Passage Bio, Inc. (NASDAQ:PASG) Q4 2022 Earnings Call Transcript

Passage Bio, Inc. (NASDAQ:PASG) Q4 2022 Earnings Call Transcript March 6, 2023

Operator: Good morning, and welcome to the Passage Bio Fourth Quarter and Full Year 2022 Financial Operating Results Conference Call. At this time, all participants are in listen-only mode. Following the formal remarks, we will open the call up for your questions. Please be advised that this call is being recorded at the company’s request. Now, I’d like to turn it over to Stuart Henderson, Vice President, Corporate Development and Investor Relations. Stuart, please proceed.

Stuart Henderson: 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 under the Press Releases and Statements section of Investors and News. On today’s call, Chief Executive Officer, Will Chou, will review our fourth quarter 2022 and recent business highlights; Mark Forman, our Chief Medical Officer, will review our clinical programs; and Simona King, our Chief Financial Officer, will review our fourth quarter and full year 2022 financial results. Before we begin, please note that today’s call may include a number of forward-looking statements. 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 statements to account for or reflect events or circumstances that occur after this call. It is now my pleasure to pass the call over to Will.

Will Chou: Thanks, Stuart, and thank you all for joining us this morning. I want to begin today’s call by briefly reflecting on this past year. By honing our strategy and operational focus, we ended 2022 in a strong position and I’m proud of the work the team did to lay the groundwork and build the momentum needed to ensure we can deliver meaningful clinical data from our two lead programs in 2023. I’m excited by what 2023 has in store for Passage Bio, and I’m pleased to report that the year is already off to a strong start, with the presentation of additional data from cohorts 1 through 3 of our Imagine-1 clinical trial for GM1 gangliosidosis at the WORLDSymposium last month. The data shared at WORLD continue to demonstrate that PBGM01 administration is well tolerated, has a positive safety profile, and exerts a biological effect across all treated infantile GM1 patients.

Mark will review these results in more detail shortly. But this data builds upon the information we presented in December and adds to our confidence of the potential benefit that PBGM01 may offer the GM1 patient community. To date, we’ve completed dosing of the first four cohorts in our Imagine-1 study for a total of eight patients and look forward to reporting initial data from Cohort 4, which is early infantile patients treated with a high dose by midyear. Based on the encouraging data we have generated thus far and our supporting preclinical data, we are moving forward with plans to treat additional patients with a higher dose than doses administered in Cohorts 1 through 4. We also plan to revise our study inclusion criteria to maximize the benefit risk profile of PBGM01.

By treating additional patients at a higher dose, we will generate important clinical data to further inform dose and patient selection, as well as discussions with regulatory authorities on the design of the confirmatory study. For our upliFT-D trial for frontotemporal dementia or FTD, we remain focused on driving patient identification and recruitment initiatives and expanding our global footprint of clinical trial sites. Based on the momentum we are experiencing, we expect to report initial safety and biomarker data from Cohort 1 in the second half of the year. While our primary focus is on generating meaningful clinical data for our GM1 and FTD programs, we also continue to advance our promising preclinical programs in Amyotrophic Lateral Sclerosis, Huntington’s disease and Temporal lobe epilepsy through our ongoing innovative research partnership with 10 gene therapy program.

Moreover, following the prioritization of our research and development efforts announced last November, we remain committed to exploring strategic alternatives to advance our two clinical stage programs for Krabbe disease and Metachromatic leukodystrophy. In addition, we continue to leverage our strong in-house analytical capabilities at our CMC lab at Princeton West, as these capabilities provide a competitive advantage and are critical to support ongoing and future clinical development of our programs. Lastly, we are supported by a strong balance sheet, providing us with the necessary runway to generate meaningful clinical data for our GM1 and FTD programs. Simona will describe our financials in more detail, but we expect existing cash resources to fund operations into the first half of 2025.

With that, I will now turn it over to Mark to review our two lead clinical programs and the recent GM1 data.

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Mark Forman: Thank you, Will. Let me begin with a brief overview of our lead program, PBGM01, the GM1 Gangliosidosis, and then I will review key findings from the interim data shared in December of last year and more recently at the 19th Annual WORLDSymposium. GM1 is a fatal pediatric neurological lysosomal storage disorder caused by a GLB1 gene mutation that results in low activity of the beta-galactosidase enzyme. This leads to rapid neurological decline and in the most severe forms, unfortunately, to mortality within several years. Patients with GM1 are a rare and underserved population, and there are currently no disease-modifying therapies for this disorder. Our Imagine-1 clinical trial focuses on the early and late infantile forms of GM1, which are the most severe forms of the disease.

The dose escalation portion of this global Phase 1/2 trial is an open label study with PBGM01, enrolling four distinct cohorts divided by age and dose level. Our approach uses a next-generation proprietary AAVhu68 capsid, administered by the Cisterna Magna to deliver a code on optimized GLB1 transgene to increase beta galactosidase enzyme activity in the brain and peripheral tissues. We’ve experienced strong momentum in our Imagine-1 trial. To date, we’ve completed dosing of the first four cohorts in the dose escalation portion of the study, representing a total of eight patients. In December of last year, and more recently at the WORLDSymposium, we were excited to share promising interim results from the first three cohorts in the study. These cohorts represent the low-dose cohorts in both early and late infantile patients and the high-dose late infantile cohort for a total of six patients.

Key findings from these interim data are as follows. First, we’re excited to see that PBGM01 continues to be well tolerated and has a favorable safety profile. There have been no treatment-related serious adverse events, no evidence of dorsal root ganglion or DRG toxicity, no immune response requiring adjustments to the immunosuppression and no complications related to the ICM procedure. Second, we observed dose-dependent increases in CSF beta-galactosidase enzyme activity, the enzyme of interest and dose-dependent decreases in CSF GM1 ganglioside levels, a key substrate of beta-galactosidase. Biomarker Data also demonstrates that ICM delivery of PBGM01 leads to β-Gal activity enzyme activity in both the CNS and the peripheral. Third, turning to clinical results.

We observed that patients with a lower developmental delay of dosing experienced a better response to treatment on the Vineland and Bayley developmental scales regardless of dosage level. We also reported imaging data from the MRI severity score, which can be used to assess treatment effects on brain volume and white matter integrity based on baseline and follow-up MRIs. At this interim analysis, PBGM01 administration was associated with stabilization of MRI severity scores in all treated patients at a follow-up period of 6 to 12 months. In contrast, published natural history data from late infantile GM1 patients showed MRI severity scores increased in the majority of children at a follow-up period of six months to four years. Overall, the data generated to date give us confidence that PBGM01 is exerting a biological effect in all treated patients with infantile GM1.

Based on the favorable safety profile of PBGM01 to date, the observed dose response in key biomarkers and supporting pre-clinical data, we plan to treat additional patients at a higher dose than has currently been evaluated in the first four cohorts. Additionally, we are revising study inclusion criteria to maximize the benefit risk profile of PBGM01. These modifications to the study design will provide us with valuable clinical data to inform dose and patient selection as we seek to optimize the therapeutic benefit of PBGM01. Moreover, these additional data will also allow us to have productive interactions with regulatory authorities on confirmatory study design and the pathway towards a biologics license application. We are excited to continue to advance our Imagine-1 program and expect to dose the first patient at the higher dose in the second half of 2023 following regulatory review.

Next, let me discuss PBFT02 for frontotemporal dementia with granular mutations. FTD is a devastating form of early onset dementia affecting patients between the ages of 40 to 65. The form of the disease we are seeking to treat with our therapy is caused by our granulin or GRN, gene mutation, which resulted in deficiency of progranulin. It is estimated that about 5% to 10% of FTD is caused by a GRN mutation. We are utilizing the AAV1 capsid to deliver a functional copy of the granulin gene via ICM delivery to the CSF. The goal of this treatment and delivery approach is to potentially provide higher-than-normal levels of the progranulin protein to the CNS to overcome the deficiency in granulin gene mutation carriers. Our upliFT-D clinical trial is investigating two dose levels of PBFT02 and is sequentially enrolling two cohorts.

Based on the results of the first two cohorts, we have the optionality for a third dose level. The primary endpoint of the study is to evaluate the safety and tolerability of PBFT02. Secondary endpoints include disease biomarkers and clinical outcome measures. We continue to focus on activating additional clinical site €“ trial sites around the globe and on driving a variety of initiatives to support patient identification and recruitment. Based on the momentum in these efforts, we expect to share initial safety and biomarker data from Cohort 1 patients in the second half of 2023. These data will focus on safety and CSF levels of progranulin. With that, I will now turn the call over to Simona to review our financials.

Simona King: Thank you, Mark. As we reported in our press release this morning, cash equivalents and marketable securities were $189.6 million, as of December 31, 2022, as compared to $315.8 million as of December 31, 2021. Following the streamlining of our operations and prioritization of our research and development efforts announced last quarter, we expect these existing cash resources to fund operations into the first half of 2021. We will continue to manage our cash burn judiciously as we focus on program execution. R&D expenses were $17.7 million for the quarter ended December 31, 2022, and $86.1 million for the year ended December 31, 2022, compared to $33 million and $117.7 million for the same quarter and year-end 2021.

G&A expenses were $10.6 million for the quarter ended December 31, 2022, and $49.3 million for the year ended December 31, 2022 compared to $17.2 million and $60.1 million for the same quarter and year-end 2021. Net loss was $27.1 million for the quarter and $136.1 million for the year ended December 31, 2022, compared to $51.2 million for the quarter and $185.4 million for the year ended December 31, 2021. Let me now turn it back to Will for closing remarks.

Will Chou: Thank you, Simona. The primary focus for 2023 is on strong execution and continuing to generate meaningful clinical data from our lead programs in GM1 and FTD. We expect to achieve several program milestones this year. By mid-2023, from our Imagine-1 study, we plan to report initial safety and biomarker data from cohort 4, which is early infantile patient’s treated with a high dose. In the second half of 2023, we look forward to dosing the first GM1 patient at a higher dose than those previously evaluated, and to reporting initial safety and biomarker data from cohort 1 of our uplifted study. Prior to taking your questions, I would like to thank my colleagues at Passage Bio, who have shown their commitment to the pursuit of our ambitious mission.

We also continue to be grateful for the support of the patients, families and clinical trial investigators who have chosen to participate in our studies, as well the support of our partners at the Gene Therapy Program. With that, I would like to open the call for your questions. Operator?

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Q&A Session

Operator: Thank you. We will now take any questions you may have. And our first question coming from the line of Yaron Werber with Cowen. Your line is open.

Brendan Smith: Hi. Great. This is Brendan on for Yaron. Thanks for taking the questions and congrats on the progress. Maybe just a couple of quick ones from us. In terms of the dose escalation plan, can you actually — can you confirm whether you’ve already identified additional patients? It looks like you’re going to go both into early and late infantile for this higher dose? And then, really can you give us a sense that are you — is there like a particular threshold you’re trying to hit in terms of biomarker response or functional improvement, or are you really just looking to see how much you can maximize the efficacy before transitioning to a pivotal study? And then just really quickly on a potential pivotal study, based on what you know so far, with these neurodevelopmental endpoints, can you maybe give us a sense of how long you think you would need to follow patients to support approval in GM1? Thank very much.

Will Chou: Hey, thanks for the question, Brendan. I’m going to turn that over to Mark. Do you want to answer?

Mark Forman: So yes, thanks. So for the dose escalation phase cohorts that are currently being considered, I mean, over the course of the past few years, we’ve received a great deal of interest in our trial, and there are an inquiries from dozens of families interested in, including both early infantile and late infantile. We’ve been reviewing these profiles and they have — and as assessed by the adjudicator and the majority of these children would meet the revised trial eligibility that we’re planning on. Thus, we’re confident that we’re able to quickly recruit the serve even with the narrowing of the inclusion criteria. With regards to the second question, with how much beta-galactosidase activity that we need, the amount of beta-galactosidase that is needed to correct the deficits in these patients is not known.

What we do know is that in animal models even modest reductions, and I’m specifically talking about the transgenic mouse knockout model that we used in our preclinical program, even modest increases in beta-galactosidase activity were associated with clinical improvement. That being said, we’re really using the pharmacodynamic marker, the CSF levels of GM1 gangliosides to drive our program. And in the data that we’ve shared most recently at WORLD, we’ve shown that at six months at the high dose, we’ve been able to reduce those levels to 75%. And the goal is to really normalize those levels. And so that is really what we’ll be looking for going forward is looking at the levels of reduction of the ganglioside — GM1 ganglioside levels in conjunction with the clinical outcomes which we believe will be a lagging indicator.

Will Chou: The last question was on follow-up. And so in terms of clinical follow-up there is a long lead-time for seeing developmental changes at a minimum at a minimum we would at least need to have a follow-up of six months.

Brendan Smith: Okay. Got it. Thanks very much guys.

Operator: Thank you. And our next question coming from the line of Madhu Kumar with Goldman Sachs. Your line is now open.

Omari Baruti: Hi, this is Omari on for Madhu. So, I have two questions. First what are the specific outputs that you’re looking for in early infantile high dose cohort for GM1 to pursue registrational studies? And then second do you have any visibility or registrational endpoint in GM1?

Will Chou: Okay, I’ll take the first one and then I’ll turn the second question over to Mark. So, in terms of specific outputs that we’re looking for it’s really two. We’re looking for durable decreases in GM1 ganglioside as Mark referenced previously and we’re looking for improvement in development. Mark?