REGENXBIO Inc. (RGNX) Earnings Call Transcript & Summary

Okay. Let's go ahead and get started. Thanks, everyone, for joining. This is the fireside chat with REGENXBIO. I'm happy to have with me, Ken Mills, CEO; and Ram Palanki EVP of Commercial Strategy. Thanks for joining us again. My name is Vikram Purohit, one of the biotech analysts with Morgan Stanley Research. And before we get started, I need to read a brief disclosure statement. 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. With that, Ken, Ram, thanks for joining. Appreciate it.

Thanks for having us.

Of course. Before we get into any specific questions on the pipeline or data, et cetera, Ken, could you just start with some opening remarks, just hit some highlights on the business and cover some of the key achievements you think the company has achieved throughout the course of the year?

Absolutely. Yes, thanks again to you and Morgan Stanley for organizing and hosting us, good to be back in-person with a lot of people we haven't seen in a while and been joining the agenda today. So REGENXBIO is a therapeutic company focused on gene therapy. We use adeno-associated viruses as vectors for delivering material to different tissue types. We're based in Rockville, Maryland. We have just about 400 employees. We're in 3 thrusts of therapeutic areas, including retinal diseases, neurodegenerative disorders, muscle wasting diseases. We've been working in AAV gene therapy since 2009, when the company was founded, we went public in 2015, almost to the date, it's actually September 17, 2015. Morgan Stanley was a part of that process. So I appreciate them. And since then, the company has been growing from clinical stage to what I'm excited to sort of talk about with you a bit more today, Vikram, which is kind of nearing the goal of being a commercial stage company. And actually, at the beginning of this year, we announced our 5x'25 strategy, which is to migrate our clinical pipeline into later stages of development and also to have some of the first commercial products ever brought to market by REGENXBIO. The history of our company back to 2009 is that, we were the company to identify a technology that was discovered in laboratory of Wilson at the University of Pennsylvania and license that in and start to build on this transformative technology that improved gene therapy in ways that made it safer, and I think made it more potent, efficacious. We did a lot of partnerships, and we've entered into a lot of relationships that have allowed people to explore the opportunity of the technology clinically and in one case, commercially. So we have Zolgensma, which is an approved product for spinal muscular atrophy that's marketed by Novartis through an acquisition of a licensee of ours AveXis. We received royalties on that product. And it's become, I think, one of, if not the unique blockbuster in, certainly AAV, if not the cell and gene therapy space, so really meaningful medicine, highlighting the potential of this technology in terms of access and commercial potential. So the work that we're doing is really on a path to become a commercial leader ourselves, and we've done that and I think, a disciplined way, focusing on having great people, a plan to help as many patients as possible, relying on the science that we brought into the company over a decade ago and trying to continue to stay well capitalized even in choppy markets like recently.

Great. Great. Let's touch on the 5x'25 strategy. Could you just cover for us what the rationale for making that a priority for the company was? What exactly it covers? And how do you hope to get there?

Yes. So I mean, culturally, the folks at REGENX and our extended partners are focused on patients every single day. So it's not hard to get people to motivated, but I was looking for something as a leader that gave us kind of a new type of goal at the company. We've run a lot of clinical trials, a lot of things succeed. We've had some things not go as well as we had hoped, and we've seen a lot of partners go through some similar things. But one of the things, we haven't done as a team and a company is exceeding commercializing a product. So we actually started this year by being in the middle of a pivotal phase of development for our RGX-314 program focused on the treatment of wet age-related macular degeneration. And we had given guidance on the fact that we would file a BLA for that treatment in 2024. And so that became the first, I don't know, a leg of the stool for the 5x'25 strategy that really advancing that BLA all the way through to commercialization by 2025. Certainly seen within reach, but then I wanted to challenge the team a bit more. We have other things that are maybe first-in-human stage. We have things that are in Phase II stages of development for neurodegenerative disorders in other aspects of our RGX-314 program. Frankly, we had preclinical stage programs where coming into 2021, I thought, wow, if we could really execute and sort of make improvements on things that we've seen done and heard, these could be things that could potential late-stage product candidates or even commercial by 2025. So we sort of mix this all up into the caldron and said, let's get together as a team and talk about how we can achieve this. Is it completely finite at this moment, Vikram, of course not, right? I mean, we're still talking about sort of a 3-year plan for the company, and we're in the middle of sort of finalizing that. But what's happened over the course of this year is, we certainly continue to execute well on things that were in pivotal phase. And we've even had some things that were sort of in Phase I/II that we've recently announced, we've advanced into later stages of development and have given additional guidance, for instance, on one program for another BLA in 2024. So it's starting to come together. It's a lot of new energy. It's brought a lot of engagement with the stakeholders that we're going to need to rely on as partners to achieve this. And I think it's important not only for the mission for patients, but for our shareholders to deliver on the important value that I think this AAV platform can bring.

Great. Great. That's super helpful. Let's switch over to 314 in wet AMD. The first just outline for us what you think the commercial opportunity is for 314, and talk a bit about what the impact could be to that view from some recent news flow in the space, both the first approval and also the data from high-dose EYLEA? How do you think that impacts the opportunity set for 314?

Yes. I think Vikram had an opportunity to launch Lucentis back in 2006 and coming back 180 to kind of fix the unmet need that Lucentis has created. The opportunity, I think, here is for people to realize that -- the problem today is to be able to sustain the visual acuity outcomes that you try to accomplish in the initial days of injections. And over long-term, that's an unsustainable way to do it, because these patients have chronic lifelong disease and you have to treat them, be it 2 months, 3 months, 4 months, but for their lifetime, right? And the frequency might change, but you're treating them consistently. And in that process, over time, there's a lot of burden on the physician, on the patient, and that all contributes into under treatment, which ultimately leads to vision loss over time. That's where the biggest unmet need is with the treatment of wet AMD. And what we are trying to solve for is that with onetime treatment, we can sustain those visual equity outcomes on a long-term basis. That's the biggest commercial opportunity that you can think of. I mean, when AMD coming into last year was a $9 billion opportunity on an annual basis, right? And then shifting gears beyond wet AMD, I think this, we have installed a program into diabetic retinopathy. And that program is really focused on the preventive aspects of the disease, where we are the first ones that are trying to address with the onetime therapy on a preventive basis to stop the progression of the disease from ever getting to vision searching complications like diabetic macular edema, neovascular glaucoma, because once you have those, it's the same problem again, you're treating these patients for lifelong.

Got it. Got it. Okay. And you have 2 different forms of 314 that you're evaluating the subretinal, the suprachoroidal. So talk us through the differences in those 2 modalities and where you think each of those could fit commercially assuming both make it to the market?

Yes, I'll try to address that first, starting with subretinal. I think with subretinal, we have seen a very clear target product profile evolve where we got really comfortable from our Phase I/II in terms of the doses we can carry into Phase III that has consistently shown in our market research that any product that can get us to that 50-plus percent of decrease in disease burden could be a very attractive product in the marketplace. So we've kind of carried that into Phase III. And then to Ken's point, I think it's really critical that we accelerate this access to a product that is innovative and game-changing. So we're now in the midst of Phase IIIs, and we are on track to submit BLA by 2024. So the idea is to bring this product as quickly as possible to the market. And on an LTM basis, the suprachoroidal programs that we have installed, the data is still evolving, and we are going through the dose escalation process. And eventually, when we get to a target product profile that we know could be carried forward, that would be something that we'll carry into late-stage programs. And the idea there is to create a broader access to 314 in the clinics for patients beyond just the OR. And with the DR indication, the only program we're doing is with the suprachoroidal route.

Got it. And as these data sets have become available over the recent months and years and you speak with physicians and KOLs at conferences and whatnot, what's the feedback you're hearing on the data that you're seeing, like what level of acceptance do you think it's finding with the people that are having the chance to view the data? And what open questions do you think they still remain in the prescriber community?

Yes. I mean, our data has been evolving, right? So if you look at our historic data today, we have presented up to 3 years coming into last year. And that data on a durability basis, we're showing that onetime treatment can be sustained on a long-term basis. We continue to follow these patients, and we'll be giving updates as the longer-term data comes into play. I mean, when we expose clinicians to the concept of a onetime treatment that can sustain this functional vision over the long-term, that's a very exciting thing from clinicians, through patients, through payers, and we have done our research with all of the stakeholders. And consistently, the views we get is that's the most valuable thing they can have in their clinics. Through the most valuable thing that payers can pay for. Of course, shifting the profile from a OR-based therapy to in office gets them more excited because it creates a broader access to their patients as well as the fact that we could actually go into a onetime treatment into a public health priority like diabetic retinopathy and prevent patients from ever getting to these vision searching complications is one of the most exciting things that the core clinical committee is really looking forward to.

Got it. And you've started 2 Phase III studies for the subretinal program. Could you just give us an update on how those are progressing? How is enrollment going?

It's going as anticipated. And right now, we're on track. I mean the first trial started earlier this year, which is ATMOSPHERE, ASCENT, which is our second trial. In both of those trials, our control arms are different. In a sense, we are actually testing 314 against EYLEA and in ATMOSPHERE, we're testing it against Lucentis. So as we even generate the data, we'll have by the time we're going to be a less submission and enable, you would have tested the product against both products. And as it stands today, we are on track towards a BLA submission in 2024. And with the choice of having the 2 different comparators just to have that breadth of data to be. It was very strategic. We wanted to make sure that there was a best of data in terms of the 2 products that dominate the market today and carrying that into the label to show that against both products, we kind of have a profile that's very differentiated.

Got it. Got it. Okay. And what do you think is the likely path to approval for the suprachoroidal option?

It's -- I mean, we're still in the dose escalation process, as you know, as the data evolves, and we get comfortable with the target product profile. The program in wet AMD is going to look a little similar to comparing it against either EYLEA or Lucentis and carrying that program the same way that we are doing with subretinal. With DR, I think it's actually a very, very different development path because the primary outcome with DR that is actually DRSS course, which is an anatomical end point, where you actually look for the diabetic retinopathy severity scale and how it shifts over time. And what -- what's been shown is that 2-step change is very meaningful from baseline. And if you can accomplish that, then you're really modifying the disease to a place where you're preventing these complications from happening. And in that context, because today, the standard of care is actually simply watching these patients, control arm is really simply following the patients on a placebo basis against treatment.

Right. Got it. Okay. So you're partnered with AbbVie on 314. Could you just give us an update on how that partnership is going? And at this point, how are the roles and responsibilities for development of 314 split up between yourself and them?

I'll give my perspective and Ken actually just came back from a meeting with AbbVie yesterday. So I think he can give you a little bit of perspective on that. The bottom line is the entire organization there as they came into this diligence, their excitement started with the subretinal program being the lead and getting us to market around the 2025 time frame. And the contribution of the suprachoroidal programs on our life cycle management basis and that excitement has stayed very consistent with the process as we've embarked on the full-blown real relationship now. And the relationship continues to examine ways to exhilarate and develop programs to bring the full 314 franchise together in the context of the subretinal program, the suprachoroidal program, the suprachoroidal wet AMD and DR program. I mean, as you know, the path that EYLEA has took, Lucentis has took and everybody else in this space, given the magnitude of the impact of anti-VEGF therapies across wet AMD, DR, RVO, DME. So these are all the things we keep examining to make sure that we are accelerating all of those in a way where, as the data evolves, we're not wasting time and we're accelerating access to patients.

Got it.

Ken, do you have any comments?

I was just in Chicago. AbbVie was hosting an event with a lot of partners and different stakeholders. And they have a lot of exciting priorities going on. I think the research pipeline was sort of in focus there and kind of some of the strategic objectives. And I was really proud and happy to see a lot of the team from legacy Allergan that's now the AbbVie Eye Care group really heavily engaged on the RGX-314 program. This partnership for us was about kind of blending real sort of talent and vision. And a big part of it, too, was taking things for us commercially outside the U.S. So there's a big international presence. I was there talking to the Head of Worldwide commercial responsibility for ophthalmology and neuroscience. And RGX-314 is not just the late-stage element of things. I mean, there's a lot of big things that are going on, but it's clear the commitment to ophthalmology and the commitment to RGX-314, it's probably just about one of the biggest partnerships AbbVie has done in the recent history, certainly in their eye care group was really encouraging. As a smaller partner kind of taking that trepidation step towards a partnership with a large pharma, it was about as encouraged as I could be, and it sort of resembled how I felt when we chose them as a partner.

Got it. Got it. Great. Let me ask you one more commercial question on 314, and then we should move on to the rest of the pipeline in the 10 or so minutes we have left. How should we think about pricing potential here? I know it's too early to maybe talk about specifics, but what are some good ranges or bookends that you think about and that people should think about.

I like the range in bookends you're talking about. I think if you just look at blindness and the impact of blindness on health care communities, there's been a lot of data that's been published. Blindness on an annual basis, cost to society of almost $200,000. It doesn't matter if it's wet AMD, DME DR. And then you kind of translate that into the type of accomplishments that you're trying to achieve on a long-term basis with therapies. I think you can kind of think about the bookends of how far you can go and then you have to start thinking about what surprise you can implement on a risk basis for the providers, for the patients and for the payers, because there are a lot of components in the business model that you have to think about that price has to be implementable beyond just the value. I think all those components combined together, maybe even some of the views that large caps are bringing into play with these long-term treatments, right? PDS recently launched the brand name being [indiscernible]. They're charging about close to $16,000 on an annual basis for something that can sustain these outcomes on a 6-month basis. So I think, there are some things that are getting installed even in terms of that long-term value for treatments. And as things evolve and as our data becomes more apparent, given the components of the evidence we will have on a long-term basis through the TPP we accomplished coming out of the Phase III. We think we have a lot of flexibility in terms of where we can price the product.

All right. Great. Fair enough. Let's move on to 121. You recently had some news there, a regulatory update about the path forward for 121. Do you want to just recap for us what the news was, what the implications are? And how you felt about that interaction with the FDA?

Yes. So it's a program that we've been working on certainly, since we went public to focus on the application of gene therapy to treat rare pediatric onset neurodegenerative disorders, and there's a subset of lysosomal storage diseases that many people are familiar with, where there are actually products approved enzyme replacement therapies that are delivered intravenously that have effect on peripheral symptoms of the disease. They're changing the course of the disease from a morbidity and a mortality perspective. But what we're finding is that subset of these kits, in some cases, a large population, 60%, up to 70% of the children with lysosomal storage diseases like the subsets that I'm talking about, mucopolysaccharidosis Type I and Type II, will actually die of the brain features of this disease. And enzyme replacement therapies aren't doing anything to reach the brain. They're getting to many other tissues, but they're not getting to the brain, they typically don't get to the bones, to the eyes. It's hard to get to the brain. It's hard to get to the brain with a weekly or biweekly infusion. It's not something that clinically or commercially is anything other than clumsy and difficult. But with a onetime therapy that can deliver the missing enzyme in the form of gene therapy, you can change the potential trajectory of that disease. And so we worked for many years to optimize a route of administration that convinced us that it was ready to go into clinic that it was safe, that what it could do is it could get into many cells of the brain and the central nervous system, deliver the piece of DNA for the missing enzyme in getting an expressed intracellularly is the key. We've done that. We've started a couple of studies in our study for MPS II or Hunter syndrome. We've started dosing and dose escalated twice. We started to look at features of the disease that we thought were important to be able to characterize the clinical outcomes. But sometimes it's not apparent exactly when the clinical condition of the kids is really going to start to decline. But when it does, it's really sudden. So we looked for things in addition to the clinical measures that are predictive markers of what the clinical ignition may be or where it may be going. And in particular, there are circulating biomarkers in the cerebrospinal fluid that are -- they're literally the substrate of the enzyme itself that's missing in the kids. And when that substrate can't be broken down by the enzyme they build up, right? So you'll find in a child with Hunter syndrome, where disease has started to progress even in older Hunter syndrome places very, very -- levels that you can't even measure they just supersaturate the assays. And what we were able to establish is that with gene therapy within a matter of weeks, we would see the substrate levels in CSF substantially declined. That told us something, not everything. We did a lot more characterization. We followed patients for longer, and we began to see a trend in a subset of patients that convinced us that, that biomarker was not only scientifically valid in terms of telling us that the gene therapy was on and doing what we're supposed to do, but it actually was showing correlation to improvements in the clinical condition of these kids when otherwise, at certain points in time, we would have expected they would have fallen off. So we bought that data package to the FDA. We had a scientific discussion. We had a clinical discussion. And we had a practical discussion about the fact that, look, this is about as personalized the medicine as you can get, right? We know what the defect is in these kids. We literally know the gene that is missing. We are putting the gene back in. We're showing that team is active, and we're showing other evidence of that gene being predictive of changes in the clinical course of a potential disease. And I think in the experience and the conversation with the regulatory agencies, but particularly bringing stakeholders like, physicians, who see these kids in their clinic every single day and parents, we were able to come to an agreement on what I'm happy about is sort of an accelerated pathway for getting access for this treatment. After the dose escalation and the safety that we've established, in about 20 children, our plan is to next dose another 10 kids at the highest dose that we've gotten to in the clinical trial at this point, calling that our pivotal dose and present that data after following those 10 children for a year as a package for consideration for accelerated approval. Now along the course of that, we're going to continue to follow other types of clinical measures. We're going to actually continue to enroll in other adjacent trials, even children of older age. And we're not planning to stop any of the work. There's no sort of pause, wait for the accelerated approval to happen and then sort of reinitiate afterwards. It's going to be a very fluid and dynamic process. I am proud of the fact that I think it will be a new paradigm for gene therapy, a new paradigm for AAV gene therapy in rare diseases, and I think having alignment with some of the thought leaders at FDA on that and the clinicians and the stakeholders, including the families that live with this disease is really important. I think it's going to be one of the first and hopefully one of many, because behind Hunter syndrome, as you know, Vikram, we have another neighboring disease in children called Hurler syndrome, MPS I. There's other forms of MPSs. There's forms of disease called neuronal lipofuscinosis, which are very similar clinical clinicians to MPS diseases, and we have another clinical stage program for the disease, CLN2, which is a form of that disease. So we think that this could be the first domino potentially in the series where safety, prospective direct benefit, confirmatory evidence and a solid profile could accelerate treatments for a very high unmet need and an area where it's not typical for this type of rapidity and development.

Got it. And did your discussion with the FDA touch at all on RGX-111 for MPS I or was it solely focused on 121?

This conversation on this specific program was actually an outgrowth of a whole effort to bring kind of the pathway for development of AAV gene therapies in general in the focus. So we actually started a whole consortium on this. FDA became a participant and a member. And we did sort of categorize MPS II and MPS I of the same type in order to emphasize that if you can do this for one, you should be able to do this for many of sort of similar clinical background. So absolutely, I was proud of that fact. I don't -- we don't want this to be a one-off. This was kind of a move for the field to have opportunities to accelerate things in general and to sort of work with the regulators in the U.S. in particular, but I think it will set the standard in other areas for more of these things to come forward.

Got it. Great. And could you just give us a quick update on where the Phase I/II study for 111 currently stands? And what some of the next steps are there?

Yes. So we -- in that study, we've already dose escalated once and we're continuing to expand the most recent cohort of patients. Again, it's about similar to 121 as you could get with any other disease. We're using, I mean, literally down to the same manufacturing process, the same AAV vector, the same clinical route of administration. It's just the interchangeable part, of course, is just the gene itself. And so we've been able to learn a lot from being ahead with 121. I hope that 111 is a fast follower. In certain ways, the enzyme activity that we've seen with 111 in early stages is really encouraging of maybe even more activity relative to the 121 enzyme. So it may be that even with 1 dose escalation, we're already at the type of dose that we'd look to take forward in a pivotal, but we'll keep following that and hope to add some updates on that in the near future.

Great. We have a little less than a minute left. So I'll ask you a catch-up question that should cover not just what we discussed today, but maybe some additional pipeline programs as well. Over the next 12 to 18 months, what are some of the key milestones people should kind of keep in mind as they follow the story?

Yes. So I mean it's all about our 5x'25 strategy of sort of converting our clinical stage assets into later stage in commercial development. Our suprachoroidal data from both the AAV8 and ALTITUDE study for wet AMD and diabetic retinopathy, we'll have 2 data updates between now and the end of the year. Coming into the beginning of next year, we're looking to initiate our Duchenne program, RGX-202. We're looking to execute on that pivotal phase of development for RGX-121. We're looking to advance the program as a fast follower in 111 for MPS I. So there's 5 indications right there, Vikram, wet AMD, diabetic retinopathy, Duchenne muscular dystrophy, MPS I and MPS II. And the team doesn't rest. So we're looking at more new areas of science. We're looking at additional ways to get new important medicines into the clinic and to patients as quickly as possible.

Great. With that, we're out of time. We'll wrap it up there. Ken, Ram, thanks so much for joining us. Appreciate it. Thank you all.

Thanks for having us.

Thank you.