REGENXBIO Inc. (RGNX) Earnings Call Transcript & Summary

Good morning. Welcome to day 3 of the Goldman Sachs Global Health [indiscernible]. Troy, and I cover the midcap biotechnology sector. Our first session this morning is with REGENXBIO, and it's my pleasure to welcome them here. Maybe what we'll do is kick it off maybe with some comments on this morning's news.

Ken, if you want to maybe kick it off on some of the leadership changes. We'll start with that and just kind of like maybe the genesis or process behind that, and then we'll get into some deeper Q&A, if that's okay with you.

Absolutely, Paul. Thanks for having us, and I appreciate everyone listening to the story in the background of REGENXBIO today. So yes, we're -- I'm incredibly pleased this morning to introduce my colleague and friend, our Chief Operating Officer, Curran Simpson, as our incoming President and CEO. We announced the leadership transition today that involves Curran stepping into that role as of July 1, and I'll be moving into an expanded role on the Board of Directors as Chairman of REGENXBIO. This is something that I think is representative of a lot of thought and sort of planning on the part of Board of Directors and the company. The truth is, I've been working at the company for 15 years as one of the founders. And we're heading into a new chapter that is really exciting and I think amazing for REGENXBIO, which is towards commercialization of products. And Curran will lead the company in that chapter as I think one of the most established people, not only in AAV gene therapy, he and I having worked together for the last 10 years at REGENXBIO, but in the biotechnology industry overall with his experience coming to REGENX. And so we're excited both of us to be here to introduce this leadership transition, talk about the company today and what's coming forward.

Okay. Maybe just a couple of follow-ups on that. In terms of your role as chair, will it be an Executive Chair or a non-executive chair role?

Non-executive chair role.

Okay. Great. Okay. And then maybe broadly, as you thought of the transition coming up here in the next few weeks or months, any thoughts on sort of ongoing strategy maybe at a high level, Curran, I guess, as you step into the CEO role, if you want to comment, any thoughts on maybe doing reassessment of the management plan, whether it's a 1-, 3-, 5-year plan or whatever the case may be, I'm sure you've probably 24 plans already set. But just as you think about maybe in broad strokes, any thoughts on that potential strategic nudges or even maybe shifts potentially?

I don't foresee any shifts. I think the news that we gave out in November around increased focus on our late-stage assets for RGX-202 with 314 and 121, which we intend to file a BLA this year. All of that will stay the same through this. So I think one of the main themes of the transition is really just a continuation of the execution on the late-stage assets.

Okay. Great. So maybe for investors who may be newer to the REGENX story, can you maybe just briefly explain what is the company's platform, your core competencies and/or technologies and just what markets the pipeline is initially targeting here?

Do you want to start?

Sure. The -- we're obviously AAV gene therapy focused in 3 therapeutic areas: retina, muscle and neurodegeneration. Curran just mentioned, in November of last year, we made several strategic decisions to focus the resources of the company on our late-stage assets. And we had planned and continue to execute on a plan to have all of our pipeline in late-stage development or filed BLA on a path to commercialization as quickly as possible by the end of this year. We continue to be very focused on that. It's part of our pipeline. In retina, we have a very large partnership with AbbVie, which we announced at the end of 2021 that continues to be multifaceted with late-stage and mid-stage development in the treatment of eye care retinal diseases using anti-VEGF as a target and our AAV technology platform. Very excited to continue to see progress there, not only in the initial indication of wet age-related macular degeneration, but in furtherance of focus on areas that are also strong candidates for anti-VEGF therapy with a onetime treatment like AAV, areas like diabetic retinopathy have become really significant opportunities for this partnership in our overall commercial planning. In muscle wasting, Duchenne muscle disease is something that I think is pretty well known to the community now. It's one of the first five or so approved AAV gene therapies at the FDA. And we think we have a fast follower that is a potential best-in-class and first-in-class with some new biology with respect to the treatment of Duchenne using AAV and a truncated form of the dystrophin gene to replace it in boys that are struggling with this disease. And then lastly, our Hunter syndrome program is really on rails for a BLA approval in the very near term. We continue to do real-time work on completing our modules for the BLA. We've reported top line data in our Phase III. We've prepared ourselves and built out a phenomenal capability in terms of quality and high-yield manufacturing in Rockville, and this is going to be our first commercial product.

Okay. Great. Thanks for that overview, Ken. Maybe starting with the retina and ophthalmology programs. You presented some data. And can you maybe briefly summarize and contextualize the wet AMD data and DR data to date for 314 versus standard of care? And maybe drilling down into it a little more, what does a 50% or 80% reduction in injection frequency actually mean for your average wet AMD patient here? Ken or Curran?

I will take it for 314. Yes. 314 is, I think a profoundly impactful treatment for wet AMD and DR. In wet AMD, when you're looking at what the standard of care is and including with the expansion of additional treatments that have been improved even in the last year or so. There's still a great need for maintaining a level of compliance with respect to vision outcomes. And I think that with a onetime treatment using AAV gene therapy, in particular, the data that we have on a long-term basis, maintaining or improving visual outcomes out to 4 years with our first-generation subretinal approach. Really nothing else like it in any pipeline or in the commercial setting that you're taking. And I think, Paul, you're alluding to the fact that we focused on a target product profile of achieving at least 50% of all wet AMD patients who have been diagnosed and on standard of care, maintaining vision without needing any other injection after their receiving the gene therapy. And we've shown data where we've actually improved vision and established 4 years of durability with that treatment profile. That's literally taking half the population of patients, which is millions of patients worldwide and changing their burden and maintaining or improving their visual outcome. And I don't think that the community has seen anything like it. We're also looking for a follow-on so that we can bring that subretinal procedure, which has set a very, very high bar into a broader potential commercial setting in the office. And we've been focused on using our a suprachoroidal device for treating wet AMD patients in the office. And that's also where we started to explore the use of AAV gene therapy in the treatment of diabetic retinopathy. For REGENXBIO and AbbVie, I think wet AMD and diabetic retinopathy represent both very large opportunities, important opportunities with a focus on visual outcomes. This is not just about reducing injections. This is not just about changing retinal pathology. The real value add here is about maintaining or improving vision in patients and we've consistently shown that our AAV technology, RGX-314 as an agent does that very reproducibly and durably. In diabetic retinopathy, I think what is special about a onetime approach is that other anti-VEGF agents, while they're actually labeled or approved for it like they are in wet AMD, they're not used at all whereas a onetime treatment has a target product profile that is unique and is entering a market that has very, very high need when you talk to the physicians. So I think that we've laid a phenomenal foundation. We expect that wet AMD subretinal, wet AMD suprachoroidal is going to be significant opportunity to be addressed in terms of unmet need and market growth, unique target product profile for onetime therapy 314. Diabetic retinopathy has become something that we don't even see anything else in the entire universe of development or clinical application. And this has become something that I think we've been talking to the market about in the last year or so. It's a unique opportunity, one that's available so far, as far as we can tell only to REGENXBIO and AbbVie.

Okay. One of the debates in the field at least the investment community is on the technical approaches used by yourselves versus other companies developing gene therapies for the eye, including specifically the IVT approach versus, as you mentioned, Ken, subretinal and suprachoroidal. So I guess, briefly, what are the pros and cons of each? And I guess, why have you chosen the latter 2 for your 314 development program here?

I mean safety first, right? In this market, it's well established that it's such a large population and the sensitivity that the retina community and patients have to long-term safety -- and acute safety is important. It's been established with anti-VEGF agents, either in clinical development or in commercial. If you are not safe and then you don't have an opportunity to really get in and expand the market in a way that other precursor products have, that's been our focus with our subretinal program and our suprachoroidal program. I think that the safety and tolerability profile of subretinal for AAV gene therapy set a very, very high bar. And then on top of that, it has these durable long-term vision outcomes that are exactly what the community, both clinical stakeholders and patients are looking for. In terms of in-office procedures, Paul, the spectrum of things like intravitreal approaches, other device approaches like our suprachoroidal, they haven't shown the same profile that subretinal has demonstrated. There have been observations in every clinical program, including our own of a whole spectrum of mild and treatable safety signals that are transient to things that are recurrent and not responsive to what I would consider to be acceptable intervention on the part of the clinicians and patients overall. So we took inventory of that when we thought about how to transition from subretinal to an in-office procedure. And we found that suprachoroidal was the best path and channel to maintain a very clean safety profile background and build on that to achieve the type of visual outcomes that will lead to significant value generation.

I want to dig in a little bit more on the safety profile of drugs in the class here and another one that frequently comes up when we speak to retina specialists is the issue of inflammation, just given the procedures involved here, which you've seen with other products too, for the eye, including 4DMT and [indiscernible]. So I guess the question here is on the topic of steroid use in particular and just -- how do you think about this as a temporary burden versus a more serious risk potentially or challenge in the elderly population? When we speak to, again, to ophthalmologists and retina specialists, this seems to be a persistent issue that comes up in terms of the various approaches here.

And I think the word you just used persistence actually is a great word to, I think, identify what is or would be a concern for clinicians. So again, if we look at the spectrum of subretinal program, which is our lead program in late-stage development that is likely to be the first approved product for gene therapy in the application of AAV for wet AMD. We have not had intraocular inflammation or other forms of inflammation that has extended beyond what is expected from the vitrectomy procedure itself, which is really something that is about days to maybe a couple of weeks that's treated in all sorts of procedures that the retina physicians and community are familiar with and comfortable with. With the in-office procedures, including with our subretinal program, we started to see a whole spectrum of different outcomes between our own work and work that others have reported. And I think that our examination of that is that what people can get comfortable with in the community is something that is low risk. And by that, I mean something that is low incidents and something that presents as something that is treatable, responsive to a short course of treatment that they're comfortable with, not things in our view that extend beyond a couple of months and which is kind of a standard taper for retina surgeons to use in different types of procedures that they commit to. So that's where we focused our target product profile. I know that other programs have extended upon that and continue to talk with people about the comfort level that the community might have by extending treatment regimens beyond that kind of couple of months' window. And I don't think that we have been convinced of that when we've sort of done our own market assessments and market check in terms of what we're trying to achieve on safety, visual outcomes and where that value is going to come from.

Okay. I think it's one reason why the dose escalation studies can take a while because you're balancing efficacy versus safety in some cases and looking at a higher dose and the need for more steroid treatment perhaps. So we've spent a lot of time investing in those studies to really carefully define the therapeutic window that will be successful. Okay. Great. I want to turn to the subject of diabetic retinopathy, which, at least as you look at the prevalence and other data sources for further literature, so just a very large prevalent population. But when you actually look at -- to your earlier point, Ken, in terms of actual treatment rates with anti-VEGF injections, it's actually quite a small proportion actually come into the doctor's office to receive shots whether it's due to lifestyle, insurance and other factors, obviously, just the actual treatment rates are quite low relative to the prevalence pool. So I guess the question to either you, Ken or Curran is just as you think about the product profile, sort of what is needed here, I guess, to attract and/or penetrate what looks like a pretty attractive market opportunity in terms of product profile.

I think safety, durable vision outcome with a onetime treatment is basically the equation for a successful product in diabetic retinopathy. And I think that -- so again, the sensitivity that you're pointing to, Paul, I think our observations of what is inhibiting the uptake of the anti-VEGF agents in the Houston's diabetic population is largely the physician decisions about benefit risk for a younger population of patients and a recognition that if they start them on those treatments, it's likely -- most likely that a high proportion of them are going to need to continue it for the rest of their lives on the basis of starting in your 40s and 50s. And they already see in the wet AMD population and all their population may be in 80s and 90s that they can barely keep them on therapy for a couple of years. So what are they really accomplishing? And what are they doing to affect the lives of those patients, but they're incredibly concerned about it because they know that some vision loss is coming for these patients overall. So you introduce something that is safe that shows durable visual outcomes that either maintain or improve the outcomes for patients with a onetime treatment, I think you have something that is a breakthrough that is necessary and important for the field.

They get played into the choice around suprachoroidal as the mode of administration as well that the in-office procedure would favor that uptake potential. Great. I guess one other factor as you think about it, is just maybe maintenance of comorbidities in this particular population, right? And maybe their vision because it's not immediately symptomatic necessarily, let's say, versus like other factors like obesity or cardiovascular conditions like that, maybe also our barriers to penetration here. Okay. Great. Maybe as we look ahead to future steps and updates for your 314 program, can you maybe just remind us what data we'll see over the near to intermediate term and just sort of where the key program at -- programs are? And how do you think about sort of your time lines versus your potential competitors here?

Yes. We -- again, our time lines are that we're the ones that are already in late-stage development with the subretinal program, AbbVie and REGENX have been focused on enrolling 2 pivotal trials that are going to include up to 1,100 patients total. So a very robust program to establish incredible evidence that I think is going to be important in what I expect will be the first BLA and global submission for wet AMD using gene therapy as a follow-on. And in that case, there's no one even close to us, Paul. And in the case of the transition to the subretinal program, we just announced last month that earnings that we'll be taking the diabetic retinopathy into an evaluation of how we're going to approach pivotal development and planning for discussions with FDA for the first time about how would a onetime treatment using AAV transition into the pivotal phase. And that's been based on some of the positive data that we've seen and reported on already from that program. With respect to suprachoroidal wet AMD, that program, we've talked about having some additional data coming up in the near future, but later this year.

Okay. Great. I want to maybe shift gears and talk a little bit about DMD. And I think your early 202 data are super intriguing, particularly the fact that you've seen some signal in older patients. And so what I want to ask here is maybe is how do you think about the high early levels of microdystrophin potentially translating into clinical endpoints when you've seen production at this sort of level, as you look at the literature, what has this meant in terms of potential clinical endpoints may be starting there?

I think we're incredibly excited with the early data, especially, as you said, in the older patients. We look forward to later this year, also showing functional data. I think the basis for optimism is -- goes all the way back to our preclinical data, we did the MDX mouse model is well known in Duchenne to translate into what we see in the field now. And at the dose that we're now identifying is our pivotal dose we see in the MDX model, functional restoration back to wild-type levels. So we're really excited with what we're seeing in the translation into human, the microdystrophin levels that we're seeing and also now looking forward to functional outcomes.

Okay. Maybe, Curran, you can remind us what -- specifically what additional dosing data you'll disclose over the course of the next year? And does this potentially include expansion cohort data?

We will get sort of a rolling process of as we dose patients. We start to look at both microdystrophin levels of 3 months and then functional outcomes closer to 9 months. So as that data becomes available, we'll include that. And then obviously, the biggest target is planning for our first pivotal doses at the end of this year.

Okay. Great. Probably one of the most closely watched events in the biotech landscape is Sarepta is upcoming PDUFA for their product, ELEVIDYS. And I want to ask you guys, how do you think about potential outcomes here? And then secondly, how does this potentially affect your development strategy in particular clinical trial recruitment for a 202 pivotal trial?

Yes. We're excited to observe an outcome there, I think, coming up. And our observation is that ELEVIDYS has been something that has been carefully watched, not just by the market, but also by the community. And I think that it really sets the stage well for continued innovation in the field, both Duchenne overall, gene therapy, AAV gene therapy and microdystrophin gene therapies in particular. I think our observation and expectation too is that the FDA is evaluating data set in a way that is really responsible and I think thoughtful. And I think we applaud the work that they put into championing accelerated approval both for ELEVIDYS and other areas even that we've been talking about. Our own microdystrophin program, the work that we've been doing in Hunter, just in the last couple of weeks, there have been even more announcements about opportunities for earlier stage programs to be able to be on accelerated pathways. I think though that we look at the data. I mean we're a science-driven company. We -- as Curran alluded to, in preclinical work, we've seen outcomes with our form of microdystrophin, which includes something that doesn't exist in any other candidate. It exist in -- doesn't exist in ELEVIDYS, hasn't existed in anything else that's been explored in the clinic, and we think that it's better. It has some biology that has marked improvement in terms of functional outcomes in animals from things that have been seen previously and we've begun to reproduce those observations, at least at the level of expression, certainly, safety and I think we're nearing the point, but we've shown some anecdotal evidence also earlier at the MDA conference by one of our investigators of sort of functional observations in kids that are very encouraging, and we'll have more on that later in the year. But I think it is important, this is a progressive disease. It progresses from the time that kids are diagnosed, which is typically in 3 to 5 age range. And there's certainly a difference between a 3-year-old, an 8-year-old, a 12-year-old in terms of where they are at the stage of the disease. What can be addressed in terms of the continued progression, what can be restored, what can be stabilized. And I think that, therefore, we have focused on areas where others have not. In order to recognize that there are gaps in not only the first generation technologies, perhaps, but also in the study of populations at a first generation level in terms of clinic. So I mean, I think what the FDA is going to do is they're going to make a decision based on the data they have, we presume. I think my expectation is that when most of the data is telling you that it's working in certain kids with a certain age and a certain progression that, that should be reflected in sort of a responsible decision on the part of the agency and we have focused our own developments on boys in those age ranges, both the current accelerated approved label of ELEVIDYS and I think the larger package, which included continued evidence from boys that were part of the original package, but was truncated a bit. And then we also have, I think, a unique profile of data in boys older than 8 that we continue to expand upon. And our recruitment has gone great. I mean I think there's been a lot of interest in not only the biology as we've reported more clinical data, the safety of RGX-202 from communities, physicians and families overall. But a real important curiosity about the impact that it might have, especially in older boys. And so I think that as we transition into the second half of the year in the pivotal phase of development, we're going to have really significant discussions with FDA about how to execute on that quickly so that we can file our own registrational packages as quickly as possible with as much evidence as possible in a way that, I think, adds something to the community overall.

Our lead of clinical development for the program at the last meetings you attended was literally swamped with people curious about the program. So I think there's also a growing buzz with the patient community about the program, the safety profile we've demonstrated and so far, the microdystrophin results and that excitement will help us greatly with recruitment.

And remember, Paul, we've talked about and you just recently picked up coverage on us, so we've had some initial conversations about the background of our thinking on the approach in Duchenne. There also continue to be important unmet need, not just at the margins of age, but on the basis of boys who might not be able to access when there's single AAV treatment available. And this won't be true unique just to Duchenne. This is going to be something that the field stakeholders like the FDA are going to have to deal with on a going-forward basis. And for us having a different AAV capsid to bring forward to the community is important because our estimate is that at least 15% of boys wouldn't be able to access no matter who brought it forward first an AAV technology on the basis of preexisting immunity. And there are also considerations about certain types of mutations and how that reconciles with safety profile of different types of products. So no matter what, as we're coming into a market where there's already an approved product on the basis of accelerated approval and whatever happens next, we're still confident about the fact that an alternative AAV treatment that while we think it could be better and significantly better than something that exists already on the basis of safety, on the basis of new biology, even if it is as good a parity profile is still going to have an important role in otherwise, boys who are going to be left behind by just a single treatment option. And again, for us, that could be anywhere as a floor of 15% and up to 1/3. And of course, with 2 products, not beyond the realm of possibility for people just to think there's 2 options here and sort of a 50-50 consideration that would ultimately be on the basis of incidents. And I think that the other thing that we look at carefully is how quickly can we get into the market to serve the prevalent population, where there's clearly a high unmet need, physicians are clamoring for anything. And that's why the feedback we've been getting from the community and the FDA about putting RGX-202 on rails for accelerated approval is incredibly important.

Yes. I agree, right? There's definitely portion of the population that's going to have background antibodies that will be ineligible for sort of the current approved products and/or may have certain, let's say, nonsense mutation that may not necessarily be ideal candidates for other therapies as well, too. I want to maybe just round out the discussion and just talk a little bit about the international opportunity, where Roche is still not necessarily gotten ELEVIDYS over the hump in Europe as well as in other markets and just kind of maybe ask you to paint in broad strokes, maybe what the international development plans might be for DMD given the lack of approved gene therapies in ex U.S. markets?

Yes. I mean you -- you're talking about a pretty large vacuum for sure and compared to what we're observing in the U.S. I mean certainly, from our perspective and on a go-forward plan perspective, REGENXBIO feels that the regulatory environment, the data set that we're generating and interactions with the FDA is where we need to focus our own internal capabilities and resources right now. And we're going to be standing on top of the shoulders of our execution on our RGX-121 program. That's going to be an accelerated approval, rare disease, potential commercial launch that we see a lot of enthusiasm and support from both the agency and the clinical community on and so we'll be drafting behind that into the Duchenne market from an execution perspective. Outside the U.S., it is a real curiosity for us and something that I think the Board and Curran will be exploring on a going-forward basis about how do we think about serving that market overall. What I can tell you for certain is that we're seeing a lot of inbound interest in the U.S. at our clinical trial sites from patients outside of the U.S. And I think that is very telling about what is already starting to be communicated to people about the potential of RGX-202 and what the additional unmet need is outside there. It actually, in many ways, doesn't feel that much different from the U.S. There's enthusiasm, but we know they're not approved products there with respect to AAV gene therapy. Whether we think about doing that alone or we look into strategies like we have when we considered how are we going to bring forward retina on the basis of ex U.S. partnership. It's not something that we've determined yet, but we certainly understand the market potential and the high unmet need outside the U.S. is meaningful. But this year, we'll be about our execution in the U.S.

Okay. Great. in our remaining few minutes here, I want to touch on 121 for Hunters. And the recent biomarker symposium, I think brought up some interesting questions. And one of the things that's I think debating in the investment community at least is the biomarkers that you're using versus, let's say, some other companies like Denali and so forth. Can you maybe just remind us how predictive DTX is of sort of clinical endpoints and sort of what KOL feedback is here.

I mean I think we're actually pretty well aligned on [indiscernible] all foundation discussion to get alignment among 2 different centers at the FDA on the use of heparan sulfate and derivatives or intermediates of heparin sulfate as biomarkers that are reasonably likely to predict clinical benefit. And that would be an MPS II, where we have overlap, that would be in other forms of MPS that we think are important, including MPS I and MPS III. I think springboarding off of that discussion, and I've had a follow-up with more people at the center. And we've seen news flow come from other sponsors of other programs, I think we got to a new level of alignment there, which we're excited about for the field and for the community overall. It's unequivocal. I mean, we've shown the data to the agency about the correlation between heparan sulfate, intermediates of heparan sulphate and clinical outcomes in a younger Hunter syndrome community, and that was part of, I think, the compelling evidence things over with us and for us at Cedar. And with Cedar, I think, was important as something we wanted to champion and support and participate in. So I think overall, this is something that REGENX, Denali, Ultragenyx and others have been talking about and wanting to support one another for years in. The fact is, I think we will be the first to submit a BLA for a new treatment for the neurological manifestations of MPS II because our guidance is to do so later this year, and we're on track to do that.

Great. In our remaining minute here, I want to talk about something that maybe is a little bit under people's radar, which is the ongoing Novartis study for SMA, which could potentially represent upside for you guys? And just kind of maybe remind us what is that population? And just sort of what is the opportunity set there for your potential royalty stream?

Yes. I mean thank you for bringing that up. I think it is an underappreciated potential inflection point that's coming up this year. I mean the intrathecal administration of Zolgensma is something that could be profound in terms of its impact in the SMA community. I think it communicates that something could be beyond the great outcomes that have been seen in type 1 could extend into type 2 and type 3 which would be, I think, a form of sort of geometric expansion for uptake in a significant way. So we'll wait to see that data, but from what we've seen preclinically and early clinically that intrathecal administration in general, is something that is a benefit, especially with AAV9, and we're pretty familiar with it because of our Hunter program.

Okay. Great. We've just hit time, so we're going to end it on that note. My thanks to Ken and Curran for joining us, and we'll end the session. Thank you very much.

Thank you.

Thanks, Paul.