Editas Medicine, Inc. (NASDAQ:EDIT) Q1 2023 Earnings Call Transcript

Editas Medicine, Inc. (NASDAQ:EDIT) Q1 2023 Earnings Call Transcript May 5, 2023

Operator: Good morning, and welcome to Editas Medicine’s First Quarter Conference Call. All participants are now in a listen-only mode. There will be a question-and-answer session at the end of this call. Please be advised that this call is being recorded at the Company’s request. I would now like to turn the call over to Cristi Barnett, Corporate Communications and Investor Relations at Editas Medicine.

Cristi Barnett: Thank you, Camilla. Good morning, everyone, and welcome to our first quarter 2023 conference call. Earlier this morning, we issued a press release providing our financial results and recent corporate updates. A replay of today’s call will be available in the Investors section of our website approximately two hours after its completion. After our prepared remarks, we will open the call for Q&A. As a reminder, various remarks that we make during this 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. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent annual report on Form 10-K, which is on file with the SEC as updated by our subsequent filings.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. Except as required by law, we specifically disclaim any obligation to update or revise any forward-looking statements, even if our views change. Now, I will turn the call over to our CEO, Gilmore O’Neill.

Gilmore O’Neill: Thank you, Cristi, and good morning, everyone. Thank you for joining us today on Editas’ first quarter earnings call. I’m joined today by two other members of the Editas executive team, Baisong Mei, our Chief Medical Officer; and Michelle Robertson, our Chief Financial Officer. As many of you know, in early January, we shared our strategy to position Editas as a leader in, in vivo programmable gene editing and hemoglobinopathies. During the first quarter, we successfully executed this strategy driving to our goal of delivering life-changing medicines to patients with previously untreatable or undertreated diseases. We are increasing our momentum in driving our ex vivo EDIT-301 program as we pursue a leadership position in hematopoietic stem cell medicines for hemoglobinopathy.

As a quick recap, there are three underlying pillars to our new strategy. First, while continuing to develop EDIT-301 for severe sickle cell disease and transfusion-dependent beta thalassemia, or TDT, we have sharpened our discovery focus to in vivo administered genome editing medicines. As part of that refocusing effort, we previously announced that we had divested our iNK cell franchise to Shoreline Biosciences in January. Second, we are strengthening our discovery engine and technological capabilities. We have divided our research division into separate technology and drug discovery groups, enhancing the capabilities of each and implementing our new target selection criteria. Finally, our third strategic pillar is an increase in expanded approach to business development.

In tandem, we will continue to deleverage our IP portfolio to drive out-licensing and partnership discussions. So, how have we executed against our new strategy in the first quarter? We have increased our investment in our EDIT-301 program after reviewing promising initial RUBY Phase 1/2 study data that indicated that we have a competitive and potentially differentiated program to treat sickle cell anemia and TDT. Additionally, we are investing to develop an in vivo approach for editing hematopoietic stem cells for the treatment of sickle cell disease and TDT, leveraging the unique and differentiated approach of EDIT-301 that we have already seen POC for in humans. We continue to ramp up enrollment and dosing of patients in the RUBY trial for sickle cell disease and are on track to have dosed 20 total patients by the end of 2023.

We are also excited to share that the FDA recently granted orphan drug designation to EDIT-301 for the treatment of sickle cell disease, and we are pleased to announce that in June we will provide a RUBY clinical data update in an oral presentation at the European Hematology Association, or EHA Congress, and in our company-sponsored webinar. Baisong will share further details regarding our June data readout and our enrollment progress in his remarks. On EDIT-301 for TDT, we are pleased to share that we dosed the first patient in our EDITHAL Phase 1/2 trial in the first quarter and that the patient has successfully engrafted neutrophils and platelets. Enrollment continues to progress and we remain on track to provide initial clinical data from the EDITHAL trial by year-end.

Photo by National Cancer Institute on Unsplash

Moving to in vivo. Earlier this year, our drug discovery group began lead discovery work on in vivo therapeutic targets at HSCs or hematopoietic stem cells and other tissues. As a reminder, under our new target selection criteria, we will select therapeutic targets that will allow our genome editing approach to differentiate maximally from the current standard of care for serious diseases. The target selection criteria will work to ensure targets are selected that maximize the probability of technical, regulatory and commercial success. Our search for a new CSO to lead this drug discovery group continues to progress, and I look forward to updating you on this search and our in vivo work in the future. Turning to our intellectual property position.

Since the founding of Editas, we have placed substantial importance in securing robust intellectual property protection, covering our cutting-edge scientific discoveries and gene editing advancements to enable the development of novel transformative medicines for patients in need. It is important to note that we have a large portfolio of foundational U.S. and international patents covering CRISPR/Cas9 in human therapeutics, only some of which are subject to interference proceedings. And we are confident that our IP portfolio will provide meaningful value in the future. We are the exclusive licensee of Harvard University’s and Broad Institute’s Cas9 patent estates, and Editas is uniquely positioned to issue exclusive and nonexclusive licenses for Cas9 to any company seeking to use these enzymes to make human medicines, including an in vivo and ex vivo therapeutic applications.

Our unique position as the exclusive licensee of this patent estate ensures that we are the party responsible for any licensing discussions as CRISPR/Cas9 products enter the market, which, given the size of the U.S. patient market, the number of companies buying to develop CRISPR/Cas9 medicines is a substantial position. With our annuity sharpened strategic focus, our world-class scientists and employees and our keen attention to execution, we continue to build upon the momentum from our clinical readout milestones during the fourth quarter of 2022. We look forward to updating you on our progress and on the execution of our new strategy throughout the year. Now, I will turn the call over to Baisong, our Chief Medical Officer. Baisong?

Baisong Mei: Thank you, Gilmore. Good morning, everyone. Let’s start with EDIT-301 RUBY study for severe sickle cell disease. As Gilmore mentioned, we continue to enroll and dose patients in the RUBY study. We have activated 20 study sites and enrolled 19 patients, almost double the number of patients enrolled from three months ago. As we previously shared, we began parallel dosing of patients earlier this year. We are on track to provide an update on the RUBY clinical data both next month and year-end as well as to dose 22 total patients by year-end. Turning to clinical data. I’m excited that we will present RUBY clinical data as an oral presentation at the European Hematology Association, or EHA Congress, and at our company-sponsored webinar in June.

The data set will include safety and efficacy data for multiple patients, including 10 months data from the first patient treated and 6 months data from the second patient treated, including total hemoglobin, fetal hemoglobin. We will also share data on safety, neutrophil and platelet engraftment and vaso-occlusive events or VOE, from the first four patients. As a reminder, last December, we presented initial data from the first two patients treated in the RUBY trial. The first patient who had five months of follow-up after treatment with EDIT-301 showed clinically significant improvements across all hematological parameters and no VOEs. Specifically, that patient had an increase of fetal hemoglobin fraction to 45.4%, five months after EDIT-301 infusion.

And the correction of anemia with total hemoglobin level well into the normal range at 16.4 grams per deciliter. These initial clinical data indicated that EDIT-301 provides patients with high and sustained level of fetal hemoglobin and normal level of total hemoglobin. This clinical observation is consistent with preclinical data, which has demonstrated that targeting of gamma globin promoter enables increases of fetal hemoglobin independent of erythropoietic stress. Given the unique gene-editing approach and mechanism of action by EDIT-301, supported by preclinical data and initial clinical data, we continue to believe that EDIT-301 can potentially provide robust clinical benefit to patients with severe sickle cell disease, and potentially provide clinical differentiation in the long-term.

As a reminder, a sustained normal total hemoglobin level is an important clinical outcome for patients, as the correction of anemia can significantly improve quality of life and ameliorate an organ damage. We believe sustained normal level of total hemoglobin could be a potential point of differentiation for EDIT-301. Turning to EDIT-301 EDITHAL Phase 1/2 trial for transfusion-dependent beta thalassemia. As Gilmore mentioned earlier, we dosed our first patient in Q1 and the patient has successful neutrophil and platelet engraftment. We remain on track to provide initial clinical data from the EDITHAL trial by year-end. As we have done for the RUBY study, we are also taking multiple measures to accelerate the development of EDIT-301 for TDT and have strong positive momentum.

We have enrolled multiple patients who have completed pheresis and have their CD34 positive cells edited or are in the process of pheresis. Recently, I have been traveling around the country visiting our RUBY and EDITHAL clinical trial sites. I very much appreciated the enthusiasm and the support from the investigators and study sites. I’m pleased with the momentum of EDIT-301 in patient recruitment, pheresis, editing and dosing in both studies. I’m excited to hear from investigators that patients dosed with EDIT-301 have already seen positive changes in their lives. We look forward to sharing additional updates as the year progresses, including RUBY study data next month and at year-end, and sharing initial clinical data from EDITHAL study by year-end.

Now, I will turn the call over to Michelle, our Chief Financial Officer, to review our financials.

Michelle Robertson: Thank you, Baisong, and good morning, everyone. I’d like to refer you to our press release issued earlier today for a summary of our financial results for the first quarter of 2023. I’ll take this opportunity to briefly review a few items. Our cash, cash equivalents and marketable securities as of March 31st were $402 million compared to $437 million as of December 31, 2022. We expect our existing cash, cash equivalents and marketable securities to fund our operating expenses and capital expenditures into 2025. Revenue for the first quarter of 2023 was $9.9 million compared to $6.8 million in the same period last year. The increase is related to the previously announced sale of our oncology assets to Shoreline Biosciences and related licenses, which was completed in January 2023.

G&A expenses for the quarter were $23 million compared with $19.5 million for the first quarter of 2022. The $3.5 million increase is primarily attributable to increased professional services expenses to support business development activity, partially offset by a decrease in stock compensation expense. R&D expenses this quarter were $38 million, which was flat compared to the first quarter of 2022. This reflects a decrease in expenses following the strategic reprioritization of our portfolio, offset by increased investments to accelerate the development of EDIT-301. This reallocation of capital is in line with our strategic priorities. Overall, Editas remains in a strong financial position, and our sharpened discovery focus allowed us to concentrate our talent and extend our cash runway into 2025, which provides ample resources for our continued progress in both of our EDIT-301 trials as well as advancing our research efforts in hemoglobinopathy and other in vivo discoveries.

With that, I will hand the call back to Gilmore.

Gilmore O’Neill: Thank you, Michelle. It has been almost one year since I joined Editas. In this time, the Company has demonstrated two clinical proof of concepts, including a proof of concept for EDIT-301, which has the potential to be a competitive and differentiated product for the treatment of sickle cell disease and transfusion-dependent beta thalassemia. In addition, as I stated in my opening remarks, we’ve taken a number of tangible steps to reshape the Company around our new strategy, which we shared in early January and have begun executing on that strategy. And this is just the beginning. We look forward to continuing our transformation on sharing our progress with you. As a reminder, our strategic objectives for the year include providing clinical updates from the EDIT-301 RUBY study in June and end of 2023, providing clinical data from EDIT-301 EDITHAL trial for TDT by the end of 2023, dosing 20 total patients in our EDIT-301 RUBY study by year-end, hiring a new CSO with specific expertise aligned to our vision, advancing discovery of in vivo editing of hematopoietic stem cells and other tissues, and finally, leveraging our robust IP portfolio and business development activities to drive value and complement our gene editing technology capabilities.

I thank all the patients, investigators and our employees who are helping to drive our strategy forward. Thank you very much for your interest in Editas, and we’re happy to answer questions. Thank you.

See also 10 Best Brewery and Distillery Stocks To Buy Now and 12 Best Performing Dividend ETFs in 2023.

Q&A Session

Operator: And our first question comes from Joon Lee with Truist Securities.

Joon Lee: Hi. Thanks for taking our questions. Novartis recently terminated their sickle cell disease program after treating a couple of patients to see no benefit. Given your editing strategy is similar to what Novartis said, could you point to some differences why your promoter editing strategy should continue to work when Novartis failed? And I have a follow-up. Thank you.

Gilmore O’Neill: Thanks very much, Joon. Yes, we did actually see that event some weeks or months ago. I think there are some elements that are critical. I think the first thing to point out that — is that in our initial POC readout at the end of last year, we actually saw a very robust data with increase in total hemoglobin — early increase in total hemoglobin as well as a robust fetal hemoglobin expression completely consistent with the preclinical data that were generated. In testing our preclinical and our clinical hypotheses that our unique approach of combining an AsCas12a effector CRISPR enzyme with the targeting of a different region of the HBG1/2 promoter, which was much closer, in fact, actually encompasses the area in which we see deletions or mutations associated with hereditary persistence fetal hemoglobin.

I think we believe that all those factors point towards a key difference and differentiation, and indeed, our preclinical data and our clinical data have actually supported that hypothesis.

Joon Lee: So, can you remind me if you have any data preclinical? Having — comparing the editing — the same region in Cas9 versus AsCas12 that you’re using, and what the difference is maybe?

Gilmore O’Neill: Sorry, Joon…

Joon Lee: Can you…

Gilmore O’Neill: Yes. So I mean, comparing Cas9, which is what I think Novartis used and AsCas12a, which is what you’re using, you can have different outcomes if you were to target the same region in terms of getting deletions or…?

Baisong Mei: Joon, I think you are a little breaking down, but let me try. This is Baisong. Let me try and see whether I understand correctly. There is background noise. So I think your question is to say compared to Novartis and do you have a comparison between Cas9 and Cas12a and also the region just Gilmore mentioned. Is that your question?

Joon Lee: Yes. No, actually, if you target the same region, either with Cas9 or Cas12a, what differences in outcome you get?

Baisong Mei : Yes. Let me just kind of take it. We did the comparison, we did — from a clinical perspective, we scanned a large region — of the promoter region to identify which areas to do the editing. So, without too many specifics, but we covered a large region of the promoter in the HBG1 and 2. And we find out that related to the region we selected, which Gilmore just mentioned, is consistent to the clinical observation for these HPFH. And then we also compared the Cas9 with Cas12 and we found the difference between Cas9 and Cas12. Does that answer your question?

June Lee: Yes. No, absolutely. Your impaired data is very good, but just was just curious what was driving that difference. Thank you so much. I’ll hop back in the queue.

Baisong Mei: Thank you.

Operator: Our next question is from Samantha Semenkow with Citi.

Samantha Semenkow: Just a couple for me. For the presentation at EHA, is that a late-breaking presentation? I just wanted to clarify.

Gilmore O’Neill: Thanks, Samantha. I’ll just have Baisong update you or give you detail there.

Baisong Mei: It is a normal oral presentation that is expected.

Samantha Semenkow: And then I also wanted to clarify, I heard you mention, obviously, we’ll have updated data for the first and second patients. And then, I heard you, I think, say, four patients. So will it be six patients total that will get data on VOE, or is that — or VOCs, or is it four patients total?

Baisong Mei: Total will be four patients at the EHA presentation.