REGENXBIO Inc. (RGNX) Earnings Call Transcript & Summary

Everyone, welcome back to the next session of this first morning of the Global Healthcare Conference here in Miami. I'm still Mani Foroohar, Senior Analyst at Genetic Medicines. I have Curran Simpson joining us as CEO of REGENXBIO. And Curran, there's absolutely nothing going on in the space. It's very boring. No news whatsoever, obviously.

Yes, I made the mistake a couple of months ago about saying we were the boring company. All we do is execute to plan and put up data when we say we will. And a lot has changed in the last couple of months, and this is a huge year for us. We've got some big catalysts coming up, really excited to take those forward.

That is awesome. I think the universe has a sense of humor when we start saying things, it listens. Let's start with the most topical news, which is -- where are we in terms of your FDA conversations? Who your FDA counterparties are in that conversation -- DMD specifically. And does the recent announced change in leadership at CBER influence that and how?

Yes. I think if I kind of work through the 202 program and planned regulatory interactions, if I work from the back end of that, we're planning a pre-BLA meeting mid this year, which will be, I think, primarily a discussion around what we've thought about on the program for years, which is the relationship between microdystrophin and functional benefit. And I think this is where our initial data looks extremely promising. So that's the pre-BLA meeting, and that's the last step before we initiate filing of the BLA. Ahead of that, we have an interaction with FDA. One of the things that's changed in the last, I'd say, 6 months or so is our access to data, natural history data, new ways to compare the data using CTAP method, for example, which we've recently published. And so we have a targeted meeting with FDA to talk through that because some of that is, I would call, in addition to what we already prospectively put in our protocol in 2024. So we've got a fuller data set and more ways to measure functional benefit versus natural history. And we want to make sure going into the pre-BLA meeting, that's as aligned as it can be. And -- so that's the sequence of interaction with FDA. How does the news of last week change that? I think there was a general worry around accelerated approval in terms of the track record. I don't have to speak to any instance of a program, but I think people were getting concerned about whether the AA pathway was still open, which is what we intend to file under. And I think that what we're looking for in this change is that what we hear from Dr. McCary around accelerated approval is uniformly adopted through the agency and hopefully applied to our program should our data warrant it. So I think that's what we're looking forward to. I think what we can do in that is continue to move the program forward, dose more patients, build our database of functional data. And what we did after we recruited the pivotal in October was we continued to add patients to the program as part of the confirmatory study. So at the time of filing, we'll have roughly 50 patients' worth of safety exposures at that point, which I think only puts us in a better position for a positive discussion with FDA.

Let's talk a little bit about manufacturing as part of this process, both as part of the data package where it has a much larger role than it does in traditional small molecule antibodies. And then -- we'll start with that, and then I'll go on to the commercial side. I don't want to turn this into a 20-part question.

Sure. Yes, manufacturing, we invested 10 years ago, early on in process development and analytical with people that were experienced in biologics, new large-scale production. And we applied a lot of the principles to large-scale biologics production to AAV production. And so interestingly, that came to fruition in terms of all those early process development initiatives translating right into the Duchenne program. So we have very high yields with very high purity. We didn't have to give up one for the other. And so 80% full capsid in our final product profile. I think interestingly, when you think about Duchenne and you think about clinical development, that product profile hasn't changed throughout, from the first patient we dosed into the last patient we've dosed in the pivotal study, the product profiles remain the same, which helps a lot with interpreting the clinical results. And then in terms of scale up, we can produce 2,500 doses per year in our Rockville plant. We have full control of manufacturing, both on the bulk process and fill/finish. And having that control is enabling us now to build launch quantities throughout this year for potential approval in 2027. And we expect the cost of goods to be very attractive there.

So let's talk about the commercial dynamic. Obviously, in DME has been volatile. Some of that has been because of safety signals, label changes, label [indiscernible] changes for existing commercial competitor. Should we think about pricing as in line with existing commercial competitor? Or is that asset so different in terms of profile that that's not really an anchor? I was thinking about [indiscernible], obviously.

Yes. I think it's early days. We haven't really worked through on our side, the pricing strategy. But I think given that we're seeing the safety profile that we're seeing, you'll see more data this week at MDA, and then you'll see a larger data set with our top line data in early Q2. Given the safety profile and the early functional benefit, I think to expect that we would be in line with the commercial product is a reasonable starting point.

Great. And you talked a little bit, I guess, on the manufacturing side and what the margin profile means. Talk to us about how -- presuming that we see the data to MDA that's reflective of what you expect and the pivotal data shows functional benefit, the safety profile that we've seen thus far, et cetera, is filed and launched on time line contemplating the accelerated approval conversations that we've had. How much build-out on the OpEx side would you need between now and that launch to support commercialization?

Well, I think the starting point is all the capital that's required to meet commercial demand is already in place. So that's part of our ongoing burn rate, if you will, is the manufacturing is already in place and ready to go. So the cost of building launch inventory, as an example, is really the variable cost of production. And given the high yields that we experience, then the cost to be ready at launch with hundreds of doses is relatively small compared to what you've seen previously in gene therapy. So we feel like we're in a great position to really make a huge dent. The prevalent market is larger than it was 2 years ago based on the dosing levels that have occurred with the commercial product. And so the opportunity has actually gotten larger in our thinking. And our capability to meet that has, because of the investments we've made, put us right on the edge of being able to quickly take a significant position in the market.

Let's talk about the global opportunity. So time line to accessing OUS markets, how you think about infrastructure, partnership, that obviously is a meaningful pool of patients, [indiscernible] commercial competitor has made, I think, a partnership approach. Like how do you think strategically about that?

Yes. I think this is where being a fast follower helps tremendously. And what we see is from an accelerated approval, you're able to penetrate rest of world pretty quickly. You see, I think, strong sales from Roche in areas where not many have thought about it. I think Zolgensma paved the way for that in some ways. And then Elevidys has done well ex U.S. So our view would be to access markets of the AA approval internationally under named patient sales, for example, that could do that. We also have plans longer term to run a more standard placebo-controlled study because we know for some countries, EMEA, that's really a requirement that hasn't changed. If it does, we'll take advantage of it, but I don't see it changing near term. So I think it's -- and that's where I think having a partner in place ex U.S. would make a lot of sense to help do that. We don't have, obviously, a sales force in Europe to leverage whereas a potential partner might.

We'll always talk about partnership and what that means for your financial dynamics. Let's touch base on your partner on the ophthalmology side. We're expecting a $100 million milestone from them this year from Allergan. [indiscernible] you want to think about it for early dosing in diabetic eye disease. That's triggered by the first patient dosed. Talk to us a little bit about what the further path of cash flows from that partnership looks like and how you do or don't bake that into the guidance you gave at the recent earnings call in terms of cash runway?

Okay. Yes. So the cost of development is in our cash runway for both the remaining spend on the subretinal program and the starting spend, if you will, on diabetic retinopathy. And that was why the original milestone for $200 million with AbbVie was devised as first patient dosed in a pivotal. We didn't contemplate a IIb study. So when that became an element of the development plan where there's an interim read and then we would go quickly into a pivotal off that data. We redid the milestones so that we get $100 million off dosing first patient in the Phase IIb study, and that helps dramatically with the spend on diabetic retinopathy. So in a way, the milestones are paying for our portion of the study going out. We've pointed to having cash going into 2027 that does not include this milestone. So that will be supportive along the way. And then I think the other really significant event that will drive value for us is in the fall when we unblind the subretinal studies with AbbVie, two 600-plus patient studies, the largest gene therapy studies ever run. And we really, really like the product profile that we see meeting our TPP, if you will, in subretinal. So safety looks great. The efficacy, we're out 4 years on some patients now. So I think that's a little bit of an untapped value add for the company that, quite frankly, has been quiet because we've been enrolling for a long time, but that time has ended, and we're looking forward to the top line data. We feel like it has a high probability of success.

While less of a focus than DMD and the debates on the regulatory and manufacturing safety debates on MPS, the commercial side of the story in ophthalmology has been one where investors have been more reticent to give credit. It's a big market. We haven't seen a gene therapy work there. The existing standard of care is, at least for wet AMD, pretty effective if applied as on the label. It is very literally a needle in the eye frequently. So there are some challenges for the patients to put it mildly. Talk to us how you and your partners think about the commercial opportunity for subretinal, suprachoroidal.

Yes. Subretinal, I'll start there. I think a couple of years ago, people were saying for subretinal that the standard of care was formidable and that an approach to extend out and in the case of gene therapy, maybe indefinitely the treatment would barely make a dent in that market. And now you've seen EYLEA HD, et cetera, come in and take significant portions. And any of the new entries to wet AMD extending out the treatment being adopted. So gene therapy to me is the next big step in that. It's not going out 4 months, 6 months, it's going out 3 years, potentially more. So I think that on what we hear from KOLs, if you keep in mind, the wet AMD business is expected to grow to over $10 billion in the next few years, there is a significant place for the subretinal approach. And interestingly, I think differentiating our program for patients who are really hard to treat, people that have had monthly injections for years that are difficult to maintain, where if they become noncompliant, their vision deteriorates quickly. And we've treated patients like that when you look at our previous data. So I think put that all together and the fact that vitrectomies are common operations that are done by a retinal surgeon, it's not unrealistic to think of we could take 10% of the market. We could take 20% of the market if you consider fellow eye. That's a lot. There's no other gene therapy that has that kind of potential in ocular that's this close to an approval. So we feel great about that. I think diabetic retinopathy from the beginning, we knew that a subretinal approach would not be likely adopted by patients who already won't take Lucentis and so -- because they're asymptomatic, they don't see the need and the drive to have such a "severe treatment." That's where the suprachoroidal delivery of RGX-314 is incredibly attractive. It's an in-office treatment, one time. And we've got patients out now 2.5 years where we're seeing 2-step improvement on many of those patients. And I think people are now seeing DR as big of a potential opportunity, if not bigger than what we see in wet AMD because of the unmet need. So I think all of those together, we'll hear AbbVie, I think, speaking about our program a lot more now that we're in late stage. They have responsibility for the filing for the subretinal program once it reads out, and they're very quick to -- from data to filing, they've got a powerhouse in terms of regulatory and clinical support there.

I'm going to pivot over to MPS if I may. Another kind of regulatory conversation with the nuance and obviously, 2 different programs. Presumably, you're actively in conversation with a Japanese partner. Talk to us about the state of that conversation with the FDA, when we should expect to hear more? And what are the underlying issues to resolve based on what we know thus far, which is maybe incomplete?

Yes. So I think there's 2 elements to it. There's the clinical hold that occurred on 111 and 121 and then there's the CRL that was issued on 121. The clinical hold, we've received the hold letter. And I think everything that we were already proactively working on is in the letter. So we feel that, that is a resolvable issue within months, not years. There's no new preclinical work that's been asked for, nothing of that nature. So we're following up on that. So I would expect to see us working towards getting off hold first, and then we will have the Type A meeting post that to address the CRL. I think one element of the 121 discussion, there were 2, I think, main issues. One is the biomarker. So D2S6 is a little different in perception to heparan sulfate. It's less published in terms of people's awareness of that. But D2S6 is just a subunit of heparan sulfate. So to the extent that other programs that are dependent on heparan sulfate as a biomarker get approved, I think that precedent is really, really important for 121 because we've measured in addition to D2S6, heparan sulfate in the same data set that we've already shown and feel really confident that we have a really meaningful effect on reducing it. And then the second part was, did we dose patients who were neuronopathic in the study. And we have Dr. Joe Muenzer, who's world expert on MPS disease, has independently looked at our data and confirmed that the patients we treated were -- because of their mutation status and other baseline characteristics, clearly neuronopathic patients. So I think we're just looking forward to a Type A meeting where we can get into that in a lot more depth with FDA. We're willing to pivot to heparan sulfate, if that's what it takes to obtain an approval. Bottom line is we love our data. We haven't had any outside group that's reviewed our data, say, this is not compelling or patients wouldn't benefit from this. And I think we've had really strong support from the patient advocacy groups in that. So by all -- as it relates to NS Pharma, we've confirmed to them that we're convinced that we can manage this to an approval.

So I want to dig in on that dynamic around neuropathic patients. So the review of your patients to find them more neuronopathic is one side of the date. There will be those more conservative, skeptical, bearish, whatever phrase you want to use, investors who will argue, well, isn't the debate more how you determine if patients out in the world are neuronopathic and who to give it to as opposed to are your patients in the study qualified. How do you answer that conversation around, well, the real debate is how do we find out who is neuronopathic in the community?

Yes. I think that -- yes, the criteria can be pretty straightforward. Patients of newborn screening will be diagnosed with MPS disease. That doesn't necessarily mean they're neuronopathic. So the second level of diagnosis is their mutation status. Some mutations are clearly -- sort of 66% or more of patients diagnosed with MPS disease are neuronopathic from all the available literature. And that next layer of how to get to that is a few things. If they've had a sibling that's neuronopathic, they will be neuronopathic. If they have a mutation that is known to cause a neuronopathic decline, that will qualify. And then the last one is if they've actually started to deviate from normal cognitive development, and this will be a discussion with FDA, by x units, make up a number, then clearly, they're on a decline phase. That one, I think, you should be pretty liberal with how early you intervene because you can't reverse the damage. So we've always felt that long term, this has to be something that's dosed early on if you want to fully prevent the worsening of the disease. But I think there are very clear criteria that we could agree with FDA on, and we had this discussion with them that we'll continue to have it with the Type A meeting as well. But I think it's something we can sort out.

And hopping back from there to the related balance sheet question. Can you remind us which of the programs that you're currently in discussion with the FDA or will be filing in the next year would be eligible for PRV?

In terms of the PRV, the interesting thing on 121 is originally, there was a September deadline. So if we were not approved ahead of that, the PRV would have expired, but that legislation was renewed. So 121 will remain eligible for a PRV. 111 would be eligible for a PRV, but we haven't started the pivotal. And then actually, the 202 program as well will be eligible. So 3 of them.

And obviously, there's a debate that now that time limitation is lifted, there's an open discussion in the market around what is the PRV worth? Obviously, we can't put a number on it. But when you think about where the demand for these assets is, I'm not sure if you guys have already started those conversations or tested those waters. I would presume you have given what we thought would be the timing of the PRV for MPS. Talk about how you think about those assets as a source of financing that is nondilutive to ownership.

Yes. I think they're incredibly valuable. And I think particularly in the risk/reward of developing a rare disease, they are an important factor. So we were pleased to see the legislation renewed. There has been a PRV sale post renewal that is in the $200 million range. So people might have speculated that, that was going to drop to $125 million to $150 million, and it hasn't. And I think part of it is -- it's like old baseball cards. There's a scarcity of PRVs available. Over time, that will probably normalize. And so I would imagine the pricing of a PRV will normalize over time as well. But it's still significant value to a company like ours. Every PRV would be at least half a year's worth of burn. So that's why we're wanting to continue to develop in this area, mostly because we care about the patients and everything they've done for us over the years being part of our studies, but as well, you have to pay the bills. And I think these are a very nondilutive strong way of doing so.

I want to go from that sort of broadly handling of the balance sheet side of the house to the operational and strategic side of the conversation. Obviously, you guys are tremendously focused on a near-term potential launch in DMD. Your partner, AbbVie Allergan are obviously quite busy on the opto side. MPS is TBD, although as far as partner there. How do you think about the pipeline earlier in DMD? And are there like opportunities for expansion? Is that even the right strategy? Or is the company so fully busy across all these programs does it make sense? Like how do you think about what the right answer is? Because I'm presuming success over the course of all these programs in the next couple of years?

Yes. I think that's a great question. 95% of our spend is targeted towards these late-stage programs. But the 5% that isn't is incredibly productive. We have new capsid technology that we're developing, liver detargeting capsids and also capsids, which are customized for suprachoroidal administration. And we are doing preclinical work in dry AMD as well using that new capsid. So I think we'll be in a good position once people hopefully see positive catalysts on these main programs to say what's next? I think we'll have good answers for what's next.

Well, we'll be looking forward to that. We're winding down to the end of our time. Thank you, and I look forward to continuing the conversation.

All right. Thanks for having us.