Passage Bio, Inc. (PASG) Q1 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for holding. Good morning and welcome to the Passage Bio first-quarter 2020 financial and operating results conference call. [Operator Instructions]. At this time, I would like to turn it over to Zoe Mita. Zoe, please proceed.

Thank you, Operator. This morning we issued a press release that outlines the topics we plan to discuss today. This release is available on the Passage Bio website at investors.passagebio.com under the news and events section. On today's call, Bruce Goldsmith, President and Chief Executive Officer, and Rich Morris, Chief Financial Officer, will review our first-quarter 2020 financial results and discuss recent business highlights. Gary Romano, our Chief Medical Officer, and Jill Quigley, our Chief Operating Officer, will also be available for the Q&A portion of the call. Before we begin, please note that today's call may include a number of forward-looking statements, including, but not limited to, comments on our expectations about timing and execution of anticipated milestones, including initiation of clinical trials and the availability of clinical data from such trials; our expectations about our collaborators' and partners' ability to execute key initiatives; the ability of our lead product candidates to treat the underlying causes of their respective target monogenetic CNS disorder; manufacturing plans and strategies; trends with respect to financial performance in cash flows; the Company's ability to fund research and development programs; impacts of the COVID-19 pandemic on the Company's operations; and its ability to manage costs along with uses of cash and other matters. These forward-looking statements are based on assumptions that are subject to risks and uncertainties that could cause the Company's actual results to differ significantly from those suggested by these statements. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Please refer to the Company's filings with the SEC for information concerning risk factors that could cause its actual results to differ materially from expectations, including any forward-looking statements made on this call. Except as required by law, the Company disclaims any obligation to publicly update or revise any forward-looking statement to account for or reflect events or circumstances that occur after this call. It is now my pleasure to pass the call over to Bruce Goldsmith. Bruce?

Thanks, Zoe, and thank you all for joining us this morning. We are really excited to be here today to talk about the progress we have made since the start of the year. I will go into more detail in a moment, but since January, we successfully completed an upsized IPO to significantly improve our cash position and runway. We strengthened our Board of Directors and internal team across all functions to increase our capabilities. And also recently announced that we expanded our agreement with our partners at University of Pennsylvania's Gene Therapy Program headed by Dr. James Wilson, adding potential depth and breadth to our pipeline. Passage Bio was founded in late 2018 with the goal of truly helping patients suffering from serious life-threatening rare monogenic central nervous system diseases. Our vision is to become the premier genetic medicines company by developing and ultimately commercializing transformative therapies that dramatically and positively impact the lives of patients suffering from these diseases. With patients at the center of our mission, we are focused on advancing our lead candidate into the clinic as soon as possible and plan to do so later this year. A large part of what makes our Company unique is our strong partnership with Penn and the Gene Therapy Program, or GTP. This collaboration gives us access to what we believe is the best discovery, technology, and research in the field of gene therapy. This includes preclinical development and manufacturing experience that will help guide our programs as we move into the clinic. The focus of our collaboration remains on identifying and advancing transformative therapeutics that have the much-needed differentiated profiles to address patient needs. Last week, we announced that we expanded this collaboration, allowing us the opportunity to deepen our product pipeline and enhance our access to GTP's pioneering gene therapy expertise. The amendment increased the number of additional options available for us to license from 6 to 11 and extended the exercise window of all remaining 11 options through 2025. We have already licensed a total of six to date, bringing our total potential product pipeline to 17 programs. Under this agreement, we have committed to fund $5 million annually for discovery research conducted by Penn. As a result, we will receive exclusive rights and licenses to certain technologies resulting from discovery research for Passage Bio products developed with the GTP, such as next-generation capcids, toxicity reductions, and delivery and formulation improvements. We are tremendously proud of the progress we have made to date through this collaboration. And beyond the enhanced access to technology and programs, this continues to demonstrate the extremely strong partnership between Passage Bio and Dr. Wilson's team at the GTP. Given today's environment, we are working closely with Penn, our manufacturing partners at Catalant, and our external partners across the healthcare fields as we navigate the impacts of the COVID-19 pandemic. Like many of our peers. our primary goal is serving patients, particularly those with no alternative effective and safe treatment options. As such, we remain steadfast in advancing our programs into the clinic and are committed to meeting our development goals. At this time, we do not anticipate any delays in trial initiations for our three lead programs. With the strong cash position from our IPO, strong collaborations, and a growing team, we feel confident in our ability to execute on these goals. While the full impact of the COVID-19 pandemic remains uncertain, so far our employees have demonstrated their ability to be flexible and have exemplified our Company's commitment to best-in-class productivity. We are focused on employee safety, physical and mental well-being, and engagement in our mission, as we believe our team is an extremely valuable asset. As we do everything we can to keep our employees safe, we are also focused on the safety of the frontline healthcare workers, patients, and their families as we think about our first clinical trial initiation later this year. In the spirit of patient focus, we are now going to highlight our three most advanced development programs in GM1 gangliosidosis, frontotemporal dementia, and Krabbe disease. Our lead candidate for the treatment of GM1 gangliosidosis is PBGM01, which we are developing for the treatment of the infantile form of the disease. GM1 is a rare monogenic recessive lysosomal storage disease caused by mutations in the GLB1 gene encoding beta galactosidase. These mutations result in an accumulation of toxic levels of GM1 gangliosides and lead to rapidly progressing neurodegeneration. Infantile GM1, which is characterized by onset in the first year of life, is the most severe form of the disease, reducing life expectancy to only two to four years. Infantile GM1 is the most common subtype of this disease and represents almost 2/3 of total GM1 cases. Unfortunately, patients with infantile GM1 have no effective disease-modifying treatment options available to them. Our development candidate PBGM01 is a next-generation hu68 AAV capsid designed to deliver a functional GLB1 gene that expresses beta galactosidase. Based on capsid comparison studies, this next-generation capsid was selected due to the superior transduction observed in cells of the CNS and peripheral organs, which we believe gives us the potential to treat both the CNS pathologies and the peripheral manifestations of GM1 in order to restore developments of potential of patients. Our planned Phase 1/2 trial will be an open-label dose escalation study of PBGM01 administered by a single injection into the intra-cisterna magna or ICM in pediatric patients with infantile GM1. The primary endpoints for this study will be safety and tolerability as well as treatment effects on the prevention of further developmental regression, restoration of developmental milestones, prevention of disease progression, and extension of ventilator-free survival. We will also be evaluating the effect of PBGM01 on a number of biomarkers, including CSF and serum beta-gal enzyme activity as well as EEG and MRI measurements. We anticipate the first patient to be treated in 4Q 2020 and we expect initial 30-day safety and biomarker data in late first-half 2021. Last month, we were happy to report that the FDA granted orphan drug designation to PBGM01. This designation represents an important recognition of the dire need for an effective treatment option for these children and their families while granting us financial incentives to support clinical development and the potential for up to seven years of market exclusivity in the US upon regulatory approval. In addition to the planned clinical study for PBGM01, we are sponsoring a natural history study in collaboration with the University of Pennsylvania's Orphan Disease Center to collect prospective data on clinical disease progression in infantile and juvenile GM1. The study is the first study of its kind evaluating patients with infantile GM1. We now have three sites open, though due to the impact from COVID-19 pandemic and concern for patient safety, we have not enrolled any patients. To address these enrollment delays, we are working with sites to explore enrolling and following patients remotely. We are also simultaneously accessing additional sources of historical control data from this important population of children. Now I will turn to our next most advanced program, PBFT02, for the treatment of frontotemporal dementia or FTD. FTD is a neurodegenerative disease and one of the most common causes of early onset dementia, causing impairment in behavior and language and executive function with further progression to immobility and death. Currently there are no approved disease-modifying therapies for these patients. In approximately 5% to 10% of patients with FTD or a prevalence of approximately 3,000 to 6,000 patients in the United States, the disease is caused by mutations in the granulin gene, which leads to deficiency of progranulin. Emerging evidence suggests that progranulin's pathogenic contribution to FTD and other neurodegenerative disorders relates to a critical role in lysosomal function. Our product candidate PBFT02 is an AAV1 viral vector that is designed to deliver a modified DNA encoding GRN to patient cells. Preclinical studies have demonstrated its ability to significantly increase progranulin above normal levels in the CSF. As part of our preclinical studies, we tested ICM administration of the AAV1 capsid against other capsid types in nonhuman primates and found that AAV1 provided the strongest transduction and also achieved up to 50 times the normal human CFS level of progranulin. Based on the encouraging safety and efficacy data from our preclinical studies, we plan to initiate a Phase 1/2 trial in the first half of 2021. Our second-most advanced pediatric program is in infantile Krabbe disease, a rare and often life-threatening lysosomal storage disease that results in progressive damage to both the brain and peripheral nervous system. Krabbe disease is caused by mutations in the galactosylceramidase or GALC gene that leads to accumulation of psychosine, which in turn kills myelin-producing cells in the CNS and PMS. Without myelin nerves in the brain and body cannot properly transmit signals, leading to rapidly progressing neurodegeneration in infants. This results in a short life expectancy which is only two years for those diagnosed with the early form, which manifests before six months of age, and approximately 5 years with the late form, which manifests between 7 and 12 months of age. There are no current disease-modifying therapies available to these patients. And we believe incidence may be higher than reported due to lack of adequate screening at birth. Tomorrow there will be a presentation of data from our Krabbe program at ASGCT by Juliette Hordeaux from GTP. While the full data set will be presented tomorrow, data from the twitcher mouse and the naturally occurring Krabbe dog model show that administration of AAV hu68 carrying a functional GALC gene into the CSF resulted in normalization of GALC enzyme activity and improved all parameters of Krabbe disease. We believe these data are very supportive of our clinical approach. Our development candidate PBKR03 utilizes the same next-generation AAV hu68 capsid as used on the GM1 program. For PBKR03, AAV hu68 will be used to deliver DNA encoding the GALC enzyme to a patient's cells to reduce psychosine accumulation and restore myelin. We believe that PBKR03 has the potential to address the underlying cause of disease and plan to initiate a Phase 1/2 trial in the first half of 2021. In addition to these lead programs, we also have three additional CNS programs in the discovery and candidate selection stage: PBML04 for MLD, PBLA05 for ALS with a C9orf72 gain of function mutation, and PBCM06 for CMT2A. We are currently coordinating with GTP to conduct discovery stage preclinical studies for these programs and look forward to progressing these into IND-enabling studies. Lastly, I want to take a moment to discuss manufacturing, which is a key aspect of our business. Earlier this quarter, we finalized a development services and clinical supply agreement with Catalant to secure clinical scale manufacturing capacity for our gene therapy programs. This agreement formalizes the supply terms for the previously announced collaboration with Catalant for Passage Bio's dedicated manufacturing suite, which we expect to be functional by year-end. Once it is up and running, the cGMP suite will be capable of meeting production requirements for our current lead product candidates for any clinical needs through early commercialization. Having our own dedicated suite is an important step toward our goal of having expanded control of the supply chain, which we believe will set us up for both clinical and commercial success by allowing for greater flexibility and control in terms of scalability and prioritization as we move products through development. And with that, I will turn the call over to Rich to give a financial and operations update.

Thank you, Bruce. As we reported in our press release this morning, we ended the quarter with cash and cash equivalents of approximately $367 million as compared to approximately $159 million as of December 31, 2019. In the first quarter of 2020, we raised approximately $228 million in net proceeds from our IPO. We expect our current cash balance to fund our operations and clinical expenses into 2023. R&D expenses were approximately $13 million for the quarter ended March 31 compared to approximately $3 million for the same quarter in 2019. The increase was primarily due to an increase of approximately $5 million in R&D costs incurred with Penn in connection with the preparation of several IND filings as well as an increase in other research costs of approximately $3 million as we prepare for our clinical trials to begin in the second half of 2020 and early 2021. We also had an approximately $2 million increase in personnel-related costs and approximately $200,000 increase in facility and other costs due to increases in employee headcount in the R&D function. G&A expenses were approximately $5 million for the quarter ended March 31 compared to approximately $1 million for the same quarter in 2019. The increase was primarily due to an approximately $2 million increase in personnel-related and share-based compensation expense due to increases in employee headcount. Our professional fees and facility costs also increased by approximately $600,000 and approximately $800,000, respectively, as we expanded our operations to explore our research and development efforts. Net loss was approximately $18 million for the first quarter of 2020 compared to approximately $8 million in the same quarter of 2019. Net loss per basic and diluted share was $1 in the first quarter of 2020 compared to $1.83 net loss per basic and diluted share in the first quarter of 2019. As part of ongoing efforts to continue to grow our organization, we have signed an agreement for new office space, which we will move into in early 2021. We also continue our active recruitment efforts, focused on leveraging the burgeoning cell and gene therapy epicenter and our unique access to a strong pool of local candidates in Philadelphia. We have made a number of key hires over the past quarter and are excited to continue to grow our team of talented, dedicated scientists and business personnel. With that, let me turn the call back to Bruce for closing remarks.

Thanks, Rich. In closing, I would like to reiterate our commitment to continue to make 2020 a transformative year for Passage Bio and the patients we serve. As a newly public company, we believe we are well positioned with internal financial and operational strength, external collaborations, and a continued focus on healthcare providers, patients, and their families. This is an important time for Passage Bio for the key remaining milestones in 2020, which are initiation of PBGM01 clinical study for the treatment of patients with infantile GM1, with first patient enrollment anticipated in 4Q 2020; advancement of two programs in FTD and Krabbe towards clinical study initiations in first half of 2021; and continued expansion of the clinical, manufacturing, and operations teams to support these programs. I am absolutely confident in our team's ability to continue to execute and we look forward to updating you on our progress. We would now like to open up the call for your questions. Operator?

[Operator Instructions]. Our first question comes from Salveen Richter from Goldman Sachs. Your line is open.

Thanks for taking the question. This is Andrea on for Salveen. I was just hoping you could speak a little bit more on how you are thinking about conducting your trials in a COVID-19 environment. You have mentioned, I guess on this call here, that you are thinking about potentially remote enrolling patients. And just given how rare the disease is, are there additional hurdles associated with remote versus traditional methods? And then how are you thinking about patient monitoring and data collection?

Hi, Andrea, this is Bruce. Thanks very much for your question. So there is two aspects of what we would like to highlight for COVID-19. First, the remote monitoring that you highlighted was actually in reference to our natural history study. And after I make some introductory remarks, I will ask Gary Romano, our Chief Medical Officer, to highlight that. That is part one. And then the second part is that we do realize that COVID-19 -- certainly we are looking at the global impact of potential delays, etc., on the trial start for GM1 -- for PBGM01 for the treatment of patients with infantile GM1. As of today, we don't anticipate any impact on the IND filing and we are certainly in discussions with our sites as well as the network of other biopharma and clinical teams and CROs. And we certainly think that there are impacts globally around COVID-19 and site openings, etc. But we also believe that hospitals will continue to prioritize trials with life-threatening and catastrophic illnesses to prioritize opening those. So for the PBGM01 therapeutic treatment for GM1 that we anticipate trial initiation for the back half of this year in the fourth quarter, we don't see any specific impacts on COVID-19 at this time. What we are focused on is the identification of patients and then the subsequent safe treatment of those patients as they do come into the sites. And Gary, perhaps you can add some additional color commentary around the natural history study and the remote monitoring that we are anticipating.

Yes, thank you, Bruce. I would just add that we are putting into place capability to remotely monitor patients in a natural history study. That includes conducting the assessments of developmental scales over the phone and over video. We are also exploring how we might use structured video data collection to evaluate patients' progress and treatment and response in the trials. This is going to start in the natural history study and the learnings that we take from that, we will apply as well to the interventional trials for patient follow-up visits as necessary.

Great. And then maybe just one additional question, if I may. Just as it relates to the expanded collaboration with Penn, could you provide some color maybe on the thinking of what spurred the decision and why now?

Sure, thanks, Andrea. And what we thought about is in terms of the timing, it really builds on the collaboration that we have and the successes we have had to date with Jim and the GTP team. And what we thought about was the specific avenues of research that the GTP is conducting in terms of thinking not only of our lead programs but also our future programs. And when we looked at the ability to not only access thinking about the next-generation capsids that GTP has been discovering and focused on but also the other technologies that they are approaching in terms of toxicity reduction approaches and delivery and formulation improvements, we thought that this was the appropriate time to build on that collaboration. Because we want to have the ability, first of all, to continue to support innovative research. And the second is to apply that innovative research to our either ongoing programs as appropriate or future programs. And the way we think about this is certainly the technology access, but the overarching benefit is also that we are adding 5 additional programs for an additional -- for a total of 11 programs that we could access. And the other piece was to have five years now to execute on those programs and to initiate the research. As opposed to under the initial agreement, we would have only had two years to start that. So there are a number of reasons why we thought that this was the appropriate time to both access technology, expand the collaboration, as well as extend the time.

Great. Thanks so much.

Our next question comes from Yaron Werber from Cowen. Your line is open.

Hi, guys. This is Brendan on for Yaron. Thanks very much for taking the question and congrats on the progress so far. I actually just really wanted to ask you a little bit more broadly on kind of how you're thinking to prioritize some of the programs a little bit further down the road. If you are still thinking to kind of really maintain initiation of Krabbe and FTD really simultaneously. And then actually beyond there how you kind of think about which opportunity to pursue first. And then also I was actually hoping to just get a little bit more kind of just your thoughts on if there is any update on the newborn screening progress. I know this is actually going to come up quite a bit across kind of the industry and in times of COVID, so I was just wondering if there is any kind of updates there. Thanks very much.

Thank you for the question. So I will begin and I think I will make a short comment about newborn screening and maybe turn this over to Jill to expand about just our general efforts there. So in terms of FTD and Krabbe, yes, we are on track for the initiation of clinical studies in the first half of 2021. And that remains consistent with our previous guidance and our previous statements that we think we can advance both FTD and Krabbe generally in the same quarter -- or sorry, in the same half to start the studies. And it really depends on all of the progress towards IND filing, manufacturing, clinical site initiations, and obviously patient recruitment that will define the actual timing -- the precise timing of clinical trial initiation. But we are building the capacity internally in terms of the clinical team and the manufacturing team in order to support the parallel development of those programs. I think that was your first question, and that remains in parallel and on track. The second question you said was how do we continue to prioritize and select new programs. The way we think about this is we are primarily focused on the patient needs, and thinking about this both internally at Passage Bio with our advisors both at our Board level and externally, and of course, with Jim Wilson and his extensive team at GTP. So we think about patient need. And then in our ability to derisk those with Jim and his team at GTP, in all of the aspects that we have talked about, whether that is delivery method, whether it is biodistribution, evaluating different capsids, etc., so that we can make sure that we have a differentiated and optimized approach. So those are the ideas behind the next series of selected programs that we have in mind. And we are thinking that we can continue to diversify our portfolio as we already have accomplished with our first six programs. These are obviously rare monogenic CNS disorders, but some are very, very rare pediatric disorders. Some are, like FTD and progranulin, a bit more expansive, etc. So we are trying to create a balanced and diversified portfolio in terms of the indications we are selecting as well. And in general, we are just engaging in active and collaboration discussions with Dr. Wilson and his team around indications with these concepts in mind. And we will continue to do so. That was, I think, the first two questions. And then the third question was on newborn screening. And I will turn it over to Jill in a moment. I just wanted to say that we are partnering as closely as possible in this era of COVID-19 with both advocacy groups and academic and clinical leaders to think about how to implement this and expand this not only for GM1 but also to continue to collaborate with Krabbe. Jill, do you want to talk in general about how we think about the necessity and expansion of newborn screening?

Sure, Bruce. Yes, newborn screening is going to be very important, of course, for early identification of patients eventually when there is a treatment available for various different diseases. We continue to have strong relationships with patient advocacy groups and KOLs. Both patient advocacy groups and KOLs are absolutely critical as we think about newborn screening and the strategy around that to support the patients that we are serving. So we have identified a few different opportunities to support the advancement of newborn screening, specifically with GM1. There are already programs, I think as everyone knows, in place for Krabbe. And we will continue to support those opportunities as we work towards newborn screening not only at a pilot state level but continue to try to find a way to move towards rust application.

Thanks, Jill. And putting that in context in COVID-19, which I think was also your question, yes, I think we recognize that all of the aspects of newborn screening, patient identification, patient recruitment are challenging. So we are partnering with groups that are in touch with patients and looking to, despite COVID-19, initiate some of those programs and partnerships. But you are absolutely right that these remain significant challenges in the era of the pandemic.

Great, thanks very much.

Our next question comes from Anupam Rana from JPMorgan. Your line is open.

Hey, guys, thanks so much for taking the question. A quick one from me, and I'm sorry if you guys already answered this because I have been hopping on a few different calls this morning. But can you give us an update on the natural history strategy for both GM1 and Krabbe specifically? It's a little bit of a follow-on to the prior question, but any update there would be helpful. Thank you.

Sure. I will make a brief a comment and then turn it over to Gary. I think for the natural history study, we are still -- maybe Gary can comment on the number of sites we have opened and also the patient enrollment status, which has admittedly been very challenging in the COVID-19 era as well as complementary approaches that we are trying to do, both from remote screening as well as other data sources. And then Gary, maybe you can comment on where we think we are with Krabbe from external sources.

So let me start with GM1, if you can hear me okay. Our natural history -- our strategy for accessing natural history data for comparisons to our interventional trial data for GM1 includes firstly a prospective collection of that data in a protocol that is sponsored by the Orphan Disease Center at Penn, as you know, which is a protocol that is nearly identical to the GM1 interventional protocol that we are going to be using for our study. And that study is running at sites around the globe, including the same sites that we are using for our interventional study, which we think will really add to the quality of that data, given that it takes into account site-specific factors. That study is -- we have three open sites as of today with several more sites coming online very soon. We have yet to enroll a patient in that study, but we are moving to be able to enroll patients remotely and then follow those patients. And that is possible there because many of those patients are very well known and so the baseline assessments can be done remotely. They have already been clearly diagnosed by the sites. We are going to also supplement that data from the prospective natural history study with retrospective natural history data. And we are working with some of the centers around the globe that have the most longitudinal data on these very same patients and we already have agreements in place to access that data. So in the end, we will have prospectively collected data and retrospectively collected data for GM1. For Krabbe, our strategy is really to rely on retrospective natural history data. And that is because there is rather abundant natural history data for Krabbe disease. For example, we are already working closely with universities across the globe who have this data. And in that case, we are writing protocols that will extract from their databases this retrospective data. And all of this work, by the way, for GM1 and for Krabbe, we will be doing with early and often communications with regulators about our strategy, our statistical analysis strategy, for using natural history study data as comparator controls to our single arm trials.

Great, thanks for taking our question.

[Operator Instructions]. Our next question comes from Gbola Amusa from Chardan. Your line is open.

It's Gbola Amusa from Chardan. Thanks for taking my call. So just a big picture question on your vision. I think you've mentioned becoming a premier genetic medicines company -- the premier genetic medicines company rather than just a gene therapy company. And not to get into semantics, but could you discuss whether you have access to non-AAV-based genetic medicines capabilities coming out of UPenn with the collaboration? Or whether you hope to obtain such capabilities from an external source? And then secondly, the first quarter in terms of expenses probably isn't representative going forward. So could you talk qualitatively or directionally about the expense ramp from 1Q to 2Q to 3Q to 4Q and then from 2020 to 2021 and 2022, given that you have a pretty long runway into 2023. I will pause there.

Great. Thanks for the question. So I will take the first part and turn this over to Rich for some comments around the burn. So you are absolutely right; I think it is a great observation that we do believe that we have the potential and certainly our vision is to become the premier genetic medicines company. And right now, our strategy in terms of the foundation that we have laid with Penn is certainly on gene therapy for patients with rare monogenic CNS disorders. And we think that with that foundation, that will allow us to build the clinical, manufacturing, and commercialization efforts that are going to be supportive of that goal. We do recognize that there is more to genetic medicines than specifically the gene therapy that is supported by the GTP current relationship and we think that there is a number of ways of accessing additional technologies that could support that goal. And one is obviously through an expanded relationship that may be either selective or broad with our existing partners, such as the GTP Group. And then the other is other opportunities external to that, which could come from academic partnerships or biotech partnerships. I think that is the long-term goal and the long-term vision because we don't want to be distracted from the near-term goals of building the clinical and manufacturing and commercial infrastructure around our extensive portfolio of up to 17 programs. And so the way we think about this is what we are laying out and executing on right now is the foundation and the genetics medicine vision or mission, if you will, from a long-term perspective is just that: a goal that we want to achieve over time as those technologies and, quite frankly, the ability to address the same goal of patients with significant unmet medical need with transformative therapies comes to be realized. So I would balance the initial focus with a long-term focus in my answer to your question. Rich, do you want to talk a little bit about the burn? Or do you have a follow-up? Sorry.

I will, after the burn question.

Great, morning. Thanks for joining the call. So obviously, the first quarter will not be reflective of the balance of the year on a quarterly basis. What you can anticipate is that obviously the quarterly expense and the expense from year-to-year will grow. We are going to see a significant growth in headcount over the course of the year, which will affect not only the first half -- or the second half of our first-half spend this year, but then will carry forward in next year. In addition, you will see our clinical trials -- and I will remind you this , there is three that will be ramping up mostly in the back half of this year. So there will be a significant increase in R&D expense as we turn those files on and then we will obviously have a full year worth of expense for those trials in 2021 compared to 2020. All that has been considered in our guidance and we are pretty excited that we have a strong cash balance and then we will get into early 2023.

Great. And just a quick follow-up. I think there was a paper by Dr. Wilson in April -- it was one that went public -- in molecular therapy methods and clinical development that compared ICM injections to other types of injections for CNS indications. Do you find that there is anything in that paper that the market underappreciates about your ICM approach?

So I think the ICM approach as we look at the volume of publications and also our internal data, I think we believe it is a very effective and very safe approach to date. And obviously, we have to show that and demonstrate it in clinical studies as well. But we also are aware that other groups are also using ICM. The advantage is a very good distribution and transduction that we have seen from -- in nonhuman primate studies. And we have also seen in the partnership with Penn that that study and other studies have supported a very good approach in terms of safety and delivery through the blood-brain barrier that is guided obviously by imaging. Gary, I don't know if you have any additional comments, but I think that's the general approach. But I don't know if you have additional comments on the kind of proof of safety and efficacy of the delivery method with ICM.

No, only to reiterate that the best -- the greatest biodistribution or most complete biodistribution is seen with ICM approaches versus other intrathecal, such as lumbar puncture. And we also believe that there are important safety and biodistribution advantages over intracerebral ventricular approaches.

Great, thank you.

I am showing no further questions in the queue at this time. Ladies and gentlemen, thank you for participating in today's conference. This does conclude your program and you may now disconnect. Everyone, have a great day.