REGENXBIO Inc. (RGNX) Earnings Call Transcript & Summary

All right. Good afternoon, everyone, we're going to get started here. We've got REGENXBIO presenting with us today. And it's our pleasure to have Kenneth Mills CEO; and Steve Pakola...

CMO.

CMO, I knew that. And maybe I can just give you a couple of minutes, you can give us a quick overview and then we can just touch into questions.

Sounds great. Thanks for having us. And we are an AAV gene therapy company that has been focused on the development of treatments in retinal diseases as well as muscle disorder for -- been public since 2015, we have a significant partnership that we started in 2021 with AbbVie that has helped launch our RGX-314 and now ABBV-RGX-314 product candidate into late stages of development for wet age-related macular degeneration. We're also studying that same pharmacological agent in a considered to be a second-generation drug delivery device that would be an in-office procedure in both wet AMD as well as diabetic retinopathy. And it's really a dynamic partnership and set of trials that are ongoing there that I know we're going to get into more detail on. Steve also and the team had an opportunity to be at the AAO conference, the Academy of Ophthalmology just a week or so ago and present some new exciting updated data that we have on our diabetic retinopathy trial from that in-office procedure. At the same time, the company is also focused on rare disease indication Duchenne muscular dystrophy, using our proprietary AAV delivery technology that we used to start the company, but also a novel new approach to the treatment of Duchenne where part of a class of treatments now, which I think has gotten a lot of attention this year. It was one of the first treatments approved using AAV technology, but the first treatment approved under the accelerated approval pathway by the FDA, using AAV for Duchenne. This was with another peer company. We view that we're a fast follower treatment to that product. And we think our inherent advantages associated with our treatment are that we have a next-generation approach to science. The gene that's deficient in Duchenne boys is very large. It doesn't package into all forms of different types of gene therapy. And in some cases, historically, there have been parts of the full length gene that have had been left out in order for people to be able to manufacture it or be able to create a reagent. Our scientists a few years ago figured out a way to reengineer a component of the dystrophin gene, that's what it's called to include part of the carboxy terminal and domain of dystrophin. That's very functional and something that really I think we've established preclinically is essential for restoring function of these truncated forms of the naturally occurring gene. So we were able to engineer it into the therapeutic. We'll be able to bring it into the clinic and just recently, frankly, as recently as about 5 or 6 weeks ago showed our first clinical data from that candidate which for us was impressive. It was showing for the first time expression in young boys that we had treated, and we're on a path to show more functional data from that treatment coming into 2024. So we've got really kind of 2 major focuses for the company right now. It's this large retina partnership, really high unmet need indications, large indications, I think some of the largest in all of gene therapy with wet AMD and diabetes with people with vision-threatening complications, millions and millions of patients. I think REGENXBIO has the opportunity to be the first-in-class treatment for gene therapy in indications like that. And then in our muscle approach, we think that we have a best-in-class opportunity to be a fast follower to the approval that I alluded to, but to bring additional data clinically in terms of bringing back additional function in these boys that are suffering from these muscle wasting diseases. So last few weeks have been really exciting for us. Annabel, I know you just picked up coverage and its been awesome find for [indiscernible] so we'd love to get into it.

Great. So maybe you can first just to lay it out for everyone where you feel that you stand out as far as your platform is concerned and the manufacturing is concerned because that's a big part of gene therapy companies that everyone's focused on specific programs, but I think that's an important part of the story also.

Yes. Thanks. I mean we've just been so taken by the progress we've had with our own pipeline lately that I got all informally...

[indiscernible] pipeline.

Yes. Our history is important. I mean we have a -- we truly have a best-in-class delivery technology. Our AAV technology, which we use to form the company and found the company around the intellectual property. We've shared with not only do we deploy it and use it in our own internal pipeline, but we shared it with a number of companies who have applied it in both clinical and commercial products. So the most notable of those is our AAV9 vector that is used in a product called Zolgensma, which is now marketed by Novartis for a treatment called spinal muscular atrophy, and that has become a multibillion dollar product and part of a very important set of products for the treatment of SMA, where 5 years ago, there were 0 treatments for Type 1 SMA, now Zolgensma is among, I think, 1 of 3 that are all generating significant improvements. And these are onetime treatments, truly Zolgensma doesn't work as a treatment without our AAV9 technology allowing it to deliver the gene where it needs to get to in young kids that are suffering from this otherwise fatal disease by the time they're 1 or 2. But in addition to that, we've had partnerships with other large companies like Pfizer and Takeda, also companies that are adjacent to us in our space, Ultragenyx, another rare disease company, who are using these in everything from neurodegenerative disorders to hematological disorders to additional muscle disorders. So we've generated revenue in the form of licensing and royalties through these partnerships. And what we've done is we've been sort of filtering it back into building out an internal capability and a pipeline, an important part of that is manufacturing. We -- and we've seen others kind of work through gene therapy, cell and gene therapy challenges that for basically a new industry have had to raise the level of their game with respect to the quality. And frankly, the scale of manufacturing compared to certainly small molecule, even biologics. And that's something that needed to start in the last 5 or 10 years. I think we've been observing and then decided to get into the investment of that starting 3 or 4 years ago. We invested in a team, then we invested in a capability and a facility that for us is in where our headquarters is in Rockville, Maryland is, I think, one of the best AAV manufacturing facilities in the world in terms of quality, in terms of scale. It's a key part of our partnership with AbbVie. I mean we are responsible for clinical supply of these 9 trials that we're doing in collaboration with AbbVie, and we'll be responsible for the first approval, which we're expecting BLAs to be filed late '25 and into 2026 outside the U.S. will be the primary source of the clinical supply -- commercial supply as well. So that investment has also been something that's been, I think, acknowledged by someone like AbbVie, who obviously knows a thing or 2 about manufacturing.

So when you think about the types of partnerships that you have, have they primarily been because of the manufacturing capabilities and the expertise and the vectors that you've established in the technology platform? Or is it the IP that you have? So how involved are you in the development and manufacturing of these products for your partners? Are there different types of partnerships today?

Yes, there -- I mean, we've had probably over 20 different types of partnerships. And there's been -- I mean, this has been -- the company has been in existence over 10 years. So -- and we've been public, what, close over 8, there's a whole spectrum. And I think the first chapter of them was mostly about technology access and sort of intellectual property licenses and things that were contributed by us that related to that technology but maybe also some know-how that sort of helped advance other people's pipelines. And then more recently, we started to build infrastructure that originated candidates, including some things that we spun out into other new companies, like I can think of an investment we made in us rare form of epilepsy that we spun out into a company that later was acquired by another public company. And we both designed the candidate, design the manufacturing process. And some of that know-how and some of that capability was actually transferred to that a company called uniQure, which is another public company in our space. But the AbbVie partnership, I think, is a great example of the kind of the maturation of all those things. I mean, we designed and developed RGX-314 as a candidate for wet AMD, started to invest and investigate it ourselves. And when we were making the transition into pivotal phase with that candidate, we went to look for an ex U.S. partner. By that time, we had really good proof of concept and really safety and efficacy data on the pharmacological agent itself. We had end of Phase II discussions with the FDA. We sort of knew the direction we were heading, but we wanted someone who could really expand on that. AbbVie paid us close to $400 million upfront to sort of access about 50% of the U.S. economics and for us, outside of the U.S. lead us into further development and ultimately commercialization. So that became a representation for us a validation of we can design our own treatments. We can execute on them clinically, we can manufacture them. And then when we need to globalize something because we're a 400-person company, maybe slightly less in Rockville. We need to globalize something. We see the acknowledgment of a multinational company like AbbVie to both de-risk that asset, but assure us that it's going to get from an access perspective to more patients. So I mean that was a long answer to the point of REGENX has been in the gene therapy game and with AAV in a way that's been important for many, many years. I think our focus today is really on our own drugs on getting them to as many patients as possible for large and important indications. And we have the capabilities to do that. More recently, we've decided to be really, really focused in areas that we think are going to drive the most value for shareholders. And that's a reaction to obviously, an economic landscape that has been, I think, important to pay attention to for all of us and for companies like us. The opportunities that we're seeing for ourselves in retina and the opportunity that we see for ourselves in this best-in-class approach for Duchenne muscular dystrophy are absolutely the right places to be focusing our efforts now.

Okay. Great. So why don't we get into this AbbVie program since...

This is Steve's spot.

Flagship partnership for you. So what we've seen so far, the most data we've seen so far is in a subretinal delivery. And we are in a changing landscape. Obviously, we have anti-VEGFs that you're seeing extended duration. We have next-generation TKIs that are moving through the clinical -- clinic, and we're going to start seeing Phase IIs on some of those and some are moving into Phase III and they're trying to extend duration to 6 months, 9 months, 12 months, whatever it may be in the end. So when you think about the opportunity for just the subretinal in what AMD, how viable is that? It is a more invasive delivery and yes, it's a one-shot deal, but it's an elderly population, complications. They're very sensitive to complications. So is that more of a proof of concept for AbbVie and then the suprachoroidal delivery is really where it's at? Or why don't you tell us how you think they're thinking about it. as this landscape is changing. That's a very loaded question.

Yes. It's a great question, an exciting one in the space really because as you mentioned, there's a lot going on, and this has come to fruition to some extent, over a lot of years where frankly, this validates what we're doing because these incremental benefits have shown real value. If you look at going from Lucentis to EYLEA, now faricimab with a little more incremental durability, you mentioned the TKIs. So we're going to probably expand a little more. And even these incremental benefits we see by who's playing in this space, how much value is perceived here. But at the end of the day, these are all still repeat injections for many of these indications for the rest of a patient's life. So for us, there's the validation there, but then there's the game changer aspect of, well, what's the best you could do, which is getting some proportion of patients we target at least 50% where you don't need any future injections. So that rescue free rate plus other patients, even if they need an injection, it's going to be much less frequent. And that's all possible because of the sustained anti-VEGF activity, which is very different from even these more durable treatments where the concept is you can extend how long the drug is working, but it still is that peak and trough effect as opposed to ideally having a sustained delivery. So with the subretinal route, we and AbbVie clearly believe this is commercially viable and will fill in a big unmet need, given the fact that even after AbbVie entered the global collaboration, we've expanded not contracted. So it's more than just a proof of concept. This in its own right is something that really can have an impact for patients globally. And that was one of -- certainly, one of the reasons for the partnership is to expand the reach globally. So that's a legitimate opportunity we and AbbVie clearly are excited about. Suprachoroidal is something that expands upon that. Earlier days, we're the first to ever do suprachoroidal delivery of a gene therapy. So another sign of leadership for us in terms of routes of administration and applying AAV gene therapy, but we have to demonstrate safety and efficacy, of course. And we just have a lot more data with subretinal, including out the 4 years durability. So having said that...

[indiscernible] you had that 50% threshold at the 4 years, yes.

Yes. So -- and stable rock solid vision. So exactly what you want to see. So the anticipated durability there. The nice thing is already in both wet AMD and diabetic retinopathy with suprachoroidal, we're showing good safety, tolerability and clear signs of efficacy. On wet AMD, fortunately, that's a space we know very well in terms of reading the data and what are the endpoints to look at from everything we know about subretinal. DR is very fascinating in that. We just -- as Ken mentioned, we just had a recent data at AAO just last month. And the striking thing there is we're already seeing an impact on the pivotal endpoint that is recognized by the FDA, which is actually showing an effect on diabetic retinopathy severity using the DRSS scale. And we just recently presented 1-year results with the first 2 dose levels, and we see exactly what we and AbbVie want to see. And in addition to that data, we also, for the first time, showed translation of those effects on diabetic retinopathy severity into actual outcomes. So proportion of patients developing vision-threatening complications. So macular edema or proliferative diabetic retinopathy. And we see a dramatic reduction compared to the control group with dose level 2 in NPDR patients, the real target for this indication. So an 89% reduction...

Are you suggesting that the endpoint might change -- the meaningful end point to the FDA might change for DR.

Well, it's interesting the DRSS, in a lot of ways, is potentially easier bar or one that's recognized from an FDA standpoint, where given the clarity on that indication, you still could use that as the regulatory bar, let's say, but the clinicians will really care about how does that translate into prevention of vision-threatening complications.

So we're talking about clinical meaningfulness [indiscernible] FDA regulatory [indiscernible].

So this really sets us up to expand on your question -- your follow-up question that this fits a target product profile for what the clinicians really care about preventing vision-threatening complications. And the important thing is it's with an in-office onetime treatment. So that's the real barrier that exists where existing therapies nor these other agents that we're talking about are really going to be able to address because even with extended durability, they still call for repeated injections. And as soon as you stop those repeated injections, the disease comes back. So this space really does need this onetime option to fill this need.

Yes. Just going back to, I guess, the more advanced one, which is the subretinal wet AMD. Your endpoint on that is 12 months and stable BCVA, stable CSTs, but the FDA wants to see just 12 months, not more beyond 12 months?

That's right. So before starting our pivotal program, we had an end of Phase II meeting, and it was the 1-year time point is what we agreed on and what they require, including because of gene therapy approach. And historically, 1 year has been used in non-gene therapy, but some opportunities to shorten that in some indications. But for us across the board, it's really a class requirement to have the 1 year. We have the longer-term follow-up from the Phase III, of course, that helps. And certainly, even patients within the pivotal program will have the opportunity to look at longer term.

I want to add something about subretinal Annabel. I think is sometimes underappreciated, because you're pointing out that it's surgery. And so maybe it has a higher bar for sort of translation commercially and the scalability...

Vitrectomy or whatever it is.

No. We've been hearing that for years, and I think there's no doubt, right? We know that like the only other approved gene therapy in the eye is based on similar type of procedure, much smaller indication, LUXTURNA. It was the first AAV ever approved in the U.S. And we levered that and thought about scalability of that procedure. And then I've been looking -- so for a long time and looking at what's the outcome of that, right? So where can you look to find evidence. First is on safety. Safety profile is unbelievable for RGX-314 subretinal. I mean it really -- and we're hurdling towards enrolling about 1,100 patients in a pivotal trial, right? And when we started that on our own, just with a U.S.-focused study, one of the -- first of the 2 trials had a target enrollment of 300. The other thing I look at when I think about commercial adoption, I know Ram emphasizes this lot when he talks is how quickly are you enrolling your pivotal trial, right? That's a little bit of [indiscernible] we enrolled that fully on schedule and fully on time. And with the expansion, all we've done is continue to stay on track with respect to enrollment rate. So I think when you look at the safety profile of subretinal and when you look at the enrollment rate of subretinal and pivotal. There's nothing to say anything different about it versus any other modality....

That's not rate limited [indiscernible] enroll in the trial.

That's been developed. So I think that those types of things would be areas now where investors could look at and say, "Oh, we might have a different trajectory to expect in commercial." Not the case at all. This is really on track to sort of hit the market in the same way that just about every other type of modality has found its way into market. And I think with a safety profile that's very strong, the only other thing that's sort of a close comparator to it would have been something like the port delivery system, which obviously had a lot of safety issues that were highlighted over its development and I think part of the pause for the pullback on the market. So I think we're feeling really strong and I think backstopped by Steve's point about AbbVie is continuing to invest for every dollar that REGENX invest, AbbVie Invest too, and sort of the expansion of these types of opportunities. So to have that kind of validation in addition has been really meaningful.

Okay. I want to not run out of time before we get into the whole DMD part of it, which originally, I think you were getting a lot of attention as a derivative play on Sarepta. And I think now people are realizing that you might have something quite differentiated with this terminal that you're targeting. And so I guess from that perspective, targeting the C terminus, do you think that would be limiting to a certain patient population? Or would be expanding that you could potentially have utility across patient type as well as an age type. So I guess that's why, [ wanted ] first question.

Yes. I mean it's an absolute expansion. I mean I think what the C terminus does is it has the potential to add additional function on top of the sort of base cases of the first-generation microdystrophins. And we're the only ones who have engineered it and launched it into the clinic at this phase. So it's -- for me, the way I've described to some investors is it's taking the class of drug and making it more potent, but with the same dose, right? And so I think what that means is it applies to all the same children and potentially expands to areas that haven't been able to respond as well to some of the first-generation products. So I think that's an incredibly important part of the differentiation story. It's not like it's differentiated for some narrower spectrum of genetics in Duchenne kids. It is laying on top of an expanding what's being demonstrated by the first generation.

And I think what was interesting to us, I think, from a preclinical perspective, you show that the microdystrophin could be really localized in exactly the area of the muscle where you want it to be. You've shown it preclinically. I think you've only shown one biopsy patients from the Phase I/II trial so far. But do we have any sense yet how that could translate into clinical outcome? I mean, do we have any, I don't know, exon-skipping agents or any microdystrophin, any evidence from other types of microdystrophin or all other nucleotides that have localized so well in the muscle and that has given us a functional outcome. And I know that's a tricky question in DMD, you don't really get that much function from some of the treatments that we have, but maybe you can expand on that.

Yes. So I don't personally think that, that localization has been an issue for any of the modalities. So I do think that the first-generation oligonucleotides that have been introduced, we're getting good localization and just really, really tiny amounts of protein. And then the microdystrophin constructs that are sort of first-generation AAV, I think are also getting good localization. They're just not getting the full protein localized there. And so those proteins are missing, they're deficient in terms of their functionality. So I think we're the first ones to be getting good amounts of protein with near the sort of full length function that you'd be looking for and localized. So I don't -- I mean, I think we are highly differentiated by having that feature of the C terminus in our expression, but I don't consider it to be a differentiation on localization per say. I actually think -- I think why FDA approved 1 of these treatments already is because they're seeing good localization and same thing for the ASO several years ago. So we stand on the shoulders of that whole class there beneficially.

Okay. Great. And then just on this past data set that you reported at you had the first dose cohort readout or parts of the first dose cohorts. And then you've now cut that first dose cohort short and you're expanding on the second dose cohort, I understand. So has FDA blessed that decision? And are you comfortable that you'll have all the data from the second dose cohort so you can start that pivotal study in 2024. Like what do you need to see to start that pivotal study?

Yes, we want to make a decision about a pivotal dose in 2024, and we're well on...

Decision or initiation?

Both. I mean, I think one begets the other and they both can occur next year, and that's what we've guided. I mean the data that we saw with the first dose was enough to convince us that we are seeing something that's already in sort of the range of our target product profile. And preclinically, we actually reran a series of preclinical experiments to compare our first dose to our second dose to convince ourselves that we should actually go through the exercise of dose -- reconvince ourselves, if you were to go through the exercise of dose escalation, then we could see more. And we saw that. We presented some of that data -- preclinical data when we showed the first clinical data from the first dose. We're going to start the second dose enrollment before the end of this year. We're going to have that data in the first half of next year. And share it also have the opportunity to share longer-term data from the first dose. And that's going to be a rich data set. The decision we made to move from first dose to second dose was out of enthusiasm and out of a great safety profile and an opportunity to see good results, but think that we may have the opportunity to do better. And our experience with every single program we've taken through drug development for AAV and then taken into a conversation with the FDA about what to do next is always benefited from dose exploration. So...

Got it. I want to ask you, I know we don't have much time left, but I do want to ask you a specific question around the age cohort that you saw, the older age, I think it was at 10.6 year old. They had lower dystrophin expression. But interestingly enough, they had just as much reduction in the creatinine kinase. So is it the creatine kinase effect that you want to see? Or is it the dystrophin levels? And so what does that mean to you in terms of who you can target as far as age groups?

First off, amazing to see that result. We're, I think, one of the only companies to have shown a level of measurable microdystrophin in an older boy to start with. There just hasn't been a lot of exploration there. And again, the evidence for us is that confidence in us being different means going into a place where others haven't gone with more patients, more expansion. CK is probably -- it's probably a little bit more insensitive. It responds to a lot of things, seeing that reduction early is good. We saw it in a 4-year-old patient, and we saw something equivalent in a 10-year old. But I think seeing for us seeing the type of microdystrophin expression that we were showing even in a 10-year-old patient because most of the studies that are ongoing or have been done even to support the accelerated approval have been in 4- to 5-year-olds, or 4- to 7-year olds. We're trailblazing here, and we're doing it because we think we have important new science to bring to bear on high unmet need. There's -- our trial runs 4 to 11, and that 8- to 11-year-old range is a part of the market that right now is potentially untouched by other treatments that are being studied for us to show that data, to show safety and to show that our gene therapy is on in doing something. And that's the reason we do what we do.

All right. Well, we're out of time. I have like an hour more questions for you, but I can't do it. So great to have you. Thank you so much.

Thanks for the time.

Thank you.

Hope we can keep the conversation going.

Absolutely.