Editas Medicine, Inc. (EDIT) CEO Cindy Collins on Q1 2019 Results - Earnings Call Transcript

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About: Editas Medicine, Inc. (EDIT)
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Earning Call Audio

Editas Medicine, Inc. (NASDAQ:EDIT) Q1 2019 Results Conference Call May 7, 2019 5:00 PM ET

Company Participants

Mark Mullikin - VP, Finance and IR

Cindy Collins - Interim CEO

Eric Ek - Interim CFO

Charlie Albright - Chief Scientific Officer

Conference Call Participants

Amanda Murphy - William Blair

Steve Seedhouse - Raymond James

Phil Nadeau - Cowen & Company

Xiaobin Gao - Barclays

Peter Lawson - SunTrust Robinson Humphrey

Whitney Ijem - Guggenheim Securities

Operator

Good afternoon, and welcome to Editas Medicine’s First Quarter 2019 Conference Call. All participants are now in 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 the Company’s request.

I would now like to turn the call over to Mark Mullikin, Vice President of Finance and Investor Relations at Editas Medicine.

Mark Mullikin

Thank you, operator. Good afternoon, everyone, and welcome to our first quarter 2019 conference call.

Shortly after the market closed, we issued a press release providing our financial results and corporate updates for the first quarter of 2019. A replay of today’s call will be available on the Investors & Media section of our website approximately two hours after its completion. After our prepared remarks, we will open 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 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 annual report on Form 10-K, 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. We specifically disclaim any obligation to update or revise any forward-looking statements even if our views change.

Now, I will turn the call over to our interim Chief Executive Officer, Cindy Collins.

Cindy Collins

Thanks, Mark. Good afternoon, everyone, and thanks for joining us for our first quarter 2019 corporate update.

In addition to Mark, I’m joined today by several members of our executive team, including Charlie Albright, our Chief Scientific Officer; Vic Myer, Chief Technology Officer; Eric Ek, our interim Chief Financial Officer, and Tim Hunt, our Senior Vice President of Corporate Affairs.

Thanks to the hard work of our dedicated team of editors, 2019 is off to a strong start with tangible progress on several of the goals we outlined on our last call. In the first quarter, we expanded and accelerated our development of the universal allogeneic cell medicines for cancer to a newly formed collaboration with BlueRock Therapeutics. We initiated IND-enabling activities for a potentially best-in-class medicine for sickle cell disease and beta-thalassemia. And we made progress in collaboration with our partner Allergan towards dosing patients with EDIT-101 for LCA10 in the second half of the year. EDIT-101 is the first in vivo CRISPR medicine approved for human dosing and represents the translation of years of clinical research and scientific advancements into a potentially transformative treatment for patients. We are confident in where Editas stands today, capitalizing on the strong start to the year and anticipating numerous upcoming milestones.

Now, let me turn the call over our Chief Scientific Officer, Charlie Albright, to discuss our pipeline in greater detail.

Charlie Albright

Thanks, Cindy.

It is a great time for the Company, and I’m happy to be here to update you on your pipeline of transformative genomic medicines. Let’s start with our development of engineered cell medicines.

We are excited to begin work with BlueRock Therapeutics to develop universal allogeneic cell medicines to treat cancer using the complementary technologies of CRISPR gene editing and induced pluripotent stem cell. In particular, gene-edited iPSC-derived allogeneic cell medicines represent truly universal off the shelf treatment that can be mass produced with superior quality, greater scale, and lower cost than autologous or donor-derived therapies. Further, we believe that the highly edited medicines will be possible with iPS-derived cells, required to unlock the full potential of cellular medicines, particularly in solid tumors where the greatest unmet need exists.

The combination of our unparalleled CRISPR gene editing platform and BlueRock’s expertise in stem cell development and differentiation brings together two leaders in the respective field. In this collaboration, we retained rights to edited cells developed for the use in the field of oncology including T-cell, NK cells macrophages and other immune effector cells. The technological complementarity, distinct therapeutic areas of focus, desire for collaboration make BlueRock a great partner and we look forward to productive collaboration.

The BlueRock collaboration builds on our existing efforts in oncology. In particular, we have wholly owned efforts in NK cells and a partnership with Celgene for engineered T-cell medicines for solid tumors and hematologic malignancies. Our work with Celgene and BlueRock are the two examples of how we are expanding and accelerate our oncology cell medicine platform as we look to drive the next generation cancer therapies.

We’ve also made significant progress towards developing an engineered cell medicines for sickle cell disease and beta-thalassemia. We believe we have a potentially best in class treatment for these severe diseases utilizing CRISPR to edit the beta-globin locus, which editing directly increases fetal hemoglobin and is differentiated from others that target the BCL11A enhancer sites to indirectly up-regulate fetal hemoglobin.

In December, we presented data at the American Society of Hematology demonstrating some of the reasons we believe we can develop a superior medicine. Since that time, we have -- our confidence has continued to build based on our work. We have finalized the design and the clinical candidate and started IND-enabling activities on the experimental medicines. We look forward to providing updates in medical conferences through the remainder of the year.

Now, transitioning to our in vivo CRISPR medicines. Our lead program EDIT-101 for LCA10 is poised to be the first in vivo CRISPR medicine administered patients in the history. In partnership with Allergan, we are conducting an open label dose escalation study to evaluate the safety and efficacy of EDIT-101 in approximately 18 patients in the U.S. and Europe. We remain on track to screen patients midyear and dose in the second half. Concurrently, our natural history study of LCA10 patients is ongoing. The natural history study helps us identify clinical endpoint measures while also serving to strengthen ties with ophthalmology centers of excellence and introduce Editas to the liver’s patient community. Initial data were presented by the principal investigator, Dr. Eric Pierce of Massachusetts Eye and Ear at the Retinal Cell and Gene Therapy Innovation Summit last week.

Following EDIT-101, we're advancing additional genomic medicines for serious diseases, starting with Usher syndrome 2A or USH2A. Our development of USH2A builds on the work we’ve done with the LCA10 program. Like LCA10, USH2A is a genetic disease that affects severe [ph] proteins and photoreceptors. In vivo [ph] have been promising and we are developing a treatment for Usher’s patients that leverages the same AAV vector, promoter and Cas9 enzyme is for EDIT-101. In particular, our USH2A medicine defers only in the guide RNA specific to the USH2A gene and represents the power of our platform to accelerate the development.

Our academic collaborators from Massachusetts Eye and Ear presented preclinical, in vivo, proof of concept of our approach last week at the American society of gene and cell therapy annual meeting. In this work, the researchers demonstrated that CRISPR gene editing of Exon 13 of the human USH2A gene can rescue the retinal phenotype and restore auditory function in a mouse model. Based on this data, we're optimizing a lead candidate and are on track to be ready for IND-enabling studies this year.

Our ocular programs are the most advanced programs within our in vivo pipeline and we look forward to expanding efforts in additional therapeutic areas that leverage this work. Our industry-leading platform, including our exclusive access to Staph aureus Cas9 and extensive capabilities translating science into treatments for patients makes us enthusiastic about the potential to target additional genetic diseases.

Now, let me turn the call over to our interim Chief Financial Officer, Eric Ek, to discuss our progress in building the business and review our financial results.

Eric Ek

Thanks, Charlie. It’s my pleasure to update you on key developments we've had over the past quarter and to summarize the financial results we’re reporting today.

As Charlie mentioned, we have formed a research collaboration and entered into a nonexclusive cross-license agreement with BlueRock Therapeutics. In each of the respective fields, Editas medicine gains nonexclusive rights to BlueRock’s iPSC and cell differentiation technology and intellectual property, while BlueRock gains nonexclusive rights to Editas Medicine's CRISPR technology and intellectual property. Each party is responsible for the payment of milestones and royalties to the respective partner for any licensed engineered cell medicine developed in their respective field.

Turning to the numbers. We have summarized the financial results for the first quarter in the press release that we issued and hour ago and full details will be available in our Form 10-Q. Our cash, cash equivalents and marketable securities decreased $27 million in the first quarter to $342 million as of March 31, 2019 from $369 million as of December 31, 2018.

Our uses of cash totaled $30 million and include cash operating expenses of $29 million and capital expenditures of $1 million.

Key non-cash items recorded in our income statement include $8 million of stock-based compensation, a $1 million of depreciation and a $5 million increase in working capital. Our sources of cash totaled $3 million and consisted of $1 million of interest income and $2 million of stock option exercises by our employees. We believe our cash, cash equivalents and marketable securities of $342 million as of March 31, 2019 provides at least 24 months of capital to fund our business.

And with that I will hand it back to Cindy.

Cindy Collins

Thank you, Eric. As part of our EM22 long-range goals, we talk openly about our Inspiritas culture at Editas Medicine. In Q1, we marked progress on EM22 by rolling out what we call our elements of Inspiritas, which is an initiative to highlight and shape the outstanding culture we have here at Editas. We'll talk more about our elements of Inspiritas in the future. But in short Inspiritas captures Editas at its best, a place where revolutionary science happens daily and our employees, editors are driven to tackle yet unsolved medical challenges while being part of a community, working for the common goal of serving patients.

At Editas, it is truly an exciting time for the Company. We are on the verge of treating the first patient ever with an in vivo CRISPR gene editing medicine. We are advancing best-in-class medicines that may revolutionize the treatment of cancer, sickle cell disease and other serious intractable diseases. And we're working to further extend the reach of gene editing as we tackle new indications, explore new targets and expand our platform to deliver on the promise of CRISPR technology. We look forward to continuing to forge this journey in partnership with the broader community, patients, clinicians, employees and investors.

With that, we thank all of you for your interest and support, and are happy to take your questions. Operator?

Question-and-Answer Session

Operator

[Operator instructions] Our first question comes from the line of Amanda Murphy with William Blair. Your line is now open.

Amanda Murphy

Hi. Good afternoon. So, I actually had a few on the BlueRock collaboration iPSC in general. So, I guess starting out with BlueRock, I’m not sure if you can share or how much you can share, but I was just curious sort of why you selected them and what they bring to the table to put it clear in terms of new programming and building a cell line if you like?

Charlie Albright

Sure, Amanda, this is Charlie. So, we thought BlueRock was going to be a great partner and we just had that kick off meeting yesterday and were really excited about it. They bring, both proprietary and nonproprietary research really with how to de-differentiate cells into iPSC. It’s an incredibly complementary partnership because we're interested in oncology and they are interested in cardiovascular, neurology and immunosuppressive mechanism. So, we think the two technologies of gene editing and iPSC derived cells are really going to create a powerful partnership.

Amanda Murphy

And then, I’m not going to ask you for timing or anything like that, but it’s the right way to think about any candidates that emerged from the partnership as more of a longer term part of the pipeline? And then, thinking about -- you mentioned solid tumors but also that I think it also covers hem. So, would you consider going after some lower hanging fruit initially with hem cancers or how should we think about the evolution?

Charlie Albright

Yes. We have rights to all oncology indications and all cell types, which is really powerful. So, we obviously have some ideas about where we're going. We haven’t shared them more broadly. And yes, all things you mentioned are on the table. I would also say that all cell types focused on oncology are on the table as well. So, that’s part of the reason we're really thrilled with the deal, because it really gives us the ability to work broadly in the space around which we're trying to build the business.

Amanda Murphy

Again, just last one, I think you mentioned it was not exclusive. So, I just was curious if you had thought about excessively on both side in iPSCs and with CRISPR from your side?

Charlie Albright

We decided to do a non-exclusivity only because at both parties the option to go and work with additional parties in our field of interest, which we think is also quite powerful, all part of why thought it was a great deal.

Operator

Our next question comes from the line of Matthew Harrison with Morgan Stanley. Your line is now open.

Unidentified Analyst

Thanks for taking my question. This is Connor Meehan [ph] on for Matt Harrison. We're just looking to hear about your sickle cell approach and sort of what you guys think differentiates your program clinically? And then just a quick follow-up after words.

Charlie Albright

Sure. We have two bases for differentiation, one of them we discussed at length at the ASH meeting, American Society of Hematology meeting last December. And we were awarded one of the best in the ASH posters for the work. So, in that study we showed that cells -- Editas beta-globin locus, which is where we’re editing reconstitute the hemato -- the erythroid lineage normally. In contrast, cells edited the BCL11A enhancer locus, which is sort all of our competitors are doing, having a significant decrease in the cell for erythroid lineage in mice. Obviously, if this translated in the humans, this could be a significant safety and efficacy issue. So, that's the first basis for differentiation. Those slides and related items that can be found on our website and we're happy to go into more detail, it’s somewhat complicated story. And then, we're also excited about the amount of fetal hemoglobin we can induce. We will be having more to say about that in upcoming scientific meetings later this year. That’s obviously also a key to driving the efficacy of the product.

Unidentified Analyst

Got it. Thank you. I will defiantly follow up with some PowerPoints on your websites. Would it be possible to just comment quickly on IND-enabling steps you guys need to take? And I guess, maybe a quick comment on the expected duration as well?

Charlie Albright

We haven’t provided guidance on the timing. And I think, like as usual, the IND-enabling activities are not atypical or put it in a positive way, they are typical for a cell based medicine in this field. And we'll obviously be discussing those with regulators along the way to make sure that we're all happy about those.

Operator

Our next question comes from the line of Steve Seedhouse with Raymond James. Your line is now open.

Steve Seedhouse

So, I know there is a lot of features of EDIT-101 that can be leveraged in USH2A and other eye indications, but how much of the knowhow and tools that you’ve developed are applicable to no retinal programs, how much time could you save on subsequent non-retinal indications?

Charlie Albright

I think much of what we learned with EDIT-101 is going to be useful in other in vivo editing indication. So, we do think AV delivery in general is the preferred way to deliver these agents. And the work that we’ve done with EDIT-101 enables that. So, as you probably realize, we have exclusive access to Staph aureus Cas9, which allows us to make an all-in-one AV with to guide RNAs. That’s unique to Editas, and we're obviously going to take that learning. And so basically, we believe anywhere you can deliver AV, we’re going to be able to editing machinery. And so, we are in the process of evaluating other indications that where the unmet need and the other aspects to the selection makes sense, and we will have more about -- to say about that in the future.

Steve Seedhouse

Okay, thanks. And then Charlie, regarding the sickle cell and beta cell program. So, given what you just mentioned, you presented at ASH last year regarding BCL11A versus beta-globin locus, I think if I’m remembering correct, that was sort of a single time point that you showed. I’m curious, what happens over time in the mice. Does the proportion of edited cells or fetal hemoglobin fraction decrease over time after engraftment, and is it any different when you edit at the beta-globin locus?

Charlie Albright

It’s -- I think we presented data from both 8 weeks and 16 weeks last year. And 16 weeks is kind of the standard time where things have reached steady state. And there were marked differences about time points between editing and the BCL11A enhancer and editing at the beta- beta-globin locus. I can’t recall if there was a difference 8 weeks and 16 weeks on either one of them.

Steve Seedhouse

Okay. And the data presentation that you have this year for the hemoglobinopathy program, is that more data comparing these methods or is it some other experiments?

Charlie Albright

We're actually in the process of figuring that out right now.

Steve Seedhouse

One quick question on the BlueRock collaboration, is this basically a way to regain sort of more favorable economics on an allogeneic CAR-T platform, is that a fair way to characterize the deal?

Charlie Albright

Right now, as part of our Celgene relationship, we’re not allowed to work on T-cells and engineered T-cells in oncology. We're allowed to work on non-T-cells in oncology. And so, that could be a way to think about things in the short run, and we have indicated that we're interested in NK cells. And I think in the long run, our interests are obviously broader.

Steve Seedhouse

So, you are not able to develop CAR-T as part of that BlueRock collaboration is what you are saying.

Charlie Albright

Not as long as we held -- as current relationship with Celgene is intact and that research portion of that expires in May 2020.

Steve Seedhouse

Understood. Okay, thank you. And one last question, I just wanted to ask about going back to the mouse studies at EDIT-101 and the LCA10 preclinical model. So, this is the Nature Medicine publication, but also for example you presented ASGCT recently. You get about 20% editing I think just above within eight weeks, and then it doesn’t increase; if anything, it drops back down to about 10% over time out to week 40. I’m just curious, is there turnover or decline of the actual cells that have been edited, are they going and turning over in the odd?

Charlie Albright

No, we have no evidence of that. We don't think there is a decrease between the time points you mentioned. And it's also important that editing is not corrected for the frequency of the retina that was transduced. So that really -- if you look at the dose response curve from that last presentation that leveled off at 50% productive editing, which is essentially the maximum you can get, and we think it gets fair and then stays there.

Operator

Our next question comes from the line of Phil Nadeau with Cowen & Company. Your line is now open.

Phil Nadeau

First, on the nature of history study in LCA, can you talk about how that study dovetails with your efforts in your clinical trials? Is it possible that you can use that study to identify patients and speed the screening portion of this study along?

Charlie Albright

Yes is the short answer. So, that study, there is several things for us that because of its similarity with the scale, it helps us set up the site, essentially, the sites are being used in the natural history study are the same sites that -- many of the same sites that will be used in the interventional study, and there will be patients that are enrolling in the natural history study. We obviously, -- it's their decision in consultation with their primary care physicians as to what they -- will they enroll in the interventional study or not but clearly they’ll have familiarity with both the site and the study and then they can make their own informed decision.

Phil Nadeau

That’s helpful. And then second, a follow-up question on the Celgene collaboration. Do you have any visibility into Bristol-Myers’ desire to get to that collaboration or maybe more broadly, is there any update on the progress of the collaboration towards the clinic?

Charlie Albright

We can only say limited things now that that the collaboration is part of Celgene, as you can appreciate with a larger pharma partner, their interest in the closure is not the same as our was with Juno. All we know is what's been stated publicly, which was that the cell-based medicines part of the Celgene acquisition is an important part of the BMS strategy going forward. And there are efforts particularly in liquid tumors synergizes very nicely with the BMS’ focus on solid tumors. And I think from the outside, I think it represents a very interesting merger of two complementary portfolios both of which have a large focus on oncology. So, for those reasons, we’re optimistic that the merger actually will bring good things with respect to the collaboration.

Phil Nadeau

And any sense of timing, when we could see these IND-enabling studies?

Charlie Albright

We can't say anything at this point.

Operator

Our next question comes from the line of Gena Wang with Barclays.

Xiaobin Gao

Hey. This is Xiaobin dialing in for Gena. Thank you so much for taking our questions. Maybe just a follow-up on the EDIT-101 question, with some natural history data, would you be able to refine more about the enrollment criteria regarding like patient age or visual acuity? And then, the second question would be just what additional steps are you taking to do actively precise? And then last one is based on the kinetics of the gene editing, would you sort of speculate on the timeline that we can see initial efficacy?

Charlie Albright

Let me start with the last question, and I’m not sure I got the second one, and I’ll hit the natural history one. So, in mice and non-human primates, editing was completed in approximately six weeks. After editing, you need to re-express the CEP290 message, the CEP290 protein and rebuild the other segments. We believe that will be sufficient to allow, like to be detected and then from that you need to activate the visual pathway to establish vision. So, there's a good reason to believe that we could -- potential patients could potentially see benefit in a few months, is the answer.

When we will disclose clinical, which is probably what you actually want to know is an entirely different question, and that will depend very much on the results we see in our consultations with our collaborators, Allergan. The natural history study will potentially let us refine, both entry criteria and the endpoints that we look at in the patient group. That’s all part of -- was all part of the objectives of running a natural history study. And so, yes, it has a potential to alter that. I’m not sure I caught the middle question.

Xiaobin Gao

Yes, just more asking about sort of what left to start the clinical -- to dose the first patients and is that part of the site activation?

Charlie Albright

Right. So, all the usual things to activate the site, IRB approval, so safety approval, delivering the drug product at a site, we plan to enroll patients in the middle of the year. So, we're virtually in the middle of the year based on our definition of second and third quarter. And so, we will start enrolling patients and then dose somewhere in the second half of the year.

Operator

Our next question comes from the line of Cory Kasimov with J.P. Morgan. Your line is now open.

Unidentified Analyst

This is Matthew on for Cory. So, the first one I want to follow-up on the previous questions for your sickle cell disease and beta-thal program, and referring to as bet-in-class, can you expand on that a little, especially as it compares to non-gene editing approaches basically. I am wondering, if your confidence here is mostly based on hemoglobin level?

Charlie Albright

Yes. And so, it’s a little bit hard to do that comparison with -- in a database where they were willing to disclose at this point because basically you're different things. So, the gene therapy approach is we have -- what I mean by that is in the gene therapy approach if you’re expressing beta-globin that it has outcompete the endogenous sickle beta-globin. And so, it's actually not clear how that competition is going to go. In our case, we're actually doing two things. We're turning on fetal hemoglobin and we're turning off the sickle. So, doing that pharmacologic comparison is actually quite challenging. Suffice it to say that we do believe, the combination of what we’re doing is -- has the potential to be best-in-class, and part of that as well as based on the human genetics. As you recall the patients with elevated levels of fetal hemoglobin, regionally available [ph] fetal hemoglobin actually suppresses the sickle-cell symptoms. And so, this is the mechanism that nature has taught us can actually rescue the disease.

Unidentified Analyst

Got it. And then, I guess, just based on what you just said, what's your like broad level strategy to demonstrate this clinically?

Charlie Albright

We're going to go into patients, and as you’ll see, fetal hemoglobin levels and symptoms come from that.

Unidentified Analyst

And then, just one follow-up. Can you provide an update about the CEO search?

Cindy Collins

Sure. Our searches are well underway and we’re really looking forward to hiring excellent executes to help us lead the Company through the next phase of growth as we move into the clinic. So, no comment on timing; we will update you when the timing is right. But, those searches are quite active at this point.

Operator

Our next question comes from the line of Peter Lawson with SunTrust Robinson Humphrey. Your line is now open.

Peter Lawson

Just on LCA10, how long should we think about the period it takes to identify screen and dose the patients? And then, if any of the patients around the natural history consented to be part of the interventional study?

Charlie Albright

We can't comment on whether anybody -- you’re basically asking whether anybody is enrolled. Yes, we can't comment on that. Clearly, we hope and believe that the natural history study will aid in the enrollment, in the LCA10 interventional study. As with any phase one gene therapy like study, there will be an interval between dosing the first patient and dosing subsequent patients. And we haven’t provided the details for that. I would just say, these are typical intervals of the gene therapy development space right now.

Peter Lawson

Got you. Thank you. And then, based on the number of sites, does this roll over from the natural history study but how many since you have and how many others would you add and what's the timing around that?

Charlie Albright

Yes. We have four sites in the U.S and three sites in Europe is my recollection. You guys are testing my memory with all the numbers. But we have an IND approved right now. So, the sites in the U.S will be open first and we feel that those will be sufficient to get us well started on the clinical trial and we will work on opening Europe and European sites, because we do believe we need in the long run patients from the Europe but we're better in the short run.

Peter Lawson

And then, when do you think you could start the sickle cell trial?

Charlie Albright

We haven’t provided that guidance yet but you will be the first I will call you Peter.

Operator

[Operator instructions] Our next question comes from the line of Denise Meacham [ph] with Guggenheim Securities. Your line is now open.

Whitney Ijem

This is Whitney. Thanks for taking the questions, well actually just one. So, on USH2A, you mentioned that there is meditational optimization ongoing there. So, wondering -- sorry if I missed this. But wondering if you can give us any color on the optimization that that you're looking through.

Charlie Albright

Actually there is nothing unusual there, we're finishing up the pharma call as a package that supports the nomination of the development candidate which will put us in a position to be IND ready for IND enabling studies at the end of the year. o we're on track for that.

Operator

I’m showing no further questions in queue at this time. I would like to turn the call back Cindy Collins, for closing remarks.

Cindy Collins

Great. So, with that, we thank you all for participating in today’s call and for your support as we work to bring transformative new medicines to patients. Have a great evening.

Operator

Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect.