REGENXBIO Inc. (RGNX) Earnings Call Transcript & Summary

Welcome, everyone, to this session of the Morgan Stanley Global Healthcare Conference. We're excited to have team from REGENX here. Curran, Mitch and Steve, thanks for coming. Let me just first read a quick disclosure. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. So with that, REGENX has a lot going on right now. But before we dive in, maybe for those who are less familiar, can you give us a brief introduction to REGENX, the gene therapy platform and the clinical areas you're focused on?

Sure. And thanks for having us much appreciate it. So we've been in business for roughly 15 years and the last 10 of which have been spent really starting to take AAV from being a licensing outfit, if you will, to getting to late-stage development on numerous platforms. We have a lot of work going on in retina. So a lot of ocular clinical studies ongoing. We have a rare disease franchise, which is the CNS programs and also a program with a lot of interest in the Duchenne space. So about 350 people. We have our own in-house manufacturing in Rockville, Maryland. And yes, it's been a real busy summer for us with our first BLA filing. It's an ongoing process.

Excellent, maybe let's start with RGX-202, the gene therapy for DMD that you mentioned. Can you really talk about the construct, the vector and how it might be different from other gene therapies in this space?

Sure. Yes. If I think back to when we first conceived the programs probably 4 years ago or so, we really chose from the very beginning to focus on differentiation. So that started with Olivier Danos, our Chief Science Officer, designing a construct that included the C-terminus, which is even in an FDA Ad Comm you heard them speak about that making microdystrophin more like full-length natural dystrophin. So that was the initial premise. But then along the way, a couple of other important aspects to the development program appeared. One was difficulty in manufacturing. So the ability to make high-purity vector, which we do now, we're at 80% full casted with a high-yielding process in the same facility I mentioned earlier. But the other piece of the puzzle that I think has come together for us is how to safely deliver high-dose AAV. And Steve can certainly reflect on that. But we have a unique immune suppression regimen that we started with from the onset of the program, and so far, we've seen a really positive safety profile associated with it. And I think most importantly for patients, good functional outcomes associated with that.

Okay. Great. So maybe just a little bit of a primer on the data that you've shown so far. What have we seen, like you said, in terms of safety and what are we not seeing dystrophin expression, functional changes? How can you frame the 202 program versus the commercial program?

Steve.

I think the concept that Curran said on of the differentiation right from the get-go of how we constructed the molecule, how our manufacturing, we have the highest purity in the field and the preclinical data that we have as well as the immune regimen that we've applied, what we're seeing is that all translate into differentiation in the clinic. So that's in terms of all 3 key factors that you raised. So safety first. A combination of all these factors, we're seeing no AEs of special interest, and that includes no evidence of liver injury and also no complement-mediated type side effects like thrombocytopenia. So this is exactly what we want to see on the safety side and this is allowing us to get to an optimal dose based on what we saw preclinically. And that's really what patients, patients' families and doctors want is their best chance at gene therapy given they just have 1 shot at it. And so on the efficacy side, microdystrophin, of course, is our accelerated approval endpoint. We're seeing very robust microdystrophin levels and I think what is really grabbing people's attention is we're even seeing that in the 8- and older age group that traditionally, that's just not been seen and you talked about translation, the biggest 1 is what do you see also in terms of how these boys are doing over time. So we've shown dose level 1 and our pivotal dose level to one-year data where we're seeing these boys do better than what you would anticipate without treatment by comparing to very carefully matched external controls. And we're seeing that across the board on these patients. So it really gives us a lot of enthusiasm and excitement, the overall risk-benefit ratio that we're seeing. And I think that's a key part of why our enrollment is going great. We're accelerating. We're now targeting completion of enrollment in the pivotal in October. So exciting times on the program.

Okay. That's great. And maybe just a follow-up to that, a question we get is just, I guess, the size of the program versus Elevidys at this point, right? At what point or are we already there where you can gain comfort in the immunosuppression regimen translating to a superior safety profile.

Sure. I think 1 of the aspects is you have to look at the mechanism of different safety issues and look at your overall evidence and whether you're targeting -- inhibiting some of those safety issues. So I think one aspect is you obviously have to look at percents and ratios and look at denominators. And I think this is where, if we go back in time and we look at the approved agent and what's in the label that it's been known that there is a risk of liver injury in upwards of 40% of patients. So that you would have more severe cases is not illogical, unfortunately. And this is one of the reasons we have sirolimus in our regimen, but also why we wanted to have as pure a product as possible in some of the other construct improvements that we made. We went with this approach not based on any data we had from our program. It really stemmed from the fact that we've been pioneers in this space for over a decade based on not only our programs, but others that have been licensed from us. So we understand the different risks that may exist with different vectors, et cetera. And really comes down to overall risk benefit where our view is the benefits maximizing those by being able to get to the dose that you should get to treat these boys and doing that safely. And if you can do that with relatively short onetime immune regimen modulation, that's a good trade-off. And we're seeing that borne out in the space.

Yes. So maybe kind of the next area of focus tends to be regulatory and commercial, right? So I think maybe we could dive into what you've learned from the commercial product that will inform how you're thinking about regulatory and commercial. So maybe the first question is, have you gotten any indication that FDA stands on the accelerated path in DMD may have changed?

Yes. I don't think we've seen any indications that the path has changed. But I think going back to the original assumptions we made from the very beginning of when we submitted our pivotal protocol to FDA was we intended from the beginning to include functional data as part of the review package for FDA. And so while the primary endpoint is based on microdystrophin that will be accompanied with significant functional data as well to support the correlation is what they were looking for. I think that still stands today. We're right in the middle with our Hunter program of an accelerated approval process and feel really good about real recent interactions that we've had with FDA on that program. Not seeing sort of any changes to the accelerated approval pathway that's proposed for that program. So I think we feel like we're on the right path. And our goal right now is to execute against it as quickly as possible.

Okay. And then if we're thinking about a potential launch in call it the 2027 time frame, how are you thinking about commercial opportunity now versus how you were thinking about it maybe a year ago. Kind of what are the moving pieces that are informing how you're thinking about potential commercial opportunity here?

Yes. We think the opportunity continues to grow in terms of -- if I go back even 2 to 3 years ago, thinking we might be third or fourth to market. Now we're well positioned to be second to market. The prevalent population is larger than only 6 months ago that we were thinking about because of some of the delays and ups and downs of the commercial product. And so I think we feel super optimistic to the extent that we're also now beginning production of commercial production in the Rockville facility as part of our BLA-enabling production batches. So we're bullish that we can file next year and have a favorable review for an approval in '27.

Okay. Great. And Steve you touched on enrollment. So it sounds like you've kind of narrowed in on when enrollment should be complete. Have you seen changes in whether it's from the clinician or patient or patient family side of demand for enrollment in the trial. Any color you can give around just kind of general demand for a next-gen or a second gene therapy in this space?

Yes. We have really close relationships with groups that you are familiar with PPMD, CureDuchenne. And we see nothing but positive interest, both in gene therapy and in our programs. So I think the real test of that is, I think, back to enrollment. Are people interested in the studies? Are we getting a lot of applications to be involved in the studies? Are sites aggressively expanding to accommodate our program and their sites? And Steve, you might want to comment. But generally speaking, the interest has never been higher, and that's what we're leveraging as we pulled forward our completion date for pivotal.

Yes. I think we, of course, get a ground level view, but also thought leaders and the patient advocacy groups that Curran referred to, where we really have a real-time sense of this. And I think the concept of next-generation potential best-in-class is really resonating, both on not just the safety, but the efficacy standpoint. So it really comes down to having some functional data to really tie everything together, like the microdystrophin, the functional data, including in older boys. So I think it's that constellation that is allowing us to be differentiated, the more that's learned in this space.

Okay. That makes sense. And maybe just last 1 that we get from time to time. You touched on sirolimus as being a component of your immunomodulation measurement. I think hearing that the commercial product has proposed adding it to their immune modulation regimen. It seems like there's been some pushback in various corners of the market or various corners of academia, I guess, does anything surprise you about people reacting that way? Has it ever been an issue in your experience that that's a component of your regimen?

It's not been an issue from a clinical standpoint or looking forward, thinking about commercial potential, looking at reimbursement in the surveys that we've done. I think it does all come back to this risk benefit where the doctor has really got to think about that, especially given what's been seen with other programs. So I think the balance is still very much in our favor. If anything, more so, the more time that goes by and as we see what happens in the field.

Okay. Maybe we'll pause 202 there for now and move on 121 for Hunter syndrome. So maybe first, just can you remind us of the agreement you have with Nippon Shinyaku, the upfront modernization and what remains outstanding. I think there's a little bit of confusion about, I guess, how leveraged your narrative is to 121 versus what you've capitalized on so far?

Yes, I could definitely chime in on that. So NS Pharma is our partner of choice for RGX-121. So upon regulatory approval, they will be commercializing for us in the U.S. as well as Asia. The only territory that's not covered at this moment in time is Europe and basically anything outside of Asia and the U.S. I think that's 1 thing that we want to make clear. We do have meaningful double-digit royalties associated with this agreement. And as you can only kind of reminded us how we have monetized that aspect. So we do have an agreement with HCR. So HCR basically has a bond in place. So once the bond is paid off via these royalty streams, that -- the royalty stream reverts back to us. So that's kind of the genesis of that and part of the reason is to use these proceeds to really accelerate our pipeline, that be 202, 314 and so forth.

Okay. Super helpful. And I think as most people know, your PDUFA was pushed back by 3 months in the interest of getting 12-month data to FDA, which you shared, I believe last week. So what's your sense of what drove the request? And I guess, just as importantly, what did not drive the request? And how do you feel about the data you showed us last week in terms of fulfilling that request?

I'll let Steve speak to the data, but it looks absolutely exciting. We love what we see in the 1-year data. The genesis of the request from FDA was we filed the modules in a rolling BLA fashion. And the last module was the clinical module, which contains 6 months' worth of clinical data. And I think when the reviewers looked at it, they simply saw that, well, these patients should be out 12 months, can we see that data, and we accommodated that request very quickly. Having said that, that can generate a major amendment and that allows for a 3-month delay in the data. We felt it was really important to the questions of why to get the data out as quickly as possible that was supplied to FDA. And Steve can comment a little bit on how supportive it is to the D2S6 biomarker approach.

And we were excited to have this data presented on podium at ICIEM. And in short, with a year follow-up, we're seeing very consistent positive results, akin to what we saw at 6 months. So we think it only strengthens the package perhaps in part because of that. After submission, we've spoken with the FDA and there's no indication in meeting any other cuts. So PDUFA extension, not surprising given they wanted another data cut, but everything looks on track. Outside of that, we've had really great advancement on the BLA review process with product license inspection, no observations, various other FDA inspections like site inspections and other aspects of REGENXBIO that have had no observations at all, which also, by the way, bodes well for 202 to have licensed facility.

Got it. And you've got several gene therapy programs going on. I guess in your interaction that -- in your interactions that were around the PDUFA delay, do you get any sense that there might be a broader trend of doing incremental due diligence on whether it's gene therapy products or just generally products under review at CBER? Or did it feel like this was a very 121 specific issue?

I think it's a general trend. In fact, if you think about the review teams, they would have just seen an MPS III program that had almost 3 years' worth of data. So I didn't see the request for a 12-month data to be out of line with any other program.

Okay. That's helpful. Just thinking about the commercial dynamics in Hunter syndrome, if you get the approval, how quickly could we see reimbursement and patients treated? What should we be ready for if I so kind of comes through on the updated time line?

It's perfect timing. We just wrapped up our second campaign for production of commercial quantities in Rockville. So we're really well poised. If you think about the delay, it would have been very difficult for us and NS Pharma to launch in mid-November or early December. So really, the delay in PDUFA doesn't have a major impact on launch plans. So we've already had preliminary payer discussions ahead of this NS Pharma did that as part of their diligence on the program as well and feels really good about prospects there. So as we lean into a potential approval early next year, we'll be ready to go.

Okay. Great. And then moving last but not least, to 314 for retinal diseases. So that program is partnered with AbbVie. So starting with the suprachoroidal DR program, you shared some changes in the go-forward development plan last month. Can you take us through the before and after and the reasons for the changes there?

Sure. Yes. So for DR, we showed at last earnings, updated data for dose level 3, which came in really at sort of Q1 of this year quite late that showed really encouraging 2-step improvement, which was not our base thesis for the program. So that really compelling data had us sort of restructure the approach to pivotal where we have a IIb run into a pivotal program. Part of that was we never contemplated the IIb run into a pivotal program in the original contract. So AbbVie actually accommodated us in the milestone structure to structure first patient in an IIb plus the first patient in to basically if you will, pay ahead on the study. So we're really happy with the flexibility they showed. And I think it really underscores their interest in moving the program forward. And that's been a question that we've been answering for 9 to 12 months. Now that question has been answered. They're ready to go. We're ready to go. Steve and the team have really strong alignment with the team on the design of the study. And we think -- we know that the SR study has taken a long time to recruit. We're excited, we'll talk about that, that it's imminently will be fully recruited. But we think DR will be recruited extremely quickly because the in-office procedure, the unmet need is incredible. So we're excited to move it forward. And I don't know if you have anything to add on DR.

Yes. I think the unmet need there is really only capable with an in-office onetime treatment because you need repeat injection no matter how infrequent it is to stave off disease advancement for the -- basically indefinitely for the rest of your life. That's a very different proposition for these DR patients who have not yet developed the blinding complications. So I think that's a big component of why we and AbbVie are so excited on top of already hitting the type of end points in Phase II that you would want to hit in pivotal.

What do you hear from clinicians on just suprachoroidal delivery here, kind of puts and takes for them, they are not necessarily all that used to, but I think there are pros and cons to various delivery mechanisms here.

Yes, after all, these are surgeons, so they're used to very complicated surgical procedures and something like this, we've seen is extremely scalable. And we have the benefit of seeing that in our own hands with starting with a number of sites, expanding that. And the groundwork in some respects, has been paid for us by Bausch as this same exact microinjector has -- is being used with a separate approved steroid for a different indication. But nevertheless, there's been no issues as far as being able to administer this in office not surprisingly, frankly.

Okay. Got it. And then can you just remind us, time lines for the Phase IIb/III to be initiated what we should be thinking about in terms of updates around the program.

We're guiding to dosing first patient first half of next year.

Okay. Great. And then you also have the Phase III program for retinal 314 and wet AMD ongoing. There are several other Phase III wet AMD trials that have gotten underway in the past year. Have you noticed any changes in pace of enrollment? Can you remind us what time lines are for sharing data on this one.

Yes. So we're very close, I would say, imminently close to completing enrollment for both studies. I'd say on enrollment trends, one of the things to remember on ASCENT is the size of the study was increased pretty dramatically through the partnership with AbbVie. And one of the rationale behind that was to globalize the program. And so one of the areas we saw or have seen over the last few months really strong enrollment is out of Europe, which I think is quite interesting around future commercial potential. So we definitely have seen a strong finish or near finish for the program, and we're really excited because that points us towards top line data next year.

Okay. Great. And then the suprachoroidal route of administration in AMD and DME. Can you remind us where we are in terms of expected updates for those patient cohorts? And how you're thinking about in wet AMD specifically subretinal versus suprachoroidal?

Sure. So we have the ongoing evaluations in our Phase II study with DME. We've completed enrollment of that cohort and we have enrollment ongoing for evaluation of wet AMD with dose level 4. We haven't given any guidance on when we'd have an next readout, but it's certainly encouraging that for DME, we already have that readout. As far as how these different routes may interplay, I think, we have the reality of how far advanced the subretinal indication is and the potential for blockbuster status here even with whatever proportion of that large pie that you can get. And certainly, the fact that AbbVie as well is moving ahead aggressively on both the subretinal and suprachoroidal, I think, gives a high degree of validation to the concept of really advancing on both these fronts.

Okay. And then maybe last, I guess just between these 3 indications, how do you think about level of unmet need, right? Wet AMD, obviously, there's kind of a more robust standard of care with durability of effect being extended in recent years. So if you had to talk about wet AMD versus DME versus the DR, how would you kind of force rank unmet need? Or are the addressable markets larger for all 3 of these that it just makes sense to keep going on across all fronts?

Yes, I think it's reasonable to expect that for wet AMD, we expect the market to potentially double in the next 5 or so years. And because of that, retina centers are overwhelmed and they're looking for options that are in line with subretinal delivery that can deal with that increased capacity need. I think certainly, DR in itself is because of the approved therapies not being utilized, the unmet need there is significant and I think it's a perfect fit for gene therapy. So we like all of them. And I think that's why you see, I think, AbbVie doubling down and expanding what we're doing in terms of the clinical development.

Got it. That makes sense. And maybe just to wrap up the company-specific questions. You've been diligent in managing your cash balance. I think probably more on top of it than many companies your size. So can you remind us of the cash runway guidance? And what are the levers there that might extend your cash runway further, maybe focus on optionality for additional nondilutive financings on what you've done thus far.

Yes, absolutely. Based on last quarter, we had more than $360 million on our balance sheet right now. Going forward, that will get us into the early parts of 2027. We're well past these catalytic events at the company and perhaps even into commercialization here. Beyond that, we could monetize our PRV, which was associated with 121 even that alone, based on today's market press for PRV that could get as steep into 2027, if not even nudging on 2028. And these other levers, as you kind of mentioned, some of these programs have approval milestones. We have not publicly disclosed what those absolute dollar signs are. And on top of that, too, even for Zolgensma IP that could also bring in additional cash as well too, through the HCR agreement. So we're well poised to actually launch these products not just to get to the clinical data.

Okay. Great. And now I'm just going to move into kind of a mini survey that we're asking all the biotech companies at the conference here. Biotech does seem to be more exposed to external and macro factors of late. So we're asking all of our management teams kind of 3 questions. First is on China and the rise in biotech innovation there, how are you thinking about competitive position? Will this influence your R&D or business development strategy?

Yes. I don't think for gene therapy, we see it as a near-term threat. I think certainly, biologics or small molecules, you could make that case. So I think, in our view, the investment we've made in manufacturing, investments we've made in clinical development, immune suppression, those will keep us ahead. But I'm part of a larger group at Alliance for Regenerative Medicine that's helping protect innovation as a team. We are approaching it that way.

Okay. Great. And the next topic is AI. Anything you'd point to in terms of leveraging AI internally or thinking about the potential for AI to disrupt business models within biotech?

I don't think there's anything I open that doesn't start with AI anymore. But generally speaking, we certainly use AI as part of things like capsid discovery, where we're trying to find new novel capsids for muscle or ocular indications. There's a lot of interesting work now going on in clinical development as well, trying to use AI to identify high-producing sites for clinical studies is something that we're interested in as well. There's a lot of different areas to continue to explore as this evolves. We're excited about it.

Okay. Great. And then lastly, with all you guys have going on in terms of FDA interaction and just where you're headquartered maybe you'll have unique insight into this one. But what's been most impactful to your business on the regulatory side. Are there changes that FDA you'd highlight that have impacted you or not? How are you thinking about pricing tariffs? Or is there something else that we haven't listed just from kind of the regulatory side of things or maybe keeping you up at night?

We did a risk analysis on tariffs, and it's really a very minor impact to our business given the nature of it. I think on FDA, our -- we've continued to say it's very much business as normal with our interactions with FDA, the review team with ongoing BLA process. But there's no doubt, we're looking to seek new relationships with leadership at FDA. There's been a lot of change there. And we're looking at that as a positive option. We hear a lot of great things from Makary and Prasad about rare disease development, and we're all ears, and we want to help them move that forward.

Okay. Super helpful. Let me see -- we have a few minutes left, if there are any questions in the room. We do have couple of mics. Okay. No. All right. With that, thank you, again the REGENX team for being here. We appreciate it.

Thanks for having us.