here at PepGen extremely excited about the progress that the team is making. The levels of exon 51 skip transcript portend our ability to produce truly meaningful levels of dystrophin above and beyond what existing therapies have been able to do today. We think this will be a tremendous benefit for patients and their families. So in closing, I'd like to once again thank the patients, the families and the investigators who have participated in this study without which we would not possibly be here today. And with that, I'd like to thank you all again and close out this call.

And this concludes today's call. Thank you for your participation. You may now disconnect.