Editas Medicine, Inc. (NASDAQ:EDIT)
Q1 2016 Results Earnings Conference Call
May 16, 2016 08:30 AM ET
Mark Mullikin - Senior Director, Finance and IR
Katrine Bosley - CEO
Andrew Hack - CFO
Alexandra Glucksmann - COO
Vic Myer - CTO
Cory Kasimov - J.P. Morgan
Matthew Harrison - Morgan Stanley
Mike King - JMP Securities
Cristina Ghenoiu - Cowen
Roy Buchanan - Janney Montgomery
Good afternoon. Welcome to Editas Medicine’s First Quarter 2016 Conference Call. At this time, all participants are 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 Editas’ request.
I would now like to turn the call over to the Editas team. Please proceed.
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 quarterly report on Form 10-Q which on file with the SEC. In addition, any forward-looking statement represents our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to today.
Good morning. This is Mark Mullikin, Senior Director of Finance and Investor Relations at Editas. Welcome to our first quarter 2016 conference call. We filed our Form 10-Q on Friday afternoon and after the market’s close and we issued a press release reviewing the topics to be covered on this conference call earlier this morning which can be found on our website at www.editasmedicine.com. Finally, a replay of today’s call will be available later this morning on the Investors and Media section of our website. After our prepared remarks, we will open up the call for Q&A.
Now, let me turn over the call to our CEO, Katrine Bosley.
Thank you, Mark. And good morning everybody and thanks for being with us for our first quarterly update call as a publicly traded Company. I am also joined today by our Chief Financial Officer Andrew Hack; as well as Alexandra Glucksmann, our Chief Operating Officer; and Vic Myer our Chief Technology Officer who will be available for the Q&A portion of this call.
As we do in many areas, we’re going to break a little bit of new ground and apart from the usual format for quarterly calls, in our prepared remarks we will focus primarily on what we’re doing to advance the finance, build the Company and to bring important new medicines to patients.
As most of you know, Editas is pioneering the development of broad class of CRISPR based genomic medicines. We believe we’re at an inflection point for genomic medicines and CRISPR is positioned to unlock the potential of the advances that we made at human genetics over the past 20 years. This enables us to work towards creating genome medicines that treat genetic diseases directly at their root cause in the DNA. To achieve this, we need to do three things: First, advance our pipeline and expand our platform; second, build our business for the long-term; and third, develop an outstanding organization. I’d like to comment briefly on each of these.
First, advancing our pipeline and expanding our platform. Our platform and products pipeline strategies are deeply interconnected. We have a diversified pipeline supported by broad-based progress at the underlying platform and we continue to invest in both. In the first part of this year, we’ve made important progress in both areas including data we shared recently at the annual meeting of the American Society for Gene And Cell Therapy or ASGCT, and at the Association for Research in Vision and Ophthalmology also known as ARVO. We reported data from our LCA10 program at both, ARVO and ASGCT. Our LCA10 program is to treat a rare form of blindness. These data demonstrated the in vitro, the CRISPR mediated genome editing of cells from LCA10 patients resulted in correction of the most common gene mutations in this disease. Importantly, these data also demonstrated that we are able to identify and characterize LCA gene editing candidates with little or no detectable off-target activity. We remain on track to initiate IND-enabling studies for this program later this year.
We’re also pleased to highlight the first public presentation of pre-clinical data from our Duchenne muscular dystrophy program; this was at the ASGCT meeting earlier this month. We believe that Duchenne muscular dystrophy is an area where our CRISPR-based approach is uniquely suited to address a range of gene mutations that are the underlying cause of this devastating disease.
We’ve seen nearly 900 combinations of guide RNA Cas9 construct pairs and each pair was designed to potentially delete dystrophin exon 51. We screened those pairs to empirically determine, which one would be able to successfully delete dystrophin exon 151. We also demonstrated that these candidates are active in vitro in patient-derived myoblast cells. Top candidates from this screen will then be evaluated in animal models of DMD and we of course look forward to sharing further data with you from this program as it advances. In addition, we presented important results at ASGCT from our work with blood cells, both hematopoietic stem cells and T-cells. Our data using gene-edited human bone marrow and cord blood stem cells should showed consistent long-term engraftment and repopulation of the blood system in animals by cells that have been edited using Cas9. This is important accomplishment in our efforts to discover treatment for a range of non-malignant blood diseases.
In our collaboration with Juno Therapeutics, we’re editing T cells to develop next generation chimeric antigen receptors and T cells for patients with cancer. And our data at ASGCT also demonstrated successful deletion of PD-1 expressions in over 90% of human T cells that we edited. We also demonstrated efficient combination of gene editing and chimeric antigen receptors transduction. [Ph] We believe both of these data sets represent meaningful programs and they showcase expanding breadth and steady progress of our genome editing capabilities in blood cells.
Second, I would like to touch on how we’re building the business for the long-term. As Andrew will describe in more detail, we have secured very strong financial foundation for the Company. This gives us the resources to both drive our program forward and support future opportunities as they arrive. While we continue to be disciplined in our approach business development with a clear focus on alliances that either broaden the range of potential medicine we can develop or that accelerate or reduce risk in our existing program.
Our collaboration with Juno embodies this approach. And we were also pleased to announce recently that we achieved $2.5 million milestone based on our technical progress in that collaboration. In addition, we are excited to announce this morning a new relationship with the Cystic Fibrosis Foundation. While significant progress has been made in the treatment of cystic fibrosis over recent years, a great deal of work still needed, and we’re hopeful that our genome editing approach will one day create new therapies that can address the genetic mutations that cause this disease. We believe that this collaboration with Cystic Fibrosis Foundation will be instrumental in helping us reach that goal.
Third and finally, we are committed to building outstanding organization. We are here to develop unprecedented mechanism and we’re working to build an exceptional organization to do that. Since the beginning of this year, we significantly expanded our senior leadership at Editas with the addition of Tim Hunt, as Senior Vice President of Corporate Affairs; Haiyan Jiang, as Vice President of Preclinical Science; and Pam Stetkiewicz as Vice President of Program and Alliance Management. Each of these individuals is a team leader in their respective fields. In addition, John Mendlein has joined our Board of Directors, bringing his exceptional experience in company building to Editas.
We are working to build a significant biopharmaceutical company, one that is resilient through the inevitable challenges associated with drug discovery, development and commercialization. Our team and our culture are fundamental to our ability to create value and achieve those goals and Editas Medicine’s expectations to meet them.
With that, I would like to turn it over to Andrew for a look at our financial position and the year ahead.
Great, thanks Katrine. As we mentioned at the start of the call, we’ll try to keep this call focused on the most significant areas of progress and the ways we’re building the Company. Therefore, while we’re happy to answer any questions you have about the numbers, I won’t be walking through all the financial details provided in the 10-Q and in our press release this morning.
With the successful completion of our initial public offering in early February, the Company continues to maintain a strong financial position, which allows us the flexibility to advance, both our platform as well as wide array of therapeutic programs. In the first quarter of 2016, our net cash used in operations was approximately $10 million and as of March 31, 2016, we had approximately $229 million of cash and cash equivalents. We believe our cash and cash equivalents as of March 31, 2016 combined with anticipated research support and payments from Juno and CFFT gives us at least a 24-month runway to advance our programs.
In addition, we believe this financial profile provides us with the flexibility to enter into strategic partnerships selectively, based on our ability to either enable new programs or because they significantly improve the speed or probability that our programs are able to benefit patients.
Looking beyond corporate alliances, we will also continue to pursue innovative collaboration structures that we think have the ability to advance our particular programs such as our recent agreement with the Cystic Fibrosis Foundation. Through the Cystic Fibrosis Foundation Therapeutics, we’ve secured upto $5 million over the next three years to fund research and development of genome editing medicines aimed to correct to underlying genetic mutations in patients suffering from cystic fibrosis. In addition, to financial support, we believe access to the Cystic Fibrosis Foundation’s resources has a potential to significantly advance our work on behalf of people with this disease.
So with that, let me summarize. The first quarter of 2016 was strong from a financial perspective and you should continue to expect us to be very active advancing the business. We sincerely appreciate the support that the public market has provided us, as we develop important new genomic medicines. As we move through the year, we anticipate we’ll continue to make steady progress in our pipeline. And we look forward to keeping you up to date on these advances as well as our progress building Editas as a Company.
And with that, we’ll open it up to Q&A. Operator?
[Operator Instructions] Our first question comes from the line Cory Kasimov of J.P. Morgan. Your line is now open.
Hey, good morning guys. Thanks for taking my questions. I have a couple of them for you. I guess first of all, at ASGCT, there was a really interesting talk by Dr. Liu from Harvard about the evolution of CRISPR technology in his lab. Can you just remind us of the structure of the agreements that you have with your various co-founders and whether you have access to -- or I guess first dip on the developments that are happening in this space that evolves pretty quickly?
Look, David Liu’s work is definitely very exciting and we were thrilled when we first heard of it. All of our licenses -- and this is common across all of academia is that what you license what intellectual property existed at the times of license, so they don’t reach forward, academic institutions don’t have those sorts of -- aren’t comfortable with those sorts of arrangements typically. So, our licenses are for the time when we signed them. But, of course David is a fantastic advisor to us on an ongoing basis as one of our founders as well. So, we do stay close to him as well as the other institutions.
And then there is obviously a lot going on in the gene editing field and in terms of what’s happening in the cystic fibrosis space, and Vertex has its collaboration with CRISPR Therapeutics. I assume and maybe it’s too early to say, but is there anything unique about the approach that Editas is bringing to the field at this point or do we still have to wait and see on that front?
It is an early program. So, definitely we’re very excited to be working with to see the CF Foundation because of the expertise they bring to the table. What I can say is that we will -- as we’ve done for all of other programs, we will share data from that program as it becomes more mature, as the data evolves. So, you will see that over time. I think it’s probably premature to compare and contrast to other people’s approaches which I don’t think they’ve shared any data on their approach. But we will certainly be sharing data from ours as we go along.
And then, one final housekeeping question. There is $3 million in legal expenses in the first quarter in SG&A, is that a good run rate to think about going forward or is there going to be some lumpiness to this as the trials proceed?
You should expect that the legal spend will be lumpy quarter-to-quarter. And so, I hesitate to forecast whether or not that’s the right run rate to use on a forward basis.
Thank you. Our next question comes from Matthew Harrison of Morgan Stanley. Your line is now open.
I have a few as well. So, just a question on the CF Foundation; can you just talk about -- so you’ve done a deal with Juno and you’ve done a deal with the CF Foundation. I mean how should we think about what you’re going to pursue in BD and should we think about some of the smaller deals as opposed to sort of a platform deals that you’ve seen other companies do as being the way you’re going to approach that or is it just going to be a mix?
Let me make a couple of comments and then I’ll ask Andrew to add his perspective to expand on it. One of the common themes we see across the CF relationship and the Juno relationship is in each case we’re working in collaboration with the party that’s deeply expert in their particular field. And that’s something that I think any alliance would benefit from. Over the long-term, business development is an important way to build the business as well. And I think that in the first couple of years of this Company, we have been fortunate that there has been significant interest from the equity market such that we’ve been able to really deeply develop the platform architecture and move some of our own programs forward before needing to take significant capital from the business development process. But over time, I think you will see that that will become a little bit more balanced; it’s really more a question of at what point in our life does it make sense to do wider range of deals.
The key features of what we’re focused on in business development is relationships that really allow us to address therapeutic areas for potential medicines more broadly than we’re able to on our own. And so, partnering with leaders in their field of expertise where we’re able to now go to places and develop the medicines for patients that we weren’t able to do otherwise is an important priority. Additionally, we’re interested in forming important alliances with companies that help us either move our programs fast or improve the probability of those programs make it to be medicines for patients. And so, again, a real focus on products and partners who provide unique insight and abilities that allow us to do things that we aren’t doing or to do things better. And then, lastly, I would say, you should expect us over time to be active, both as a buyer and a seller, so to speak in business development, so there maybe additional technologies that they’ll bring in over time, additional intellectual property, you may see us enter into additional focus alliances or broader base alliances. But we expect to be very active on business development and we look forward to the year ahead.
And then on the burn, just ex legal spend, can you talk about the burn rate and is that -- just to flip Cory’s question around, if that’s a good burn rate to think about or should we think about that as increasing as you go through the year?
We continue to grow the organization and so spend will grow with the organizational growth.
Thank you. Our next question comes from Mike King of JMP Securities. Your line is now open.
I just wondered if you could -- have you guys started to think about certain rules of how CRISPR is actually working in your hands. And what I mean by that is are you starting to establish to set sort of operating principles from let’s say -- the first time you create a construct and you measure its editing efficiency in vitro and moving that into in vivo to what you might think would actually happen in a human setting?
Let me make a couple comments, and then I’ll actually ask Vic Myer, our Chief Technology Officer to expand on that. As we’ve built the platform, one of the things came to very much on our mind is if you make it scalable high throughput and to capture data and knowledge, and learning from everything we work on to really get to the point that you are asking about, which is are rules of the road how to make these molecules and optimize them and advance them. So that’s certainly a philosophy that we have in terms of building a platform and the way we are doing it that shows up the lot of the technical details what we are doing. But Vic, if you like to maybe speak a little bit more to the substance of Mike’s question please?
Yes, thanks Katrine and thanks for the question. As we reported at ASGCT, we are scaling our platform approach to be able to collect large amounts of data. And in that experiment, we went after over 900 guide RNA pairs for Duchenne muscular dystrophy. And as we scale on that space and this is the only approach that we are using sort of in a high throughput manner, we are of course, warehousing and collecting that data, and we are actively analyzing it to help inform us as we move forward with new therapeutic areas.
And I guess this is also derivative to the earlier question which has to do with the advancements in field. As you guys think about what the ultimate approvable product is going to be, how do you think about some of the advancements, either in actually guide spend, PAM sequences, some other novel enzymes like Cpf1 and others that are sure to emerge; or can you say at this point right now that a Cas9 construct is the one that would be first to market, but others may ensue after that?
Yes. So, actually, what I may remind you of the context of how we’ve built our platform, we have these four parts types of platform, nuclease engineering, delivery, control and specificity, and directed editing. And to some of the variants that you just mentioned, the line of PAM variants engineered PAM variants et cetera, those essentially be part of that nuclease engineering domain of the platform, critical. And we have a lot of work going on in house as well to create -- as part of our platform work to create new variants that can do different jobs of molecular level. And then those essentially interlock with the other dimensions of the platform because the technologies that we are developing, working on directed editing can then be applied with any of the different nucleases that we might work with. Delivery, same thing, part of how we think about is have we made new variants that we created and emerged, fit with the progress that we make on delivery. Control and specificity, similarly, think about we’ve talked before about guide seek and start to share a lot more data about guide seek in the LCA10 posters that we showed the other week.
So, that’s for all programs that’s part of what we do and that would be the case, whatever we’re using wild type pyogenes Cas9 or array [ph] of Cas9 or an engineered variant or some other nuclease. So inherent in the platform strategy how we constructed it is able to quite easily receive and integrate new variants as they may arrive.
And then finally, with regard to the relationship with Juno or any future CAR TCR developers, do you know if there is any theoretical capacity limitation for -- especially in the T cell space, I am just wondering, because of the ability of CRISPR to multiplex, I just wonder if there is -- do we know of any theoretical limits of a T cell to endure to be able to handle multiple editing steps? Thank you.
Well, I think that that is something that we will be working with our collaboration to understand with Juno. I think as we’ve done with our program there, we’ve shown some data at ASGCT and it’s great to have a partner who also wants to communicate data to the marketplace. And so, they are great partner to work with because the biology is really behind the question just asked which is what changes do you need to get to the therapeutic outcome, and that’s one of the important things that they bring to the table with that deep biology knowledge out. At the end of the day, the number of changes will depend on what you’re trying to achieve in a given cell. And a great thing about what we do with CRISPR is t hat we can ask and answer that question empirically and that’s part of what we’re doing in a collaboration with Juno, so we have different specific programs in that collaboration and obviously working with them to decide what changes we to the we can achieve and the part profile that we want to achieve with them.
Thank you. Our next question comes from Cristina Ghenoiu of Cowen. Your line is now open.
The first one is on the LCA10 program. I was wondering if you can comment what are still some of the gating factors for this program getting CRISPR into enough cells or cutting efficiency level of protein production and that would be helpful. Thank you.
In terms of the pre-clinical work that lays ahead for us, it is the typical kinds of pre-clinical safety assessments, the manufacturing at GMP [ph] level and all the QA/QC that goes along with it. It is those sorts of endeavors that are between us and an IND as you would expect for any program on this kind of a timeline.
So, the timeline for the program is still early to get into the clinical, still early in 2017?
As we’ve said before, our goal is to initiate IND-enabling studies later this year, and we aim to advance for the clinics next year.
And have you had the opportunity to start thinking about that clinical development program, are you identifying patients, and do you have to come up with a new endpoint like Spark did for this program?
We haven’t finalized what the first clinical trial protocol will look like, although we’ve been talking with keeping new leaders for well over a year now, and we’re exceeding and deepening those relationships. And part of that as with any rare disease beginning to also, as you say, identify patients but understand financial history of the disease is critical. All of that is part and parcel of how any rare disease would be developed, and that’s the case here as well. And if we move towards the clinical, work with our KOLs to fine tune what that clinical work will look like and then of course interaction with the regulatory authorities are important to that as well.
And for the cystic fibrosis program, are there some of the mutations more amenable to CRISPR technology; can you comment on some of those?
Yes, I will comment briefly and then I’ll also ask Alexandra Glucksmann, our Chief Operating Officer to comment briefly. There are different approaches depending on which mutation you want to address. Some editing approaches are easier and some are more challenging. We haven’t disclosed the specific approaches that we’re taking. So, we will show data over time on that front. But I’ll ask Alexandra to comment on this as well because she is close to the program.
Thanks for the question. I think Katrine basically covered, there are 1,800 different kinds of mutations, some are more rare and some are more common. The goal of the program deals and the goal is to be able to treat as many patients as possible. And so, we will in order to advance the technology start with some of the types of mutations that are more tractable and in that way, evaluate various delivery modalities, and in a parallel fashion also work on mutations that are more difficult to repair.
Thank you. Our next question comes from Roy Buchanan of Janney Montgomery. Your line is now open.
I want to look down the road a little bit, so please bear with me. I am just wondering regarding future trial plans, if you could speak about how you argue for a genome editing approach in DMD when there might be trials enrolling, using standard gene therapy with micro or mini-dystrophin? And a related question, if terlipressin is on the market, I assume you think there should be no issues taking it and doing genome editing at the same time, but please correct me if I am wrong. But, if the studies for terlipressin are ongoing, how do you foresee these trials impacting the ability to enroll at genome editing study? Thanks.
So, DMD program is early and so I think while one always needs to think from the outside what that full development path is going to look like, it’s premature to speculate, specifically on what the trials might be. That said, with any program we work on, we think about the context of what other treatments are available for those patients and we need to think about, how the design trial is in that context. And so, if there are other drugs approved and patients are taking the drugs, we’ll have to take that into account. But overall why do we think the genome editing approach is potentially an exciting and hopefully efficacious approach to DMD is the genetics of this disease are pretty well understood. And that’s always -- that you always want your hypothesis to start from the human biology. And so, we do think that this could have great potential to help these patients. And that’s the number one reason that any program is in our portfolio.
I just wondered patients might be more comfortable with the “standard genome gene therapy versus gene editing.” And if you have any I guess arguments against that approach because I know the micro-dystrophin eliminates 70% of protein where you guys are only eliminating 1%, if that’s a compelling counterargument to maybe the fact that you’re editing the genome?
I think for any genomic based approach, be it gene augmentation or gene editing, you have to demonstrate that you have compelling data that would make it appropriate to go into clinical work. I just want to make sure that we are clear; this is an early program. We are very excited about it. But we need to show the right kinds of preclinical, efficacy and safety in order to advance it. And we’ve got to look forward to showing those data as they emerge.
Thank you. [Operator Instruction] And at this time, I am showing there are no further participants in the queue. I would like to turn the call over to management for any closing remarks.
Well, thanks to everybody for participating in the call today. We really appreciate your engagement and we love getting questions about the science and the pipeline. That’s why we’re here to turn that science into medicines. We look forward to updating again soon. And we are excited about the progress we’ve made and what we’re going to accomplish for patients over the years ahead. Thank you very much.
Ladies and gentlemen, thank you for your participation on today’s conference. This concludes your program. You may now disconnect. Everyone have a great day.
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