Spark Therapeutics, Inc.'s (ONCE) CEO Jeffrey Marrazzo on Q2 2016 Results - Earnings Call Transcript

| About: Spark Therapeutics (ONCE)

Spark Therapeutics, Inc. (NASDAQ:ONCE)

Q2 2016 Earnings Conference Call

Aug 10, 2016 08:30 AM ET

Executives

Stephen Webster - CFO

Jeffrey Marrazzo - Co-Founder and CEO

Katherine High - Co-Founder, President and CSO

Analysts

Whitney Ijem - JPMorgan

Philip Nadeau - Cowen & Company

John Scotti - Evercore ISI

Michael Yee - RBC Capital

Salveen Richter - Goldman Sachs

Yun Zhong - SunTrust

Gena Wang - Jefferies

Operator

Good day ladies and gentlemen, and welcome to the Spark Therapeutics Second Quarter 2016 earnings conference call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will be given at that time. As a reminder, this conference call is being recorded.

I would now like to hand the meeting over to Stephen Webster, Chief Financial Officer. Please go ahead.

Stephen Webster

Thank you, operator. Welcome, everybody to the Spark Therapeutics second quarter 2016 conference call. With me today from the company are Jeff Marrazzo, our Chief Executive Officer; and Dr. Kathy High, our President and Chief Scientific Officer.

Please note that this conference call will include forward-looking statements, including statements regarding voretigene neparvovec, which is the non-proprietary name for SPK-RPE65, as well as our SPK-9001 and our other product candidates. Because such statements deal with future events and are subject to many risks and uncertainties, actual results may differ materially from those in the forward-looking statements. For a full discussion of these risks and uncertainties, please review our Annual Report on Form 10-K and our quarterly reports on Form 10-Q that are filed with the United States Securities and Exchange Commission.

This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast today, August 10, 2016. Spark undertakes no obligation to revise or update any statements to reflect events or circumstances after the call. The conference call is being webcast and will be archived on our website for one week.

Earlier, today, we issued two press releases, one reporting new data from the continuation of the Phase 3 trial of voretigene neparvovec and the other summarizing the financial results for the quarter ended June 30, 2016, as well as business highlights from the periods since our last earnings call. If you have not received these news releases, please visit the Investors section of our website at www.sparktx.com.

And now, I'd like to introduce Jeff Marrazzo, our CEO.

Jeffrey Marrazzo

Thanks, Stephen, and welcome, everybody. We have several topics to cover today as disclosed in this morning's press releases. The first will be an update on the voretigene neparvovec program where I will review our progress and the work remaining to complete our regulatory submission; while Kathy will summarize the new one-year safety and efficacy data for the nine control subjects from the Phase III trial that crossed over and received voretigene neparvovec as well as a two-year follow-up data from the 20 subjects in the initial Phase III intervention group. Kathy will also provide an update on our hemophilia programs, and Stephen will briefly review the numbers. In my closing remarks, I will discuss the progress we have made in further scale up of our manufacturing process for future application as well as review our plans across our product portfolio for the remainder of the year.

During the last period, we continued to make significant progress in preparing the potentially first ever BLA submission of a gene therapy for genetic disease. And while we're on track to submit the clinical modules and finalize the vast majority of the chemicals, manufacturing and controls, or CMC components, before the end of the year, based on a recent reassessment of the timelines for completion of the CMC modules, we do not expect to reach our goal of completing the entire rolling submission in 2016.

We now expect that generation of certain data using validated quality control methods that are part of the CMC modules will occur in early 2017. To be more specific, there are 24 quality-control methods or assays that we have determined together with regulatory input are critical for use in evaluating manufacture of voretigene neparvovec. The majority of these assays are unique to gene therapy and as such are not off-the-shelf generally available assays. Over a very short period of time, our team has made great strides in developing, qualifying and validating novel assays, investments that will further differentiate Spark’s gene therapy platform.

Because of these efforts, today I can report that we have completed or substantially completed the necessary activities to meet the regulatory requirements for 22 of these quality-control methods.

Preparing the two final assays for validation has taken longer than we had originally anticipated. However, we do expect to complete these validations by the end of the year. From there, we will utilize these assays to generate the final data points for the CMC modules. We believe these remaining work can be completed in a timely manner early in the year, maintaining the potential for a 2017 approval.

Now let me turn it over to Kathy to review the new data that we released earlier today on voretigene neparvovec, data that we will now incorporate into the clinical component of the BLA that we plan to submit later this year.

Katherine High

Thanks, Jeff, and good morning, everyone. As you may have read this morning, today, we're reporting out new data from the continuation of the Phase 3 trial of voretigene neparvovec, namely the one-year crossover data and the two-year durability data.

As a quick reminder, in the Phase 3 trial we administered voretigene neparvovec to both eyes of 20 subjects in the modified intent to treat, or mITT, intervention group. There were nine additional subjects that constituted the mITT control group. We announced the positive results of this pivotal trial in the fourth quarter of last year, and we refer to this as the 301 study.

After one year of undergoing the same retinal and visual function testing as the intervention subjects, these nine subjects in the control group were eligible to crossover and all nine elected to do so and received voretigene neparvovec in both eyes. We refer to the assessment of this group as the 302 study. These subjects are now out at least one year from administration, during which time they were evaluated using the same endpoints and at the same intervals as the initial intervention group. The results at one year post administration reaffirm what we've seen across all of our earlier trials to-date.

On the primary endpoint, the bilateral mobility test, I am happy to report that eight of the nine subjects improved. Importantly, all eight of these responders were able to navigate the course of the lowest light level, one lux, demonstrating the maximum improvement measurable on the mobility test.

The average improvement among all nine subjects was 2.1 light levels, a little better than the 1.9 average level improvement seen in the original modified intent to treat intervention group of 20 subjects.

As measured by full-field light sensitivity threshold testing, or FST, eight of the nine crossover subjects improved, with an average improvement of nearly 200 fold. This improvement is larger than the more than 100 fold improvement average seen in the original intervention group.

Visual acuity in the crossover group also demonstrated an average improvement of 4.5 letters on the eye chart average across both eyes. The 301 intervention group shows an average improvement by eight letters by the same analysis, although it did not achieve statistical significant.

There were no product candidate related serious adverse events, or SAEs, in the crossover group and the safety profile largely was consistent with what we've seen in all of our earlier trials. There was one SAE among the nine crossover subjects. This was in one eye and was determined to be related to the surgical procedure rather than the product candidate, voretigene neparvovec.

This subject exhibited foveal thinning and reduction in visual acuity after the surgical procedures, and visual acuity did not return to baseline as we typically observed. Nevertheless, this subject improved on a bilateral mobility test and also showed again in FST.

So, overall, strong confirmatory data from the 302 study in terms of safety and efficacy. We've now added substantially to the Phase 3 data set going from a total of 20 subjects tested at one year to a total of 29. Across both the 301 study and the 302 study, we saw 27 of 29 or 93% of subjects demonstrating gain in functional vision as measured by the primary endpoint in the study with 21 of 29 or 72% of subjects reaching the maximum improvement measurable on the mobility test.

The other updates from the Phase 3 trial is that all of the injected subjects in the 301 study, the original 20-person modified intent-to-treat intervention group, are now out past their two-year evaluation.

I am delighted to share with you today that the benefits observed in this cohort at one year are maintained at a two-year time point. The average improvement of the bilateral mobility test at one year as I mentioned previously at 1.9 light levels. That change was maintained at 1.9 light levels at the two-year time point.

On FST, the more than 100 fold improvement average seen at one year similarly maintained for at least two years. So, the effect seen in this larger groups for two years confirms the durability data we've seen from the 102 cohort.

And speaking of a Phase 1 trial we recently had positive follow-up data of the 11 subjects in the second Phase 1 trial published in Atlantis, providing insights into the long-term safety and durability of the effects through three years of the contralateral eye administration of voretigene neparvovec.

Switching now to our hemophilia programs, and starting with hemophilia B. Pfizer and we recently released additional data for the Phase 1/2 trial of SPK-9001 on the World Federation of Hemophilia Meeting last month. As a reminder, SPK-9001, the novel bio-engineered AAV capsid designed to improve upon the challenges we observed in the clinic with our earlier study with the AAV. This novel vector expresses a codon-optimized high-activity human Factor IX variant and the data shows that first four subjects, each of whom received a single administration at the initial dose of five times 10 to the 11 factor genomes per kilogram, all have experienced consistent and sustained Factor IX activity levels beyond 12 weeks.

Across the four subjects, average steady-state Factor IX activity levels are 31.8%, plus or minus 7%, with a range of 20% to 44% of normal, determined by averaging levels beginning at eight weeks, i.e. the plateau period, through periods of follow-up ranging from 12 to 31 weeks. These results are remarkably consistent in terms of the kinetics and the Factor IX activity levels and remember that we're generating them with a dose of five times 10 to the 11 factor genomes per kilogram, which we believe is the lowest dose being tested that is driving therapeutically relevant levels of Factor IX in any hemophilia gene therapy trial.

To date, SPK-9001 has been well tolerated. We see no elevation in liver enzyme levels above 1.5x the upper limit of normal and no subjects have needed or received immunosuppressions. Furthermore, none of the first four subjects over a combined 76 weeks of observation through July 12 has received any infusions of Factor IX to prevent bleeding events. Only one precautionary infusion has taken place, and this was due to a suspected ankle bleed in one subject two days after vector administration.

Based on these results pattern, we recently decided to expand enrollment at the initial dose of five times 10 to the 11 factor genomes per kilogram rather than dose-escalating at this time. Following the release of these early data, we've seen a positive uptake and interest from both clinicians and patients in participating in the trial and our goal now is to enroll up to 10 subjects at this same dose, and we’re well on track to meet this goal in 2016.

For the remainder of 2016, Pfizer and we will not be providing regular updates on the subjects in the Phase 1/2 trial of SPK-9001, other than at major medical meetings. As I hope you have already seen, SPK-9001 recently was awarded breakthrough therapy designation by FDA. I would like to congratulate the Spark team on this accomplishment and thank them for their dedication and hard work in getting the program to this point.

Transitioning now to hemophilia A, as we discussed in our June call, we remain very excited and encouraged by the preclinical data we're seeing with SPK-8011, our wholly-owned lead product candidate for hemophilia A. We intend to initiate the Phase 1/2 clinical trial in the fourth quarter. Like the hemophilia B trial, we've received quite a lot of clinician and patient interest in participating and have already successfully prescreened a number of potential subjects for pre-existing antibodies to the Spark200 capsid. We look forward to reporting proof-of-concept data, similar to what we've presented for hemophilia B in the first half of 2017.

And let me now to turn it over to Stephen for a brief review of the financials.

Stephen Webster

Thanks, Kathy, and congratulations on all the great data. In the three months ended June 30, 2016 and 2015, we recognized $1.3 million of revenue associated with our Pfizer collaboration. In the six months ended June 30, 2016, we recognized $2.6 million of revenue associated with our Pfizer collaboration. In the six months ended June 30, 2015, we recognized $2.6 million of revenue associated with our Pfizer collaboration and $1 million of a nonrefundable payment after we concluded discussions on a potential agreement with the pharmaceutical company.

Research and development expenses for the three months ended June 30, 2016, were $19.6 million versus $9.3 million for the three months ended the year before. The $10.3 million increase was due to an $8.6 million increase in internal R&D expenses, primarily due to significantly increased headcount and an increase of $1.7 million in external R&D, primarily from an increase of $2 million related to the preclinical testing of other product candidates in our advancing and expanding pipeline, offset by a decrease of $0.3 million related to SPK-CHM, now that both dose cohorts are fully enrolled.

For the six months ended June 30, 2016, R&D expenses were $37.9 million versus $17.7 million. The $20.2 million increase was due to a $15.4 million increase in internal R&D expenses, primarily due to significantly increased headcount and an increase of $4.8 million in external R&D, primarily from an increase of $1.8 million in expenses related to clinical trials and pre-launch activities for voretigene neparvovec as well as an increase of $3.9 million related to other product candidates, offset by a decrease of $0.9 million in external costs for clinical trials of SPK-CHM and SPK-9001.

General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, legal and patent costs and other professional fees. G&A expenses for the three months ended June 30, 2016 were $10.7 million versus $6.3 million in the three months ended June 30, 2015. The $4.4 million increase primarily was due to increased headcount, including stock-based compensation and increased legal and patent expenses.

For the six months ended June 30, 2015, G&A expenses were $19.6 million versus $10.6 million in the prior year. Forgive me, that $19.6 million was 2016. The $9.6 million increase primarily was due to increased headcount, including stock-based comp and increased legal cost.

Our net loss applicable to common stockholders for the three months ended June 30, 2016, was $28.7 million or $1.04 basic and diluted net loss per common shares compared with a net loss applicable to common stockholders of $14.3 million or $0.60 basic and diluted net loss per common share for the three months ended June 30, 2015.

The net loss applicable to common stockholders for the six months ended June 30, 2016, was $54.3 million or $2 basic and diluted net loss per common share as compared with a net loss of $24.7 million or $1.17 basic and diluted for the six months ended June 30, 2015.

As of June 30, we had cash, cash equivalents and marketable securities of $379.1 million with 30.6 million shares outstanding.

Now, I'll turn it back to Jeff for his closing remarks.

Jeffrey Marrazzo

Thanks, Stephen. So, in summary, we had great clinical data in two programs and received our second FDA breakthrough therapy designation as a company. We continue to make progress in preparing our BLA submission for voretigene neparvovec. Of course, we hope to complete the submission sooner, but we do believe there is -- we do not believe there is any incremental risk and our ability to complete the BLA submission. And I can assure you that we know to what we need to do and we had where the work to get it done.

Furthermore, we understand all too well the needs of patients and their families with RPE65-mediated inherited retinal disease and we plan to work expeditiously without risking quality in order to complete this omission as soon as possible.

The supplemental Phase 3 data that we disclosed today corroborates the result from the control pivotal portion of the trial, as well as the evidence and durability and benefits seen in our 102 study that we first reported last year and recently had published in Atlantis.

Also, we're very encouraged by the preliminary safety, efficacy and consistency of the early data in hemophilia B with SPK-9001. And I too want to congratulate our team and being awarded a breakthrough therapy designation by FDA for SPK-9001.

Including voretigene neparvovec, this is a second breakthrough therapy designation awarded to Spark and importantly the first and only granted thus far for hemophilia gene therapy candidate.

In addition, we closed the quarter with a healthy balance sheet to enable continued funding of our effort and to ensure that internal resources and capabilities, included the expansion and scale up our manufacturing capacity are in place to execute our long-term vision.

On the manufacturing front, particularly given the progress across our hemophilia programs, we have been working diligently to anticipate future manufacturing needs. We have been highly successful to date with our current process, which utilizes HEK293 mammalian cell and an adherent cell culture process.

In fact in less than two years, we've successfully commissioned our own facility, had transferred the process from CHOP and already have conducted manufacturing campaigns encompassing more than 40 full-scale sublots of materials here at Spark.

For many of our programs, particularly those targeting the eye, this current process will meet our capacity need and will continue to be utilized. However, for certain indications such as hemophilia A, with larger target patient populations or larger volume requirements per patient, it will be advantageous to have a more readily scalable process.

Importantly, during the last year, we have made significant tangible progress in developing a high productivity and fully scalable suspension culture manufacturing process upstream and a more scalable method downstream. As far as approaches to producing AAV, we have evaluated several methods. But in principle, we believe it's critically important to maintain a process that utilizes our HEK293 mammalian cell line.

This has a number of advantages, including: one, using mammalian cells that are well-established natural host for AAV and therefore produce significantly higher specific activity vectors as compared to non-mammalian systems; two, reducing the risk of potentially immunogenic residual impurities as well as the risk of potentially pathogenic infections that may result from other cell lines or processes, which require the addition of helper viruses; three, maintaining product continuity with our clinical development experience, reducing the risk that may come from building [ph] studies; and four, leveraging almost all aspects of our current quality systems, including many of the validated quality control methods I mentioned previously.

Adopting adherent-dependant HEK293 mammalian cells to a non-adherent system, importantly while retaining specific per cell and volumetric productivity historically has represented a significant challenge. I'm happy to report today that we have established proof-of-concept for an upstream manufacturing process using our current HEK293 cell line in a non-adherent serum-free suspension system and bioreactors, as well as an all-column, downstream purification process using many aspects of the current process. The early returns we have tested or operationalized aspects of this new process are encouraging, and when projected forward, meet or exceed our anticipated needs. We are now focused on allocating capital and human resources to further operationalize this new process at full scale.

Lastly, I want to lay out what you will see from us for the rest of the year. For voretigene neparvovec, if accepted, we would anticipate presenting the overall safety and efficacy analysis of both the 301 study two-year durability results and the 302 study one-year efficacy results that Kathy shared with you this morning at a top line at the American Academy of Ophthalmology meeting in October. And as I mentioned at the outset, we intend to incorporate these data into the clinical modules of the BLA, which we believe will only further strengthen our clinical submission in the fourth quarter of 2016.

In the next six months, we also plan to present follow-up durability analysis from the Phase I trials. These data will include four-year mobility testing and FST durability data from the cohort of eight subjects in the 102 study that would have qualified for the Phase III study. In hemophilia B, if accepted, we would anticipate presenting extended and expanded data at ASH in December.

As Kathy mentioned, we intend to initiate a Phase 1/2 trial for SPK-8011, our lead product candidate for hemophilia A in the fourth quarter of this year followed by initial efficacy data in the first half of 2017. We are very encouraged by our preclinical data in hemophilia A and are excited to get this trial underway. For SPK-CHM for choroideremia, we are guiding to initial efficacy data in the fourth quarter. And lastly, for SPK-TPP1 for a form of Batten disease, we are working to complete the IND-enabling studies over the next several months. Given that we will be testing SPK-TPP1 in pediatric subjects, we are focused on ensuring that we have initial dose that has a meaningful likelihood of delivering a clinical benefit.

So all in all, a quarter with significant progress. During the quarter, we, again, grew all areas of our operations and today have over 150 full-time employees. Our success continues to be the result of the hard work and dedication of our growing team.

As always, I will now be happy to take your questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Cory Kasimov from JPMorgan.

Whitney Ijem

Good morning. This is Whitney on for Cory. First question, just on the remaining two assays for the CMC portion of the NDA. I guess, just to confirm, how much research is still going into those assays? Or how many unknowns are there around those? Or is it like you definitely know what needs to happen. It's just taking a little bit longer, but you have the steps lined up to tackle that?

Jeffrey Marrazzo

Yes. I would say, with both assays, we're in a position where we've fully developed them. There is some optimization, but it's largely about getting it ready for initiating the validation. And that initiation, as I said, has taken us longer to get to that step than we originally anticipated. But the assays are basically there.

Whitney Ijem

Okay. That's helpful. And then, in hemophilia, I guess, I'm just wondering what you're hearing from KOLs now in terms of target level of factors now that we've obviously seen that you can get pretty robust data. I think, initially 10% to 15% was thought that that would be awesome. But now that we know we can go higher, where is the conversation going there?

Jeffrey Marrazzo

I'll let Kathy handle it.

Katherine High

Well, as you know, from natural history studies, there is good evidence that levels above 12% are sufficient to block spontaneous bleeding episodes. So that I think a good benchmark. The extended half-life Factor IX products are providing even higher levels, trough levels, in the range of 20% to 30% to the very best of those. So I think that the bar may be changing and hemophilia B. But I think that initial results from our work suggest that that's the part that we can meet with gene therapy as well

Whitney Ijem

Great. Thanks for taking the questions.

Jeffrey Marrazzo

Just one note on that, that 12% level, it is -- that level being consistently maintained as opposed to the peaks and troughs that you have with other therapeutic modalities, which a point we should always continue to remember about the benefit of gene therapies that you're continually expressing at that level.

Operator

Thank you. And our next question comes from the line of Phil Nadeau from Cowen & Company.

Philip Nadeau

Good morning. Thanks for taking my question. Jeff, first on the 24 assays that you had to develop, can you talk a bit more about the novelty of those assays? How unique are they? Or could you possibly patent them and how big of a competitive advantage -- is it that you have worked those out with the FDA now other people may need to replicate them?

Jeffrey Marrazzo

So, I would say at high level, there are -- a number of those assays as I said a vast majority of those are unique and specific to gene therapy and then some of them are unique and specific, of course, to AAV gene therapy and then some of them might be specific to capsid and some of them might be specific to product. So, they sort of fall within different tiers. But I would say that part of the reason why we spend the time that we have invested in them and ensuring that we optimize -- develop and optimize them to a point that we had them and we set a high bar as we thought was achievable to get us to the finish line for submission, but not sort of putting it too high for us at that point. We did that because we do think it presents a competitive advantage.

In certain areas, you could imagine that we might file patents around some of those. And I think even without that, the standards that we're seeking to set around these assays as well as sort of the amount of assays we're looking to bring to answering certain questions around purity, safety, potency, so on and so forth, are critical and set an importantly high bar.

Philip Nadeau

Okay.

Jeffrey Marrazzo

As you know, from other fields like monoclonal antibodies in the past, there have been certainly competitive advantages created by companies who have set very high analytical method standards around their products. And we think that that's an important precedent to think about.

Philip Nadeau

Okay. Great. And then just one clarification for me. Once you validate these assays, you are applying them to product that you've already produced, or is there some manufacturing that has to happen after they're actually validated? So basically, the two that you have left, if you have the product, that's where you need to kind of go through those assays. It's just a matter of optimizing to the point where you're comfortable pushing the button.

Jeffrey Marrazzo

Well, we're going to continue and -- through both the submission as well as after it, we'll continue to produce vector. I mentioned before in my comments around the manufacturing process that we produced more than 40 sublots of material, a substantial amount of that is related to RPE65, some of it is related to other clinical candidates or preclinical candidates. So, we're going to continue to produce vector. We have vector produced already from prior exercises. We're continuing to produce vector.

And there is a key element that you have to do here from a timeline perspective to tee up the completion of a run, when you do certain activities with those assays. And so we're syncing those up with another run that's ongoing.

Philip Nadeau

Okay. Great. And then, on the new data presented today, specifically on the two-year data, what would the natural history be in these patients? What would you have expected to have happened to their mobility test scores and FST over a two-year period?

Katherine High

So, that's a really important question and it's something that is always critical to think about. We have recently completed a natural history study on 70 individuals with autosomal recessive mutations in RPE65. While we're still in the process of analyzing those data and so don't have a direct comparison for you right now, it is certainly the case that the data that we've collected in that retrospective chart review demonstrate an inexorable decay in visual acuity in all of the individuals that we'd surveyed. So obviously, in that natural history study, you're not going to have serial testing of mobility test because that was really an endpoint that we developed for this trial. But for other measures of retinal and visual function, clearly there is an ongoing decline in all of those measures over time. And so we are looking forward to overlaying that natural history data with the data from the trials.

Philip Nadeau

Great. And then last question for me...

Jeffrey Marrazzo

I would just say, I think it's an important point. I don't mean to interrupt. But part of what we've focused on in our discussions so far about the data, as we've released them and the way we designed the trial was to measure essentially gain of function compared to baseline on the end points that we've looked at. But as you know, from all of your work, there are certainly many therapies that are out there that are measuring against the progression of the disease. And so we think that not only are we demonstrating the gain of function in multiple of these endpoints, but as Kathy said, as we continue to unwrap the natural history work, we'll be able to present the other piece of this, which is the inexorable decline as Kathy mentioned. I think it only strengthens the overall case that can be made about the value that's created from the potential approved therapy.

Philip Nadeau

Understood. Just last question. The data are spectacular and I don't want to focus on the negative. But I'm curious about the one patient, the one control patient who didn't respond. Was there anything unique about that person? Or did you learn anything from their clinical characteristics?

Katherine High

So we do always try to look carefully at any case that is unusual for any reason. The one non-responder was a subject in her 20s. There was nothing that we were able to determine that was unusual about her case. The surgical injection was good and it was in the right place and so forth. So I'm sorry, we don't really have an answer for that. So she is the non-responder in the group, but there was nothing easily traceable as the reason for that. The overall response rate was 93%, but you have this occasional occurrence of a person who doesn't exhibit the gain of function that everybody else did.

Philip Nadeau

Great. Congratulations again on all the progress.

Jeffrey Marrazzo

Thanks, Phil.

Operator

Thank you. And our next question comes from the line of Mark Schoenebaum from Evercore ISI.

John Scotti

It's John on for Mark today. Congrats on the progress. I just have a few questions. So I guess, I wanted to ask about the labeling language. So based on your latest interactions with the FDA, can you describe your confidence on getting a adequately defined label. So for RPE65 as opposed to LCA, specifically? And then also, can you help me understand, and I'm not sure if I heard you correctly, but how did the subject with an SAE improve on the mobility test and FST but actually lost visual acuity? I'm just trying to understand what happened with that patient. And then, I guess, lastly on hemophilia, I think some of your competitors have said they're going to move to a Phase 2b with a goal of accelerated approval. And I guess, do you have the same ambitions? And if so, when could we see a study start given that you've guided to the 10 patients? And what are the plans after that? Thanks

Jeffrey Marrazzo

Okay. So you wanted to talk about the label, the SAE and then the hemophilia development strategy. So on the label, what I would say is, of course, we have ongoing interactions with the FDA. I think we probably covered this briefly in our last call because our most recent formal interaction with them was our pre-BLA meeting, which was in the end of the first quarter. And during that interaction, as frankly has been consistent over the course of the last year or so as we’ve begun to have this topic, of course, at the end of the day, this will be a review issue. But what that conversation did tell us is that the latest science will really look to drive where we think we'll end up. And at the end of the day, that type of feedback gives us great confidence in where we're going. But again, of course, it's a review issue.

On the SAE, I'll let Kathy answer that.

Katherine High

Yes. And the one thing that I would also say is that the FDA has repeatedly underscored the fact that they would like to have the most scientifically accurate and data driven label. So, I think that's always important to remember.

Around that SAE, and your question about how can you improve on the endpoints like light sensitivity and mobility testing if your visual acuity does not improve. So, the answer to that really is that, as you know, the way the multi-luminance mobility test works and the way RPE65, the vector, works is that it improves light sensitivity. So, in the mobility test, because it is related to the level of brightness of the lights in the room, if your light sensitivity improves, it improves your ability to navigate in dim light. And so that won't be affected by change in visual acuity provided it's not a very marked change.

Jeffrey Marrazzo

So -- and then lastly, John, on the hemophilia development strategy, I think you're asking a question -- sort of a general one. Obviously, we are -- as we just spoke about a few minutes ago, we're working to initiate our hemophilia A trial later this year in the fourth quarter. And with our hemophilia B trial, we have said that we intend to continue to enroll subjects at the current initial dose of five times 10 to the 11 factor genomes per kg, which is a significantly -- than where others are in both hemophilia B and hemophilia A. We -- so that's our current plan, to extend that Phase 1/2 study in hem B.

But, of course, with a breakthrough therapy designation, as we gather more data, you could expect that we'll have interactions with the FDA about potential paths forward. And I think you would expect that as we get that information and have more clarity and make decisions on those paths, including getting feedback from regulatory agencies, we will then give input back to you about that.

John Scotti

Thanks so much. If I can ask one quick follow-up. Is it possible for you to file on the 10 patients of data?

Jeffrey Marrazzo

I think without a regulatory interaction, that would be making an assumption that is not founded.

John Scotti

Okay. Great.

Jeffrey Marrazzo

Obviously, at the end of the day, the collaboration with Pfizer, that would be a determination that we need to make.

John Scotti

Great.

Operator

Thank you. And our next question comes from the line of Michael Yee from RBC Capital.

Michael Yee

Hey, good morning, guys. On the factor A program, obviously, your -- a competitor had some data recently. Maybe you could talk a little bit about your learnings from some of that data that was recently presented. How does it change your thinking about perhaps what doses to start at? How was your Phase 1 protocol design? How are you going to dose patients and proceed? What would be the, I guess, trigger points actually announced on some of that Phase 1 data?

Jeffrey Marrazzo

So, let me may be make a few sort of high level comments, then Kathy can add on top of it. So, first of all, the design of the trial, we haven't sort of specified all the specifics of that yet. But you'd expect it's not going to be all that different from the hemophilia B trial, both in terms of the number of patients that we might have in cohorts and how we might dose escalate based on what we see in those first cohorts.

In terms of dosing, sort of specific dose, we haven't specified what that's going to be yet, but we have said in previous calls that we would expect it to be sort of in the range of where we are with hemophilia B. And, of course, as a point of, I think, important clarity, that dose, if we're in that range of where we are at hemophilia B, is about 120 times lower than the dose that the competitor use to report out that data.

I want to just take -- may be make a brief comment about the fact that, that could, of course, be due to a number of different things. But I will say that one of the reasons that we spent a little bit time on this call stressing the importance of our manufacturing plans going forward is that I think it is important to understand and start to elucidate the differences in choices in manufacturing platforms. As far as we know, that competitor -- other competitors are using a baculovirus-based system. And as you just heard us describe, we are going to continue to leverage the work we've done and all the experience we have with our HEK293 cell system. And you heard all the reasons that we believe that that ends up, we believe, in the end of the day an advantage.

So those are the couple of things I would say about that. But there's probably some other learnings that would come from additional information as that competitor provides that information certainly about information about use of steroids and how that looks. Certainly, the levels that they're getting on some of the subjects being as high as they are, I think, are questions that will be important to answer for the field as time goes on. But that's probably just the most I can share at this point. Kathy, anything to add on that?

Katherine High

Yeah. I would just say that based on our own data from the factor IX trial, to me, I think if we could identify a dose where we can avoid the necessity for a course of steroids, I think that does offer some advantages. And so I think that will be one thing that we've learned from our factor IX trial that we might try to emulate in factor VIII.

I think the other point I would just make is that I actually thought it was an attractive feature of the already announced factor VIII trial that they escalated rapidly through low doses so that you don't have a lot of patients who are developing an antibody to AAV and yet are not getting very much factor VIII expression. On the other hand, it then makes it complicated to try to back off on the dose if that's what you want to do, if you don't have much data at the lower doses.

So that's just another thing to think about in terms of clinical trial design features. I think one of the encouraging aspects of the already announced factor VIII study is that they were using a B-domain deleted construct for factor VIII, and so we found that very encouraging since we are as well.

So I think all in all, we learn thanks from both our own factor IX trial and from the already announced factor VIII data that give us confidence as we proceed.

Michael Yee

Okay, and just…

Katherine High

Well, I was just going to add that I think what you would likely see from us for factor VIII is that we would hold until we had data comparable to what we did when we announced our factor IX results at the European Hematology Association. So we would want to make sure that we had followed people for a sufficient duration of time that we could comment with confidence on the data.

Michael Yee

Okay, very helpful. That's great. And then lastly on choroideremia, you have some data coming up. Can you just remind us since the study is ongoing, et cetera, but how you're currently thinking about that data? What will you actually present to us? And how do we think about continuing to go forward with the program or not? What's your hurdle as the data is finishing up?

Katherine High

One point that I would make is just that in contrast to the hemophilias and to RPE65, choroideremia is a situation where for the most part what the vector will do is prevent further decline rather than give a gain of function. And therefore, it will need a longer duration of follow-up to demonstrate the difference between the patient's baseline and the comparison to the contralateral uninjected eye. As you know, natural history studies demonstrate that the most likely useful endpoints are going to be visual fields, microperimetry and then some form of imaging either fundus autofluorescence or OCT, for example. And so those are the end points that you will see us comment on.

Michael Yee

Okay. Thank you.

Operator

Thank you. And our next question comes from the line of Salveen Richter from Goldman Sachs.

Salveen Richter

Thanks for taking my questions. So I recognize you're switching manufacturing to suspension cells versus adherent to improve scale, but just wondering how much risk may be added by this change. And then curious how pricing discussions or early pricing discussions are going. And do you expect any impact here from Glaxo's recent pricing of Strimvelis?

Jeffrey Marrazzo

So first on the first question, I want to make sure we're abundantly clear about this. We're not switching the manufacturing process for voretigene neparvovec. We would not anticipate changing the process or at least the use of the process for other eye applications and likely perhaps some other indications beyond the eye as well, where either the market size was sufficiently smaller or the dose per patient was smaller.

So, our goal going forward would be to have two systems. One is the adherent system, and the second is a non-adherent system. In terms of the risk of that, there is obviously a fair amount of information you can capture by understanding bioequivalence and doing bioequivalence work throughout both preclinical studies and testing that you can do, as well as doing early clinical studies even if, let's say, for example, you start with not an adherent system and switch to non-adherent system, you can do those with a can full of additional patients in an early study as, in essence, bridging.

And one of the points that I made is we believe that maintaining the HEK293 cell line as being common across those two all the elements, the same plasma, the same cell line, that that actually substantially reduces the risk. And then if you have very well defined assays that on the back end characterize and help you understand the product you're getting, which is why the investments that we talked about in the beginning are so critical, then even before you put that into people, you have a good understanding of the characterization and the activity of that particular product, which is a function of that process. So, that's sort what I would say about it, and that's exactly why we sort of designed this approach for the second process in the way that we have.

On pricing, I would say a couple of things. And I think one of the things that happened to come up on this call with some of the questions that Phil asked was around the gain of function we are seeing in RPE65 as well as, obviously, the data we released today, the additional 20 subjects in durability. I think those key points around the fact that in the case of RPE65, we are observing a gain of function, a restoration of functional vision as opposed to slowing the progression of the disease, provides an important point of value. I think characterizing that against the natural history is important, as Phil asked about and Kathy walked through. And then, of course, the durability of the benefit is also I think critical to that.

From my perspective, the other piece to this is that there are other -- there is a course of backdrop of the disease that's critical to understand and think about. And obviously, these are different diseases. There is, of course, differences in size of the market. In this case -- of the Strimvelis case, there is a completely different profile in terms of availability of existing treatments in both transplantation as well as ERTs. Obviously, with RPE65, there is nothing available for these patients. So, I think all these things need to be factored together.

And I would say lastly, I think it is relevant, and I think we will need to learn more as more information becomes available about the fact that what I understand is that GSK's price is -- price negotiated in Italy for all the patients in Europe to come to one center in Italy. I would like to learn more that that's actually the way it will be operationalized. That is certainly a different approach that we're going to take to book Italy. And I think we'll also learn more as GSK unveils its plans of -- if they do so in terms of coming to the United States. So I think there's a fair amount to be learned here over time.

And from our perspective, our conversations -- to go back to your original question, our conversations continue to go well. We do believe that going back to those key points around gain of function and durability of benefit that we do sort of share in the philosophy at a high level that GSK appears to be espousing around, depending upon that reimbursement environment, sharing in risk and reward around those elements that can be presented by a treatment like this.

So, that's sort of what I would say is our thoughts on it, given that there is a lot more information I think to come out.

Salveen Richter

Thanks, Jeff.

Operator

Thank you. And our next question comes from the line of Edward Nash from SunTrust.

Yun Zhong

Hi. This is Yun Zhong for Edward. Thank you for taking the questions. First, I wanted to confirm, have you seen any decline in any of the treated patient in hemophilia B program?

Jeffrey Marrazzo

No.

Katherine High

No.

Jeffrey Marrazzo

I mean, what we presented in -- at WFH was the data as of July 12. You would expect that if we saw something that was materially different from that, we would disclose it. So the fact that we're not tells you that we haven't.

Yun Zhong

Okay. So, that's good. And about the hemophilia A program and -- some literature seems to suggest that there might be a difference between the wild type protein and the B domain deleted protein. And I don't know how much this will affect the clinical benefit in terms of the patient after treatment.

Katherine High

Well, of course, that was pretty extensively worked out with the original recombinant proteins. And when the B domain deleted Factor VIII proteins were initially used clinically, it is true that there were some differences in coagulation assays typically used in laboratory. And that all had to be worked through. But in terms of clinical effect for hemostasis, the B domain deleted Factor VIII recombinant proteins work well, so I wouldn't expect anything different for a gene-based production of those.

Yun Zhong

Okay. So, the 12% threshold that you talked about for hemophilia B still applies to hemophilia A?

Katherine High

So, actually, that is from a study of hemophilia A subjects. This threshold of 12%, that natural history study was actually of hemophilia A patients and showed that people with naturally occurring levels of 12% or above don't have spontaneous bleeding episodes.

Yun Zhong

Okay. So, last question. So the preclinical data in hemophilia A seems to be quite nice and very nice range and dose -- reasonable dose. How well do preclinical data translate into clinical data in your experience?

Katherine High

Well, of course, that's the $64 million question. And if it always translated exactly, then we could license drugs based on studies in animals, which, of course, we cannot do. I mean, I would say that overall, the question that you're asking, how well the animal studies translate forward to clinical results can be different from one target tissue to the next in gene therapy. But what I would say is that based on our experience with hemophilia B, we have a reasonable level of confidence that our non-human primate data in B translated well to the clinic. And I think that gives us confidence that our non-human primate data in A should also predict the clinical results.

Yun Zhong

Okay. Great. Thank you.

Jeffrey Marrazzo

Thanks.

Operator

Thank you. And our next question comes from the line of Gena Wang from Jefferies.

Gena Wang

Thank you. My first question is on Factor VIII, more helping us gauge the expectation for your initial data next year. So based on limited clinical data, it seems that Factor IX has a quick onset of expression and plateau in relatively short period of time, but Factor VIII seems to have a late onset in both protein expression and on liver toxicity.

So based on your experience, do you think that, that is due to differences in Factor VIII, Factor IX transgene, or is that due to the AAV vector?

Katherine High

So, first of all, I am not sure based on our preclinical data that I would agree with the statement that the onset and the kinetics of expression are different between Factor VIII and Factor IX. So, there may be differences between what we saw for Factor IX and what other people saw for Factor VIII, but I wouldn't say that from our own non-clinical data for Factor VIII and Factor IX. I am not sure I can help you there. I think there may be several differences in products even though they're all AAV, that may account for that. But I don't think it's a difference between the transgene.

Gena Wang

I see. So that…

Jeffrey Marrazzo

We do have different -- I mean, historically -- and Kathy, you can correct me if I am wrong -- you do see slight differences in capsid. When you go from one cap to the other, you may see a difference in terms of the speed in which you see peak expression. But those differences will be matters of a couple of weeks here or there. I mean, obviously, the other difference between these two beyond capsid, when you talk about just Factor VIII, what I mentioned before is the manufacturing process. So those are -- that is the difference between the two approaches.

Katherine High

I mean, again, another difference between what we've done and what some other people have done, for both our Factor IX product and our Factor VIII product, it's a single-stranded AAV genome. Some other groups have used a self complementary or double-stranded factor non-genome. And you may have faster ramp-up of expression with the self complementary. But for us, because both of them are single-stranded, we would really expect very similar kinetics. And, of course, you cannot use a self-complementary for Factor VIII, it's too big.

Gena Wang

I see. Can you hear me?

Katherine High

Yes.

Gena Wang

Okay. Thank you. So, my next question is about choroideremia. We know that the data will come later this year. So, when we look at the -- like the history from the change from ClinicalTrials.gov, it seems that excluding criteria of 2020 vision was removed for the second cohort. Just wondering if you could share us the reason behind it.

Katherine High

You know, I think that the general approach of the regulators is always to request that initial studies are done in more severely affected individuals to reduce any risk. But then if the safety data supports the change, then in general, in clinical development, you can move to less severely affected individuals perhaps earlier in the course of their disease. And so that's the rationale for that. And you will see that across clinical development, Gena, in gene therapy, that initial subjects are often more severely affected. And then if the safety data support it, you can move to a broader population.

Gena Wang

Okay. Thank you. So, one question on the RPE65. There is one procedure related SAE. Just wondering if there is something -- that is something you can manage or improve. It seems surgery is an important part of the RPE65 gene therapy. Just wondering if you have any thoughts on procedure management in the real world.

Katherine High

Well, we actually made a number of innovations to the procedure early in clinical development that were all designed to reduce any risk related to the surgical procedure. These were things like careful positioning of the patient postoperatively, using a bubble to try to position the blob so that it didn't move, very careful positioning near, but not directly on the areas of highest visual acuity and so forth.

So at release of epiretinal membranes to try to reduce any risks around retinal tearing, all of these things were procedures -- were ways in which the surgical procedure was minimized to reduce risks related to it. And we have tried to look carefully to any case that showed any surgical adverse event. For this particular one, we did not see any characteristic of the subject that might have been correlated with a difference in the surgical outcome.

Jeffrey Marrazzo

The only other thing I would add is that we have developed -- it's not complete yet. We developed an extensive risk management plan -- in draft with actually both the U.S. and European regulators and got very good feedback on it with both. And I think it's consistent with looking to manage this risk, as well as it is consistent with the way we expect ultimately to commercialize this product candidate if approved, which is in a limited number of centers and a limited number of hands of surgeons hopefully. We think that those are the right approaches to ensure best results if it's approved for patients.

Gena Wang

Thank you. And my last question is regarding the manufacturing. Wondering how many liters you can produce at a full scale with the HEK293 cell line. Will that be sufficient for Factor IX and other candidates and how that compared to the HeLa cell?

Jeffrey Marrazzo

So, a couple of things. One, you can -- in terms of the number of liters, I think you mean how large of a bioreactor. I mean, you can -- as long as you can continue to scale up, you can use whatever size of bioreactor you can reasonably get to.

Based on -- as I said earlier in our prepared remarks, based on what we are seeing thus far, albeit, with more scale up to do, we would expect that what we're seeing so far with reasonable assumptions or even certain degradation of assumptions as we scale up we are well within the range of what we need to produce for applications like hemophilia.

In terms of the HeLa system, Kathy?

Katherine High

I think it's also important to recognize that given the fact that our dose is very low, we don't have the same requirements for production of products that other manufacturers may have.

Jeffrey Marrazzo

I think -- I mean, you're -- so going back to that 40 or 100 or 120 fold difference, that drives straight into manufacturing requirements. The comment about HeLa, we can certainly talk about it in more detail. I made a reference earlier to the fact that certain systems, whether it's HeLa systems or others, may use helper viruses in them. And there is, therefore, then a different requirement to clear that entire potentially pathogenic residual on the backend. So that's the trade-off. You ultimately -- and our decision was -- the current system we've been using, which is an HEK293 cell system using transgene transfection, moving that forward, we think it balances that best in terms of safety and yields and productivity we can get.

Gena Wang

Thank you very much.

Operator

Thank you. And that concludes our question-and-answer session for today. I would like to turn the conference back over to Jeff for any closing comments.

Jeffrey Marrazzo

Given that we're already over the 9:30 time, I will be just brief. I want to thank everyone for joining the call today and the questions, and look forward to seeing you in the near future and updating you on our progress through the balance of the year. Thanks.

Operator

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Everyone have a good day.

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