REGENXBIO Inc. (NASDAQ:RGNX) Q3 2023 Earnings Call Transcript

REGENXBIO Inc. (NASDAQ:RGNX) Q3 2023 Earnings Call Transcript November 8, 2023

REGENXBIO Inc. beats earnings expectations. Reported EPS is $-1.41, expectations were $-1.44.

Operator: Good day, and thank you for standing by. Welcome to REGENXBIO’s Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be question-and-answer session. [Operator Instructions] Please be advised today’s conference is being recorded. I would now like to hand the conference over to your host today, Patrick Christmas, Chief Legal Officer. Please go ahead.

Patrick Christmas: Good afternoon and thank you for joining us today. Earlier this afternoon, REGENXBIO released financial and operating results for the third quarter ended September 30th, 2023. The press release 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 sections, REGENXBIO’s annual report on Form 10-K for the full year ended December 31st, 2022, and comparable risk factors sections in REGENXBIO’s quarterly reports on Form 10-Q, which are 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 date of this call, November 8, 2023 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 may be provided is preliminary and does not purport to project financial positions or operating results of the company.

Actual results may differ materially. I would like to now turn the call over to Ken Mills, CEO of REGENXBIO. Ken?

Ken Mills: Thank you, Patrick. Good afternoon everyone and thanks for joining us. I’m pleased to begin today’s call with an explanation of our updated strategic plan. Dr. Steve Pakola, our Chief Medical Officer, will then provide an update on our clinical programs. And Vit Vasista, our Chief Financial Officer, will provide an overview of financial results for the third quarter ended September 30th, 2023. At the end of the call, we will be opening up the line for questions. At REGENXBIO, our mission is to improve lives through the curative potential of gene therapy. Earlier today, we began work on a pipeline prioritization and corporate restructuring plan that will enable REGENXBIO to focus our capabilities and resources on large commercial opportunities where product candidates are differentiated, can be expedited, and support meaningful value generation soon and for the long-term.

I want to be clear about what this sharpened focus means moving forward. Our highest priority programs our ABBV-RGX-314 program for the treatment of wet age-related macular degeneration and diabetic retinopathy being developed in collaboration with AbbVie, RGX-202 for the treatment of Duchenne, and RGX-121 for the treatment of MPS II or Hunter Syndrome. Now, in the last two months, we’ve experienced exciting progress from each of these programs. We’ve reported positive clinical data from investigational treatments from diabetic retinopathy and Duchenne and we’ve held a very encouraging RMAT meeting with the FDA about expediting the BLA for the treatment for MPS II. These milestones demonstrate how our science is supporting avenues to accelerate the development of new gene therapies.

And today, we’re following that encouraging data and announcing updated strategic plans for REGENXBIO. We believe that there’s a multibillion-dollar potential for RGX-314 as a single injection treatment to become the first-in-class gene therapy for Wet AMD and the standard of care to treat and prevent the progression of diabetic retinopathy. Initial efficacy data from patients treated with RGX-202 is enabling us to accelerate this program. Duchenne is a market where there is a large unmet need for new therapies, and that is capable of supporting multiple gene therapies and we believe RGX-202 has unique differentiating features that support its potential to be a best-in-class product. During a very constructive RMAT meeting with the FDA just recently in October, we received encouraging feedback and confirmed alignment with the FDA on key elements of an expedited BLA.

So we remain on track to support a BLA filing in 2024 using the accelerated approval pathway. RGX-121 would be the first gene therapy treatment for MPS II. In today’s challenging market, the ability to create value quickly and efficiently is critical. Importantly, these restructuring decisions extend our cash runway much deeper into 2025, allowing us to progress our pipeline to a number of key inflection points. These would include initiating and dosing the first pivotal trials for 314 using suprachoroidal very, enrolling the pivotal program for our RGX-202 program, and completing performance qualification locks to support a plan BLA for RGX-202, and also achieving the BLA approval for RGX-121 and MPS II. Now it’s worth noting that successfully achieving certain of these milestones between now and then would also trigger hundreds of millions of additional funds, such as milestone payments from our collaboration partner, AbbVie, for initiating suprachoroidal pivotal trials, which these milestones represent a meaningful portion of the over 560 million in development milestones eligible through this partnership for us.

And the potential receipt of a pediatric review voucher for approval of RGX-121. Generally, we’ve been observing POV sales are resulting in nearly $100 million to DLA sponsors at the time of receipt. So our updated strategic plans are intended to generate significant value for shareholders as we ensure resources are allocated to our most valuable assets, to be able to accelerate the development of these assets and to extend our operational runway in order to achieve even more milestones that can unlock value. These additional non-dilutive sources that I just highlighted, for instance, are not in our current runway guidance. And if received, would allow us to bridge to additional value creating milestones, such as more product approval and potentially to profitability.

Now I’ll turn the call over to Steve so he can review some of our clinical progress and guidance for the prioritized programs in greater detail. Steve?

Steve Pakola: Thank you, Ken. I’ll begin with 314, which is being developed in collaboration with AbbVie to treat Wet AMD and diabetic retinopathy via subretinal and suprachoroidal routes of administration. 314 utilizes our NAV AAV8 vector to deliver a gene encoding of therapeutic antibody fragments to inhibit VEGF. The anti-VEGF market opportunity is poised to grow significantly as the population ages. 314 for the treatment of wet AMD via subretinal delivery is being evaluated in two ongoing pivotal trials ATMOSPHERE and ASCENT, which are expected to enroll a total of 1,200 patients in the US, Europe and Japan, supporting the global development of the program with anticipated global regulatory submissions in late 2025 through the first half of 2026.

We also have two ongoing Phase 2 trials that fall under our collaboration with AbbVie assessing the in-office suprachoroidal delivery of 314 for treatment of wet AMD in the AAV8 study, and diabetic lechnopathy or DR in the ALTITUDE study. AAV8 is an active controlled dose escalation trial evaluating 314 for the treatment of wet AMD. We most recently presented safety data in July from Cohort 6 evaluating the dose level 3 that included short course prophylactic ocular steroids following administration of 314. The initial data presented continues to support the safety profile of 314 and highlighted the inclusion of short course prophylactic steroid eye drops, which resulted in zero cases of intraocular inflammation. We plan to present full six-month results from Cohorts 5 and 6 at the Hawaiian Eye and Retina Meeting in the beginning of 2024.

ALTITUDE is an observation controlled dose escalation study of 314 suprachoroidal delivery for the treatment of DR We’re very excited about the opportunity in DR, given the size of the market, which exceeds that of even wet AMD and because we believe this patient population can benefit the most from a potential one-time gene therapy. At AAO this past weekend and on a call with retina physicians on Monday, we presented positive data from dose levels 1 and 2 Cohorts at one year. Patients at those dose levels did not receive prophylactic steroids before or after 314 administration. 314 was reported to be well tolerated at both dose levels. One-time in-office 314 injection demonstrated clinically meaningful improvements in disease severity with reductions in vision-threatening events, Importantly, 100% of the patients with baseline NPDR treated with dose level 2 achieved stable to improved disease severity.

Moreover, dose level 2 in these patients reduce the risk of visioning threatening events by 89%. We are encouraged by this data and the potential of a one-time in-office injection for patients with diabetic retinopathy. Moving now to RGX-202 for the treatment of Duchenne. RGX-202 is a potential one-time gene therapy for the treatment of Duchenne being developed as a highly differentiated product, designed to deliver a transgene for a novel microdystrophin that includes the functional elements of the C-terminal domain, found in naturally occurring dystrophin RGX-202 is designed to support the delivery and targeted gene expression throughout skeletal and heart muscle using our NAV AAV8 vector and a well-characterized muscle-specific promoter.

Our AAV8 capsid also represents an alternative for boys who may not be eligible for other AAV mediated microdystrophin therapies due to the presence of preexisting neutralizing antibodies. At World Muscle held in October, we shared interim clinical data from the Phase I/II affinity Duchenne trial. Initial results from the first two patients for whom results were available showed robust microdystrophin expression and appropriate localization to muscle cell membrane. In the 4.4-year old patient, microdystrophin expression was measured to be 38.8% compared to control. A reduction from baseline in serum creatine kinase or CK levels of 43% was observed, supporting evidence of clinical improvement. The 10.6-year old patient had microdystrophin expression measurements of 11.1% compared to control and a reduction from baseline in serum CK levels of 44%.

Microdystrophin expression was measured by Western Blot with comparable results observed when measured by the LC-MS/MS. Overall, the data showed that RGX-202 was well tolerated with no drug-related serious adverse events in all three patients treated as of the time the data were presented. As Ken shared earlier, we recently held an RMAT meeting with the FDA for RGX-121 for treatment of MPS 2. I’m pleased to share that this was a very positive and constructive discussion. We were able to align with the FDA on our manufacturing strategy, the adequacy of our safety database and confirmatory study design. Patients treated with RGX-121 continue to do well on follow-up, and we expect to share top line data from the Phase 1/2/3 CAMPSIITE trial in the first quarter of 2024.

While we are no longer moving forward with our RGX-111, 181 and 381 rare neurodegenerative programs, we believe in the potential of these therapies and are committed to finding strategic alternatives for them, including potential partners or leveraging public private partnerships. So to conclude, we have made significant progress with data updates and trial progression across all programs in our pipeline as we continue working to advance our prioritized programs. Lastly, I’d like to thank the patients, families, clinicians and patient advocacy representatives who have been involved in and supported all of these trials. And with that, I turn the call over to Vit to review our financial guidance. Vit?

Vit Vasista: Thank you, Steve. REGENXBIO ended the quarter on September 30, 2023, with cash, cash equivalents and marketable securities, totaling $365 million compared to $565 million as of December 31, 2022. The decrease was primarily driven by cash used to fund operating activities during the nine months ended September 30, 2023. R&D expenses were $58 million for the third quarter of 2023 compared to $63 million for the third quarter of 2022. The decrease was primarily attributable to an increase in development cost reimbursement from AbbVie under our Eye Care collaboration. With the strategic reprioritization plan and 15% workforce reduction announced earlier today, we expect to save at least $100 million over the next two years.

We now expect the balance in cash, cash equivalents and marketable securities of $365 million as of September 30, 2023 to fund our operations into the second half of 2025. This cash runway guidance is based on the company’s current operational plans and excludes the impact of any payments that may be received from AbbVie upon the achievement of developments or commercial milestones under our 314 collaboration. With that, I will turn the call back to Ken to provide final thoughts. Ken?

Ken Mills: Thanks, Vit. As we look ahead, our extended cash runway will now enable us to reach additional meaningful value-driving milestones for our programs, which I’ve outlined. We also want to bring focus to the fact that we have a lot of important near-term value-driving catalysts expected at medical conferences upcoming in the first half of 2024. This would include new six-month data from recently dosed cohorts of the AAVIATE trial for wet AMD suprachoroidal, additional dose level one, an initial dose level two data from the AFFINITY DUCHENNE trial, and top line data from the pivotal Phase III CAMPSIITE trial. I want to reiterate that our updated strategic plans are intended to generate significant value for our shareholders as we assure resources are allocated to our most valuable assets to accelerating the development of these assets and to extending our operational runway and to achieve more milestones that can unlock additional value, including access to non-dilutive capital that we talked about from the AbbVie partnership or other sources like anticipated sale of a PRV that could, all of which extend our runway even further.

With a renewed sense of focus, I expect that we’ll continue to perform at a high level as we execute on our mission. And as a result of these updated strategic plans announced and implemented today, we believe REGENXBIO is well-positioned for long-term success. With that, I think we can now turn the call over for questions. Operator?

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Q&A Session

Operator: [Operator Instructions] Our first question will come from the line of Gena Wang with Barclays.

Gena Wang: Thank you for taking my questions. Okay, I will follow just one question, Lou [ph]. I know there are tons of a question I can ask. So one question I have is what you can learn from Sarepta’s experience in terms of clinical development for the DMD program and regarding primary endpoint selection and also efficacy bar?

Ken Mills: Thanks, Gena. This is a good question. Obviously, we’ve ourselves been engaged in dialogue with regulators about RGX-202 and especially as we’ve been able to emerge with our own clinical data, it’s been an important focus for us since World Muscle Society to think about how to accelerate the program, and we’ve given guidance next year that we believe we have the ability to both dose select and start a pivotal phase program. I think that what we’re seeing in the landscape of microdystrophin continues to be encouraging that it’s clearly helping boys. I think it’s something that we viewed since we entered the space beyond a sort of increment, but something that in certain boys it certainly is having more response than in others.

We believe that the C-terminal domain hypothesis for RGX-202 is a meaningful differentiator. And I think where it can be an important differentiator is on clinical function, the long-term clinical function. So we’re very much engaged about how to design trials to accelerate and still continue to borrow the endorsement and the use of microdystrophin in the surrogate endpoint to support accelerated approval — think about how to further support that in a pivotal setting and even in a commercial setting with respect to looking at long-term function. So I think that the domains that are part of the scoring that’s used in Duchenne boy. I think some people are starting to recognize both at the regulatory level and at the clinical level, that some of these domains are more reliable in terms of prognostic indicators for improvement.

We’re very much dialed into that and think that having an opportunity to have our own direct dialogue about our data and seeing the evolution of what’s happening on the regulatory landscape actually puts us in the best position to start executing next year on a really great package.

Operator: Our next question comes from the line of Dane Leone with Raymond James.

Q – Dane Leone: Thanks for taking the question. One for me what I have to be the DFD person. There’s help that obviously ALTITUDE and AAVIATE care support moving into pivotal studies in 2024. One, could you comment on the potential for that? And then two, there’s been a lot of debate in the shift in regulatory landscape on whether, the wave you’ve run the subretinal study can actually be used for further studies of gene therapies. I mean, said differently, it seems like the FDA is shying away from an ability to use a sham control and that may cause problems for longer-acting anti-VEGF therapies in controlled studies going forward. Thank you.

Ken Mills: Thanks, Dan. I’ll probably let Steve address the comment about the regulatory landscape. I guess, with respect to ALTITUDE and AAVIATE. I think what’s been an important part of the update today with respect to the strategic plan is that the extension of the runway for REGENXBIO, I think, for us, increases the likelihood of current capital supporting the transition of suprachoroidal into pivotal phase in achieving some of these milestone value events that can be unlocked. We have $0.5 billion of potential development milestones over and a large proportion of that is associated with transition of suprachoroidal delivery for wet AMD and DR occurring and patient dosing beginning there. So we view that the data that’s starting to come off that we’re particularly excited about right now with respect to diabetic retinopathy is really shaping up for support of decisions for that transition, and we have additional data coming up just early in 2024 with respect to the AD8 study.