Voyager Therapeutics, Inc. (NASDAQ:VYGR) Q1 2023 Earnings Call Transcript May 9, 2023

Voyager Therapeutics, Inc. beats earnings expectations. Reported EPS is $2.94, expectations were $0.77.

Operator: Good morning and welcome to Voyager Therapeutics First Quarter 2023 Conference Call. All participants are now in listen-only mode. There will be a question-and-answer session at the end of the call. Please be advised this call is being recorded at the Company’s request. A replay of today’s call will be available on the Investor section of the Company’s website approximately 2 hours after completion of this call. I would now like to turn the call over to Pete Pfreundschuh, Chief Financial Officer. Please go ahead.

Pete Pfreundschuh: Thank you and good morning. Joining me on today’s call are Dr. Al Sandrock, our CEO; Dr. Todd Carter, our Chief Scientific Officer. We issued our Q1 2023 financial results press release this morning. The press release and 10-K are available on our website. We plan to provide a brief summary of key highlights from the quarter and reserve the majority of time for your Q&A. In a moment, I will turn the call over to Al. Before I do this, I want to remind everyone that during this call, Voyager representatives may make forward-looking statements, as noted in Slide 2 of today’s desk. These forward-looking statements include future expectations, plans and prospects. All forward-looking statements are inherently uncertain and are subject to risks and uncertainties that may cause actual results to differ materially from those indicated by these forward-looking statements.

You are encouraged to review and understand various material risks and uncertainties facing the Company as described in the Company’s annual report on Form 10-K filed with the SEC. As in the filing of today’s quarterly report on Form 10-Q, there have been no material changes to the risk factors described in our annual report. All SEC filings are available on the Company’s website. Now, it is my pleasure to turn the call over to Al.

Dr. Al Sandrock: Thank you, Pete, and good morning, everyone. Please turn to Slide 3. I’d like to take a moment to recognize the incredible innovation happening right now in neurotherapeutics and in gene therapy. We believe we are witnessing a renaissance in neurotherapeutics. Just this year, the second disease modifying therapy for Alzheimer’s disease received accelerated approval and the first drug was approved for Friedreich’s ataxia. We have seen breakthroughs in treating negative symptoms of schizophrenia, something for which there are no approved therapies. Just two weeks ago, the FDA granted accelerated approval to an antisense oligonucleotide for SOD1, amyotrophic lateral sclerosis. Importantly, the FDA based the approval on the finding that treatment driven reductions in neurofilaments are reasonably likely to predict clinical benefit and SOD1 ALS patients, establishing a precedent for a biomarker based path to accelerated approval.

I hope this will drive further new treatments for patients suffering from this devastating disease. At the same time, the gene therapy field is coming of age. We have recently seen the FDA approval of the first gene therapy for hemophilia B. Gene therapies offering important potential advances in treating Duchenne muscular dystrophy and hemophilia a are approaching PDUFA dates. And through that, we may see the accelerated approval path utilized for gene therapy. Importantly, long-term data on Zolgensma, one of the first gene therapies approved recently then durability of effect after 7.5 years, which physicians have called transformational. Voyager sits at the intersection of neurotherapeutics and gene therapy and we believe we are uniquely positioned to leverage the advancements in both fields.

To date, the delivery of gene therapies into the central nervous system has proven challenging, approaches to inject these therapies into the brain parenchyma or various CSF spaces have not been very successful. Voyager TRACER discovery platform is the foundation of our approach to solving this delivery challenge. Voyager scientists have engineered multiple capsid libraries, each with more than ’20 novel variants of AAV9 and AAV5 capsids to select those novel capsids that display greatly increased transduction in the central nervous system following intravenous delivery. We have leveraged these capsids to advance our own and our partner’s CNS gene therapy programs, several of which are now advancing towards clinical trials. This is how Voyager is enabling the future of neurogenetic medicines, and from where I sit, it’s an incredibly exciting place to be.

Moving to Slide 4, I will briefly review our investment rationale. Our first pillar of value is our TRACER capsid discovery platform, which I just discussed. In the preclinical studies, our novel capsids delivered intravenously have demonstrated more than 100 total higher trans gene expression in the brain compared to conventional AAV9 capsids. We have shown high levels of CNS gene expression at low doses, and we have demonstrated the ability to target specific cells, such as neurons and glial while targeting in the liver and dorsal root ganglion cells. We look forward to sharing more data on our capsids at ASGCT later this month. Our second pillar of value is our CNS pipeline. We are advancing four programs through late research and towards IND.

Two of these programs are wholly-owned, our humanized anti-tau antibody for Alzheimer’s disease and SOD1 gene therapy program for ALS. The other two, our GBA1 gene therapy program for Parkinson’s disease and our frataxin gene therapy program for Friedreich’s ataxia are being co-developed with Neurocrine. Our third pillar of value is partnerships. We completed tax adoption and license agreements with Pfizer and Novartis. We have executed strategic collaborations around our pipeline programs with Neurocrine, and we are exploring more such transactions. Turning to Slide 5, we continue to make progress advancing our CNS pipeline. I’ll note a few recent highlights. During the first quarter, we selected a lead humanized anti-tau antibody candidate VYTAL 01 for the treatment of Alzheimer’s disease.

In March, we presented new data at the AD/PD meeting highlighting the differentiating characteristics of this lead candidate. Last month, we received pre-IND written feedback from the FDA for VY-TAU01. Voyager continues to expect to initiate GLP toxicology studies this year to enable an IND filing in the first half of 2024. Another change this quarter was to the timeline for our SOD1 ALS gene therapy program. Voyager previously said, we expected to identify a lead development candidate for this program in the first half of this year. That has moved out to the second half of this year, as we continue to evaluate data from this program to identify the optimal development candidate. We intend to provide updated guidance on the IND timeline once we select the development candidate.

Given where we are today, we expect the IND to occur in mid-2025. Our frataxin gene therapy program for Friedreich’s ataxia and our GBA1 gene therapy program for Parkinson’s disease and other GBA1 mediated diseases both continues to advance in collaboration with Neurocrine. I’m pleased with the progress we are making here. Additionally, during the first quarter, we launched two new early stage gene therapy programs combining vectorized siRNAs, with our novel intravenous tracer capsids. One combines two siRNA to enable specific knockdown of mutant HCT and MSH3 for the treatment of Huntington’s disease. The other uses siRNA to reduce TAU expression in the brain for the treatment of Alzheimer’s disease. I’d like to now turn the call over to Pete Pfreundschuh to discuss our financial results for the quarter.

Pete Pfreundschuh: Thanks, Al. I will cover some key financial points on this call and refer you to our press release and 10-Q issued today for further details. Please turn to Slide 6. We announced Q1 2023 collaboration revenue of $150.5 million, composed of $69.5 million from the 2023 Neurocrine collaboration agreement for the GBA1 program. $79 million from the Novartis option exercises and $2 million from the 2019 Neurocrine collaboration agreement activities. Our R&D expense was $18.6 million, an increase of $4.2 million as compared to Q1 2022, driven by increased headcount, increased program related R&D spend, and milestone fees. And offset by decreased facility costs. Our G&A expenses were $9 million for the first quarter of 2023 as compared to $7.7 million were the same period in 2022.

The increase in G&A expenses was primarily a result of increased compensation costs driven by headcount increases. As a result of strong revenues in Q1 2023, the Company had net income of $124 million, resulting largely from our collaboration revenues as well as increases of $1.8 million in other income due primarily to increased interest revenue from cash and marketable securities. Regarding the balance sheet, Voyager reported $273.3 million in cash, cash equivalent and marketable securities at the close of March 31, 2023. We also had a receivable at the close of Q1 2023 from Novartis’ $25 million option payment received in April. Together, this resulted in pro forma cash, cash equivalent and marketable securities totaling $298.3 million for the close of the quarter.

Of node deferred revenue increased by $18.7 million related primarily to the upfront payment from Neurocrine allocated to the three new discovery programs of $74.4 million, offset by the recognition of $54 million into revenue from the Novartis options exercise. The Company has a same balance sheet enabled by our non-diluted collaboration revenues. We expected our balance sheet plus expected reimbursements will be sufficient to meet our planned operating expenses and capital expenditures into 2025. I will now turn the call back over to Al.

Dr. Al Sandrock: Thank you, Pete. Turning to Slide 7. As you can see, Voyager has had a productive start to 2023. We began the year by securing $175 million upfront payment in strategic collaboration with Neurocrine Biosciences, followed by Novartis’s OPT-in decision on capsids to two neurologic disease targets, triggering another $25 million payment. These transactions strengthened our balance sheet and enabled us to further advance our platform and pipeline. As discussed, we selected a development candidate for our anti antibody program for Alzheimer’s disease. We aim to select a development candidate for the ALS SOD-1 program later this year, and we launched two new early stage gene therapy programs for Huntington’s disease and Alzheimer’s disease.

In addition, I’m thrilled to welcome George Scangos to our Board of Directors, as we announced in our press release this morning. George is one of the most accomplished executives in the entire biotech industry, having served as CEO of Vir, Biogen and Exelixis. His vast experience building biotech companies that deliver highly innovative therapies to patients while creating value for shareholders will be invaluable to us as we strive to develop Voyager into a leader in neurogenetic medicine. Looking forward, we continue our work to break through the barriers, constraining the fields of gene therapy and neurology. We will continue to share the exciting data we are generating at scientific conferences including at ASGCT later this month. Importantly, our pipeline advancement is leading towards what we view as multiple opportunities for value creation.

As we look towards 2024 and 2025, we anticipate the potential for multiple IND filings across our wholly-owned and collaborative and or license programs. This translates into multiple opportunities to earn milestone payments and even more importantly, as clinical trials begin several shots on goal to establish human proof-of-concept for our novel capsids. Furthermore, there is potential to see early biomarker based evidence of disease impact in some of these very difficult CNS indications. And of course, we continue to engage in active discussions with potential partners around our platform and pipeline. In summary, it’s been a great start to 2023, and as always, it is all due to the incredible Voyager team. I look forward to continuing our momentum throughout the year.

With that we’re happy to take any questions you may have. Operator.

Q&A Session

Operator: Thank you. [Operator Instructions] The first question that I have today will be coming from Jay Olson of Oppenheimer. Your line is open.

Operator: Thank you, one moment while we prepare for the next question. And our next question will be coming from Jack Allen. Again, please wait for your name to be called before you ask the question. Your line is open. Jack Allen, your line is open.

Operator: Thank you, one moment while we prepare for the next question. And our next question will be coming from Philip Nadeau of TD Cowen. Your line is open.

Operator: Thank you, one moment while we prepare for the next question. And our next question will be coming from Yanan Zhu of Wells Fargo. Your line is open.

Operator: Thank you and one moment while we prepare for the next question. And our next question will be coming from Laura Chico of Wedbush. Your line is open.

Operator: Thank you and one moment while we prepare for the next question. And our next question will be coming from Joon Lee of Truist Securities. Joon Lee, your line is open.

Operator: Thank you, one moment while we prepare for the next question. And our next question will be coming from Sumant Kulkarni of Canaccord. Your line is open.

Operator: [Operator Instructions] The next question is coming from Jack Allen of Baird. Your line is open.

Operator: Thank you. This concludes today’s Q&A session. There are no more questions in the queue. I would like to turn the call back over to Dr. Al Sandrock for closing remarks.

Dr. Al Sandrock: Thank you, everyone, for joining us today and for the great questions. Feel free to follow-up with us directly if you have any further questions. Thanks again.

Operator: Thank you everyone for joining today’s conference call. This concludes today’s event. You may all disconnect and everyone have a great rest of your day.