Voyager Therapeutics, Inc. (VYGR) Earnings Call Transcript & Summary

Good morning, and welcome to the last day of the 41st Annual JPMorgan Healthcare Conference. My name is Dave Praharaj and I'm an associate with the Healthcare Investment Banking Group. Today, I have the pleasure of introducing Voyager Therapeutics and their CEO, Alfred Sandrock. In the audience, we also have CSO, Todd Carter; and CFO, Peter Pfreundschuh. Please note, there will be time for Q&A at the end of the session. A mic will be passed around, thank you, and take it away Al.

Thank you, David. It's my pleasure to tell you how Voyager Therapeutics is breaking through barriers in neurology and in gene therapy. Today, I'll be making some forward-looking statements during this presentation. Please refer to our SEC filings, our annual 10-K and our most recent 10-Q. So why invest in Voyager? This is our investment thesis. We have 3 pillars of value. It begins with our capsids. This capsid platform, which we call TRACER has the potential to address some of the key barriers holding back gene therapy by widening the therapeutic window. And what do I mean by widening the therapeutic window? With IV-delivered gene therapy, we hope to increase the transduction efficiency across multiple regions in the central nervous system and hopefully, therefore, increase the efficacy and we hope to do so at lower doses than currently being used with systemic gene therapy. And so with that, we hope we provide better benefit to patients at safer doses. Recently, we identified the receptor for a leading class of capsids, and we found that this receptor actually has a human homolog, and so we believe this greatly increases the likelihood that this capsid family will also work in humans when we go to clinical trials. And finally, this capsid platform has led to some very important alliances for us with Pfizer, Novartis and Neurocrine as well. The second pillar of value is our pipeline. We believe that this is -- we are starting the renaissance of a new era in neuro therapeutics. And we see evidence of that all around us. I think we've seen evidence of that at this particular meeting. And the reason for that is that we now have validated targets -- drug targets, due in large part to advancements in human genetics. We also have biomarkers that really help us with drug development. The biomarkers are tools that help us decrease the risk early during the course of development. And by them, I mean -- by biomarkers, I include imaging biomarkers, such as MRI or PET scans but also fluid-based biomarkers in the spinal fluid as well as blood-based biomarkers. No one doubts I think, the high unmet need in this category of diseases. These are some of the worst diseases on the planet, and they're growing in incidents as we age. So diseases like ALS, Alzheimer's disease and Parkinson's disease, polygenic diseases like that, but also monogenic diseases like Friedreich's ataxia. Now we expect to nominate lead candidates, which should lead to IND filings in 2024 and 2025 time frame. The third pillar of value are our partnerships. These have generated non-dilutive revenue for us there are 2 -- broadly 2 kinds of partnerships. One are capsid licenses. These capsid license structures basically are exclusive to target, but not the capsid. So several companies, including ourselves, could be using the same capsid for all we know. Pfizer after spending a year kicking the tires in their own labs with our capsids decided to opt in last October and we expect the Novartis decision in Q1 of this year. Neurocrine, we've enjoyed a long-standing collaboration with them on Friedreich's ataxia and 2 undisclosed targets. And we just signed -- on Monday morning, we announced that we signed a new collaboration around GBA1 and 3 additional undisclosed targets. I'll talk more about that in a minute. And I should emphasize that we're exploring additional partnerships, both types, capsid license as well as co-development partnerships. So on Monday morning, we announced this collaboration with Neurocrine, and I just wanted to review this transaction. In this transaction, Voyager receives an upfront consideration of $175 million, of which $136 million is in cash and $39 million is in equity purchased at a 50% premium. This secures program funding for one of our high-priority programs. So Neurocrine will pay for the costs of these -- of the GBA1 program, at least until Phase I. And at the end of Phase I, we have the option to opt in on a 50-50 cost and profit share. This has transformational downstream value. There are up to $4.2 billion in potential milestones, of which $1.5 billion are during development and $2.7 billion in commercial -- potential commercial milestones as well as royalties as shown on this slide. In this transaction, Neurocrine receives worldwide rights to Voyager's GBA1 gene therapy program for Parkinson's disease and other GBA1 mediated diseases as well as 3 additional programs for rare CNS targets. Each of these programs will be enabled by Voyager's next-generation TRACER capsids, and moreover, we're very happy and very excited to announce that Jude Onyia, the CSO at Neurocrine will join our Board of Directors. Let me explain to you why we're so excited about this collaboration. First, it recognizes the value of our pipeline. It underscores that when we combine novel capsids with cutting-edge payloads, we have a powerful combination that can really help patients and thus shareholders. We believe that this transaction increases the asset's overall value. Neurocrine brings expertise in neuroscience R&D, and they've demonstrated that. They also have expertise in commercialization of products, especially in the movement disorders. So this, we believe, improves the likelihood that this program will reach patients and thus benefit shareholders as well. This demonstrates partnership momentum. We have had a good track record of success in capsid licensing. We now have an example of a co-development partnership, and we're exploring and open to other types of partnerships as well. This collaboration provides attractive financials, which I just discussed in the previous slide. And moreover, the resources derived from this transaction enables our future growth. We hope to use the resources to advance our platform, advance our prioritized pipeline programs and also add cutting-edge research. Enabling genetic medicines is the key feature of what we want to do at Voyager. And let me show you how we combine novel capsids with diverse payloads. So our capsids, as I said, are going to be IV delivered. They get into the brain, cross the blood brain barrier at unprecedented levels. We have seen capsids that are 100-to-1,000-folds better than the standard AAV9 capsid and AAV9, by the way, is considered the king of neurotrophic capsids Not only do we improve, sell tropisms across a wide variety of cells so we can transduce neurons, we can transduce glial cells and some capsids transduce both. And at the same time, many of these capsids also de-target the cells that lead to toxicity such as the liver cell or the dorsal root ganglion cell. And as I said, identification of a receptor for a leading class helps us greatly, not only in understanding the potential for human translation but also we can use the receptor identification to reverse engineer novel capsids. The diversity of payloads that -- capabilities that Voyager has may not have been appreciated. But I'll tell you, I feel like a kid in a candy store sometime because we have incredible capabilities on the payload side. And I think the GBA1 collaboration demonstrates that. So for gain of function mutations, we can vectorize siRNAs. In fact, our SOD1 ALS program is a vectorized siRNA. For loss of function mutations, we can replace the gene that's missing. That's the -- that's what we're doing in GBA1 as well as Friedreich's ataxia. And we can also vectorize antibodies. So we can have cells within the central nervous system, make antibodies in a durable manner that can target well-validated drug targets on the cell surface. This is an amazing array of tools for a drug developer like me to look at. And we hope this will enable neurogenetic medicines -- many more medicines in the future. Just an update on our financials. As of September 30, we reported $131.6 million in cash, cash equivalents and marketable securities. This did not include the $10 million option payment from Pfizer that we will -- that we received in October. At the same time, in our Q3 earnings call, we communicated that this balance sheet plus expected reimbursements were sufficient to meet planned expenses and capital expenditure requirements into 2024. Now with this collaboration with Neurocrine that we just announced on Monday, we add $175 million of upfront consideration. We expect to close this last year, preliminarily in an unaudited manner. We expect to close with $119.2 million. This leads us to a $294 million in pro forma cash following the Neurocrine collaboration. We expect the Novartis decision in Q1 of this year, around 3 options to license capsids on select CNS targets at $12.5 million each. And this could be upsized by 2 additional targets of $18 million each. So you can see we are continuing to strengthen our cash, our balance sheet and our runway while enhancing long-term value. And we expect to provide further financial guidance as part of our 10-K financial results in March of this year. I'd like to take a look now at our pipeline. So I want to begin with the Neurocrine collaboration programs. With the deal announced on Monday, we now have 2 programs, Parkinson's and other diseases that are GBA1 mediated as well as the Friedreich's ataxia program, which we had before. So these are co-development collaborations. In addition to that, we have 3 wholly owned programs. A passive antibody against tau for Alzheimer's disease. This is a differentiated C-terminal antibody that blocks the spread of tau in animals, highly differentiated from the N-terminal antibodies that don't do that. We also have, as I said earlier, an SOD1 gene silencing program using a vectorized RNA -- siRNA against SOD. And we have multiple early-stage programs. And on Monday, we added some color into one of those. We have a unique -- we believe, a relatively unique approach to Huntington's disease, where we're taking into account the latest clinical trial data as well as data coming from biological studies on the pathophysiology of disease. So this new approach employs -- will employ an allele-specific vectorized siRNA in combination with an MSH3 knock down. MSH3, we believe, will be important in limiting or reducing the somatic expansions that occurs in cells that are destined to die and the allele specificity of the MTT -- mutant MTT knock down will help us increase the therapeutic window and be able to provide benefit more safely. We also, as I mentioned earlier, have a number of license -- capsid license structures around 5 gene therapy programs for undisclosed disease -- undisclosed diseases with Neurocrine, a rare neurological disease with Pfizer and 3 gene therapy programs for rare CNS diseases with Novartis. So I want to close with this slide. I'm continuing to build my team, and you'll see -- you'll meet a couple of members of that team in a minute during the Q&A. We're building the Board of Directors and I'm very excited about what we're doing here at Voyager in terms of the team. We presented data in the second half of last year at AAIC and ESGCT, where we showed data on differentiation of our anti-tau passive antibody program at the AAIC meeting. And at the ESGCT meeting, we showed that we can deliver low doses intravenously, much lower than currently being used on the order of 10 to the 12 BGs per kilogram and affect very efficient CNS cell transduction. We also presented our data without identifying the actual receptor. We showed that we actually -- the data that led us to believe that we actually have the receptor for one of our leading capsid families. In Q3 of 2022, Pfizer exercised this option on a rare neurology target. And for that, we received a $10 million payment. And in Q1, on Monday, actually, we announced the Neurocrine strategic collaboration that extends the collaboration that we already enjoyed with them. And as I said earlier, a potential for $4.4 billion for GBA1 and 3 discovery stage programs. As we look forward, we look forward to the Novartis decision in Q1 of this year, potential for up to $37.5 million payment. We expect to identify lead candidates for all 3 priority pipeline programs. For the tau program for Alzheimer's, GBA1 Parkinson's program, gene therapy program in collaboration with Neurocrine and the SOD1 ALS gene therapy program. And as always, we continue to talk to multiple parties, and we're open to additional value-adding, value-creating partnerships, and these discussions are ongoing. So thank you very much for your attention. We'd like to now open it up for Q&A. And I'd like to invite Pete Pfreundschuh, our CFO; and Todd Carter, our CSO, to join me up here.

Any questions in the audience? Okay. I'll kick it off. First off, congratulations on this week's announcement. Given the size of the collaboration agreement -- you mentioned how this agreement affects your balance sheet. But what has this allowed you to really focus on as you continue to advance Voyager?

Yes. So it's really about continuing to think about how we can add diverse payloads to our novel capsids and tackle some of the worst diseases on the planet with the highest unmet need. And so I talked about our ability to vectorize siRNAs to knock down toxic gain of function, gene expression. We can also replace missing -- essentially due to loss of function mutations, missing genes and we can vectorize antibodies. So not only does this collaboration take sort of the expenses of one of our 3-priority pipeline programs off of our expenses. But also we get resources to reinvest in early research. So you can expect us to announce more early research programs as time goes on. Todd, Pete, do you want to add anything?

No, I don't think I would add much more, Al. I think the benefit of course thinking the Neurocrine collaboration earlier this week is allowing us to not only secure the advancement of the GBA program and these new programs that Neurocrine wants to advance in collaboration with us, but also for us to reinvest in our business and continue to grow, as Al described. And I think that is our incentive as we move forward to further the advancement of our science and technology in the business. So it's a great situation. It sets us up for 2023 and beyond. And as Al said, I think you're going to hear more from the company with regards to some further early-stage programs as we move into the year.

Okay. And moving -- advancing into 2023, what is -- I guess, what would be your #1 priority?

Well, I mean, all 3 of our priority programs are sort of equal, if you will. They're all exciting in the sense that they address high unmet need, but also we believe that they will provide proof of biology very efficiently. So we chose these programs so that we can do clinical trials and with -- very efficiently provide the evidence that we've got adequate gene expression to provide the therapeutic benefit that we will need. And so all 3 are high priority.

Okay. Could you -- actually, go ahead.

Well done on creating some excitement here for shareholders after a period of difficulty. I really admire the fact that you've hung in there persevered and brought some real strong talent, added to the talent that you obviously had. When you see numbers like this from a big pharma outlook, they'll look at the next 5, 10, 15 years, so $4.4 billion, whoever -- well, Neurocrine have made that investment, they got to be looking at least 5 or 10x their money to do that. Where are the commercial points of excitement? Where does this go commercial? And what are the total available marketplaces as you would be successful in commercial?

Pete, do you want to take that?

Yes. I think first and foremost, from the perspective of the GBA1 target, the advancement of that particular program from a PD perspective, we always envision that, quite frankly, we would most probably need a partner in order to be really successful. I think the benefits of Neurocrine is that they're already playing in this space to some degree and they really do have a [ calling ] sales force already in this space. So I think, quite frankly, they bring great development capabilities, but also wonderful commercial capabilities. And I think for us as an organization, you've got to kind of know your limitations as to what you can do as a small biotech company and partnerships like this really reinforce, creating value for the long term, but also derisking these programs both in the development as well as in the commercialization phases of the product.

[indiscernible] Clearly you've done a great job and got a great partner. There may not be a better one than Neurocrine, and they're there, they're commercial ready. They address the commercial opportunity that they had to be looking at we -- I'm a Voyager shareholder, you all had to be looking at to put this in place 5 and 10 years out. It's going to take a while, but you get through into the late 2020s and early 2030s, what kind of revenue opportunities are out there. If they deliver -- if you deliver and the team delivers the product, what can they do with it?

Well, I mean -- well we can look at the patient numbers -- so 10% -- up to 10% of Parkinson's patients are GBA1 carriers. Parkinson's is the second most common neurodegenerative disease. There are about 1 million patients just in the U.S. with Parkinson's. So 10% is about 100,000 patients that are addressable -- so -- and obviously, the price will determine the ultimate commercial potential. I think we're still a ways off from that. But...

Yes, price will drive the revenues. But I'm just -- if you look at any of the big pharmas, they're all talking '25 to '30 and they roll out what their numbers are going to be. My view is that those of us in the small pharma ought to do the same thing because it really impacts our cost of capital. And it impacts your ability to attract talented people when they see this is going to be a powerful machine. That's what you're building, it's clearly what you have in mind, but expressing that as a potential, I think, makes a lot of sense. And it's helpful what you just said on Parkinson's.