REGENXBIO Inc. (RGNX) Earnings Call Transcript & Summary

Hey, everyone. Good afternoon and welcome to Day 3 of the BofA Health Care Conference. Thanks for joining the session with REGENXBIO. My name is Alec Stranahan, I'm an analyst on the U.S. bio pharma team here at BofA. And I'm pleased to be joined today by Ken Mills, President and CEO of REGENXBIO. And I believe Ken is going to run through some initial comments to start, and then we'll jump into some Q&A. So with that, Ken, over to you.

Thanks, Alec. Appreciate the invitation as always from you and the BofA team and the good work to put this conference on in the virtual format. Just an introduction to REGENXBIO, for those of you that know us and don't know us, we've been a leader in the gene therapy field for more than a decade, focused on development of what we think are highly curative potential AAV gene therapies. Inside the company, we're advancing a broad pipeline programs with multiple ongoing clinical studies in 2021, including a pivotal program for our lead asset, RGX-314, which is for the treatment of wet AMD. Outside of the company, our NAV technology platform has enabled also the development and commercialization of therapies and numerous gene therapies that are also in clinical development across a real range of therapeutic areas pursued by our partners, including notably ZOLGENSMA, which is marketed worldwide by Novartis for the treatment of spinal muscular atrophy. A lot of activity going on at the company this year. We're moving into new office and labs. We have a new GMP production facility coming online in that same facility, which is expected to allow us to achieve NAV vectors that scales up to 2,000 liters using our platform suspension cell culture process to support continued clinical development and pre-commercialization efforts around things like RGX-314. And we're about 300 people, mostly headquartered here in Rockville, Maryland but actually spread throughout the country, supporting our work. It's a team of experts really in manufacturing, preclinical, clinical development, committed to innovative approaches with gene therapy. In this past quarter, we -- talk about the financial side. We finished March 31 with over $650 million in cash. How we're allocating that capital is mostly towards our internal pipeline. I've talked about 314. We think it has a profound potential impact on the clinical management of patients with wet AMD, but also adjacent areas like diabetic retinopathy, where gene therapy could be a onetime treatment for a broad range of patients that today mostly rely on monthly or frequent anti-VEGF therapy. In that program, we've completed a Phase I/II study with several patients now out over 3 years from a single injection. And those patients have shown stable to improved vision and anatomical response and reduction in the use overall of previous anti-VEGF therapy. I mentioned we started a pivotal study. That's one of 2 pivotal studies we have planned to evaluate efficacy of RGX-314. That first study, ATMOSPHERE, is ongoing. A combination of those studies and a bridging manufacturing study will be the basis for a BLA that we expect to file in 2024. 314 as a pharmacological agent is also being explored by REGENX with a different route of administration. Another device that we use called the SCS Microinjector to reach the suprachoroidal space. We're currently enrolling patients in clinical studies that are Phase II for both wet AMD as well as diabetic retinopathy. And finally, we have work going on in the CNS that's active clinically. Gene therapy in the CNS is a very important area, we think, for both monogenic disease but also holds great potential for biology and diseases outside of a traditional monogenic basis. We've reported interim data on our product candidate called RGX-121, which is for a treatment in Hunter syndrome or mucopolysaccharidosis type 2. The data there has shown that biomarkers and measures of neurodevelopmental function, up to 2 years after dosing of a single administration have shown CNS activity and evidence of changes in the progression of the disease as well as evidence of some systemic expression of protein and biomarker changes. And finally, we're focused in early research and development and a number of things. But most recently, we've announced the very beginning of this year, the development of RGX-202, a single administration gene therapy candidate for the treatment of Duchenne muscular dystrophy. Olivier Danos, our Chief Science Officer, has been spearheading work really in gene therapy for DMD for multiple decades. His approach here scientifically is based on a novel advanced microdystrophin construct that we're working diligently to bring into an IND submission in the middle of this year. So I mentioned that the company is truly focused on the curative potential of gene therapy for patients, both inside and outside the company. Our commitment is to that mission with new treatments as soon as possible for patients, in a way, having deep in-house knowledge of gene therapy, AAV vector production and manufacturing, scalability, puts us in a great position, we think, to participate in the leadership of AAV gene therapy, getting the patients in the market. Thanks, Alec.

Great. Thanks, Ken, for the intro. So we'll move into the Q&A now. [Operator Instructions] So maybe we can focus first on 314. Obviously, this is your most advanced clinical program and is sort of spearheading your own in-house innovation efforts and really leading the charge as you move away from sort of an AAV platform technology that's really an innovative gene therapy company. So maybe first, we could just talk about the Phase III studies. You've got one that, I think, recently launched and one that will be launching soon against Lucentis and EYLEA. So I guess which of these studies do you see as being maybe the more meaningful in terms of kind of KOL adoption? Or is it really going to be a mix that prescribers will look at?

Yes. So the pivotal plan here, Alec, was basically an output of a process that we had at the end of last year involving engagement with regulators both in the U.S. and particularly with FDA, of course, and outside of the U.S. And then standing on top of that, extending that planning and thinking to providers and payers to think about how to position a onetime gene therapy candidate for wet AMD in the best possible way for patients. We've been seeing excellent safety and efficacy outcomes from our active Phase I/IIa study with RGX-314 and its subretinal delivery. What we wanted to do was establish a program that was going to reinforce the robustness of that data. In the first study, we chose a traditional design, basically non-inferiority to existing standard of care, the labeled Lucentis product, the ranibizumab. It's a known drug that many patients are responsive to with regular therapy. And RGX-314, compared to that therapy as a onetime treatment, is something that the regulators are comfortable with and we think that the sort of payer environment and the commercial environment is going to be very comfortable with as well. We think that, that study is going to tell us a lot. The regulators are always looking for ways to reinforce proof-of-concept and statistically significant data from one study, often with a second study. In that case, we're going to design another study that's similar to the design of the first study ATMOSPHERE, but also has some ways to enhance people's understanding of the use of RGX-314 against maybe a broader spectrum of standard of care, for instance, and also get to patients at different sites and different clinics, potentially also extending a bit beyond U.S. domestically. So we view this as a step towards the market and the clinic with really good understanding of the pharmacology of gene therapy from our first-in-human and Phase II studies, but also with a lot of input from the stakeholders in mind about how to bring their gene therapy forward for wet AMD in an intelligent, informative, safe and effective way.

Right. That makes sense. And I think what we saw in the Phase I/II is that some patients didn't require any rescue injections for a year or more, which would obviously be quite disruptive to the standard of care. But I guess I'd be interested to hear your thoughts on looking to a BLA filing in 2024. What could sort of change in terms of the competitive landscape in wet AMD, whether it's other VEGFs that maybe have a longer treatment interval? Or anything else on the horizon?

Yes. I think we -- this is something that we've paid attention to you for years, even when we started our original preclinical work and candidate selection work for how to bring gene therapy forward in wet AMD. I think our view, overall, Alec, has been that existing treatment labels, treatments that are available for patients as well as a lot of the activity that is occurring clinically is really focused on the sort of on rate, the incident population, immediately getting them on to good treatments that are based on a well-understood mechanism of action that shows really excellent response with respect to VEGF inhibition. But it is really about the sort of short-term care of those patients. And we always view that gene therapy was significantly differentiated in the spectrum of patients, that once they start to receive treatment, they had injections for months, a year or more, maybe they're looking for something else, maybe convenience and compliance start to complicate the landscape of how care can really continue to be provided to those patients. And if you can transition patients like that to a single treatment that reduces or eliminates the burden of the convenience or compliance, then you really have changed the name of the game when it comes to the long-term chronic care of those patients. And so that's where we view gene therapy as a onetime treatment is really well positioned. There's not anything much that we see in the spectrum that even approximates what the target product profile of gene therapy could be with a onetime administration and examples of patients who, for years, haven't received additional injections. But we have seen the field very active in the spectrum of injections every 1 month, 2 months, 3 months, even out to stretching the boundaries of what the intersection of chemistry, biology and physics can do to get maybe treatment to patients in the 4 to 6-month range as well. But we feel really strongly about the profile of gene therapy starting as soon as possible and certainly by 2024.

Okay. That makes sense. And you mentioned your suprachoroidal delivery, which I think could be interesting. And I'd like to hear your thoughts on how this could maybe slot in, say, if subretinal is approved first? And then along those lines, looking to the third quarter, sort of what -- how you would frame the data update there?

Sure. So gene therapy is a very novel and innovative technology. And clinically and commercially, it's new. It's new to a lot of audiences, a lot of stakeholders. But when we thought about that concept in wet AMD, our first interpretation of how to bring that forward was very safely, very conservatively with things as much as possible that were known, known to work, known to work safely, known to be manufacturable, known to sort of be provided to physicians in their care and delivered to patients. And we chose the subretinal route of administration for a lot of those reasons. It's -- of the 2 approved AAV gene therapy products in the U.S., you know one of them is based on the subretinal route of delivery for a rare form of retinal dystrophy. It's an inherited disease. But because of that, there was a fair amount understood in the retina community about subretinal treatment. As we establish the foundation of additional pharmacology on top of that, we turn back to ourselves inside the R&D of the company and said, what else can we do that's innovative, that preserves our understanding of what's working well with the subretinal approach, but maybe expands the target product profile overall? And that's where something like the suprachoroidal delivery approach comes in. This is an innovative approach for gene therapy. We're the first ones ever to use subretinal delivery in offices of retina clinics to deliver AAV gene therapy. We're doing this, therefore, since the end of last year for the first time. And what we really -- what I, in particular, really like about the synergy between the first generation approach and next-generation approach here with suprachoroidal is actually the synergy and the overlap. Like many smart companies, we're thinking that we're going to be launching a product, establishing a commercial footprint for ourselves in the future in wet AMD, I think, for us. And that investment, that investment in CMC, in clinical support, manufacturing supply chain, commercialization, it transcends route of administration, right? So being able to have a pathway to see that point achieved with subretinal is incredibly invaluable and important to us and we also think will benefit a lot of patients. And behind it, we're looking for ways to just expand upon that platform. Doing that in retinal offices, doing it with patients who may have a better opportunity to receive care using an in-office treatment versus the opportunities that exist with good outcomes in subretinal just increases the spectrum of opportunity for us overall. We think this is a really smart approach, a smart investment approach overall and one that is a long-term view.

Okay. And then in terms of the 3Q data update from AAV8, how would you sort of frame what we should expect there?

Yes. I mean, I think what we should expect is our first data set ever and anyone's first data set ever on suprachoroidal and use of suprachoroidal delivery for the treatment of RGX-314. That being said, the benefit that we have is we've seen this drug in the subretinal delivery environment. We've evaluated it preclinically. We've selected the suprachoroidal approach because of certain features and factors based on safety and outcomes we saw about parallels to the subretinal outcomes. And as usual for us, we're going to bring a very transparent and large matrix of data at the right point in time to be able to update ourselves and our stakeholders and our investors about what this suprachoroidal approach can show. And that means we'll be showing safety, we'll be showing secondary outcomes like visual acuity and retinal anatomy, and certainly, monitoring these patients for eligibility and reduction of standard of care that, again, we continue to focus the clinical development of RGX-314, whether it's subretinal or suprachoroidal, Alec, on patients that have already received treatment, have been receiving treatment in many cases for at least a year, if not, many years and converting them over to gene therapy to change that short-term chronic management into a long-term solution for them.

And you mentioned sort of preparing the company for the future, whether it's commercial or otherwise. And you guys are starting to move into your new manufacturing facilities. I'd be interested to hear sort of how you're viewing the ultimate volumes you'll need in order to launch 314, not only in wet AMD, but maybe in diabetic retinopathy as well plus supporting your internal pipeline. Do you think the 2,000-liter capacity in the new plant is going to be sufficient for that? Or will you also need to rely on maybe third parties as well to support the launch?

Yes. Capacity will be there. And the scalability of our suspension cell culture process certainly provides us the scale that we need, not only for the RGX-314 program, but for the entire pipeline of work that we're doing. It tends to be in gene therapy that the volume of material that's required for these intraocular indications, whether it's subretinal or suprachoroidal, is much less than what's needed for indications where we're going directly, intravenously, intravascularly or even into the CNS. So scale is sometimes more about other programs for us than it is about 314. But quality analytics and safety is everything. And that's paramount, and the reason for the investment in our facility is to bring the expertise of our team and more of those things under our control. We already have an excellent partnership and a supply chain that's -- where our people are deeply interwoven with groups like Fuji for our upstream manufacturing as well as a group of others for final fill and finish. They've done really -- our team with those groups have done an excellent job of providing what we need to execute on our clinical stage programs. But we know the bar is rising. It's rising because we want it to rise. We want the level of safety and quality to be better than we've done and keep improving on it. And our view and the view of our leadership team is that the way to take that next step was to bring things in-house, have more under our control. Are we still going to have a supply chain that involves some form of contract manufacturing outside of the virtual 4 walls or real 4 walls of REGENXBIO? Absolutely. I mean, there are good business reasons to do that for purposes of strategies to globalize, strategies to have additional sites and so forth. But this is the right time for us to make this investment, and making that investment in safety and quality is most important.

That makes sense. And I wanted to shift gears to the rest of your pipeline actually. And maybe we can start on 202, which is one of the newer assets to enter your pipeline. And I believe you guys have said in the past that 202 has the potential to become really a best-in-class gene therapy for DMD. So I'd be interested to hear your thoughts on the competitive landscape here and maybe how 202 solves some of the issues with some of the other therapies in development.

Absolutely. Yes. This is a program we're very excited about. We did a lot of work inside the company and through collaborations for, really, years before we brought forward our plans to move this into the clinic with an IND in the middle of this year, RDX-202. I have to give credit to our Chief Science Officer, Olivier Danos, this is really his brainchild, along with everything I already referred to with respect to our CMC infrastructure and requirements, really needed to be in place in order for us to commit to DMD with the long view of the way that I think we have and will continue to. Again, manufacturing and science sort of underpin a lot of the direction that we're going in the future of REGENX's internal pipeline. I've addressed the CMC piece and how important we think the safety and quality and analytics and scale. Here is a case where scale becomes very important given the potential volumes that are required for single patient dosing and then scaling at to thousands, tens of thousands of patients. In the case of the science, though, I think Olivier has been working in muscular dystrophy, Duchenne as well as other forms of muscular dystrophy and gene therapy going on -- spanning across almost 4 decades. And in that form a lot of collaboration, a lot of science, a lot of understanding, a lot of learning about what works and what doesn't work, really found its way into the minds of the R&D team here at REGENXBIO. And the scientific exercise was taking advantage of things that were known in the clinic that actually, in our view, were working quite well, but enhancing them with what is, I think, at this point, understood by a lot of people in the space to be one limitation of AAV gene therapy approach overall is that we can't fit the entirety. It's one of the few proteins, actually, this dystrophin protein that is deficient in these Duchenne boys. We can't fit the entirety of it and package it into a single AAV vector and manufacture that in a safe and reproducible way. So we have to create these truncated forms of the dystrophin protein, looking to maintain the same equivalent activity and performance as the original dystrophin protein. This is not a trivial exercise. It's something that's been worked on legitimately for also decades. However, some of the things that have launched into the clinic, it was the first chapter, maybe the middle chapter of a book that's going to be written. And I think what we wanted to do was write a more forward-looking chapter, bring in a domain of dystrophin that's not been designed into an AAV vector before. One that Olivier and our team thought and have established has the opportunity to do things structurally from a recruitment perspective of other things that are required around dystrophin to establish the stability and durability of a complex that restores what we hope is approximating the natural behavior of dystrophin. And so we call that our C terminal domain, which is -- a biochemistry, protein people understand what that is, but it's basically a functional domain of dystrophin protein that's had to basically been left on the cutting room floor of a lot of other AAV gene therapy products. We've been able to engineer it back in, found that it's manufacturable, found that it delivers on outcomes preclinically that are differentiated from other types of therapies we've seen enter the clinic. And we're excited to bring this forward and participate in another treatment that we think will be meaningful for Duchenne boys.

Great. And I wanted to ask on the RGX-381 program as well. This is obviously a new program for a disease area. You guys are very familiar with the CLN2 disease. So could you maybe walk us through the next steps for this program and also the 181 program as well and when we might start to see early data in patients?

Yes. We have -- sorry, 2 programs in development for CLN2 disease. This is lysosomal storage disorder, also known as Batten disease, CLN2 form that really has wide-ranging manifestations. Many of them are CNS-based, Alec. We have -- we see neurodegeneration. We see change in psychology and behavior of kids. But we also see degeneration of things like their vision, which can be a separate physical compartment that can be accessed with gene therapy. So we started the development for a treatment in CLN2, thinking about the CNS manifestations, very similar to how we had designed treatment candidates for our Hunter and Hurler programs, RGX-111 and RGX-121. But over the course of engagement with really all the stakeholders, the providers, the families, the children, we saw that there was a significant unmet need for -- basically, which is another form of retinal dystrophy, a retinal degeneration that occurs because of the same gene mutation. So we picked off again with what we knew, where we borrowed the route of administration from the early work of RGX-314 and applied it to Batten disease and designed what we call RGX-381, which is really the same gene construct that's going to be in our CNS program to address neurological function symptoms, but inject it into the eye to potentially ameliorate the degeneration of the retina that occurs in CLN2 as well. We just had some requests come back from the FDA on our first IND filing associated with these 2 programs. We're working through our understanding of what those requests mean in terms of how we will progress the program. And we'll update on that, both for 181 and 381 in the second half of '21.

Okay. Okay. That makes sense. And obviously, having your deep expertise in AAV vector technology will obviously help support all of these programs as you move them through preclinical development. And maybe in the time we have left, I would like to ask sort of on your BD plans for the next year or 2. Obviously, you've got over $500 million in cash on books. You've got your investments in your new facilities. But I guess, how much of your focus for BD over the next couple of years will be on supporting your ongoing pipeline development and maybe ramping up commercialization activities? Or would you guys also maybe pursue smaller M&A to bring new technologies and that maybe complement your internal capabilities?

Yes. I mean, we have established a growth plan for the company that is certainly, first and foremost, about delivering treatments from our internal pipeline to patients as quickly as possible. And we're being very transparent end-to-end about things. We have all the way at pivotal phase of development 2 things that are near IND and even exercises -- because this week we have the American Society of Gene & Cell Therapy occurring, a number of things that are going on intramurally as well in terms of use of capital to advance other gene therapy approaches in different tissue types and different diseases. The role that BD plays in that -- I mean, REGENX has had a really rich history in business development and the licensing of our NAV technology platform. And that AAV expertise, it does sort of transcend inside and outside the company. I mean, I think our vision, our scientific vision, CMC and our business vision is to continue to always have best-in-class science. And if we think that there's something to be done on the business development front to enhance or accelerate best-in-class, we'll be doing and participating in that if we think we're accomplishing it internally, and we don't need to turn to business development to do that, we'll move in that direction. When it comes to the internal pipeline and the advancement of things overall, a big outstanding question for us is thinking about commercialization of 314, so think about things like globalization. Now as I mentioned, we have about over 300 people in the company, the majority of which are based here, either in Maryland, in Rockville or throughout the United States. We view the potential of gene therapy to be global, and we need to work through how to accelerate and expand that value beyond the borders of the U.S. So those are the types of things that I think naturally present themselves for a company that has our capabilities, access to capital and science at this stage. And I continue to be -- feel really good about approaching BD opportunistically as needed.

Okay, great. Definitely looking forward to watching the progress over the next few years. But I think for this session, that's all the time we have. But I want to thank you for participating in the conference and for the overview of your business. Really great conversation.

Thanks, Alec. Thanks for having me, and good luck with the rest of the conference.

All right. Thanks, Ken. Take care.