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

Hello, everyone. Welcome to the morning session of Day 2 of the Bank of America Virtual Vegas Health Care Conference. I'm Greg Harrison, U.S. biopharma analyst here at BofA. And I'm very excited that we have Rocket Pharma with us today. Here to speak on behalf of Rocket is President and CEO, Gaurav Shah. And if you'd like to send me questions, you can do so anonymously, and I can read them at the end if we have time. And with that, I'll hand it over to Gaurav.

Great. Thank you, Greg, for having us today. And I hope that you and everybody on the call is safe and healthy in these challenging times. And this particular conference call comes at a very opportune time, couldn't be better timing actually. We had some updates at ASGCT yesterday and this week. And we also, of course, along with others, had earnings. So it's a great opportunity to update the group on the ongoings at Rocket. I will refer to some slides from the most recent corporate deck from May 2020, for those who are following. We'll start with Slide #3. Rocket is a multi-platform gene therapy company. And our basic philosophy is really that we start with the disease indication in mind and then find the appropriate platform that is most effective for that unmet need. We have 2 platforms that we currently work on. One is the in vivo AAV gene therapy platform. The other is the ex vivo lentiviral gene therapy platform. Slide 4. So in addition to being multi-platform and focused on diseases first, there's a couple of things that I would like to highlight about Rocket in general. One is that we try to be first, best and only in class, which -- with each indication. This way we can do things the most efficient but the right way without competing necessarily. Secondly, we look for diseases in which we -- there is a direct on-target mechanism of action, basically targeting the protein responsible for the full disorder and the cell that harbors that protein. All of the indications that we show here in both ex vivo lenti and in vivo AAV, notably Fanconi Anemia; leukocyte adhesion deficiency-I, or LAD-I; pyruvate kinase deficiency, or PKD; and infantile malignant osteopetrosis, or IMO, in the lenti space and then Danon AAV space. What characterizes each of these is that a transplant is the only potential curative option in all cases, but is associated with high rates of toxicity across the board, whether it's a bone marrow transplant for the lenti disorders or a heart transplant for Danon disease. So transplant is the standard of care and gene therapy offers an approach that is potentially just as curative and less toxic. Now as a company, we see ourselves as an integrated company here for the long term. By integrated, I mean, we are building a company that spans everything from discovery to research, to translational science, to CMC, to clinical, regulatory, manufacturing, commercialization, and ultimately, life cycle management. So we're an integrated long-term company here to stay. That said, there are several near- and medium-term drivers. Near term, we anticipate that all 5 of these programs will be in the clinic. In fact, the -- all of them except osteopetrosis are already in the clinic. Osteopetrosis will enter the clinic this year. We showed some additional data in Fanconi Anemia and LAD-I yesterday at ASGCT. I'll talk about that in a minute. We also anticipate having the first preliminary clinical data in both Danon disease and PKD by the end of this year. Two of the programs, Fanconi Anemia and LAD-I, are actually now in registration-enabling Phase II global studies. Medium term, meaning starting next year and the years beyond, we anticipate starting BLA and MAA filings. We will expand our pipeline with similar indications and -- but new ones. And I also want to point out that most of these programs are pediatric focused and, therefore, are potentially eligible for PRVs. In fact, we already have that eligibility granted for some of them. So along with launch, PRV vouchers represent an interesting milestone for the company in the medium term. The next slide, Slide 5. Most of the folks in the company on the leadership team certainly have actually gotten drugs approved, have gone through everything from discovery to launch and commercialization. And I think that's important for a small company because it's always good to start with the end in mind, the label and knowing what the focus is for patients in mind, and then work backwards all the way through discovery and research. And we're very fortunate to have this great team around the table here. So Slide 6 is an overview of the pipeline. And as you can see, 4 programs in the clinic. Fanconi Anemia is now in the registration-enabling Phase II study. LAD-I is just now entering Phase II. We've completed enrollment in the Phase I recently. And 2 other programs, Danon and PKD, are in Phase I, and osteopetrosis will enter Phase I soon. So let's focus first on the ASGCT updates. Fanconi Anemia, by way of background, is a bone marrow disorder in which DNA repair is derailed. Without the ability to repair DNA, cells all over the body die, especially stem cells in the bone marrow. Bone marrow stem cells are, of course, responsible for producing blood cells, red cells, white cells, platelets, et cetera. And without this reserve of stem cells, that are functional, the bone marrow really fizzles out over the first 10 years of life. In fact, 80% of these patients enter fluoride bone marrow failure by the age of 10. Our transplant can work, but is associated with high early mortality and graft-versus-host disease. And in fact, patients who get graft-versus-host disease from the transplant have at least 30x increased risk of later head and neck cancers. So Slide 8 shows that by administering a gene therapy early in life, we may be able to avoid the need for transplant all together. And in fact, in Fanconi Anemia, there's something called a selective advantage in which cells that have a corrected version of the gene, over time can repopulate the entire marrow as the disease cells fizzle out. So in the lenti space, we, of course, know of many, many success stories: beta-thalassemia, sickle cell, onward. But all of those require some form of preconditioning to wipe out the native diseased stem cells that are flawed. Because in Fanconi Anemia, these stem cells fizzle out on their own, we don't need conditioning. So in fact, the marrow conditions itself. This is proven in nature by something called somatic mosaicism shown on the left side of Slide 8, and in fact, led us to the thesis that we may be able to administer gene therapy in Fanconi Anemia with 0 preconditioning whatsoever. So with this in mind, we started a Phase I study with our partners at CIEMAT in Spain using a Process A, which is just the original version of the cell processing method. And using that process, we treated several patients, and this was updated yesterday on Slide 10. The first 4 patients who were treated and that folks have been -- I think, have been following pretty closely, continue to show evidence of this selective advantage. In fact, patient 02 and 06 at the top now have something like 0.6 and 0.3 VCNs peripherally long-term at around the 3-year mark in the absence of any conditioning whatsoever. There's, of course, some fluctuation up and down, but you can see the selective advantage here. And this also applies to patients 05 and 04 who did not receive the same quality of drug product. They received lower VCN drug product and lower cells also and still show engraftment. Even 1 cell in the bone marrow of Fanconi patient that is corrected can over time repopulate the entire marrow, and this is borne out in the gene therapy trial here. We also showed data in 3 additional patients who were followed for 1 year or longer. We don't have it on this slide, but it's available on our website from the ASGCT update from Juan Bueren. And those 3 patients also show evidence of engraftment. Two of those patients, patient 08 and 13, had at least 100,000 corrected CD34 cells per kilogram, and those patients show engraftment, I would say, dynamics similar to what you see in patient 06 here. So some of the better patients treated here. Patient 07, even though they had only about 40,000 or so corrected CD34s per kilogram, that patient is also showing signs of early engraftment. And so the thesis continues to be validated beyond these 4 patients as well. Now the essence of diagnosing a patient with Fanconi Anemia is you take the bone marrow and you expose the bone marrow stem cells to an alkylating agent such as mitomycin C. As you can see here at month 0, on Slide 11, for all 4 patients here who've been followed long term, they had 0% of their stem cells surviving the onslaught of mitomycin C. And over time, you see a population of cells emerge in the bone marrow that is resistant to mitomycin C. In fact, if you look at patient 02 and -- especially patient 02, but even patient 06, and you put this marrow side-by-side with a normal person, it's going to be hard to distinguish these patients from normal people. And therefore, you can argue that these are no longer Fanconi patients diagnostically. This is also matched in the peripheral blood with another assay that determines somatic mosaicism on Slide 12 for these 4 patients. They all are representing somatic mosaic status now. In fact, the other 3 as you can see on our website, also are now somatic mosaics based on this assay. This is an interesting slide because we talked about how, as the native cells fizzle out, which are the red cells, the uncorrected leukocytes fizzle out and the corrected leukocytes here in the green come up in number. There's a point at which those lines crossed. That's happened already in patient 02. It's basically happening now in patient 06. And hopefully, over time, we see a similar trend in patient 05 and 04. But as you can see on the next slide, for 02 and 06, once that happens, you start seeing not only stabilization of blood counts but an uptick in some of the lineages, notably here, hemoglobin. You can see how basically it normalized to baseline for both of these patients. In fact, it's higher than it was at birth for both of these patients. So again, this is all in the absence of conditioning. So the key takeaways from ASGCT 2020 yesterday's presentation by Juan Bueren, no SAEs in this Process A trial at CIEMAT, and also we see a progressive repopulation of gene-corrected stem cells 1 to 3 years post-infusion. In fact, 6 out of 6 patients who were infused with what we would consider a minimally adequate dose, all had correction engraftment over time and a pretty robust engraftment at that. Also, in the patients who received higher doses and have been followed the longest, we also see an increase in some of the blood lineages, not only stabilization but an increase as well. So based on this study, we started a pivotal global program in Fanconi Anemia using Process B. Process B improves on Process A through the achievement of higher vector copy numbers with transduction enhancers as well as with a commercial-grade vector and also some optimized cell processing that we think increases the number of truly viable stem cells. This trial, on Slide 17, as you can see, has led 2 patients in Phase 1 at Stanford, who were treated last year. Both of these patients had higher VCNs than the patients at CIEMAT. The liquid culture VCNs in these cases were both greater than 2. Preliminary clinical data in this program was presented at ASH, nothing new here. We saw evidence of early engraftment at 4 to 6 months, both by peripheral vector copy numbers as well as by bone marrow mitomycin C resistance in the first patient who was tested. This is nothing new here. Blood counts have been stable in these patients as presented at ASH. So I did want to also highlight today an additional update, exciting update that is being presented at ASGCT this week by the lead site here with regard to the long-term follow-up of the Fanconi Anemia Process B global Phase II trial. So both of these patients who were treated last year at Stanford are approximately 1 year post-treatment. I just went through the ASH data. We had shown officially numbers that confirmed early engraftment and blood count stabilization. So specifically now, a year later, patient 1 continues to demonstrate hematologic stability through this year. And we've already seen evidence of mitomycin C resistance on the prior slides, more on this patient to come in Q4 of 2020. Patient 2 got an influenza B infection approximately 9 months after therapy, and this had nothing to do with the gene therapy, but this flu led to decreased blood counts. This is common, especially in cases where the nascence -- the native stem cells are flawed as they are in Fanconi Anemia. So this patient needed some supportive care, some blood transfusions, but has now recovered from this infection. Blood counts have stabilized and supportive care requirements have decreased. Importantly, a 12-month bone marrow from this patient did reveal the emergence of a population of bone marrow stem cells that were resistant to mitomycin C. So this supports the notion that the patient is now starting to engraft and responding to gene therapy. As you know from the Process A data that we showed earlier, even the smallest number of cells over time can help repopulate the marrow and potentially lead to long-term blood count stabilization. So while before this trial started, these patients were on their way toward becoming aplastic. I know -- we know right now, the PI is not seeking transplant for either patients, and we are excited to present more results at the end of this year. So that's the Fanconi program in a nutshell and with a couple of updates. Let's skip forward briefly while we're on the lenti programs to talk about LAD. Let's get to Slide 38. So LAD-I is a disorder of neutrophils in which infections are very common, neutrophils cannot extravasate into sites of infection because an absent CD18 on the surface of these cells. This is a more traditional lenti approach in which myeloablative therapy is necessary to wipe out the flawed stem cells and make room for new stem cells that will produce normal neutrophils with intact CD18. Skipping forward to the trial results here, Slide 43, we treated 1 patient last year. And this was an older patient with LAD-I. Severe LAD-I, by the way, is associated with high early mortality. 2/3 of patients don't make it past their second birthday, and it's very rare for patients to live into their teen years. This particular patient lived longer, especially because of the availability of excellent medical care locally. This patient had infections through her life and found out that she had LAD-I around the age of 7, was given gene therapy by Dr. Don Kohn, who presented yesterday with a drug product as shown on Slide 44 with a VCN of 3.8 and 4 million stem cells per kilogram, CD34 cells per kilogram. At 3 months, we showed data that the CD18 expression was 45% in the peripheral blood. Now we know 6 months later, it remains about the same, it's 47%. And the VCNs, the myeloid VCNs associated with this increase in CD18 were between 1.2 and 1.5 and were maintained over 6 months. Slide 46 and 47 also shows that skin lesions resolved. So there's clinical benefit. This patient has not had to go -- had other infections since getting gene therapy 6 months ago. And this patient is also now off of all prophylactic antibiotics, which she was on for several years prior to gene therapy and is feeling great. A second patient was also treated 14 days ago, as Don Kohn pointed out yesterday. And it's too early to tell anything on this patient, but that does mark the completion of our Phase I program for LAD-I, and hopefully, the initiation of the Phase II program soon. I did want to point out that this is using Process B. Process B uses transduction enhancers, commercial-grade vector, modified cell processing, just like the Fanconi Anemia Process B does, and this really validates Process B across the portfolio. Briefly, on PKD. PKD is a blood cell disorder, a hemoglobin disorder, hemolytic anemia, very similar in some ways to beta-thalassemia in terms of what we would look for, for long-term clinical endpoints. We wanted to look for transfusion independence. Again, like for LAD-I, it is a traditional lenti disorder we want to fully myeloablate and make room for the gene-corrected cells to engraft over time and reduce the hemolytic anemia component of this disorder. We think that, on Slide 50, we probably need about 20% to 30% engraftment to ensure long-term clinical benefit for these patients. We know that we can get VCNs in the 2 to 4 range with our Process B. And we did announce publicly that the first patient was apheresed already and will be treated in -- now in Q3. We look forward to presenting results on PKD at the end of the year. And by the way, PKD is the one program in the lenti portfolio that we don't talk about that much because it doesn't require much explanation given the familiarity with other hemoglobin disorders, but also represents the biggest market opportunity between 3,000 and 8,000 U.S. plus EU patient prevalence. Slide 53, osteopetrosis is a bone resorption disorder in which osteoclasts cannot function because of a gene defect in TCIRG1. This is similar to LAD-I in which there's frequent mortality before the age of 10, again a traditional lenti disorder. We're very excited about this program. This year, we'll be filing an IND and anticipate starting up this program later this year as well. So we'll have 4 programs using the lenti portfolio in the clinic. I'll skip now back to Danon, which is on everyone's mind, I'm sure, who's following Rocket and heart failure gene therapy in general. So Danon disease, the gene therapy for Danon disease, starting on Slide 23, is really transformative, not just potentially for Rocket but, I think, the gene therapy landscape at large. It's the first time in history that we may have a potentially curative gene therapy approach to a heart disorder. This is a disorder of autophagy, on Slide 24. Autophagy is like the recycling system of our cells. Without autophagy being intact, the recycling doesn't function and debris builds up inside these cells: organelles, mitochondria, et cetera. Fast forward briefly to Slide 29. In Danon patients, autophagy is impaired because of missing LAMP2 protein. And without that LAMP2 protein, debris builds up, just like I said. In the knockout control, the second panel from the left, you can see, there's a lot of vacuoles that have built up that are -- look very different from the wild type on the left. Even at modest doses of AAV9, by the way, AAV9 loves the heart. It is the capsid that -- in which heart tropism is higher than for muscle or for CNS. So it's the capsid of choice for heart in our opinion. So even at modest doses of AAV9, LAMP2B at 5E13, you see complete resolution of these vacuoles in heart, liver and skeletal muscle. And certainly, at the higher doses, this is further validated, if we go backwards slide by slide, on Slide 28, via dose-dependent protein expression; Slide 27, mRNA expression; Slide 26 is survival advantage; and most importantly, on Slide 25, improvements in cardiac contractility and relaxation in a dose-dependent manner, starting as low as 5E13 vector genomes per kilogram. Moving forward and skipping to the clinical slide here on Slide 35. We're now enrolling patients in a Phase I trial. We have completed enrollment of cohort 1, which is the adult age 15 and lower -- and older low-dose cohort. This dose was 6.7E13 vg per kilogram. We did not experience -- patients did not experience any DLT, any dose-limiting toxicities, in this cohort. We did announce recently that we have IDMC as well as FDA sanction to move to a higher dose. We haven't announced what that higher dose is, but we're very, very excited to move this program to a higher dose cohort soon. And we're equally excited to be able to share data across both low- and high-dose cohorts at the end of this year as announced in our earnings release. Finally, I'm going to skip forward to Slide 56. We're excited that we've resumed construction on our Cranbury R&D and manufacturing facility near Princeton. And the right side of this building will be dedicated to AAV production, clinical GMP AAV production starting in 2021. The left side of the building will be dedicated to R&D, which will include QC and analytics but also a discovery engine to allow development of new pipeline programs in the future. So we're very excited. There was a 1-month pause due to COVID, but construction has resumed. We also announced at JPMorgan that there would be a onetime spend in the first half of 2020 because of the site and spend should resume to normal in the second half. And on Slide 57, you can see all the milestones. We have reached the 2 quarter milestones already with Danon advanced to the next cohort, LAD-I data and Fanconi data. In the third quarter, we'll enroll our first and infuse our first Danon patient as well as PKD patient. Like I said, the PKD patient was already apheresed. And in the fourth quarter, many, many exciting updates that we're very excited about: LAD-I longer-term data; Fanconi Anemia Process B, in other words, global registration-enabling data with more patients; LAD-I, we'll be initiating the Phase II; PKB, we'll have the preliminary Phase I data; osteopetrosis, we'll start; and then Danon, we'll have some preliminary Phase I data in the fourth quarter as well. I'll stop there, Greg, for any questions.

Okay. Great. That was very helpful. I do have one question from the audience, and then I have a couple of other ones. So the one that we received is around your description of the company as being an integrated company, maybe if you could talk a little bit more about that and then kind of discuss the -- your preparations for commercial operations?

Certainly. So I'll make 2 or 3 points. One is that gene therapy is interesting. This is not a space in which you have to have high throughput screening for 10,000 molecules to find one, right? You can select an indication and you can create a few vector variations and move them forward yourself. So by integrated, I mean that we hope to be able, especially with Cranbury coming on board, to develop programs right from day 1 and not be dependent necessarily on external partners long term. So that's the integrated early side. The middle integration is already ongoing. There's a very close connection between CMC, clinical and regulatory. These are -- this is the bread and butter of our development and operations day-to-day. So the middle level is already integrated. In long term, because this is rare disease, we believe that even as a biotech company and not being a big pharma and without a huge sales force, we believe we will have the ability to potentially commercialize all of these therapies in U.S. and beyond. So by long term, by integrated, I mean, everything from discovery to launch to commercialization to life cycle management. We've thought about this carefully. We've thought carefully also about whether even partnerships and those things make sense. But we truly believe that we can stay integrated long-term here because of the nature of these diseases, our familiarity with the clinical aspects of them and the relationships we have with the centers of excellence and the KOLs around the world for these diseases. So that's that point. Now in terms of commercialization plan, we've always done things step by step. We only incur spend when we are confident about something. For that reason, we've waited on manufacturing for quite a while longer than one might expect. We just wanted to get comfort around our big AAV program, which we have recently. So for that reason, we haven't done a huge commercialization scale-up yet. We do anticipate that as we gain additional data in clinical trials. However, there are aspects of commercialization that are most important and partly and largely relevant to even Phase III design, notably thoughts around reimbursement, HEOR, et cetera, and also just knowing how many patients are out there. So these efforts are ongoing as we speak, not through the official commercialization team but through internal efforts right now.

Okay. Great. And then I think we just have probably time for this one last question, something we've been asking a lot of the companies this week. And just want to get your take on the impact you're seeing from COVID? And then given that you're -- you have so many programs in the clinic right now, what steps are you taking to keep all those on track as best you can?

Yes. So it is case-by-case, indication-by-indication, patient-by-patient. As Don Kohn mentioned yesterday, an LAD patient was actually infused 2 weeks ago. So despite COVID, some of these diseases are life-threatening and are not considered -- these are not considered elective procedures. So some of the programs are going on track. Other programs have experienced some modest delays, either screening or enrollment or data follow-up delays. We've talked about this. However, as things resume and assuming things are resuming soon, we don't anticipate that any of those delays will have material impact on our long-term guidance or any of our data readouts at the end of this year. How we're managing this is, honestly, taking a hard look really once a week or more in terms of when patients are coming, when they're being screened, and if these have any impact whatsoever, not only on our guidance but in our overall registration plans. And so far, we've been very fortunate that the answer has been no. But if that changes, we will update this group and The Street.

Great. That's very helpful. And with that, we're about out of time. So I'd like to thank you, Gaurav, for being with us today, and thank you to everyone for being on the line.

Thank you, Greg, and thank you to them.