Editas Medicine, Inc. (NASDAQ:EDIT)
Q2 2016 Earnings Conference Call
August 09, 2016, 17:00 ET
Mark Mullikin - Senior Director, Finance and IR
Katrine Bosley - CEO
Andrew Hack - CFO
Xandra Glucksmann - COO
Vic Myer - CTO
Cyrus Amoozegar - Morgan Stanley
Mac Frahm - Cowen and Company
Roy Buchanan - Janney Capital Markets
Brittany Terner - JPMorgan
Gena Wang - Jefferies
Welcome to the Editas Medicine's Second Quarter 2016 Conference Call. [Operator Instructions]. I would now like to turn the call over to the Editas's Senior Director. Please proceed.
Good afternoon this is Mark Mullikin Senior Director of Finance and Investor Relations at Editas and I'd like to welcome you to our second quarter 2016 update conference call. We issued a press release earlier this afternoon reviewing our second quarter 2016 results and updates regarding the Company which will be covered on this conference call. A replay of today's call will be available approximately 2 hours after its completion on the investors and media section of our website. After our prepared remarks we will open up 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 provision 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 is on file with the SEC.
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. 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.
Now, let me turn over the call to our Chief Executive Officer, Katrine Bosley.
Thanks Mark. Good afternoon everybody and thank you for being with us on our second quarterly update call. I am joined today by Andrew Hack, our Chief Financial Officer, 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 build Editas, we have three key goals. First, to advance our pipeline and expand our platform; second, to build our business for the long term; and third, to develop an outstanding organization. During the last few months we made progress on all three fronts and as we continued to advance our leadership position in genome editing.
I would like to share some of those highlights with you here, today, starting with advancement of our pipeline and expansion of our platform. As many of you likely saw, we recently announced an exclusive licensing agreement with Massachusetts General Hospital for a next-generation CRISPR genome editing advancement. This includes new engineered forms of CAS9 known as high fidelity CAS9 nucleases and CAS9 PAM variants. These will enable us to even more specifically address an expanded range of genetically defined diseases. The agreement with MGH fully aligns with our strategy to build the leading genome editing platform and it also further solidifies our leadership position in the field by integrating these important new forms of CAS9 together with the four components of our platform. Those four components being nucleus engineering, delivery, control and specificity and directed editing.
In addition, during the quarter and recently, we have announced a strategic collaboration with the San Raffaele Telethon Institute for gene therapy led by professor Luigi Naldini. Professor Naldini's team has been a pioneer in gene therapy and cell transplantation for many years and has played a critical role in the discovery and development of the first approved [indiscernible] stem cell gene therapy. We're very excited to be working with them to discover potential therapeutics. We're focused on certain rare diseases of the blood and bone marrow and it's also an opportunity to advance platform capabilities and directed editing, a great opportunity to work with one of the world's most sophisticated and innovative gene medicines institutes.
More broadly, since April, our scientists have given 10 scientific presentations at a number of different scientific meetings, at ARVO, at ASGCT, at the Ash genome editing meeting, at the FASEB genome engineering conference and at the Weizmann Institute's CRISPR2016. The data and the advances we presented are extensive and multifaceted. These presentations covered work across a wide range of our programs and platforms advancements. They demonstrate our broad-based accomplishments as well as our continued commitment to engage with the scientific community and to communicate the progress of our programs and platforms.
Our second goal in building Editas is to build the business for the long term. This morning we announced the collaboration Adverum Biotechnologies that will explore the use of Adverum's proprietary adeno-associated virus vectors in up to five specified ophthalmologic indications. Adverum brings unique vectors to the collaboration, in addition to substantial preclinical and clinical development capabilities and optimalogical gene delivery. This relationship also aligns our disciplined approach to business development, where we're focused on establishing alliance that builds value in both the near and long term.
Finally, we're continuously focused on further developing an outstanding organization. We have significantly expanded our internal team this year, adding over 20 people so far year-to-date. And in addition, we're very pleased to announce that in keeping the expertise on our directors, Akshay Vaishnaw has recently joined our board. Akshay is Executive Vice President of Research and Development and Chief Medical Officer at Alnylam Pharmaceuticals and is a unique scientific leader in the industry. We look forward to his contributions to our board and to building Editas. Overall it has been a very productive quarter.
With that, let me turn it over to Andrew for a few remarks on our financial position and business objectives.
Thanks Katrine. Similar to our first quarterly update call, I will review the most important components of our financials, but won't be walking through all of the detailed results that can be found in our press release. In the second quarter of 2016 our net cash used in operations was approximately $10 million. And as of June 30, 2016 we had approximately $218 million of cash and cash equivalents. Primary drivers of our spending are our expanding pipeline platform and legal expenses, offset somewhat by research reimbursement and the $2.5 million milestone we received from Juno Therapeutics.
Based on our current cash position, as well as research support under our collaboration with Juno and payments from the Cystic Fibrosis Foundation, we believe we have at least 24 months of capital to fund the advancement of multiple therapeutic programs in parallel and to further expand our technology platform leadership.
Although the past quarter was clearly quite active from a business perspective, it's worth noting that we continue to look at a range of potential corporate alliances, collaborations, acquisitions and licenses that we believe have the potential to build upon our current strengths and allow us to extend our leadership in genome editing. We have a big vision for what we can accomplish for patients and for shareholders and will remain active in shaping the business in a very deliberate and thoughtful manner in the quarters and years ahead.
With that we will open it up for Q&A. Operator?
[Operator Instructions]. Our first question comes from the line of Matthew Harrison with Morgan Stanley. Your line is now open.
This is Cyrus on for Matt, thanks for taking my question. You've done a lot of BD lately, are these the kind of deals that we should expect in the future or do you have other deals that you -- rather larger deals, like product licensing, that you are considering? And then on the IP side, how do these recent deals augment your IP position?
I will ask Andrew to comment on business development strategy and I will pick up the intellectual property questions. Andrew?
On the business development question you asked, there is tremendous interest in a whole range of different business relationships related to our platform and our programs. I think as we've been clear, our focus is really on how we create the most value for shareholders and for patients through these transactions. And so of course we take them all very seriously and as I mentioned, there is a tremendous amount of demand, but you should expect us to be disciplined in the kind of transactions we enter into.
With regards to the additional intellectual property that we recently licensed in particular with the Massachusetts General relationship, I think it's a great example of how we're continuing to invest in and build the platform overall. The work that Keith Joung did really is at the cutting edge of how we can really build products and medicines out of our overall platform. If you think about the four components of our platform, nucleus engineering, delivery, control and specificity, directed editing, its fits very neatly into that and leverages all of the other dimensions of our platform as well. It's really not only fantastic science, but very product directed.
And our next question comes from the line of Marc Frahm with Cowen and Company. Your line is now open.
First, just with today's earlier announcement, with the Adverum deal, are these capsids what you're planning to use in the LCA program and some of the other ophthalmology indications you've disclosed already or is this entirely new indications?
Our LCA10 program remains on track, we're confident in how that continues to progress. The work with Adverum further extends what we can do in the field of ophthalmology. We very much appreciate their expertise and some of the innovative vectors they have really give us opportunities we look at further extending what we do in ophthalmology.
Maybe speak a little bit about why these capsids, there are a number of other companies out there who have some various AAV capsids and what made these ones particularly attractive?
I'll ask Xandra to comment on this, but as you say, there are a lot of companies working in the field of AAV. And our to desire to work with Adverum, it is in the field of ophthalmology and what we think they bring to the table there. Xandra?
Yes, our relationship with Adverum is two-pronged. They are not just any AAV, but well-characterized AAV and also their clinical experience in the eye and taking things into clinical development. So it's not just a [indiscernible] early vectors but vectors that have been well-characterized. And as Katrine said, help us expand what we can do in the eye.
And maybe to build on that one step further, of course AAV is only one of a number of delivery strategies that we employ across a range of modalities. And so that's part of that broader delivery strategy that we have in place.
Okay and then just quickly, if you can give an update on the patent interference case and where we stand there and when we might see some more updates there?
I think as many of you know, the overall position we have in intellectual property is one that we're very comfortable and confident in. The interference is in the midst of this first procedural year, there are number of process steps that have occurred throughout the year and will continue through the balance of 2016. We would expect it in Q1 of next year, those very procedural steps will have judgments from the patent office and then if there is still an interference at that point in time, it would then move into the phase where they determine priority. That said, I think both given the process of the interference so far as well as the overall IP position, we're very comfortable and very confident in where we're.
And our next question comes from the line of Roy Buchanan with Janney Montgomery. Your line is now open.
I have a broad question about delivery. You said in the statement that in, for example, cystic fibrosis, you plan to work with different groups, optimize delivery of the lungs, even including academic groups. I want to get a sense of a level of risk in delivery to various tissues and another example might be BMD in the heart muscle. How confident are you that you can achieve sufficient delivery in the heart and how do you provide for the best shot on goal?
Sure, so I'll ask Vic Myer, our Chief Technology Officer to speak to that. And in framing it a bit, you're absolutely right, the different tissues represent different degrees of challenge and difficulty. Our goal is to provide a solution that allows us to get to the tissue, as opposed to having our portfolio strategy being defined by a delivery mode. So with that, Vic, do you want to talk of little bit about what our strategy is and some of the questions that he's asking?
So overall, our delivery strategy is to leverage existing technologies that are out there today and dive in and really develop technology as needed over time. As I'm sure you all appreciate, the amount of work that's been done in gene therapy and sRNA and RNA-based therapeutics has created a tremendous amount of knowledge and of expertise out there in the field. It's our goal to tap into that expertise and that knowledge. And I think the announcement of the collaboration with Adverum is a good example of how we think about this delivery strategy. So in general, we will work in a given tissue, some will be probably more straightforward based on what's been done previously, both in research as well as in clinical modes, we will perform benchmarking experiments and iterate towards a solution that we think is going to be sufficient.
It sounds like the majority of your internal work is going towards Cas9 itself, off targets, that kind of stuff and minimal work on delivery you're outsourcing that essentially?
We consider it a place for very active collaboration.
And our next question comes from the line of Cory Kasimov with JPMorgan. Your line is now open.
This is Brittany on for Cory, thanks for taking the questions. As we look towards the end of the year and early into next, what can we expect in terms of preclinical data updates? Are there any conferences in general that should be on our radar that could be a venue for any potential notification?
Just as we've done not only this year, but last year as well, we're very active in communicating our science. As mentioned in the prepared comments, we had 10 scientific presentations since April and there were others earlier this year. You certainly should expect to see us continue to communicate data at relevant meetings.
It will be a mixture of meetings that are more technology focused like ASGCT and CRISPR focused meetings, as well as more clinical and preclinical oriented meetings for individual programs such as ARVO, where we presented work on our LCA10 program this year. Certainly, as we present at those meetings, we will announce those as they come. But I think hopefully, our track record of sharing data on a regular basis, you'll see that we're going to continue to do that across our portfolio as well as the platform.
And a quick follow up. Can you provide any more detail on the milestones in royalties Adverum is eligible to receive?
We haven't disclosed more detailed financials in that relationship, but I think as we did say, there is the potential for five different programs there so it has the potential to be quite a meaningful relationship over time. We're certainly excited to be working with them. We think that they really have a lot of great capabilities and technologies as well.
[Operator Instructions]. And our next question comes from the line of Gena Wang with Jefferies. Your line is now open.
Just wondering how much you can share with us regarding next-gen AAV from Adverum, in terms of serial type promoter enhancer manufacturing and I assume this AAV is different from your current LCA10 program, right?
As mentioned earlier, our LCA10 program does remain on track and the Adverum relationship is more forward-looking. The specifics of the vector have not been disclosed, but I think as you and others have already mentioned, the work they've done to create innovative and more advanced versions of the AAV that have improved capabilities over first-generation AAV is one of the things that we found attractive and so we appreciate the technology development that they have done in that area.
Regarding the LCA10 R&D filing, just wondering what kind of preparation you would need to do before the filing?
I will ask Xandra to speak to this briefly as well, but as with any program, you're going to enter into the clinic all the appropriate preclinical work, Base E, toxicology work, GMP manufacturing, et cetera, all of that preclinical work is part of our plan.
Yes, as Katrine said, the traditional -- we can leverage from other gene therapies that have gone into the clinic to understand what the package will look like and also work with MEA and FDA to figure out what is the appropriate package for an indication in the eye.
Okay, just a quick follow up. Have you disclosed the AAV serotype for LCA10 program?
We haven't yet. No. We have not disclosed that.
Our next question comes from the line of Roy Buchanan with Janney Montgomery. Your line is now open.
I just had a follow-up on the Telethon. Just off-the-cuff, maybe this is wrong, but it seems like three years might be a little bit short. I'm sure you can extend it at the end, but maybe you can't answer this, but do you have any idea or can you tell us anything about where you think you might be at the end of the term of the deal in three years? Thanks.
Sure. It is an academic collaboration, we have a tremendous amount of respect for what they bring to the table, but I think that part of the purpose of a collaboration like that is to advance the science and then work from there to develop products. One of the reasons that we wanted to work with them is they do have a lot of experience with products in these sell types, as you may know from collaborations they've done with other industry partners.
So there is a great track record there of working with industry and actually developing real gene therapy products. So that expertise is certainly something I think is well precedented. And as we've done with other programs, we'll share data as we go.
[Operator Instructions]. At this time I'm showing no further questions. I would like to turn the call back over to the Editas team.
Thanks to everyone for dialing in today. We definitely appreciate being able to answer your questions and look forward to any thoughts you may have in the days ahead. Thanks very much and it's been a great quarter for us and we look forward to building the Company over the rest of the year and the years ahead as well. Thank you.
Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may all disconnect. Everyone have a wonderful day.
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