Voyager Therapeutics, Inc. (VYGR) Q2 2018 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Voyager Therapeutics Second Quarter 2018 Financial Results and Corporate Highlights Conference Call. [Operator Instructions]. Please be advised that this call is being recorded at the company's request. At this time, I'd like to turn it over to Mr. Matt Osborne, Voyager's Vice President of Investor Relations and Corporate Communications. Please proceed.

Thank you. Good afternoon, and welcome to the conference call. This afternoon, we issued a press release which outlines the results and corporate highlights for the second quarter of 2018 and provides our corporate goals and financial guidance for 2018. The release is available at voyagertherapeutics.com. Today on our call, Andre Turenne, Voyager's President and CEO, will review our recent corporate and program highlights; Allison Dorval, Voyager's VP of Finance, will review the financials; and then we will open up the call for your questions. Joining us on today's call for Q&A is Dr. Steven Paul, Voyager's Senior Advisor, Board Member and past CEO; Matt Ottmer, Voyager's Chief Operating Officer; Dinah Sah, Voyager's Chief Scientific Officer; and Mark de Somer, Voyager's VP of Clinical Development. Before we begin, just a reminder that various remarks we make during the call about the company's future expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the company's view as of today, August 7, 2018. Voyager disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to today's press release as well as Voyager's filings with the SEC for information concerning risk factors that could cause actual results to differ materially from those expressed or implied by such statements. With that, I'll pass the call over to Andre.

Thank you, Matt, and good afternoon, everyone. Thank you for joining us on our call. Before we begin our formal remarks, I'd like to take a moment to thank Steve Paul on behalf of Voyager and the Board of Directors. As the founding CEO and as a leading neuroscientist, Steve has been fundamental in creating the company that Voyager is today. I'm delighted that Steve will continue to contribute to Voyager moving forward as a senior advisor and board member. With that, as this is my fourth week as the new CEO at Voyager, I'd like to start today by highlighting what attracted me to the company. I will then update you on the progress of our programs before reviewing the financials and opening it up to Q&A. I joined Voyager because I believe that this company has the potential to have an enormous impact on people's lives. Voyager is a leader in AAV gene therapy development at a time when the technology and its delivery are getting vastly more refined and better understood. The company is applying its expertise to neuroscience at a time when the biology of CNS disorders is elucidating faster than ever before. This focus and expertise rather uniquely position Voyager in the pursuit of transformative therapies for patients with severe neurological diseases. Having been involved with Voyager since the early days through the collaboration with Sanofi Genzyme, I've seen firsthand the progress made by the team on the programs, manufacturing capabilities and overall platform. I've also seen a rare degree of scientific rigor applied by this company in the selection of its candidates and optimization of every aspect of the delivery. When you deal with one-time interventions for such devastating conditions, you need to get it right. Voyager's rigorous approach gives me great confidence in the quality of our current portfolio and product engine. So I'm thrilled to be joining Voyager at a compelling strategic inflection point in the company's relatively short 5-year history. Thanks to all the work done to date and the contributions of our founders and employees, clinicians and patients, as well as those of all of our collaborators, I join a company that has already established itself as a leader in CNS gene therapy development. Now, with a pivotal program kicking off and a rich pipeline approaching the clinic, we have the opportunity to build on this foundation to potentially deliver critically needed therapies for patients. Now, turning to our recent updates. As our recent announcements show, we've made tremendous progress on VY-AADC for Parkinson's disease, our lead program. On the regulatory front, we were pleased to receive RMAT designation and Type C meeting feedback from the FDA. As you know, RMAT is a program for the advancement and approval of regenerative medicine products, including gene therapy. It includes all the benefits of the FDA's fast track and breakthrough therapy designation programs. To be granted such a designation, preliminary clinical evidence must indicate that a therapy has the potential to treat, modify, reverse or cure a serious or life-threatening disease. Shortly after receiving RMAT designation, we obtained written feedback from the agency from a planned Type C meeting. The responses clearly informed our plans to submit a BLA for VY-AADC based on data from the randomized, placebo-controlled Phase II trial alone, or if needed, from the randomized, placebo-controlled Phase III trial. The 2 trials, as such, now form the basis of our pivotal program. On the clinical front, the sum of our experience to date with VY-AADC and the regulatory feedback have allowed us to select the dose concentration and preferred route of delivery for the pivotal program. We are now focused on the execution of that trial. We have selected 24 high-quality clinical trial sites. These include both neurosurgical sites, where the therapy will be administered, and neurology sites, where patients will be referred -- or from which the patients will be referred. We recently held an investigator meeting and were very pleased to have all sites represented. I had the opportunity to participate in this meeting, and I was struck by the collective degree of interest and commitment to the successful execution of this study. We are now at the stage of IRB submission, site activation and patient screening. During the remainder of the year, we will provide updates as to our progress with patient enrollment. Turning to our pipeline. The ASGCT conference in May in Chicago was a showcase for scientists and clinicians to present progress made on our programs, including ALS, Huntington's and Friedreich's ataxia. We also shared some of our advances in the manufacturing of our AAV candidates. As I touched on in my opening comments, I believe that Voyager has been extremely systematic and rigorous in its science and in optimizing all aspects of our candidates. Last year, the company chose to further optimize the delivery of our ALS and HD programs. The aim was to potentially improve upon the distribution of vector throughout the spinal cord for our ALS program and into the cortex for our HD program. While this caused a slight delay before advancing into the clinic, we believe that it was the right choice to make, consistent with our goal to develop best-in-class therapies. We're excited to provide updates on preclinical data from these optimization efforts later this year at scientific conferences. Finally, moving to management updates, I want to take a moment to update you on Bernard Ravina. Bernard is transitioning to a new opportunity at a private company while continuing to contribute to Voyager as a clinical advisor. Like Steve, Bernard is one of the original Voyagers. He's played a key role in steering the programs to this inflection point. Bernard, therefore, leaves us at a natural transition point with our lead asset entering a well-designed pivotal program. I'm highly confident in the strong medical team already in place to continue to execute on this program and on our pipeline's translational efforts. A CMO search is under way, and I look forward to introducing our new medical leader in the near future. With that, I will now turn the call over to Allison, who will review the financials for the quarter.

Thanks, Andre, and good afternoon, everyone. Voyager reported a GAAP net loss of $25.5 million, or $0.80 per share, for the second quarter ended June 30, 2018, compared to a GAAP net loss of $18.9 million, or $0.73 per share, for the same period in 2017. Collaboration revenues of $2.6 million for the second quarter of 2018 compared to $1.2 million for the second quarter of 2017. Collaboration revenues reflect amounts recognized for research and development services provided by Voyager for various programs under its collaboration agreements with Sanofi Genzyme and AbbVie. The increase in the second quarter of 2018 compared to the same period in 2017 primarily reflects the revenue related to the AbbVie collaboration, which was announced in February. This increase was partially offset by a reduction in revenue under the Sanofi Genzyme collaboration, resulting from the January 1 adoption of new accounting rules related to revenue recognition, as well as Sanofi's decision in October 2017 not to exercise its option for ex-U.S. rights in Voyager's Parkinson's program. Research and development expenses of $16.5 million for the second quarter ended June 30, 2018, compared to $15.3 million for the same period in 2017. The increase in the R&D expenses related primarily to expenditures associated with increased personnel, facility and external costs to support the advancement of VY-AADC into the Phase II trial. General and administrative expenses of $11.8 million for the second quarter of 2018 compared to $4.5 million for the same period in 2017. The increase in G&A expenses was primarily due to an increase in personnel costs, including noncash, stock-based compensation expenses and higher professional fees. Cash, cash equivalents and marketable debt securities as of June 30, 2018, were $197.0 million. Based on the company's current operating plan, Voyager continues to expect to end 2018 with total cash, cash equivalents and marketable debt securities of approximately $125 million to $135 million and projects that its existing cash, cash equivalents and marketable debt securities will be sufficient to fund operating expenses and capital expenditure requirements into early 2020. With that, I'll turn the call back to Andre.

Thank you, Allison. And with that, operator, we can now take questions.

[Operator Instructions]. Our first question comes from the line of Matthew Harrison of Morgan Stanley.

Hey, this is Ismael [ph], on for Matthew. Thank you for taking our questions. So two from me. The first is: Can you update us on your current progress with ramping manufacturing, and given some of the recent issues in the field regarding DNA fragments and plasmids, while also commenting on their source material and their supply chain? And then I have a follow-up after that.

Yes, thanks for your question. So we have made progress, significant progress, on our manufacturing in the past months. And we introduced Luis Maranga, who joined us recently and has helped us think through, overall, our strategy, and -- which is at this moment not to internalize our manufacturing but rather to work with multiple suppliers across the full process to be able to deliver on our PD program and our other programs at the moment. So at a high level, everything has been advancing very well, and continues to be on track, certainly on every one of our named programs.

And I'd add as well -- this is Matt -- that based on Andre's message here as well, we don't need to own one particular facility. We actually own the process and source multiple contract manufacturers along the supply chain, and that allows us the redundancy that we can have if there's any unforeseen event. But so far, things have gone very well, especially as we've transitioned into the baculovirus material. As you know, at the beginning of the year, we had the IND cleared for that, and that provided us -- already we had that confidence ahead of it, but it certainly secured what we believe is comparable data between the 2 systems.

Great, thanks. And next, can you speak about the work you're doing to start enrollment in the pivotal program? Just, what are the key steps you still need to take before you enroll the first patient? Thank you.

Yes, and thanks for your question. Andre here. So we have carefully selected 24 sites, as I mentioned. We have nine of them that are neurosurgical sites, 15 of them that are patient referral sites and where patients will be managed. We have, as can be found on clinicaltrials.gov, we have one site currently that's been fully activated and is screening, so there's active screening of patients at one site. And we have a number of other sites that are exactly at that stage to finalize IRB approvals to be able to start that screening process. So some of them will use common IRBs, and we expect in -- very soon to have a number of other sites starting to screen patients, so that's progressing nicely.

Our next question is from the line of Jim Birchenough of Wells Fargo Securities.

Just following up on the first question, if you look at the 24 sites that you're initially looking to enroll in, what proportion of your target patient population do they encompass? And maybe if you could speak a bit about the target patient population and how many centers you really need to get experience with to really fully cover that landscape? And then I have a follow-up. Thanks.

Yes, thanks, Jim. Thanks for the question. So here, the decision was made to have this number of trials to execute and take into account that we want to have a transition from the early clinical experience to adding new trials. We've taken great care and we've been very fortunate to have investigators that have participated in this program from the start, who continue to participate and help to train new sites on the delivery and the medical management that goes with it. So it's -- for the trial sites that we have for this Phase II, we have selected that number of sites as being ideal in terms of the catchment, the referral sites, but where also we can be very close to the sites in terms of support for medical management, and the number of sites that we want to have, again, to be able to enroll just a very high quality within a reasonable time frame. So as you project now to, in light of this regulatory feedback, where this first trial could serve, potentially, as a basis for a BLA filing, what we are going to do as an organization is prepare ourselves for the scenario that we are able to do that filing with this study. So the work, then, is to transition to thinking about, how do we scale up from there to be able to move from the clinical trial setting to the commercial setting? I mentioned this; just to highlight it again, we had everyone present, every site represented, just a couple weeks ago in our investigator meeting kicking off this pivotal program, and again, there is a lot of enthusiasm, and there's a lot of procedures in place to help with shared learnings from what has happened in the Phase Ib to this trial. And throughout this trial, per design, we also have incorporated a number of features to have continuous shared learnings throughout the experience.

And Jim, also, the nice thing to add, too, as well, as Andre mentioned, these are specific surgeons who are skilled in delivering these types of treatments, especially with DBS. But around that, we have a range of neurological feeder sites, right, that are feeding into the neurosurgical sites that are actually performing the surgery, and these are also geographically dispersed in the country so we can capture the wide range of patients that are eligible for this trial.

Okay, got it. And maybe just one follow-up: Just in terms of the Phase II protocol and looking ahead, potentially, to the Phase III, could you talk about what you're doing to manage dyskinesia so you avoid the overshooting of levodopa reduction that we saw in Cohort 2? And we haven't seen the Cohort 3 results yet, but presumably at a certain level, you may get a little overshoot with dyskinesia as the need to adjust. So what have done in the protocol differently in the Phase II versus what we saw in the Cohort 2 experience from the Phase Ib? Thanks.

Yes, thanks for the question. So again, here, there's a learning about the patient selection for the study. So the baseline dyskinesia is important. I think another important learning that was highlighted also at this investigator meeting is the rate at which levodopa is managed after therapy so that we limit the rapid reduction in levodopa therapy and we provide a guidance in this protocol to the clinicians to be able to do this in a more stepwise fashion. So that, again, is a clear learning from that Phase II experience which we think is going to help reduce some of the variability in that -- from the Phase Ib, which would help us reduce variability in this Phase II trial.

Our next question comes from the line of Laura Christianson of Cowen.

I'm just curious to try to get a little bit more color on the number of patients that you're referring to when you are talking about the improvements seen from the Phase I posterior trajectory trial. Is that including all 8 now when you say that there's been improvements consistent with those achieved in the Cohort 2 and 3 at the same time point, or are you still holding off on giving us any of that data until the future medical conferences and/or scientific conferences?

Yes, thanks for your question. So the data we have at hand, the data we've reported upon, that's half of that cohort, so 4 out of 8 patients. And we will -- as we look at that sample size, we think the best way to report the data is once we get to the full sample size, to report, and we will report it at the type of time endpoint that we've looked at before, so at 6 months, at 12 months. And we're going to look to marry that, obviously, with the appropriate scientific conferences. So as we move into the coming months, we'll look for an opportunity to present in detail the full cohort of 8 patients.

And keep in mind, Laura, we had learned a lot already from the total 8 patients right at baseline, so could we surgically infuse this using the posterior approach and reduce surgical times? We were in fact able to do that with all 8 patients. And then could we get the coverage that we wanted to see in a consistent way across multiple sites? And we did that with greater than 50% coverage that we did report. So really, the last part was, once the ADDC enzyme is there, does this convert levodopa into dopamine, and do we see the clinical motor function improvements that we would hope to see? And indeed we saw that from Month 0, from right at baseline, to Month 6. And that, again, was consistent with what we saw at the same time points for Cohort 2 and 3. And keep in mind, all those cohorts, 2 and 3, in the posterior, were different than Cohort 1.

Got it. And your expectation for the full data remains the same? Namely, that you anticipate the Cohort 2 and Cohort 3 patients that have previously been presented some combination or some -- in between those 2 cohorts is what you anticipate the posterior approach to deliver?

Yes, I think that's something that we'll continue to follow, as Andre mentioned. We'll provide serial updates on these trials. Durability of response is key in any gene therapy program, and we'll continue to follow these patients. Certainly as Cohorts 2 and 3 and even 1 -- now with Cohort 1 we're beyond 3 years of treatment, and we'll provide that data over time. But seeing the consistent results, again, with Cohorts 2 and 3 in the posterior trajectory versus Cohort 1 is important to us, and certainly we'll monitor that over the coming years.

Our next question comes from the line of Christopher Marai of Nomura Instinet.

Hi, this is Allen Cha, on for Chris. So I have one question regarding the new FDA gene therapy guidelines. Can you tell us how those updates have changed your approach to trial design on some of your upcoming pipeline programs? Like, are there any programs that you plan to meet with FDA for registration on Phase I? And I've got one follow-up.

Yes, thanks for that. So I'll highlight the RMAT designation that we recently obtained, and that really, for the other programs that we have in the pipeline, we'll also consider that regulatory program, which gives us that privileged access to the regulators early on in the program, which I think is going to prove to be beneficial for the overall pipeline. So we're seeing this already in this program, and we're going to tap into the benefit now of having received that RMAT designation, so we think it's important that the field is evolving. Now there are multiple programs in the clinic in gene therapy, some with similar vector serotypes, some now for similar indications, I think with benefit for all of the companies in the space to be able to have that frequent dialog from the agency so that we learn together as the field advances.

Got it. But no specific pipeline program that you think can get a faster path to approval?

Yes, this is Steve Paul. Just to comment briefly, as you know, the other pipeline programs that Andre outlined -- ALS, Huntington's and Friedreich's, but particularly ALS and Huntington's -- those are fatal diseases. In the case of ALS SOD1, it's a rapidly progressive disease. So we don't want to comment on what we might ask in discussions with the FDA, but we think they're going to be quite receptive to something that really works well, and we look at something there as being very disease-modifying, delaying progression to ventilation and delaying death. So there I think we're going to see some interesting receptivity on their part. But again, time will tell as we continue to discuss that program with them. We -- as Andre said, we've made great progress, and we'll be updating further the progress we made scientifically in the delivery of those 2 programs.

Got it, got it. That was helpful. Just going off that, on the SOD1 asset, are there any biomarkers that can be used in place or in combination with functional improvements? Anything that you can point to for us to kind of get a sense?

Yes, Steve Paul again. So the one biomarker that seems to be emerging that looks really encouraging for both ALS and Huntington's is something called neurofilament light chain, which can be measured in plasma and in CSF, and looks to be a very good marker of disease progression. So we're quite excited about that. We've actually published some data in a very interesting dog model which has the same SOD1 mutation in -- as do humans, that develop ALS. And they in fact develop elevations in neurofilament light chains that progress with the disease. So the biomarker front for both ALS and Huntington is looking very, very positive, very encouraging right now.

And I'm showing no further questions. I would like to turn the conference back over to Andre for any closing remarks.

Okay, thank you, Amanda. And with that, we'll conclude our call. So thank you very much, everyone, for attending this afternoon, for your questions. We look forward to updating you on our progress in the near future, and personally, I look forward to meeting you also in the coming weeks. Thank you.

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