REGENXBIO Inc. (RGNX) Earnings Call Transcript & Summary

Okay. Great. Thank you, everyone, for joining. My name is Vikram Purohit. I'm one of the biotech analysts with the Morgan Stanley research team. Very happy to have with me the team from REGENXBIO. Before we get into our fireside chat, just need to read a brief disclosure statement. So for important disclosures please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative. So with that, happy to introduce Ken Mills, CEO; and Steve Pakola, CMO from REGENXBIO. Ken, Steve, welcome.

Thanks, Vikram.

And actually one more item before we get into our Q&A here. Everyone in the audience, you can submit questions if you'd like. I can see them pop up here. So if you want me to ready any questions into the dialog here, please feel free to submit them, and I'll make sure to touch on them. So Ken, let's go ahead and get started. So maybe the best place to start, Ken, is the collaboration that you announced yesterday with AbbVie. Maybe just kind of walk us through the rationale for that, where you believe that gets the company, what that achieves for the company and what some of the next steps are there in that partnership?

Yes. Thanks, Vikram. And first, I just want to say thanks again to you and to Matthew and the entire MS team for the invite. I think this is our fifth or sixth year at the conference, and we're always excited to kick off the fall season with some good discussion with a lot of great questions from investors and the interaction with all of you. So thanks again for the invite. I'll just quickly go through some of the facts yesterday about this exciting announcement. It was AbbVie and REGENXBIO announcing that we formed a strategic partnership, combining the excellent eye care and gene therapy expertise, where the companies are going to together develop and commercialize RGX-314, which is our investigational gene therapy product that we're studying in the clinic for wet age-related macular degeneration, diabetic retinopathy and also has potential application for other chronic diseases. This transaction was an important milestone for REGENXBIO. It really was validating our leadership in gene therapy for wet AMD and DR and are positioned as a leader in areas like AAV manufacturing technology and the capability that -- I think, also an important point that we are demonstrating a real commitment to expanding the potential impact of what we've seen from the RGX-314 product candidate to patients around the world. AbbVie certainly probably needs no introduction to this audience, but we view them as an incredibly strong, complementary, innovative partner in drug development and commercialization. We expect their leverage to help us grow the global development and commercial infrastructure that's going to be needed to deliver this product worldwide. And their leadership in eye care with our expertise in AAV gene therapy development and knowledge and manufacturing is really a nice fit. We're looking for this transaction to leave us well capitalized for us to continue to be a leader in AAV gene therapy to pursue other innovative gene therapy treatments, including things like we have in our pipeline that I'm sure we'll talk about RGX 202 for Duchenne and our CNS platform for programs in areas like Hunter and Hurler syndrome. Just a couple of the high points about some of the key terms of the agreement. We announced yesterday that upon sort of customary conditions associated with a regulatory process period, this deal should close by the end of the year. At that point in time, we would receive a $370 million upfront payment and we will also be eligible as REGENXBIO to receive over $1.3 billion in development, regulatory commercial milestones. Over half of that, about $780 million are actually specified through the achievement of development and regulatory milestones. As partners, we're going to be splitting profits of sales in the United States 50-50. And again, the emphasis here in terms of the global reach of a wonderfully innovative partner like AbbVie is that they're really responsible in taking on the global responsibility for ex U.S. commercialization, where we'll be eligible to receive tiered royalties on net sales. So just incredibly excited. Again, we think this transaction is transformative for us. I think it's a great validation for our program, our people capabilities and science, but I think also a great assist for the direction that things are going for the AAV field overall. And happy to talk more about it.

Great. So with that, I wanted to touch on the topic of the 2 different delivery mechanisms you have for RGX-314. I know it's a topic you've talked about quite a bit before, but I feel like it's important to unpack, especially for those in the audience that may not be fully familiar with both mechanisms. Could we just revisit for both the sub retinol and the suprachoroidal delivery of RGX-314, what motivated you to pursue 2 modalities here? And where do you see both of these kind of fitting into the treatment paradigm as data develops and as you potentially move closer to the market?

Yes, maybe I'll start a little bit with some of the origination of the program overall at REGENX, and Steve is such a great person to talk about the potential clinical impact of these different device approaches. It really, Vikram, at the very beginning of our interest in bringing gene therapy forward for wet AMD was about what has worked and what has really stood out as something that has proven over and over again, that it's safe and effective for transferring genes to cells in the retina. What we're trying to achieve with a onetime treatment is continuous expression of an anti-VEGF antibody, antibody fragment, something to address the underlying cause of disease that we know is effectively clinically meaningful because of other existing repeat injectable treatments, but safety was paramount. You don't have to look too far. You can see really the first ever gene therapy product that was approved in the United States. LUXTURNA was based on a subretinal delivery approach, one that has proven safe and effective in a disease in this case, LCA 2 targeting retinal pigment epithelial cells, which tend to be the primary cell target as well for our RGX-314 program. So look, we literally worked with the investigators and partners who were behind some of the initial development and late-stage development and commercialization of LUXTURNA. And we also recruited other scientific and clinical expertise in AAV gene therapy and specifically in wet AMD, to bring this combination of device, great AAV technology and real thought about wet AMD forward. We started that trial about maybe 4 years ago, went through a really excellent process of building, I think, a very steady and consistent dose curve about the pharmacology of RGX-314, that formulation and that device and delivery and showed something to ourselves. And I think to many in the community, the retina community in the field and to patients that we were having the types of effects that we were looking to have with this subretinal route of administration. And we moved that program into pivotal phase development. As we talked about today, that's a key component of the advancement of our strategic partnership here with AbbVie is to move RGX-314 subretinal forward towards potential BLA approval in the United States in 2024 and otherwise geographically as quickly as possible ex U.S. We also looked at this product profile as something that requires patients to go into the operating room with retinal surgeons to receive this treatment. And we've evaluated the market opportunity for that. We think it is significant. The benefit risk of a onetime treatment to achieve these types of outcomes is really meaningful. But we were looking for something else that was perhaps another way to extend the profile of this product as well. And that led us to look at a number of different options for what we call an in-office procedure. And I'll let Steve talk a little bit about what that transition was like and what the suprachoroidal delivery is about.

Yes. Thanks, Vikram. Thanks, Ken. Yes. I think I just accent a little what Ken said in terms of the subretinal route of really being the gold standard based on all of the learnings that we have across different programs, including an approved product in LUXTURNA. The other -- or I should say, one of the components of why that route of administration has become the gold standard is the local delivery opportunity compared to, say, something like intravitreal administration. And also related to that, the immune privileged status of the subretinal space. And that has a couple of key important components to it. One is you don't need to give supplemental immunosuppressive agents, such as steroids, unlike in the setting of intravitreal administration. And the other benefit is you don't have to exclude patients who have pre-existing neutralizing antibodies to the vector that you're using for your gene therapy. Now in the case of RGX-314, the vector is AAV8. And fortunately that's -- the prevalence of neutralizing antibody positive status is lower than with, say, other vectors like AAV2, but they're still 30% to 40% of the population that have positive neutralizing antibodies. So in a nutshell, subretinal has a lot going for it, plus the fact that we actually have proof-of-concept clinically and are hitting our target product profile based on the data that we have from the first-in-human study across a range of doses. But we do look to expand the optionality of RGX-314 by, as Ken mentioned, assessing how can we deliver this in office. And for us, safety first again and also related to that, optimizing efficacy, something that you can still give locally. But in the office is -- as always, from our advantage point, theoretically been a better option than the other approach that's been out there of intravitreal. And I think what really was transformational here was our technology in terms of our AAV8 vector, which we knew was less immunogenic than first generation AAV vectors. And actually demonstrating that with suprachoroidal delivery in small animal models and then nonhuman primates, both in our in-house GLP toxicology studies as well as independently in collaboration with people like Peter Campochiaro who has published on this, where we do not see inflammation with suprachoroidal delivery in nonhuman primates or small animal models with suprachoroidal delivery of RGX-314. And we also see good transduction across a broad area of retina. So that's really what led us to then attempting to translate this into the clinic to have the potential optionality of an in-office delivery approach to deliver RGX-314. Based on the fact that we did not see inflammation in our preclinical studies, we advanced -- and also the pharmacodynamic response that we're hoping to see, we have advanced 2 suprachoroidal delivery studies of RGX-314, one AAVIATE, which is for treatment of wet AMD and another study ALTITUDE, which is for treatment of patients with diabetic retinopathy without center involved DME. And both these studies are ongoing and importantly, in both studies, we do not include any prophylactic steroids based on our local delivery and the preclinical data that we have. And yes, we're excited of how far we've advanced so far. We've completed 3 cohorts of dosing in the AAVIATE study, the wet AMD study. And we've also completed dosing of the first cohort in the diabetic retinopathy study, ALTITUDE and the second cohort there is enrolling. So with these advances now, we are getting close to having actual readouts from these studies, which is going to be really great because these are the first 2 ever suprachoroidal delivery studies for delivering gene therapy for treatment of patients in the clinic.

Great. And maybe that's a good segue to discussing some upcoming data you have from AAVIATE. So you've guided to data at an upcoming conference. Could you just talk a bit about what are some of the key parameters of data you would expect to be able to share with the presentation? And in your mind, what constitutes a successful outcome here?

Sure. So we are, for the first time, going to have a data release presentation of interim results from cohort 1 of the AAVIATE study, and that's going to be given by Nik London, one of the investigators in the study at the Retina Society on October 1. This is an interim results presentation of -- based on 6 months data of cohort 1 from the study. And this is consistent with how we've guided all along from even before the start of the study and also consistent with how we've talked about how we look at wet AMD and assessing response both from a safety and tolerability as well as primary and secondary efficacy endpoints. So you can expect to see the same type of variables that are clinically relevant for this patient population when looking at a onetime treatment option with an anti-VEGF gene therapy. So very consistent with the type of endpoints that we have traditionally given in our prior subretinal Phase I/II study. So for example, of course, safety and tolerability in cohort 1 as well as actual endpoints that allow us to see, are we seeing a treatment effect with this initial dose. So that includes looking at function, best corrected visual acuity, not surprisingly, anatomy, looking at retinal thickness on OCT. And the goal is with onetime treatment to be able to maintain or improve these functional and anatomic endpoints that we look at in the wet AMD clinical trial space, but importantly, to be able to do that while decreasing the need for repeated anti VEGF injections. So those are the main parameters. We do have cohort 2 and cohort 3 that I mentioned have completed dosing. We have much less follow-up on those patients because they completed -- they started and completed dosing later than cohort 1. So it's -- it would be a bit of apples and oranges to present anything granular on cohorts 2 and 3. But consistent with how we've done data cuts in the past that you'll recognize from our Phase I/II subretinal program. We will, whatever data cut time point day is used to assess those 6-month fulsome results for cohort 1, we'll also look at safety and tolerability in cohort 2 and 3 to at least be able to give a high-level general statement in terms of safety and tolerability. So quite a bit and just very excited to reach this first interim time point for cohort 1.

Great. And then staying on that topic, how did you come to -- how did you decide which dose levels are the appropriate dose levels to evaluate in the first few cohorts of AAVIATE? And more broadly, how would you guide people to think about how the effect of different dose levels could be similar or dissimilar between subretinal and suprachoroidal delivery?

Sure. So we have the benefit of a really nice broad range of dose assessment in terms of safety and tolerability and efficacy in our subretinal delivery program across 5 dose cohorts in 42 patients. And what we wanted to see in terms of hitting a target product profile from cohorts 3 through cohort 5, and obviously, we're advancing there in pivotal development. And we really felt based on that extensive experience that we had that we could more efficiently or, I guess, more streamlined develop in terms of suprachoroidal delivery, although it's a different route of administration, it still is local, close to the target tissue. And we also had the benefit of our preclinical package to have a sense of actual results from Peter Campochiaro's hands and his lab and our own in terms of confirmation of good transduction and expression across a broad area of retina across a range of doses. And we also have the good tolerability and safety in terms of no inflammation or other safety concerns going up to not only that highest dose level that we had dosed in the clinic for subretinal, but also higher. So we just decided to take full advantage of that package to start already with 2.5E11 as the first dose level to assess for suprachoroidal delivery, which is the same GC per eye as dose level 5 in our subretinal program. And having completed cohort 1 of both AAVIATE and ALTITUDE, we then proceeded to dose level 2 in both studies, which is double that dose or 5E11. And then it's really a case where you got to do the human experiment. You got to really assess it in the clinic to ultimately see how that translates. So we're excited that we've been able to dose up. And then also in AAVIATE, in cohort 3, also look at that higher dose in patients who have pre-existing neutralizing antibodies. I think earlier, you'd asked also, like what are we hoping to see. These are the first ever gene therapy suprachoroidal delivery studies, safety first, we want to see that these are well tolerated, onetime in-office treatment regimens in these 2 separate patient populations. And in wet AMD, really, it's very similar to what we would hope to see and what we've seen with subretinal delivery. Perhaps the target product profile is even a little easier in a certain sense because of the in-office optionality of this, but we still look at it in the same general way is that, especially in this dose-ranging phase, safe and well tolerated and as good or improved anatomy and function, but with a meaningful reduction in anti VEGF injections.

Got it. Maybe I'll ask you one more question on 314 and then we can move to other parts of the pipeline. So given the sub retinal program has further advanced, at this point then suprachoroidal, how do you think the regulatory paths could converge in the future? Or rather, do you think that there's a potential for time savings for the suprachoroidal program, just given the experience you will have generated with the subretinal program as both of them develop in the next couple of years.

I think maybe streamlined is perhaps the best way to characterize it in terms of the learnings, like what we mentioned, you've been in terms of where we could start the dose response assessment and also in terms of our ability to assess safety and efficacy in terms of the typical endpoints. I think it would be premature to say anything more aggressive than that though we look to leverage all this learning as much as we can for this different route of administration. And then of course, as Ken referenced, also very excited to have the opportunity to collaborate with our partner on this for global development.

I would emphasize one other point because I'm sure Steve addressed not unsurprisingly, the potential for clinical streamlining, and that was probably the center of your question, Vikram. But CMC and GMP manufacture is also an area where streamlining is an important focus for us here. We're standardizing on a suspension-based process to manufacture bulk RGX-314 that's being deployed into the pivotal program for subretinal as well as being used even in these Phase II studies for suprachoroidal. So the suprachoroidal program, of course, is going to benefit from all of the investment we make in the standardization, qualification and establishing that process for subretinal. And I mean, as we know, from our industry and other parts of the industry outside of AAV gene therapy, manufacturing is of paramount importance.

Actually, one final question on 314. So you've guided to some diabetic retinopathy, excuse me, data in the fourth quarter. Just remind us what we can expect to see there, how substantial of an update do you expect that to be?

Sure. So we did announce completion of dosing in that first cohort around midyear. So our guidance has been that we have our first interim update from that study before the end of the year. So that gives you some sense of what type of follow-up we'd have diabetic retinopathy and assessing for anti-VEGF activity with our onetime sustained delivery approach is different endpoints than the wet AMD. Of course, here in this patient population, though, we do have the benefit of a very well-validated imaging, scoring, called the diabetic retinopathy severity scale scoring that literally grades how severe the diabetic damages to the vasculature of the back of the eye and that you can actually grade this quantifiably with mass central reading centers who use a very standard approach that has shown very clearly that the more advanced your diabetic retinopathy severity score is the more likely you are to go blind from the sight threatening complications of diabetic retinopathy. So this is great because it's standardized, it's validated, it's assessed by mass reading centers, and it's actually the endpoint that's used for pivotal studies for diabetic retinopathy. So we assess those at various intervals during the study. So that is the main way that we look at treatment response in the setting where we know repeated anti-VEGF injections do decrease the severity of diabetic retinopathy, but -- and there's actually a label -- on label expansion that occurred for both Lucentis and EYLEA. But clinicians nor their patients are signing up for this because of the repeated nature of the treatment. And that as soon as you stop giving the anti VEGF injections, you get return of the severity of the diabetic retinopathy. So our approach is a onetime treatment that can achieve that without the unsustainable treatment burden, and, of course, safety and tolerability. So I should have started with that, but I'll finish with that for this first ever suprachoroidal delivery for wet AMD -- sorry, for diabetic retinopathy.

Okay. Great. We have a couple of minutes left. Maybe we should touch on some of the pipeline programs beyond 314. Maybe let's touch on 202 quickly. If you could just provide us an update on where that program currently sits and what's pending for getting an IND submitted it in place is there?

Ken, you're on mute?

And I'm off. The 202 candidate is our treatment for Duchenne. It's a onetime intravascular administration intended to target muscle cells to deliver a gene that encodes for a truncated form of the full-length dystrophin gene that we know is the underlying cause of Duchenne. Our scientists have engineered a novel gene construct that includes a new functional domain on the C-terminal and of the full-length dystrophin. It's differentiated from other product candidates that have been studied clinically in the past, we think has the potential to provide not only scientific benefit in terms of additional structural and biological recruiting activity for the Duchenne dystrophin complex, but also to translate into additional clinical benefit. We're using our AAV8 vector here. It's one where we're familiar with on the manufacturing side from the RGX-314 program. We're in the stages right now of working on completion of the IND writing reports. The science has all read out materially, and we expect to file the IND before the end of the year with a goal of starting this trial in 2022 and accelerating this to patient care centers for enrollment and data to validate our scientific hypothesis as quickly as possible. We think this has an opportunity to be differentiated and meaningful for boys with Duchenne and we're excited to be a part of that effort.

Great. And I think we have time for one last question. So maybe we'll end with a broad one on your pipeline. So you've discussed earlier-stage programs for the neurodegenerative diseases, angioedema. And I was wondering if you could just kind of walk us through your internal R&D prioritization efforts and just discuss how aggressively you plan to build your pipeline over the coming years?

Yes. I think what I -- like what I alluded to, Vikram, the original focus of the RGX-314 product candidate reconciled with subretinal. We continue to feel really strongly that device and delivery is a key component of making AAV gene therapy successful in a safe and effective way. And AAV has shown to be across many diseases and lots of routes of administration very safe. But we still want to use it in a targeted and safe way. So our capabilities that we're growing internally with respect to new research on target discovery, gene expression, gene construct development and even AAV development all reconcile with a lot of the clinical and research experience we have in ocular delivery with subretinal, ocular delivery with suprachoroidal, CNS delivery with intrathecal, with intracerebral ventricular and with our version of intracisternal. And still, in some cases, in intravascular, it hasn't been a central focus of our R&D, but we certainly know products like Zolgensma in emerging hemophilia A products and our Duchenne product profile was intravascularly delivered. So I think that for us has really completed the circuit of end-to-end capabilities, being real experts in device and delivery. We were naturally when we formed had expertise and had strong science in the AAV technology and building strong capabilities being able to safe and with high-quality manufacturer AAV gene therapy means that I view that we're one of the companies that has a product engine that can take a lot of new potential treatments forward in a very efficient way. And we're excited to have this new partnership with AbbVie to give another boost to the execution and potential for RGX-314 program and certainly bring in some new capital to advance what we think will be other high-value treatments for patients.

Great. And with that, we're actually out of time. So thank you, Ken. Thank you, Steve. Appreciate your time. Thanks, everyone, in the audience. We're going to go ahead and sign out, but thanks for tuning in.

Thanks for having us.