Rocket Pharmaceuticals, Inc. (RCKT) Earnings Call Transcript & Summary

Good afternoon. My name is Ankit Agarwal. I'm an associate with the Investment Banking Group at JPMorgan. It's a pleasure to have you all guys here this afternoon. Our next guest is Mr. Gaurav Shah, CEO and President of Rocket Pharmaceuticals.

Thank you, Ankit. Thank you, JPMorgan. This is the first time that we're presenting and hopefully for many years to come. So friends, welcome to the 2020s. Like the 1920s, which is when penicillin and insulin made a lot of headway, this decade may be anticipated to be roaring again with regard to curative medical innovations. And I'm super happy that Rocket is a part of the story of this decade. So 3 key take-homes. There's always 3, right? Despite being a relatively young company, we did a reverse merge 2 years ago. We have largely been under the radar. We do now have 4 gene therapies in the clinic. Two have already achieved proof of concept, but each one of them is first, best and only in class. And these are across 2 platforms, right? So 4 clinical assets across 2 platforms, that's point #1 to take away. Secondly, we established proof of concept in these 2 indications, Fanconi Anemia and LAD-I, at the end of last year. This is proof of concept for the whole lenti platform. These were -- these patients were treated with Process B, which is a commercial-ready platform. So it's validated now as a process that we can apply to all lenti indications. That's point #2. Thirdly, what is this year about? There could be some major inflection points this year because we haven't even started treating and showing results in our 2 largest indications. One is Danon disease, which is 15,000 to 30,000 patients in the U.S. plus EU. It's an AAV program. And the second is pyruvate kinase deficiency, or PKD. Data from both of these could be very promising, potentially represent proof of concept, and we anticipate these by the end of the year. Over the coming years, we think that many gene therapy products could hit the market as a result of Rocket's efforts. So thank you for listening. I'll walk us through the slides. Some of these will be dedicated toward general messaging and some are going to be very specific and specialist-oriented. So the 2 platforms that we have are in vivo AAV therapy, this is what we use for Danon disease; and ex vivo lentiviral-based gene therapy like for Fanconi Anemia and PKD. The pipeline is shown here. There are 5 programs now in development, 4 in the clinic: Danon disease, like I said. The second is Fanconi Anemia. This is the furthest along clinical asset in the ex vivo lenti space. Leukocyte Adhesion Deficiency, or LAD-I, where we also showed proof of concept last year; pyruvate kinase deficiency, or PKD, which is now in the clinic, and we're screening patients. And then finally, osteopetrosis, which enters clinic this year. As you can see, 4 of these are in Phase I. In fact, Fanconi Anemia, the second one is now in a pivotal registration trial. So what is Fanconi Anemia? Fanconi Anemia is a bone marrow-derived disorder in which DNA repair mechanism in patients is fundamentally damaged. So these patients cannot repair their DNA when it's insulted by toxic environmental events. How does this affect the body? Primarily in the bone marrow because stem cells in the bone marrow are required to produce progeny cells, red cells, white cells, platelets. And without stem cells in the bone marrow that are functional, eventually patients go into bone marrow failure, unless they have a chance at an allogeneic curative bone marrow transplant. The problem with bone marrow transplant, though, is that it inexorably increases the risk of head and neck cancer. In fact, if you have a bone marrow transplant and have GVHD, the risk of head and neck cancer can go up by as much as 30-fold. So our approach in Fanconi has been what I think has moved the science needle as well as the pipeline. We've been able to take advantage of something called somatic mosaicism, a single cell in a Fanconi patient that has reverted to normal has the potential to repopulate the entire bone marrow even without any conditioning or any cytotoxic chemotherapy. This is different from other bone marrow-derived disorders. And as you can see here on the bottom left, Slide #8, a patient who had a single cell revert to normal over the course of 5 to 10 years normalizes their blood counts and their bone marrow. These are patients called somatic mosaic patients. And they're a sort of a natural approach to gene therapy, or nature's gene therapy, you can say. This has led to the proposition by which we've developed the Fanconi program at Rocket, which is that you can maybe get engraftment without any conditioning whatsoever. This is the thesis. And in fact, it's come true. 4 out of 4 patients treated at a Spanish site called CIEMAT, it's like the NIH of Spain, have shown progressive engraftment of their peripheral mononuclear cells with gene-corrected versions of the cell despite 0 conditioning. So in most bone marrow-derived diseases like beta thalassemia and the other 8 or 9 lenti-based programs that have achieved proof of concept, unlike those, for Fanconi, even though you start with the vector copy number and the peripheral blood of 0, you actually increase this copy number over time, as you can see here, with 0 conditioning. This is, again, as a result of the selective advantage that's present in Fanconi Anemia and not in any other disease. Now Fanconi Anemia is diagnosed by taking a sample of the bone marrow and exposing the stem cells in the bone marrow to an alkylating agents such as mitomycin C. When exposed to mitomycin C, a normal person's marrow will be highly resistant. So 60%, 70%, 80% of stem cells in a normal person will be resistant to alkylating agents. And in Fanconi patients, 0% of cells are resistant. So all 4 of these patients start at 0. And again, similar to the VCN increase you see in time peripherally, you can see that their bone marrow becomes increasingly resistant to mitomycin C. In fact, the first patient here, Patient 02, if you put that person's bone marrow side by side with a normal healthy person at year 2 and beyond, it would be almost impossible to differentiate. So this is basically no longer a Fanconi patient by the diagnostic test itself. So I will move now. So that was Process A that we developed at CIEMAT. Consider that a very reliable academic process, but not one that can pass regulatory testing and lead to drug approval over time. We've now made what we call a Process B. Go back here. Difference between Process B and Process A is a couple of key things. One is that we have a commercial-grade vector. Two is that we have enhanced the transduction process through improvements in culture media as well as transduction enhancers. And thirdly, we have improved the cell processing, the cell selection process itself. So now Process B, under which 2 patients were treated at Stanford earlier last year, has now been introduced into a global pivotal trial that's going to be taking place in both the U.S. and the EU. And under this trial, the vector copy numbers and the drug product that we're getting are higher by 2 to 3x versus Process A that we used to show the proof of concept that I just showed you earlier. So the VCNs in these patients are north of 2, as you can see in liquid culture in the bottom right on Slide 16. And at ASH, we presented early results from these 2 patients, and we showed that both of them had vector copy numbers, even though very early, only 4 months after treatment, that were reminiscent of the best patients treated at CIEMAT, which is the program I just showed in which the 1 patient has nearly normal bone marrow. So that was the proof of concept for Process B that validated a commercial process ready for regulatory submission under Rocket's IND. In these 2 patients, also we see stabilization of blood counts, if not improvements in blood counts, over the first 6 months. And this is important because we've achieved agreement with both FDA and EMA that a combination of mitomycin C resistance in the bone marrow, like I said, we achieved that in 4 out of 4 patients at CIEMAT and are now achieving it at Stanford, a combination of that end point, along with stabilization or improvement in blood counts, could be grounds for accelerated or conditional approval. So that was Process B. And again, the key conclusions there, we're able to get liquid culture VCNs that are better than all of the patients treated under Process A. We're also starting to engraft pretty markedly and are showing clinical stabilization, if not improvement, in the 2 patients treated so far. The first patient now has been treated with the phase -- under the Phase II banner of Fanconi Anemia. That patient was treated on Thanksgiving Day. This trial will enroll relatively rapidly in the coming months to support a BLA filing as early as 2 years from now. So that's our lead lenti program, Fanconi Anemia. Now to talk about the biggest market program that we have -- the biggest market opportunity, which is Danon disease. Danon disease is a multiorgan disease that is an issue because these patients have derangement of a protein called LAMP2. LAMP2 is required for autophagy. What is autophagy? Autophagy is the vacuum cleaner of our cells. LAMP2 is the on switch. So if you turn on the on switch, then the mitochondria and other organelles that build up naturally in all our cells are cleaned up. And without that LAMP2 on switch, this debris builds up. So you can see here in the second panel on Slide 28 in a preclinical model that in the knockout control, without LAMP2, the heart, liver and skeletal muscle build up a lot of vacuoles. And you can see no underlying architecture, no underlying design of heart and liver. Wild type on the far left, and you can see using an in vivo AAV9 approach, similar to that employed by AveXis for Zolgensma and others, even at a modest to moderate dose of 5E13 vector genomes per kilogram, you see complete resolution of histology or restoration of histology that continues in a dose-dependent fashion. This translates to improvements in protein expression, mRNA, survival and cardiac function. So based on these very exciting preclinical results, we initiated a trial in humans at UCSD. And this trial enrolled 3 patients in the low-dose cohort, followed by 3 patients in the high-dose cohort; 3 adults low dose, 3 adults high dose. We'll also start enrolling a pediatric population very soon. So the announcement I do want to make today with regard to the Danon trial, at ASH, we had shown and we had revealed that 2 patients were treated, we had no major safety concerns, the safety was manageable, and we did not need to use a drug called Soliris to control complement activation. Today, I'm happy to report that we've treated 3 patients. The 3 planned patients for the low-dose cohort have now been treated. We continue to have a manageable safety profile, and we have not needed to use Soliris to date. Like I said, Danon disease is the largest disease indication that we're looking at, 15,000 to 30,000 in the U.S. and EU. We are very confident with these numbers. And in fact, these are based on pathogenic variance of LAMP2, known Danon cases. However, there's also a group of patients who have variance of unknown significance, and many of those patients also have Danon and pass away of heart failure. So the number is conservatively 15,000 to 30,000, but could be much vaster than that. We'll uncover the gap between current estimates of Danon and true prevalence of Danon in the coming years with improvements in genetic testing and also exposition of family trees. In fact, I can just give you an anecdote here. There was -- one of the family members of a Danon patient -- the family knew that 2 of their children had Danon disease, both boys and both very sick. So they did testing on a lot of family members around the table. And it turns out that 14 known patients in that family were tested positive for Danon. In fact, a couple of them passed away of heart failure, and we wouldn't have known it was Danon unless we have done this genetic testing. So this is a disease that was relatively recently identified. The gene was discovered in 2000, and the gene was put together with the triad of disease in around 2008. So it's a new diagnosis, a new note -- a previously unknown and now known cause of heart failure. And I think in the coming years, you're going to hear a lot more about it, especially as we advance to potentially curative therapy for it. Now I move to Leukocyte Adhesion Deficiency, LAD-I. And while this is a relatively modest market, market size-wise, we think that there are 25 to 50 patients addressable with severe LAD-I. It's especially exciting for us because it might constitute our first regulatory approval. LAD-I is a disorder of neutrophils in which CD18, which is a protein on the surface of neutrophils, is not expressed or underexpressed. CD18 is required for neutrophils to get out of the blood and fight infection. Without CD18, these patients have recurrent infections. And in fact, if patients have less than 2% CD18, they -- most of them pass away, unfortunately, by the age of 2. So this redefines what we call devastating, right? If patients have more than 4% and especially more than 10% CD18 expression, they almost invariably live into adulthood and have moderate LAD-I, right? So this is truly a case where a little protein goes a very long way. So I'll skip to the results we showed at ASH for 1 patient who was treated and we followed for 3 months. This is a patient who is 9 years old, had recurrent infections over many years, leading to treatment with gene therapy. We were able to treat this patient with a robust Process B, which I had mentioned earlier with a very high drug product vector copy number of 3.8 and a high cell dose. And you can see here an abdominal lesion and a lower back lesion that were very angry-looking on the left side healed at 3 months and continue to disappear. Also true of a bone marrow aspirate site. And this is because the protein expression in this patient at 3 months was 45%. Remember how I said you only need 4% to 10% or so to constitute clinical benefit, 45%. So this really validated Process B as a regulatory-ready process to move forward. Pretreatment was less than 1%. Again, 3 months at 45%. The LAD-I trial now is enrolling globally with -- sorry, this back button is -- there we go. The LAD-I trial is now enrolling globally at a site in the U.S. at UCLA and also a site in Spain. Another site to open soon. And both Fanconi Anemia and LAD will enroll next year, and we'll be having, what I would call, mature registration-level results toward the end of next year and into 2021. We should be getting ready for regulatory filings shortly thereafter. So Fanconi, LAD and Danon. PKD, pyruvate kinase deficiency, is actually the reason I took this job 4 years ago. It's perhaps, in some ways, the -- it's the biggest lenti program, bigger than Fanconi. These are 3,000 to 8,000 patients in the U.S. plus EU with PKD. But it's also the one where there is a very good precedent based on beta thalassemia and other red cell disorders. We know that you probably need about 20% to 30% engraftment to show clinical benefit, number one. And we also have validated clinical end points. Beta thalassemia was recently approved in Europe based on bluebird's excellent results in beta thalassemia using their gene therapy. So there's already a way to get there. That's -- the path has already been trotted. Is that the right word, Jonathan? Trotted. Someone has already tried it on that path in the past. So this is truly a de-risked program using an enabled technology. If we can get vector copy numbers in the drug product of between 2 and 4, we can get a cell dose in the few millions CD34+ cells per kilogram, we should be able to have clinical benefit. I'm thrilled to announce today also that this program is now in the clinic, and we're actively screening patients. So while LAD and Fanconi had preliminary proof of concept last year that we showed at ASH, both Danon and PKD will have preliminary proof of concept second half of this year. And more mature data from both Fanconi and LAD-I will be shown in both the first and second half of 2020. So that's the big year for Rocket and all the milestones to anticipate. The last program that we have is osteopetrosis, and we never talk about this. We will start talking about this program this year. This is the fourth lenti program, another devastating pediatric disorder bone marrow-derived disease called osteopetrosis. These are young boys and girls who get blind and deaf at birth because their bones cannot resorb. They can lay down bone but cannot resorb it. So a lot of these patients have devastating bone marrow failure and other issues by the age of 10, very similar to LAD-I. This will enter the clinic, and we'll be speaking further of osteopetrosis in the coming months. I want to thank a lot of our partners that we've been working with over the years, as you can see here. We have a very close partnership with REGENXBIO with regard to the AAV9 program, but we're also now working closely with academic partners in the U.S., Stanford, UCSD and UCLA. So I want to also leave you with 3 take-homes at the end of this talk. We've always had a staged approach to everything we do, right? As we have gained confidence in the pipeline, we have made moves. And when we like what we see, we tend to invest more as a company. So what we'd like to announce today is that based on the early clinical trial development of Danon disease, even though we're not going to be revealing the data until the second half, I can say that we're committing, as of today, to build out GMP manufacturing facility near Princeton. We already have a footprint of 102,000 square feet that we've announced in the past. But today, 50,000 square feet of that on the right side of the building, could have been the left, but happens to be on the right, will be dedicated to AAV manufacturing. We anticipate being ready with GMP clinical material for both the Phase II pivotal study as well as for commercialization in 2021. Now there is an upfront spend that will be associated. There's a $30 million onetime hit that will be reported in the first half. So there will be a higher spend in the first half by the company. It will go back to normal in the second half. But despite that uptick in spend in the first half, we continue to stand behind our cash guidance, which is that we have enough cash into the beginning of 2022. So no change from the prior disclosures despite this additional reveal. The second take-home -- so the first take-home is we have manufacturing that we're building out. The second take-home is that Fanconi and LAD will be moving toward BLA and MAA filings in the next 2 years. So we are going to be anticipating building out further clinical capabilities and also with an eye towards commercialization in about 2 years' time. Now we pride ourselves in being nimble, agile, efficient. In fact, between IND filings and CTA, clinical trial application filings, in Europe, we did 7 of them in the last 18 months or so. So we have a relatively small team, but we're efficient sort of like a well-oiled machine. And in the next 2 years and beyond, in the same way, we anticipate filing several concomitant BLAs and MAAs, I think starting with LAD and Fanconi, but with PKD, Danon and others soon to follow. We also will expand our pipeline over time. We anticipate being an integrated, sustainable, long-term company. We're here to stay. I think this is a phenomenal roaring decade of the 2020s. We're so honored to be a part of that story. Please join us. Thank you. And I think the Q&A is going to be across the hall in the Yorkshire room.