Good morning, welcome to Editas Medicine's third quarter 2019 conference call. All participants are now in a listen-only mode. There will be a question and answer session at the end of this call. Please be advised that this call is being recorded at 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.
Thank you, Operator. Good morning, everyone, and welcome to our third quarter 2019 conference call. Earlier this morning, we issued two press releases that will be discussed on this call. The first announces an amendment to our longstanding collaboration with Celgene. The second press release provides our financial results and corporate updates for the third quarter of 2019. A replay of today's call will be available on the investors and 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 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. 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 Chief Executive Officer, Cindy Collins.
Thank you, Mark. Good morning, thank you everyone for joining us for our third quarter 2019 corporate update. In addition to Mark, I'm joined by several members of the Editas executive team, including Charlie Albright, our Chief Scientific Officer, Judith Abrams, our new Chief Medical Officer, and Eric Ek, our interim Chief Financial Officer. Editas has had a productive quarter. We are excited to share some of the highlights with you today. First and foremost, I am pleased to welcome Dr. Judith Abrams as our new Chief Medical Officer. Judith has tremendous experience and an outstanding reputation. She is a valued addition to our executive team. Her arrival is ideal as we prepare to dose the first patient in the BRILLIANCE phase I/II clinical trial. Second, we announced this morning an amendment to our longstanding collaboration with Celgene to develop engineered T-cell medicines for cancer.
As you may recall, our original collaboration spanned the entire field of engineered T-cells. The amended collaboration will focus on alpha/beta T-cells, freeing up Editas to develop its own medicines using non-alpha/beta T-cells. As a result of this amendment, we are entitled to receive a payment of $70 million with the potential for future milestones and royalties on alpha/beta T-cell medicines developed by Celgene using our technology. Third, we are making solid progress with EDIT-301, our pre-clinical candidate to treat sickle cell disease and beta-thalassemia. We look forward to sharing in vivo data at the upcoming ASH meeting, demonstrating why we believe it has the potential to be a best-in-class medicine. Fourth, we recently formed a new collaboration with AskBio, a leader in AAV gene therapy, to develop in vivo CRISPR medicines to treat neurological diseases.
This marks our second therapeutic focus for our in vivo CRISPR medicine portfolio in an area with high unmet need. Our ophthalmology portfolio is advancing with the first patient dosing of EDIT-101 for LCA10 anticipated by early 2020. With that, I'd like to turn the call over to Judith Abrams, our new Chief Medical Officer, to introduce herself.
Thanks, Cindy, for your warm introduction. Thank you all for being with us on the call today. Over the course of my career, spanning more than 25 years, I've had the opportunity to lead the development of medicines through all stages of clinical development across a number of therapeutic areas, including immunology and neurology. I'm thrilled to join Editas Medicine during this pivotal time and look forward to advancing EDIT-101 as well as additional experimental medicines in our pipeline through clinical development, including EDIT-301 for the treatment of sickle cell disease and future engineered cell medicines for the treatment of cancer. Now let me turn the call over to our Chief Scientific Officer, Charlie Albright, to update you on our pipeline.
Thank you, Judith. As Cindy mentioned, we have amended our collaboration with Celgene to focus on developing autologous and allogeneic engineered alpha/beta T-cell medicines to treat cancer and autoimmune diseases. We've been working with our partners at Juno Therapeutics and now Celgene since 2015 to develop engineered T-cell medicines to treat cancer. As the original research term was set to expire in May of next year, we've extended and focused our collaboration to enable the advancement of medicines into the clinic. As a result of the amendment, we have regained rights to develop non-alpha/beta T-cells in all disease areas. These rights were previously exclusive to Celgene for oncology. For example, we now have the right to pursue gamma delta T cells for oncology. Gamma delta T cells are part of the innate immune system, as are NK cells, where we have a significant effort using both donor-derived and iPSC-derived NK cells.
We believe that cells from the innate immune system both complement alpha/beta T-cells and increase the potential to treat solid tumors, an area of significant unmet need. Moving on to our other area of focus in engineered cell medicines we are developing, EDIT-301 is a best-in-class medicine to treat sickle cell disease and beta-thalassemia. EDIT-301 uses an engineered Cpf1 enzyme to edit hematopoietic stem cells at the beta globin locus. We are confident in this program as other editing approaches target the BCL11A erythroid enhancer, which we believe may impact overall survival of the erythroid lineage. At last year's American Society of Hematology meeting, our work showing this effect was recognized with a Best of ASH Award. We will present additional data from our program at the upcoming ASH meeting describing our product configuration, in vivo efficacy data, and off-target analysis.
The totality of the data captures why we are so encouraged by this program, and we think clinicians and patients will be as excited as well. Switching gears to our in vivo CRISPR medicines pipeline, in partnership with Allergan, we are developing a portfolio of gene-edited ophthalmology treatments for inherited retinal diseases. Our lead program, EDIT-101, is a treatment for patients suffering from LCA10, and the BRILLIANCE phase I/II interventional study is underway to evaluate its safety, tolerability, and efficacy. The first potential patient that we anticipate participating in the trial has been successfully screened, and confirmation of a surgery date by early 2020 is pending. With that being said, drug product has been manufactured and is available for dosing. Multiple sites are recruiting, and we are actively engaged with clinicians to identify, screen, and schedule patients for the initial cohort.
Our ophthalmology portfolio also includes an experimental treatment for Usher syndrome type 2A. To restore fully functional Usherin protein and correct the disease, we knock out exon 13, which contains the most common disease-causing mutation. At the European Society of Gene and Cell Therapy meeting, we demonstrated therapeutically relevant editing of up to 60% in human retinal explants. This data gives us confidence in our ability to treat the disease and supports further preclinical development of our lead candidate. The program draws heavily on the work we've done to research and develop EDIT-101, utilizing the same AAV vector promoter and Cas9 enzyme, leveraging many of the same functional assays and models, and following on the regulatory path paved by EDIT-101. Beyond ophthalmology, we have recently formed a collaboration with AskBio to develop in vivo CRISPR medicines to treat neurologic diseases. AskBio brings significant expertise in AAV development and manufacturing.
With AskBio, we target cells in the peripheral and central nervous system, a well-known challenge for drug development. The combination of AskBio's expertise and knowledge in vector engineering and manufacturing, coupled with Editas' gene editing expertise, could address a host of neurologic diseases with high unmet need. For example, we are excited about the potential for gene editing to treat debilitating pain and Huntington's disease. We look forward to providing additional updates on our programs in the near future as Editas works to translate gene editing into transformative treatments for patients with serious diseases. With that, I'd like to turn the call over to Eric, who will provide a financial update.
Thanks, Charlie. I'm pleased to update all of you on our business and present the latest financial results. These numbers are summarized in the press release that we issued an hour ago. Full details will also be available in our Form 10-Q. Our cash equivalents, and marketable securities increased by $15 million in the third quarter to $333 million as of September 30th, 2019, from $318 million as of June 30th, 2019. Our uses of cash totaled $29 million and include cash operating expenses of $27 million and capital expenditures of $2 million. Our sources of cash totaled $44 million and consisted of $41 million related to the at-the-market offerings, $2 million of stock option exercises, and $1 million of interest income.
We believe our cash equivalents, and marketable securities of $333 million as of September 30th, 2019, provides at least 24 months of capital to fund our business. With that, I will hand it back to Cindy.
Thanks, Eric. It has been a busy past few months for Editas as we work to deliver the promise of CRISPR into treatments for patients with serious diseases. It is truly an exciting time for us with the work we have been doing to advance our programs and explore new possibilities for genome editing. Editas programs have the potential to revolutionize the treatment of genetic blindness, cancer, sickle cell disease, and neurological conditions, but our work is only getting started. We are excited for what the future holds with upcoming data readouts, scientific achievements, and program advancement. Thank you all for your interest and support during this journey we have been making alongside researchers, clinicians, investors, and most importantly, patients. With that, we are happy to take your questions. Operator?
As a reminder, to ask a question, you'll need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Steve Seedhouse with Raymond James. Your line is now open.
Hi, this is Timur Ivannikov on for Steve Seedhouse. We have a couple of questions for EDIT-101 based on a recent competitive readout. They had a couple of super responders in LCA10. Then they had the worst vision at baseline in the low-dose cohort. It turns out the best responder took the longest time to lose his vision. The company didn't specifically say what the genetic or epigenetic differences were. In addition, there was one patient whose contralateral eye improvement of 0.2 logMAR was relatively significant. Given the potential for super responders and potentially high placebo response, we were wondering how you address those issues in your study. Thank you.
You're right, this is Charlie. Those are things we will be monitoring, and they're not obvious explanations for some of the phenomena that have been seen to date.
Okay. I guess, do you also, in terms of a safety follow-up, do you have an expectation for how many patients will develop cataracts in your study? Just to see what the baseline rate would be. Thank you.
We don't have any expectation it'll be any different than the other therapies in this space, the other AAV-based therapies. It's something we'll clearly be monitoring.
Okay. Just a quick housekeeping question on your updated Celgene partnership. Looks like you're getting additional $70 million. Is that mostly just for the expanded timeline? Not clear how much after 2020 it is, because it seems like you're also getting back some of your rights. If you could explain a little bit better. Thank you.
The $70 million is an upfront payment in recognition of the work we've done to date and the contributions going forward. Yes, you're right, we are getting some rights back.
Okay, thank you.
Our next question comes from Matthew Harrison with Morgan Stanley. Your line is now open.
Hi, good morning. This is Kosta Sohn for Matthew Harrison. My first question is, can you explain a little bit what caused the timeline for the first dosing of EDIT-101 to be pushed back into 2020 from 2019?
Sure. As you can appreciate, this is a rare inherited retinal disease, and as with all rare diseases, accruing patients is challenging. Particularly challenging since the entry criteria for this first patient is restricted because that's the right thing to do. This has to be an adult with light perception only. It's further complicated by challenges with the holidays. The patients typically need to bring a caregiver, need to arrive before the surgery, and they can't fly for 10 days after the surgery. The combination of those things has just made it complicated as we've approached the holiday season.
Thank you. How is the screening progressing for other patients beyond the first patient?
We're progressing well. In addition to the patients we've identified in the natural history study, we've opened two sites. Two more sites are pending. We continue to screen for patients outside the natural history study. We have, as part of our screening, identified other patients which are potential patients in the subsequent cohorts.
Okay, thank you. One more question, please. Can you talk about the reason for Cpf1 in your hemoglobinopathy program?
Sure. Our general strategy is to use the best enzyme for the application. In this, the hemoglobin program is a fascinating one because you're knocking out a transcription factor binding site. As we'll show at the ASH meeting, not all edits at the transcription factor site are actually productive edits where they knock out the binding of the transcription factor. It turns out in this case that when we edit with Cpf1, we get a much higher fraction of productive edits in the long-term hematopoietic stem cells. What we've done there is really to create a relatively unique product where we maximize the ability to induce fetal hemoglobin, which is of course the objective of this program. It's really been an interesting journey there, and we look forward to the upcoming ASH meeting.
Okay. Thank you. One last question to follow up on this. Given that we expect data from another CRISPR medicine in hemoglobinopathies again before year-end, can you talk a little bit about how this data could inform your strategy in this area of diseases?
We carefully monitor the competitors in this space as we do in every program we have. We do have reason to believe that we have developed a best-in-class medicine, and we clearly monitor that with time. It will be interesting to see the upcoming data, particularly in light of the abstracts we've seen to date.
Thank you very much.
Our next question comes from Whitney Ijem with Guggenheim Securities. Your line is now open.
Hi, good morning, guys. This is Amita on for Whitney this morning. Could you please give us more color on the vectors that you may gain access to under your AskBio collaboration and the initial indications that you may be considering in this CNS space? What attracted you to AskBio in particular versus other next-gen vectors in the space? I have an additional follow-up. Thanks.
Sure. We're very impressed with AskBio, not only are they a leader in AAV and have a track record, the people involved in AskBio have a significant track record of putting medicines into the clinic that are efficacious. They've also developed a nice infrastructure. They have an excellent manufacturing facility. They've acquired some significant businesses that go with their core business and complement the core expertise they've developed in AAV manufacturing. It is a very impressive group, and we're super excited to be working with them on the neurologic disease. Our initial efforts will be pointed to severe pain. We don't want to say tremendous about it now. It's an area of high unmet need, where the targets are genetically validated, and we think we can do something very unique.
Okay, in your beta thal and sickle cell program, what is the HBF target that you're aiming for, and is it any different between the two diseases? Thanks for taking my questions. Thanks.
We believe we need to get more than 30% fetal hemoglobin increases, and it needs to be significantly pan cellular, obviously. We'll show data at ASH that we've exceeded those targets and believe we have a very interesting experimental medicine.
Our next question comes from Gena Wang with Barclays. Your line's now open.
Thank you for taking my questions. This is David on for Gena. My first question is regarding LCA10 data read-through. How do you think that the LCA data read-through to the Usher syndrome in terms of initial dosing?
For each of these, we are doing the pharmacology modeling to correlate the editing with the dose. We haven't shown that data. We do anticipate that dose responses between medicines will be quite similar. We've seen some of that pre-clinically. We'll show more of that next year. As with all molecular medicines, the pharmacodynamic, pharmacokinetic relationship is typically reasonably well-maintained across therapies in different spaces. We anticipate the same thing here.
Got it. Very helpful. Second question is regarding the pre-clinical data for beta thalassemia and sickle cell disease, your pre-clinical data at ASH. How does it compare to the BCL11A approach, and what do we expect in terms of timing to phase I?
Taking them in reverse order, we haven't disclosed the timing to phase I. What we said though is we're in a position to begin IND-enabling studies and are advancing it as rapidly as possible, and we, of course, stand by that. The data compares favorably. I think you'll be able to judge that when you see the poster as far as fetal hemoglobin is.
Okay. Very helpful. Last question on the recent prime editing news that came out. What do you think is the impact to the CRISPR?
We monitor the competition across the space, both the direct gene editing approaches and the modified gene editing approaches. The prime has many similarities to the base editing and we anticipate many of the same issues, quite frankly.
Okay, great. Thank you. I'll hop back on the queue. Thank you.
Our next question comes from Amanda Murphy with BTIG. Your line is now open.
Hi. Thanks. Good morning. Just a few questions, I guess, on the Celgene change or re-up of the agreement, and then also just what you've been up to on that front. I know you've been presenting for a while now at various conferences, preclinical data on TCF1 and T-cell. Just curious if you can update us on what, I guess, A, what happens to the work that's been done previously with TCF1 and T-cell that you've presented, and then I'm assuming that also includes engineer TCRs in terms of taking that back, if you will. Curious if you can just update us on both of those programs, where you're at with those and when you think you might have an update on timing and indications and things like that?
Yeah. I wish I could be more clear about the timing and the details of the Celgene programs. Unfortunately, that's not possible. Suffice it to say that the work that we have shown will carry forward into the new collaboration. We have shown a lot of data on multiplexing, targeted integration, knockout of what one would say are the typical genes in this space. All of that work gets rolled into the new collaboration with Celgene. As you can imagine, as we believe the leader in T-cell medicines for oncology, including arguably the best CD19 and the best BCMA CAR T programs, they have a strong interest in maintaining their leadership position. Gene editing is certainly an important part of what are likely to be the next generation of T-cell medicines for oncology.
We're excited to continue to work with them in that space, and we'll be able to use the knowledge we've gained to date to do that. Unfortunately, we just can't be transparent about the nature of the products or the timing of the products.
Okay. Fair enough. Just on the NK program, and I'm sorry if I missed this. Have you talked about there what your timing is? I know you had an NK cell program that was sort of running individually, and then you obviously have the iPSC collaboration, and I think you've talked about iPSC-derived NK cells as well. Just looking for an update there, if you can provide one.
We provide a general update without the specifics that you probably really want. Suffice to say that the science is going really well, and you'll hear a lot more about that next year as we go into the oncology and the stem cell meeting. We are able to, with our collaborators BlueRock, identify well-defined and characterized iPSC lines. We've been able to edit those iPSC lines, and we've been able to differentiate them into NK cells that have potent killing activity in vitro. We're starting to combine all those things now into what we believe will be interesting experimental medicines and accumulate the data as rapidly as we can to advance those into the clinic. We have a similar effort in the healthy donor-derived NK cells that we think complement the iPSC-derived NK cells.
We do anticipate providing significant update next year that illustrates that progress in a scientific venue.
Got it. Again, if I can sneak in one more about EDIT-101. Just remind us again from a protocol perspective, what's required for sort of a second patient dosing. Is that going to be a little more I just forget? Just a reminder on the timing there.
Yeah. The entry criteria for both patient 1 and patient 2 are quite similar. Light perception, only adults. There's an interval between the dosing of those two patients, which I believe is six weeks. We are obviously trying to accrue both the first and the second patient, because that's what's required in the first cohort.
Yeah. Okay. Thank you very much.
Our next question comes from Joe Thome with Cowen and Company. Your line is now open.
Hi there. Thank you for taking my questions. The first one on the 101 program. In terms of patient screening, I know you mentioned that obviously the first cohort we want patients with only light perception and kind of advanced disease. Have you screened patients that maybe just didn't have advanced disease enough that would be applicable for a later cohort? How is patient interest in the program sitting?
Yes. The simple answer is yes. We have screened patients that did not fit the criteria for cohort 1, that could fit the criteria for cohort 2 and 3. Obviously we're interested in them. The interest in patients and their physicians remains high. We're optimistic that we're going to start to get this study dosing and further enroll.
Thank you. One more on that program. I know it's looking ahead, but in terms of data disclosure, I know you're following for a year, but there is the potential for some interim. How do you anticipate releasing data? Would you release data from the first cohort, or would you wait until you had a few cohorts of patients dosed for a meaningful amount of time?
Right. It depends on the data, quite frankly. Remind you that we are partnered with Allergan on this study, and they're going to have an important say in the release of data. We have said we're not going to release data on a patient-by-patient basis because we don't believe that data will be representative, and as illustrated by one of the earlier questions, there are some super responders here, and you can be significantly misled by releasing patient-by-patient data. I think it'll very much depend on what the data is, and our discussions with our partners, Allergan.
Great. Just one last kind of housekeeping question on the Celgene deal, the $70 million milestone. Do you expect to receive that in Q4? Maybe how are you going to account for that? In terms of when Celgene can opt in on some of these programs, is there a specific time after proof of concept, before pivotal, or how are they thinking about that?
Yes, we are going to accrue in the fourth quarter. The deal is structured, so they can opt in at any point in time.
Okay, great. Thank you.
Again, if you have a question, please press star and then one. Our next question comes from Geulah Livshits with Chardan. Your line is now open.
Thanks. Good morning, everyone, and thanks for taking my questions and congrats on the progress. A quick one on LCA10 and then one on the oncology. With respect to the LCA10 program, just to make sure I understand, was that first patient that was identified rolled in from the natural history study?
Yes
Great. With respect to the Celgene collaboration in terms of overall oncology strategy, kind of a broader question, you have a number of tools at your disposal now, and I'm just wondering how you're thinking about the decision process towards deploying a particular T or NK or gamma delta T cell therapy, I should say, towards a given target or towards solid versus liquid tumors and internal versus Celgene collaboration. If there's any color that you can provide on that.
The collaboration with Celgene is very much about working with somebody who's a leader in alpha/beta T cells, and as you know, they're a leader in alpha/beta T cells directed at hematologic indications. CD19 and BCMA are at the top of their portfolio, as we believe, and I said they arguably have the best medicines in both of those spaces, and I think that maintaining that leadership will be at the top of their list of things to do. We are going to focus most of our effort on solid tumors, an area of significant unmet need where engineered cell medicines have been relatively unsuccessful to date, but we believe we can get there and that you're going to need significant genetic changes and editing to do that. The iPSC platform really provides that ability to make the genetic changes that are going to be required.
For instance, you're going to need targeting, you're going to need increased persistence, evasion of the immune system, evasion of the tumor microenvironment, and probably ability to stimulate the endogenous immune system. There's no way you're going to get there with any cell type derived from healthy donors. We're building a platform we believe is unique in the space and affords the ability to make complex products which will get us into a space that has a significant unmet need. Right now, our efforts internally are focused primarily on NK cells. They are one of the easier cell types to make from the iPSC platform, and there's emerging clinical data that they are indeed efficacious in patients, albeit in hematologic indications to date. We are very excited about that.
We've made a lot of progress in that area, and we look forward to disclosing all that at the meetings next year.
This is kind of theoretical, but then would Celgene's potential opt-in rights include something like an iPSC-derived alpha/beta T cell based on the structure of the agreement?
It could. That's not the initial focus of the agreement.
Great. Just one last one on the AskBio collaboration. You mentioned went through AskBio. Just out of curiosity, under the collaboration, do you have access to the Synpromics informatics platform?
We do. That's a great example of the way they're expanding their technology footprint to really become what we believe is one of the leaders in the AAV field.
Great. Thanks.
Our next question comes from Silvan Tuerkcan with Oppenheimer. Your line is now open.
Well, congrats on the quarter, and thank you so much for taking my question. First off, I wanted to ask you about Matthew Porteus' approach, which is academic, that was presented at ESGCT in sickle cell disease. He will be starting up a phase II trial next year. Could you maybe highlight the differences between your approach and his, and is there potential read-across from his trial that could apply to EDIT-101?
Sure. His approach, as I understand it, is to actually target correction of the sickle cell mutation. That obviously has some theoretical appeal because you're going right after the mutation. As you can appreciate, though, not all of the genetic changes at the sickle cell allele are productive, i.e., not all of them lead to correction of the mutation. The problematic aspect to that strategy is when you don't correct, you actually make an indel, which is highly likely to be non-functional. Those alleles, and potentially those cells, will now not contribute hemoglobin to the patient. If you don't get enough correction, you actually have the potential to make beta-thalassemia patients, take sickle cell patients and make them beta-thalassemia patients, which we have found to be a significant risk.
Great. Thank you. Could you please remind us of what's left to do to file an IND for Usher and what could be a potential timeline?
We haven't disclosed a timeline. What we have said is that at the end of the year, we anticipate having a molecule that'd be ready for an IND-enabling study. You recall that the Usher program is part of our collaboration with Allergan, and it's an option agreement, so we provide packages at the end of the discovery phase to Allergan, and then they have the right to opt in. We anticipate delivering that package to them at the end of the year. We remain on track for that. At that point, they'll have a decision to make, and once they've made their decision, we will potentially have a decision to make as well.
Great. Thank you so much.
At this time, I'm showing no further questions. I'd like to turn the call back over to Mark Mullikin for any closing remarks.
Great. With that, we thank all of you for participating in today's call and for your support as we work to bring transformative new medicines to patients. Have a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.