REGENXBIO Inc. (RGNX) Q1 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the REGENXBIO Q1 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference may be recorded. I would like to introduce your host for today's conference Mr. Patrick Christmas, Senior Vice President and General Counsel. You may begin.

Good afternoon, and thank you for joining us today. With us today are Ken Mills, REGENXBIO's President and Chief Executive Officer; and Vit Vasista, our Chief Financial Officer. Earlier this afternoon, REGENXBIO released financial and operating results for the three months ended March 31, 2017. The press release reporting our financial results is available on our website at www.regenxbio.com. Today's conference call will include forward-looking statements regarding our financial outlook in addition to regulatory and product development plans. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted, and can be identified by words such as expect, plan, will, may, anticipate, believe, should, intend, and other words of similar meaning. Any such forward-looking statements are not guarantees of future performance, and involve certain risks and uncertainties. These risks are described in the Risk Factors and the Management's discussion and analysis section of REGENXBIO's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, which is on file with the Securities and Exchange Commission, and available on the SEC's website.. Any information we provide on this conference call is provided only as of the day of this call May 9, 2017, and we undertake no obligation to update any forward-looking statements we may make on this call, on account of new information, future events or otherwise. Please be advised that today's call is being recorded and webcast. In addition, any unaudited or pro forma financial information that maybe provided is preliminary, and does not purport to project financial positions or operating results of the Company. Actual results may differ materially. I would now like to turn the call over to Ken Mills, President and Chief Executive Officer of REGENXBIO. Ken?

Thank you, Patrick, and thank you all for joining us here this afternoon. On today's conference call, we'll share an overview of our progress over the past three months, an update on our development programs, and financial reports and results for the first quarter of 2017 as well as provide a look at our upcoming milestones. After that, we will open the call for questions. At REGENXBIO, our mission is to improve the lives through the curative potential of gene therapy based on our proprietary NAV Technology Platform. As a remainder, our AAV gene therapy product candidates are designed to deliver genes to cells to address genetic defects or enable cells in the body to produce therapeutic proteins that are intended to impact disease. Through a single administration, our AAV gene therapy product candidates are designed to provide long-lasting effects, potentially significantly altering the course of disease and delivering important patient outcomes. We are currently advancing an internal pipeline of product candidates, which employ our proprietary NAV Technology Platform within three disease areas; retinal diseases, metabolic diseases and neurodegenerative diseases. These areas of focus have been strategically selected because we believe they can be uniquely addressable by our vectors [audio dip] there are many diseases with urgent unmet medical need. Beyond our internal development programs, we selectively license components of our NAV Technology Platform, most typically single vectors for single indications to third-party companies whose vision and commitment to gene therapy is aligned with ours. Our NAV Technology Platform consists of over 100 novel adeno-associated viral vectors or AAV vectors, including vectors like AAV7, AAV8, AAV9 and AAVrh10. Our vectors are the result of world-class research conducted at the University of Pennsylvania in the lab of Jim Wilson. These efforts were aimed at discovering and developing safer and more effective gene therapy vehicle than those previously [audio dip] resulting AAV vectors, the foundation of the NAV Technology Platform, were found to have the following significant and differentiating attributes as compared to earlier generation AAV vectors, including higher expression and increased durability, broad and novel tissue selectivity, reduced immune response, and improved manufacturability. REGENXBIO has an exclusive worldwide license to these AAV vectors. Our goal is to utilize these vectors to enable the development of one-time disease altering gene therapy treatments. Since our inception, our patient-focused mission remains the same, even as our Company or platform in the field of gene therapy evolves. Our support of patient communities we work with is unwavering. We're actively engaged with patient advocacy organizations to have an acute understanding of the patient experience, which guides our program development and allows us to be a reliable and compassionate partner to the patient communities we serve. We believe we are advancing towards the future where a single administration gene therapy treatment that significantly alter the course of disease and deliver improved patient outcomes will become a reality. In March, we made a valuable addition to our management team, who we believe will be instrumental in helping us achieve our mission. With the appointment of Olivier Danos as the Company's Chief Scientific Officer. Dr. Danos is a respected leader in gene therapy space and brings to REGENXBIO an immense step to [audio dip] scientific experts. Olivier most recently served as Senior Vice President, Cell and Gene Therapy, at Biogen where he worked to develop novel technologies for gene transfer and genome engineering. We're very excited to have Dr. Danos as a member of our team, believe his experience, knowledge will contribute to the advancement of our REGENXBIO's programs, will enable our Company to remain at the forefront of innovation of gene therapy. Additionally in March, we bolstered our balance sheet through the closing of an underwritten public offering of 3.7 million shares of common stock, followed by the exercise installed by the underwriters of their option to purchase 555,000 shares from the Company in April, each at a price of $20.50 per share from which we raised an aggregate gross proceeds of $87.2 million. I'd now like to turn to an update on our product programs, which currently target the following indications: wet age-related macular degeneration or wet AMD, homozygous familial hypercholesterolemia or HoFH, and Mucopolysaccharidosis Type I MPS I, and Mucopolysaccharidosis Type II MPS II. I'll begin with RGX-314 for the treatment of wet AMD, our lead therapeutic candidate in our retinal disease franchise. Wet AMD, which may impact over 2 million individuals in the US, EU and Japan combined is characterized by [audio dip] resulting in fluid leakage that leads to diminished, distorted, or even total vision loss. The current standard of care for wet AMD is the treatment with one of a class of vascular endothelial growth factor or VEGF inhibitors, which neutralize VEGF activity to impair the formation of these blood vessels that lead to this vision loss. While effective, these standard of care therapies require frequent and inconvenient administration by injections directly into the eye, with typical dosing regimens requiring administration every four to eight weeks to maintain efficacy. This dosing regimen places a burden on the patient, and often results in a lack of compliance. Patients often experience vision loss with reduced frequency of treatment. Utilizing the NAV AAV8 [audio dip] RGX-314 is expected to gene for monoclonal antibody fragment. The expressed monoclonal antibody fragment is designed to neutralize VEGF activity, employing a similar mechanism as a standard of care therapy to inhibit formation of abnormal vasculature and retinal fluid accumulation. The NAV AAV8 vector has been selected because it's demonstrated effective transduction of retinal cells as observed in multiple preclinical animal studies. RGX-314 is administered with one-time sub-retinal injection. Site activation is underway at six leading retinal surgical centers in the U.S. for our Phase I clinical trial of RDX-314. Drug has been shipped to a number of sites in anticipation of dosing of our first patient, which remains on track for mid-year 2017. This will be a multi-center, open-label, multi-cohort dose escalation trial. The primary objective of this study is to evaluate the safety and tolerability of a one-time sub-retinal delivery of RGX-314 in up to 18 wet AMD patients at 24 weeks. Additionally, [audio dip] including best corrected visual acuity and SD-OCT. We are developing RGX-314 under a multi-institutional collaboration with world renowned gene therapy ophthalmology experts including Jim Wilson, Jean Bennett and Al Maguire at Penn's Gene Therapy Program and Center for Advanced Retinal and Ocular Therapeutics, and Dr. Peter Campochiaro at Johns Hopkins Wilmer Eye Institute. We look forward to sharing an interim update from this Phase I trial by the end of this year. I'll now turn attention to our metabolic franchise, in RGX-501, our clinical candidate for the development of treatment of HoFH. HoFH is a rare genetic disorder caused by a defect in the low-density lipoprotein or LDL receptor gene. The LDL receptor is responsible for processing LDL cholesterol. When mutations occur in both the LDL receptor genes or in both of the copies of the LDL receptor gene, the LDL pathway is severely disrupted resulting in an accumulation of LDL cholesterol in the blood stream that can lead to coronary artery disease at a very young age, a severe and ultimately fatal condition. RGX-501 is designed to address the underlying genetic defect by correcting the receptor deficiency responsible for disease pathology. One-time administration of RGX-501 [indiscernible] because this vectors demonstrated focus on liver cells is designed to deliver a healthy copy of the LDL receptor to those cells. In March, we were pleased to announce the dosing of the first patient in our Phase I/II trial evaluating RGX-501. Patients receiving one-time intravenous administration of drug will be evaluated for safety as a primary endpoint, but secondary endpoints will include LDL cholesterol reduction at 12 weeks and other clinical outcome measures. Enrollment is progressing, and we look forward to sharing an interim update from this Phase I/II trial by the end of the year also. I'll now finally turn our attention to our neurodegenerative franchise where we have two product candidates in development, RGX-111 for the treatment of MPS I and [audio dip]. MPS I and MPS II are both rare genetic central nervous system or CNS disorders caused by a defect in the IDUA and IDS genes respectively. These genetic defects lead to deficiencies in the lysosomal enzymes required for breakdown of waste products within cells and results in both physical symptoms and significant cognitive decline. While there are approved marketed therapies for the peripheral symptoms of both MPS I and MPS II, treatments for the CNS symptoms of the disease are severely limited or non-existent. As such, our programs are designed to address this area of urgent unmet medical need. In this case, we are using the NAV AAV9 vector for both RGX-111 and RGX-121 due to this vector's affinity for the central nervous system cells. We are employing a one-time administration of therapy directly into the cerebrospinal fluid via an intracisternal administration to optimize exposure of RGX-111 and RGX-121 to target cells. We plan to file INDs for the Phase I/II trials of RGX-111 and RGX-121 in mid-2017. Because these programs are closely linked, we will wait to file the IND for RGX-121 until the IND for RGX-111 is active, so that we may effectively incorporate any regulatory feedback from our interactions around RGX-111 into our submission for RGX-121 as appropriate. In addition to our internal development programs, we're advancing our NAV Technology Platform through the efforts of partners and licensees. And as of March 31, 2017, our technology has been licensed to nine NAV Technology licensees and is currently employed in the development over 20 partnered programs and partner product candidates. As licensee programs continue to move forward and achieve safety and efficacy milestones, we believe that they validate the strength of the NAV Technology Platform and provide additional data that collectively drive the advancement of the AAV gene therapy space. We continue to be encouraged by partners such as AveXis, which recently presented results from its Phase I [audio dip] AVXS-101 at the Annual Meeting of the American Academy of Neurology. AVXS-101 utilizes the NAV AAV9 vector to target spinal muscular atrophy Type 1. The data presented demonstrate a sustained efficacy profile and showcase the transformative potential of gene therapy as a therapeutic modality. All in all, 2017 has been off to a productive start and promising start paving the way for several clinical advancements in 2017. With that, I'll turn the call over to Vit for a review of our financials.

Thank you, Ken. REGENXBIO ended the quarter on March 31, 2017 with cash, cash equivalents and marketable securities totaling, $209.6 million as compared to $159 million as of December 31, 2016, an increase of $50.6 million. Cash, cash equivalents and marketable securities as of March 31, 2017 includes aggregate net proceeds of $70.8 million received from the previously announced underwritten public offering of common stock which closed in March 2017. Research and development expenses were $16.6 million for the three months ended March 31, 2017, compared to $6.2 million during the same period in 2016. This increase was primarily due to increased personnel costs and increases in preclinical research and development, manufacturing and clinical trial expenses. General and administrative expenses were $6.6 million for the three months ended March 31, 2017, compared to $5.5 million during the same period in 2016. This increase was primarily due to the continued establishment of the infrastructure necessary to meet our business objectives. The net loss was $22 million or $0.82 per basic and diluted common share for the three months ended March 31, 2017, compared to a net loss of $10.8 million or $0.41 per basic and diluted common share, for the three months ended March 31, 2016. As of May 5, 2017, we had 30.8 million common shares outstanding. REGENXBIO reiterates that it expects full-year 2017 cash burn to be between $75 million and $85 million. Full-year 2017 cash burn excludes the effect of REGENXBIO's previously announced underwritten public offering of common stock in March 2017 and the underwriters' exercise of their option to purchase additional shares in 2017, which resulted in aggregate net proceeds through REGENXBIO of approximately $81.5 million after deducting underwriting discounts and commissions and estimated offering expenses. With that, I will turn the call back to Ken to review our upcoming 2017 milestones.

Thank you, Vit. We continue to look forward to ongoing clinical advancements of both our internal and partnered programs. With the March 2017 initiation of the Phase I trial for RGX-501 for HoFH and with the Phase I trial for RGX-314 for wet AMD on track for enrollment by mid-2017. We expect to report our first interim trial updates in each study by the end of this year. Additionally, we plan to file the INDs for RGX-111 and RGX-121 in mid-2017. With our recently augmented cash position and strengthened management team, we look forward to executing on these upcoming milestones and providing you with further updates on patient enrolment in clinical data this year. I like to take this time to especially acknowledge and thank the individuals and families who volunteered to take part in our clinical trials. Their participation is crucial to advancing research and development of our novel therapies that may dramatically improve lives and we're grateful to them. With that, I'd like to open up the call for any questions. Operator?

Thank you. [Operator instructions] And our first question comes from the line of Matthew Harrison from Morgan Stanley. Your line is now open.

Matthew, are you there?

Yes. Hi. Sorry about that. This is Vikram on for Matthew. So we had a question about what kind of data we could expect from the interim update for 501 and 314, specifically for 314 there's often been mixed results and different kinds of endpoints reported for wet AMD programs. Any insight you could provide about what kind of data that could be presented would be helpful?

Sure Vikram, and thanks for the question. So I think when we initiate the study, we will have an outline of the progress of enrollments over the course of the year. And by the time we get to the end of 2017, we expect that we will have made meaningful progress in that kind of dose escalation study design, probably having focused on working through at least the first two dose cohorts of patients and perhaps even expecting to have initiated dosing of the third dose cohort. For each of the cohorts when they receive RGX-314 for follow-up of up to six months, we will be making measures of visual acuity looking at imaging using spectral OCT that I described, as well as taking measures of fluid from the aqueous of eyes that have been injected with RGX-314 in order to also measure a protein product that we expect will be expressed from the delivery of the RGX-314 treatment. So among those outcome measures at different time points depending on when patients have been dosed, that's all constitute basically the package of the interim update at the end of the year.

Okay. That's helpful. Thank you. End of Q&A

Thank you. [Operator Instructions] And I'm not showing any further questions over the phone line at this time. I'd like to turn the call back over to Ken Mills, REGENXBIO's President and CEO, for closing remarks.

Thank you very much, and thanks to everyone for joining us on the call this afternoon. We look forward to advancing our pipeline through the rest of this year and providing further updates on our progress. Have a great afternoon.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program and you may now disconnect. Everyone have a great day.