REGENXBIO Inc. (RGNX) Earnings Call Transcript & Summary

Great. Welcome, everyone. This is the fireside chat with REGENXBIO. My name is Vikram Purohit. I'm one of the biotech analysts with Morgan Stanley Research. Happy to have with me Curran Simpson, CEO; Steve Pakola, Chief Medical Officer. Thank you both for joining us.

Good to be here.

Great. Let me read a quick disclosure before we get started. 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, let's go ahead and get started. Curran, I'd be interested to hear some opening remarks from your side on what you think have been some of the key inflection points for the business this year, especially as you've recently come into the CEO role.

Okay. Great. Happy to do so. This has been an exciting year so far, and there's a lot to go for the remainder of the year. I guess I would highlight, first, the advance in our RGX-202 program, the Duchenne program. It's exciting that the program has gone from initiating our first patient in Phase I to being ready by year-end for our pivotal study. So a lot of progress on that front. And then Steve will be able to talk to especially our ocular programs, which is partnered with AbbVie, RGX-314, which has 2 different modes of delivery, the suprachoroidal mode and then also the subretinal approach as well addressing the wet AMD market. One of the real exciting aspects of joining when I have is we're also poised to file our first BLA, literally in the next few weeks, for RGX-121, the Hunter disease program. And it's always sort of a special time in a company to be the first -- so the first BLA filing is an exciting point for the employees who've been with this program for almost 9 years and now we see a path towards approval, and with that licensure potentially of our facility, manufacturing plant, and then potentially realizing our first sales next year. So there's a lot going on. The benefit I have taking over from Ken in July is I've been with the company for a long time, been there for 9 years. So at least I know the nuances of the programs. But it's exciting to come in and take on this new role.

Great. Helpful overview. And I think a good segue into diving right into 202. Just to level-set for everyone, could you remind us how is 202 differentiated and designed in kind of a unique way to be a differentiated DMD therapy?

Yes. I can speak to some and then I'll have Steve add a bit of color to it. So I think from the outset of the program almost 2, 3 years ago when we thought about what is the ideal construct to enter knowing at the time we were potentially third or fourth to market, we really did look towards an eye of differentiation. And that's in several ways. One is the overall serotype is different. We're based in AAV8 as opposed to some of the other programs that have different AAV9 or rh74 capsid. I think the main differentiation is that the microdystrophin construct we're working with contains the C-terminus, which is more like natural dystrophin, and we think could convey improved functional benefits patients. So that, I think, is a really key element of it. And then I think the third element that I would point out, of differentiation, is maybe a little bit more hidden in the background, is that we have a really advanced manufacturing process for the program using a suspension-based bioreactor process that, for our facility, we can produce over 2,500 doses per year. And I would also point out we're able to achieve those high yields and expressions with also a very high purity level, so up to 80% flow capsid, which we think is one of the enablers to be able to dose at the pivotal dose we've established. I don't know, Steve, if you want to add?

Yes, I can accent a little. First, thanks, Vikram, for having us.

Of course.

So I think the differentiation aspects are something that's really resonated with the community. And even the FDA, if you think about it. So Curran's point about the C-terminal domain. So if you look back at the ELEVIDYS ad com, even the reviewers raised the issue of it seems like you would want to have some of those functional elements. So we think that's a key differentiator. And there's various aspects that make sense that we, with Olivier Danos, our CSO, who's worked in this space for decades, that to really take advantage of not just the construct, not just the serotype, but really optimizing everything about the product. And in my role as CMO, I get to see how that all translates, first, in the pharmacology where we actually demonstrated that C-terminal domain does add benefits in terms of actual function in the relevant animal models. And now being in the clinic, where we've dosed patients across 2 dose levels, we're starting to see the fruits of our labor here. So we're glad to discuss that more.

Great. From a real world perspective, what sort of benefit do you think this differentiated, distinct design could add for DMD patients? Where should this show up once you have kind of more mature, functional data in patients?

Yes. So even the actual microdystrophin expression levels may be enhanced by a lot of these differentiating aspects. Things such as codon optimization that we've been able to take advantage of, and even the C-terminal domain. So we often talk about how, pound for pound, with the same level of expression, you'd want that expression to be with the protein that has the functional elements of the C-terminal domain, but the C-terminal domain may help in terms of the half-life that exists within the cell. So even the expression, and we've started to see some suggestion of that differentiation, particularly in the older boys who've been treated. But even at parity, let's say, in microdystrophin expression levels, we'd expect to see over the long haul some of the benefits that we see in pharmacology that we've seen at the doses that we're testing. So obviously, there's been a lot of discussion around NSAA and the lack of sensitivity for detecting potential benefit based on that, especially through just out to 1 year. I think that's true that with less sensitive measures, it's going to take longer to see whether you have any differentiation at the clinical outcome level. But I think we -- the whole field has gotten to learn from a lot of the trial data that's been generated in terms of, okay, NSAA is relatively crude and it's a binary, tertiary, cut points across different measures. But we do have more sensitivity with the continuous variable measures like timed function measures, things like time to rise and 10-meter walk-run. So we get to take advantage of all those aspects. And we look forward actually to presenting our first interim look at functional data with both Dose Level 1 and Dose Level 2. So we're going to look at all the traditional things. NSAA, we'll look at it because that's certainly out there and certainly a reference point. But we'll also look at these other measures that we believe make sense that they would be more sensitive while also being clinically meaningful.

Understood. And scope out for us how -- like what we can learn from the dataset. How many patients is it going to be? How much follow-up do you think that you'll have at that point?

Sure. So at our Dose Level 1, 1e14, we dosed 3 boys, and we've reported microdystrophin values there. And in our Dose Level 2, 2e14, we've reported on 4 boys microdystrophin levels. We're completing the full expansion cohort very soon, which will be a total of 7 with Dose Level 2. Of course, the earlier ones, like Dose Level 1, we're going to have at least a year. Dose Level 2, the early ones we're going to try to get as much data as we can. Realistically, we'd like to have more than 6 months, 9 months, maybe some of those boys at Dose Level 2 we can have out a year or so. So will depend on exactly when we cut, when is the best opportunity to do that. But that gives you a rough sense of the data we look forward to coming out of that.

Got it. And you touched on this just now, but just to maybe put a fine point on it, what are you hoping to see? What do you think would be a really strong outcome that would give you a lot of conviction that this was a great use of REGENXBIO's platform?

Yes. I think one of the nice things here is you could really think of this on a patient-by-patient basis because they're baseline age and baseline NSAA and other functional measures, can help you predict what would normally occur, the natural history in that type of setup. So we really are going to have more than a handful of patient vignettes basically where we can really look how did each of these patients do. And I think that really gives the opportunity to have a powerful signal if you see certain of these boys who have good microdystrophin expression, certainly above the 10% threshold that a lot of experts talk about is what you'd like to see in terms of clinically meaningful. And you can see a trajectory in those boys that's different than what's known to be the case. So maybe it's a particular baseline demographic where you know with how treatment, they go down, they get worse inexorably. And if you could stabilize -- if you see patients are stabilized, then that's good. You may have other patients where, okay, maybe you'd anticipate they'd be stable, and in those, if you can show actual improvement. So we really have the chance to look at all these boys for -- at these time points and also across these different measures.

Got it. Great. Just from a pivotal trial perspective, you've mentioned that your pivotal study is starting in the fourth quarter. What is the design of that study? What could that look like?

Yes. So we have had our end of Phase II meeting, as we've guided toward, is very constructive and very favorable and really confirm the key things we care about, which are accelerated approval, is certainly there given the differentiated aspects that we've discussed. No need for placebo control, which was very important for us, even ethically from our viewpoint, that it's really important to give these boys a chance to have treatment and not have placebo treatments to 6 months, and certainly not longer. And so we definitely reached agreement that that's not needed, the placebo control. But we still would, of course, use -- utilize historical data and actually match control data based on baseline characteristics and risk factors to really make up for that difference in design. Accelerated approval, so based on that 3-month microdystrophin, but still gathering long term, 6 months, 9 months, 12 months longer functional outcome measures with the goal that we're able to show that correlation to some extent in terms of microdystrophin and functional outcomes.

Right. Okay.

I think one positive outcome in the end of Phase II as well is that we'll have dosed 7 to 10 patients or so at Dose Level 2 in the Phase I/II study, and we were able to have a discussion with FDA about including them as part of the safety database. And given that from Phase I/II to our commercial and manufacturing process, we're not implementing anything that would change the product profile, we've got good agreement that we could utilize that set of patients. So that will give us kind of a running start going into pivotal. And we've been getting really good signals from the field about recruitment. We think that there are a lot of patients interested in the study. KOLs are very interested. And so we feel very confident that that will move quickly.

Got it.

The other aspect is our desire to enroll across a broad age range. So we really -- we recently announced expansion to the 1- to 3-year-old. We already are dosing up to 11-year-old. So I think that 1 to 11 is important for us. And certainly, one of the biggest wow factors from the data we've generated so far is the high microdystrophin expression levels that we've seen in 8 and older boys, which are the ones traditionally one thinks of as the toughest to treat clinically and also, just based on pathophysiology, the health of the muscle tissue. So to actually see these types of values has really been impressive for our investigators and thought leaders.

Great. I guess on that point then, what have you set about the peak sales opportunity or just the raw commercial potential for 202, especially given that Sarepta is currently on the market? Where do you think 202 fits? And what could that look like from a dollar perspective for REGENXBIO?

I mean I think the estimates we've developed and that we've seen externally value the market potential at $7 billion to $9 billion. And so we think we can be eligible for a substantial part of that. And I think part of it is, obviously, the potential for differentiation, the data that Steve talked about with the 8 and older patients, we know that by the time we anticipate our submission of the BLA and approval, that there still will be a significant prevalent population to address and many of them will be in that age category. So we think the market potential for our place in the market is substantial.

Got it. Okay. Great. That's helpful. Maybe it's a good pivot point then to 314 because I want to make sure we talk about everything you have going on with your retinal programs as well. You have data from ATMOSPHERE and ASCENT, your subretinal wet AMD programs. The Phase III trial is expected in 2025. What is the target product profile you're looking for there to feel like you have a competitive product candidate?

Yes. So this is something we've had the opportunity to look at over a number of years. And we've seen it pretty stable in terms of what is really going to fill an unmet need here. And we have the benefit of our global partner as well where, over the last couple of years, we've been able to in tandem reevaluate, and we keep coming up with the same basic concept, which is there are effective treatments, but we see them being successfully -- or satisfactorily successful in the trials because these patients are followed up very closely, you know they're getting these repeated injections. But in the real world, that winds up not mattering. These patients don't get what they need. And they wind up losing the gains and even still going blind in many cases over time because they're not getting the injection. So the unmet need really is sustained anti-VEGF to dramatically reduce injection burden. And importantly, it's not just that feasibility or burden reduction; it's that that will translate into better visual outcomes for these patients because they're going to have that sustained activity. So how do you translate that into numbers, let's say? So we've consistently seen, just to really make it very simple, that if you can be reducing the injection burden by over 50%, and also if you can hopefully have at least 50% of patients who not only have a reduction but actually you have no need for anti-VEGF or rescue injections, that is an ideal target in the setting that you can achieve that while maintaining or improving underlying disease control as measured by OCT and also best corrected visual acuity. So those are -- you really have to achieve those. If you can't achieve those, it doesn't matter that you're reducing injection burden. So that's really the trifecta of what's needed. And of course, good safety. So that's what we met with subretinal Phase I/II, and that's why we advanced. And with AbbVie, expanded the pivotal program to be global. And so that's why we're excited to hit those milestones that you summarized.

Got it. Great.

I think in terms of the expansion of the opportunity too that the work we're doing on fellow eye, Steve might want to talk about, is important too, that subretinal has this advantage of being able to treat the fellow eye.

Yes, that's a great point, Curran, that one of the key reasons we started with subretinal is that's the gold standard for safely and effectively getting gene therapy to the target tissue in retinal disease. And the safety side is that's a relatively immune-privileged space, the subretinal space. So that's borne out in our Phase I/II and now advancing into pivotal. The issue with other routes of administration that are not compartmentalized or localized, like intravitreal, is there's more of an immune response, and you also have systemic spillover. So as soon as you have that, you wonder, well, how will that affect that immune response to a second dose even in a fellow eye because you've had that systemic priming with the serotype? And we know with subretinal delivery, for example, with Luxturna, there's no issue with fellow eye dosing. So it was important for us to test fellow eye even from a label standpoint as a requirement to have done that. And also many of these patients with wet AMD and DR have bilateral disease. So ultimately, you'd like to be able to treat both eyes. So long story short, we've completed dosing in 20 patients in fellow eye. So we look forward to having data that will come out from that. We can also look at efficacy and really see confirmation of BCVA response from that to further bolster confidence as we go into future pivotal readouts.

Great. And you're also developing a suprachoroidal administration option for 314 for wet AMD. Assuming the datasets for the subretinal in 2025 meet the threshold, then you move towards commercialization, how could the regulatory path for suprachoroidal be perhaps expedited or bridged to be a little shorter than otherwise because you have all this experience with 314 in subretinal and that could also be on the market? Does that help suprachoroidal move faster or does that suprachoroidal option need to kind of move through its own Phase III program separately?

So on the pro for easier side of the coin is, it is the same product, and it's going into the eye. On the other side, even though we're very excited about suprachoroidal delivery because it's also compartmentalized, so for safety and efficacy, we wanted to stick with what worked for subretinal, which is the compartmentalized nature, but it's still a different space. So I think it's TBD. We'll need some of the regulatory discussions that we've had before. But conservatively, we're planning as though you may need a lot of the same in terms of demonstrating efficacy. I think safety, there's some overlap in a way, even though it's a different route. It certainly gives all of us more comfort that we've seen good safety there. Durability in subretinal, in a way, if you think of it, if we show good durability in subretinal, no matter -- that means no matter how you actually get the gene to the retina, once it's there, you have support that that's going to be durable whether you've got it there via subretinal or suprachoroidal. So a lot of these are things that, I think, decrease the risk, increase the probability of success, but in the end may not translate into the bar being lower from that standpoint. Certainly, CMC and aspects like that would be a lot more straightforward.

Right. Okay. That's helpful. I guess on either option, broadly, some investors have had concerns about commercial appetite for gene therapy and retinal indications. I guess first question on that is, what infrastructure, what level of training do you think a center would need to be able to administer 314 in either presentations seamlessly?

FC. Start with FC, yes.

Yes. So FC is very straightforward. They already have the infrastructure. It doesn't take any more infrastructure personnel than intravitreal injection. So it's a slightly different injection, but the prep is the same, and the ease of it is really the same. And we have the benefit of using an already approved device for this that was developed by Clearside, so received regulatory approval for a totally different indication and product, XIPERE, which then was licensed to Bausch who has trained many retina specialists across the country. So we know from our own experience, it's upscalable beyond initial investigators that you train, in our hands and then also in Bausch's hands. So both from a feasibility and a retina practice basis, very straightforward. No hurdles there. Subretinal, honestly, it's not that complicated either because these guys are surgeons. They're used to doing much more complicated procedures than this. This is about as simple as you get, frankly. There's still training in terms of producing the bleb to administer the drug. But they've actually done that before in their training for treatment of things like subretinal hemorrhage. So feasibility of upscaling, very straightforward. Of course, where this would get rolled out, you would need to have retina surgeons, with 90% of the 2,500 retina specialists are surgically trained in the U.S. So again, there as well. And retina specialists are very good at scheduling, that consideration in OR prep and the like. The prep in the OR is very standard as well. And certainly, we'll work to make that as straightforward as possible. So we don't see an issue from that standpoint.

Got it. And it sounds like, from your commentary, that you envision subretinal suprachoroidal, assuming both make it through their pivotal programs with strong data, you anticipate that they'll both kind of coexist commercially. You're not looking to make a decision for one versus the other necessarily.

No.

No, I don't think we are. I think that they're independent. They may come down to which patients are best suited for which therapy based on the data we generate. I would say, certainly if FC AMD is highly successful, I think the natural forces of the market will probably drive more patients that way than subretinal. But I think both have a place.

Got it.

One unique indication is diabetic retinopathy. So there, we've focused suprachoroidal there because the big unmet need there is get patients who are at high risk of developing vision-threatening complications before they get them. And the issue is any repeated injection is just not going to be accepted in that setting. But the same with the surgical procedures. We felt the target product profile required not just single injection, but also in office. So that's one that's really carved out uniquely for suprachoroidal delivery. And that's why we and AbbVie are so excited that we have proof of concept and are actually hitting that target product profile there already from our Phase II data. And that's allowed us to advance for plans for end of Phase II meeting, that we initially guided would be Q1 of next year, and given our excitement and continued evaluation, we've actually accelerated that to Q4 of this year.

Right. And for the pivotal trial for DR, could you just kind of walk us through what the trial would look like, just the general construct of the design. What will you need to be able to file in that indication?

Sure. So a nice aspect of diabetic retinopathy is, in spite of how big the unmet need is, there's regulatory precedent for what type of design would be acceptable on what type of endpoint. So our approach is not really to sway too much from that, so to maintain that derisked regulatory standpoint. And probably the biggest aspect is that we can do a placebo-controlled trial, or a sham-controlled trial even in our case with the suprachoroidal injection. And the reason we can do that is even though EYLEA and Lucentis are labeled actually for DR treatment, it's definitely not the standard of care. In fact, hardly anyone gets that because it's just not a reasonable thing to inject patients for the rest of their lives. A onetime treatment would change that paradigm. So that's the whole approach. So in a nutshell, sham-controlled and 1-year follow-up, which is a standard endpoint for DR, and also the requirement for gene therapy treatments in this division. And the endpoint is also derisked in that we know meaningful improvement compared to control or a decrease in meaningful worsening as measured by the clinically validated DRSS, or Diabetic Retinopathy Severity Scale, are both accepted as pivotal endpoints. And we've seen good results on that in our Phase II study already. So we'll be -- that will be one of the aspects that we'll be talking about with the FDA and deciding amongst our data, but we certainly have good choices to pick from that we feel confident about. So I think a lot of the discussion at the FDA is around a lot of these aspects where we already have a pretty good sense of how the regulators think about this.

Got it. That's helpful. From a commercial standpoint, I mean, looking 5, 7 years out, let's say, what do you think is a larger commercial opportunity for 314 specifically, DR versus wet AMD? And within wet AMD, I guess we can encompass both presentations of 314. What do you think is going to be a bigger kind of top line driver for the franchise?

I think that's a bit of an open debate. I actually think we view them as pretty similar in the sense that, for wet AMD, there's already a large established market that we think we can get a significant share of. But actually diabetic retinopathy for gene therapy is an open field in a way. And so I think we view them as very similar opportunities. I think AbbVie is there as well in terms of how they see that. And they're both very large markets.

Got it. Okay. Great. Maybe let's make sure to touch on 121 before we run out of time here. So for this program, when do you think a launch could occur here?

So our plan that we've got an agreement now with FDA is to file a rolling BLA. And I think as I mentioned at the beginning, that first module filing is imminent. And so the last module we plan to submit in Q1 of next year and expect a 6-month review for that. So ideally, we would see an approval late Q3, early Q4, which could generate our first sales, which would be super exciting. And I think I would add, we did a pre-BLA meeting with FDA during the summer, and found it to be really constructive, really positive, and sort of derisking the BLA process. So I think we feel really positive going in that more of the focus might be more on the confirmatory study that would follow then the specific dataset we've already shared with them. So it's exciting. And we just released additional data on 121 showing not only a neurocog benefit in terms of reduction of D2S6, but also systemic benefits. So 80% patients treated to date have been able to stay off and either not go on enzyme replacement therapy or go off enzyme replacement therapy, and then have stable urinary GAG levels, which was not part of our original assumptions for the program but it's really a nice upside, if you will, to the clinical prospect.

Got it. We're actually at time with that, but let me close out with 1 housekeeping question. Remind us of where your cash balance currently stands and what the associated runway is. And importantly, what level of pipeline development is contemplated in that runway? Where can each of these programs get to with your current cash balance?

Yes. So we are pointing towards -- I think we're at $320 million as of the last quarter. We are pointing towards a cash runway that takes us to 2026. And we have all the resources we need to progress the programs we've already talked about. Not in that cash runway are 2 key milestones. So $200 million for the first patient dosed in the DR program, which we expect to initiate next year. And then also, we would expect a PRV voucher, which we have the option to monetize with the approval of 121. So I think our cash position looks really, really good in the next couple of years. And obviously, with late-stage success, we can grow from there.

Great. Great spot to close out. Thank you both so much for joining us. Really appreciate it.

Thank you.