Good afternoon, and welcome to Editas Medicine Second 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.
Please go ahead.
Thank you, operator. Good afternoon, everyone, and welcome to our Q2 2019 conference call. Shortly after the market closed, we issued a press release providing our financial results and corporate updates for the Q2 of 2019. A replay of today's call will be available on the Investors and Media section of our website approximately 2 hours after its completion. After our prepared remarks, we will open the call for Q and 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 newly appointed Chief Executive Officer, Cindy Collins.
Thanks, Mark. Good afternoon, everyone, and thank you for joining us for our Q2 2019 corporate update. In addition to Mark, I am joined today by several members of our executive team, including Charlie Albright, our Chief Scientific Officer Vic Myer, our Chief Technology Officer Eric Eck, our Interim Chief Financial Officer and Tim Hunt, our Senior Vice President of Corporate Affairs. As we announced this afternoon, the Board ran a comprehensive process over the past several months focused on identifying the right leader to take Editas into its next chapter, accelerate our achievements and focus on our EM22 goals. The Board's search was run by the Nominating and Governance Committee with assistance from leading executive search firms.
Overall, the Board interviewed many candidates and was focused on executives with strong industry, scientific and development expertise, a proven ability to grow and scale companies and a passion for driving long term success for Editas and patients. As a veteran of the gene and cell medicine industry, I knew Editas well, which is why I jumped at the chance to join the Editas Board last December. I believe that this company has an extraordinary opportunity to develop durable medicines that can dramatically transform patients' lives in ways never imagined. And as Interim CEO, my enthusiasm has grown as I have dug in and learned more about the people, programs and capabilities of the company. That is why I am pleased and humbled to accept the Board's appointment as permanent CEO.
We've had great momentum in 2019, and we are determined to build on that and establish Editas as the clear leader in the gene editing space. We have been driving programs, executing business development deals, hiring and building teams and strengthening our Inspiritas culture. I am proud of what our team has accomplished and I am excited to update you on our latest progress. I will hit on a few of the highlights and then hand it over to Charlie and Eric to discuss in further detail. First, in partnership with Allergan, we have initiated patient screening in our Phase onetwo clinical trial with EDIT-one hundred and one for liver congenital amaurosis 10 or LCA10, and we are on track to dose patients in the second half as previously communicated.
This is a thrilling moment in the history of medicine as we are on the cusp of treating people for the first time ever with an in vivo CRISPR medicine as well as a first for Editas Medicine. 2nd, beyond EDIT-one hundred and one, we are making strong progress on our broader pipeline of in vivo CRISPR medicines, starting with another ocular disease, Usher Syndrome 2A. This program is derisked and accelerated by our work on EDIT-one hundred and one, and we expect to be ready for IND enabling studies by the end of the year. 3rd, we continue to advance our engineered cell medicines. Our confidence in EDIT-three zero one as a potential best in class medicine for sickle cell disease and beta thalassemia continues to build, and our team is making tangible headway on its development of engineered cell medicines for cancer, including universal allogeneic cell medicines.
Finally, we are investing in manufacturing infrastructure required to develop and commercialize CRISPR medicines, including manufacturing capacity at our site in Boulder, Colorado. Now I will hand the call over to our Chief Scientific Officer, Charlie Albright, to update you further on the pipeline.
Thanks, Cindy, and thanks to everyone on the call for joining us today. I'll start with our first in vivo CRISPR medicines beginning with our lead candidate EDIT-one hundred and one for LCA10. As Cindy mentioned, we have initiated patient screening for our Phase onetwo interventional study called BRILIENCE in collaboration with Allergan. We remain on track to begin dosing in the second half of this year. BRILIANCE is an open label dose escalation study to evaluate the safety, tolerability and efficacy of EDIT-one hundred and one in approximately 18 patients.
The site at Mass Eye and Ear is currently recruiting and we plan to open 3 more sites in the weeks ahead. We also expect the first patients in the trial will come from our natural history study, which enrolled patients with very similar enrollment criteria to the interventional study. You will recall that accelerating the interventional study was one of the objectives of the natural history study. For our 2nd in vivo program, we are developing an experimental medicine for patients with Usher Syndrome 2A. Like LCA10, USH2A is an inherited retinal disease that affects the photoreceptors.
USH2A is caused by a mutation in the gene encoding Usherin, a protein essential for phototransduction in the retina. And the most common mutation in the US2A gene is a single nucleotide deletion in exon13 causing a frame shift that results in a truncated non functional protein. Our therapeutic approach uses CRISPR gene editing to remove the exon containing the mutation and thereby create a functional protein. Our collaborators from Mass Eye and Ear showed preclinical proof of concept for this approach at the recent American Society of Gene and Cell Therapy Conference, and we are currently completing preclinical studies for our lead molecule. This medicine will share many features with EDIT-one hundred and one, including the AAV serotype, promoter and proprietary staph aureus Cas9.
We anticipate having a molecule for S2A patients that is ready for IND enabling studies by the end of the year. Finally, we're working on additional ocular programs and we'll speak further about these programs in the coming months. These programs will illustrate the power of our platform to rate in vivo editing medicines. Transitioning to engineered cell medicines, the second pillar of our therapeutic strategy, for developing EDIT-three zero one to be a best in class medicine for sickle cell disease and beta thalassemia. This program uses gene editing to induce fetal hemoglobin expression to treat hemoglobinopathies.
As a reminder, our therapy involves targeting the beta globin locus in hematopoietic stem cells. This therapeutic approach is differentiated from other approaches, which go after the BC11A erythroid enhancer, which only indirectly upregulates fetal hemoglobin. Our findings suggest adding the VC11A enhancer may impact stem cell differentiation and ultimately the number and viability of edited red blood cells in vivo. We have found that adding the beta globin locus on the other hand had no detrimental effect on our thyroid output while inducing robust fetal hemoglobin. IND enabling activities are underway and we plan to present additional data demonstrating the features and benefits of EDIT-three zero one at a medical conference later this year.
Due to our confidence in this program, we are building manufacturing capacity at our site in Boulder, Colorado. In particular, we intend to use this facility to supply guide RNA and ribonucleic protein for preclinical and clinical studies with EDIT-three zero one as well as other engineered cell medicine oncology programs. We expect this site to be commissioned next year. Beyond our work on hemoglobinopathies, we are investing broadly to develop engineered cell medicines in oncology. We have a long standing partnership with Celgene to develop engineered T cell medicines, and in parallel, we are advancing wholly owned efforts to develop engineered NK cells as potential therapies for cancer.
Last quarter, we announced a collaboration with BlueRock Therapeutics to develop cell medicines for oncology using induced pluripotent stem cells or iPSCs. Engineered cell medicines from iPSCs may offer several potential advantages, including the ability to make a highly engineered cell with total control of the genome and thereby create a truly off the shelf medicine. We believe these features will be essential to unlock the potential of cell medicines for solid tumors, an area of high unmet need. I'm encouraged by the rapid progress we are making we have made in just the past few months. First, we have successfully generated iPSCs from fibroblasts and peripheral blood cells.
2nd, we have achieved efficient editing of iPSCs. And third, we have differentiated iPSCs into functional NK cells with potent killing activity. Progress puts us on a good path to develop highly engineered off the shelf NK medicines that address the high unmet need for patients with solid tumors. I have more to say about these results at upcoming scientific meetings. In conclusion, our team continues to make strong headway against both in vivo CRISPR medicines and engineered cell medicines.
Now let me turn the call over to Eric to provide a business and financial update.
Thanks, Charlie. I'm pleased to update all of you on our company's financial results. These numbers are summarized in the press release that we issued about an hour ago and full details will also be available on our Form 10 Q. Our cash, cash equivalents and marketable securities decreased $24,000,000 in the second quarter to approximately $318,000,000 as of June 30, 2019 from approximately $342,000,000 as of March 30 1, 2019. Our uses of cash totaled $32,000,000 and include cash operating expenses of $31,000,000 and capital expenditures of $1,000,000 Key non cash items recorded in our income statement include 6 $1,000,000 of stock based compensation and $1,000,000 of depreciation.
Our sources of cash include $2,000,000 of stock option exercises and $1,000,000 of interest income. We believe our cash, cash equivalents and marketable securities of $318,000,000 as of June 30, 2019 provides at least 24 months of capital to fund our business. And with that, I will hand it back to Cindy.
Thank you, Eric. Before we close, I'd like to make a few comments interference between certain patent applications submitted by the University of California Group and certain patents issued to the Broad Institute, which are exclusively licensed to Editas Medicine. We have the utmost confidence in our intellectual property and expect these issued patents to be confirmed and upheld in this proceeding. On the organizational side, executive searches remain active to bring on an excellent new CFO and Chief Medical Officer. We look forward to updating you at an appropriate time.
In closing, we are making history with the first ever treatment of patients with an in vivo CRISPR medicine. Our pipeline is advancing to translate CRISPR gene editing into genomic medicines across a wide range of serious diseases from hemoglobinopathies to cancers to inherited blindness. And we are further enhancing our end to end capability to bring medicines to patients by building manufacturing capacity to reliably supply CRISPR medicines. With that, we thank all of you for your interest and support and are happy to take your questions. Operator?
Thank
Our first question comes from the line of Gena Wang from Barclays. Gena, your line is open. Our next question comes from the line of Matthew Harrison from Morgan Stanley.
Hello. This is Kostas on for Matthew. I have two questions. The first one is, how do you expect to report the data from the PRILIANCE study given that this is an open label study? Will you announce data from few patients first or you will wait until the study is completed before you present data?
Hi, this is Charlie. So, number 1, we're really excited to get the study going. And as we said, this is the first ever in vivo CRISPR editing. And how we report the data will very much depend on the circumstances. And so we will be able to see the data in real time.
We will but we want to be careful about how the accuracy of our conclusions and we'll make that ultimate call in collaboration with Allergan, our key collaborators in this area.
Okay. Thank you. And one more, can you detail what do you need to complete an IND filing for EDIT-three zero one?
It's all the usual stuff. And so, we need to scale up manufacturing, complete the IND enabling talk studies.
And do you know approximately how long will this take?
No. We have not disclosed timelines for EDIT-three zero one yet. Stay tuned though. You'll see more data on the program at an upcoming scientific meeting, which I think you'll find quite interesting.
Okay. Thank you.
Our next question comes from the line of Cory Kasimov from JPMorgan.
Hi, this is Gavin on for Cory. Just want to extend congrats to Cynthia on the new appointment. And then we just had to maybe a follow-up on the first question on EDIT-one hundred and one, the disclosure strategy. Do you guys see any potential headwinds from the pending deal with the partner? And then just a follow on for the Usher syndrome, what are the gating factors that remain for the IND enabling studies?
Thank you.
I didn't quite understand the first question about headwinds. I mean, we have a partner and we will disclose in collaboration with them. Are you talking about the AbbVie merger?
Correct. Is the disclosure on Allergan's side or?
Right now, Allergan is our partner right now. And so that deal is obviously not closed. And until it does, AbbVie is not a factor in any decision making. So, it's business as usual, very much on all of the ophthalmology programs that are partnered with Allergan. And so, we've got our head down and trying to deliver the portfolio.
Osteastinum IIa, we're we aim to be ready for IND enabling activities by the end of the year. So we have a variety of preclinical pharmacology studies going on now and completing some other studies that get us in a position to have the package we need to proceed into the IND enabling studies.
Great. Thanks for the clarity.
Our next question comes from the line of Steve Seedhouse from Raymond James.
Yes. Hi. This is Timur Ivannikov on for Steve Seedhouse. And we would like to follow-up on patent interference question. So, what is your estimate of the legal costs involved?
And also, what is your view of the accusations being made by Berkeley regarding Zhang willfully making inaccurate statements? And finally, what would be an ideal resolution if the other side wanted to come to the table and negotiate? Thank you.
So, first of all, we're not going to speculate on what the overall cost of the litigation might be nor make any comment about accusations of the inventors. And your last question, I apologize, was?
Well, what would be an ideal resolution if the other side wanted to come to the table and negotiate? What would be an ideal situation?
So I think an ideal situation for us would be that we continue to prevail with the intellectual property position that we have, which we feel very confident around, particularly as it relates to Cas9 and Cpf1.
And then we also have a follow-up on the BRILIEN study. I think in the past, you've talked about preliminary design. I don't know if that's still the case, but I've seen 2 patients in the 1st cohort. I don't know if that's still the plan for you. And they're going to be dosed with a low dose and then you will escalate to higher dose.
So the question is, is it still 2 patients or have you made any changes? And also, is the second patient going to be younger than the first one? If you can disclose. Thank you.
Sure. And so, obviously safety is a paramount concern. So, 2 of the main objectives are safety and tolerability and the 3rd objective is efficacy. So, obviously, the right thing to do is to put the risk benefit very much in our favor as we start the trial. So, we will start the trial in adults that have very poor vision.
And there will be 2 patients dosed at the low dose, a dose that we think can be will be pharmacologically active, but on the low end of the range of pharmacologic activity. And then based on the results from those two patients, we will escalate the dose and eventually we will escalate we will move into adults that have better vision and based on those results, we will eventually move into ideally children that have poor vision and better vision. Because a priority, you would expect children with some vision to have the most benefit from this therapy, but that's obviously not the right place to start this trial from a risk benefit standpoint.
Okay. Thank you very much.
Our next question comes from the line of Amanda Murphy from BTIG.
Thank you and congrats Cindy. I guess I had a question for you Cindy just since you've been there now for several months, just curious if you've now you have some context and thinking about your broader strategy in EM-twenty two etcetera. Any tweaks that you're thinking about making, whether you have already or going forward? And obviously, the company is changing somewhat going into from a preclinical entity into a clinical entity. So I'm assuming there's some resource hiring and things like that.
But just was curious if you now that you've had a year behind you or I guess almost a year, what your perception is now?
Thanks, Amanda. It's been about 6 months, but maybe it feels like a year shift. So we remain very committed to our current EM22 strategy and to our 2019 corporate goals. And you are correctly referring to the fact that the company is now moving into a clinical phase, which is different for us. We'll continue to hire the required resources that we need to support that growth as we scale.
We talked a little bit about some of our efforts in manufacturing in our Boulder facility and we'll just continue along that trajectory for the near term.
Okay. Got it. And then just one on the wholly owned Enkei side of the world, both I guess considering NK and iPSC derived NK cells. I know you said solid tumor and this may be too early to ask you, but just curious about your strategy there going forward with the view to would you focus more on maybe starting out in some more well validated targets, but ones that are a little more crowded competitively? I know there's not that much in solid tumor really, but or would you kind of go, I don't know, thinking high level how you might approach from an indication perspective?
Sure. This is Charlie, Amanda. So, we obviously haven't disclosed the details of where we're going. I think you can draw some parallels from how we treated other disease areas and be assured we'll have a thoughtful approach to the indications we pursue in that area to develop both differentiated and transformative medicines.
Okay. And I just had one last one on
the iPSC side. It seems like that IP landscape is almost as complicated as CRISPR, not quite. But is there anything to factor in there as we think about your opportunities? Do you feel like you have seen them to operate broadly there or is there anything from a restriction standpoint to think about?
We feel very good about our petition there and are very enthusiastic as hopefully you gathered about advancing those medicines.
Yes. Okay. Thanks
very much.
Our next question comes from the line of Peter Lawson from SunTrust Robinson.
Hey, Cynthia. I just want to offer my congratulations on the role. Maybe a question for Charlie. Just how should we think about the timing for entering the clinic for betathione sickle cell? And would you start beta first or sickle first?
And can we use, I guess, timing from peers as an example there?
Yes. That's good. Thanks, Peter. Yes, I think the precedents in this field are numerous and it's totally fair to use the existing trials as a guidepost. We haven't disclosed our strategy on sickle cell versus beta thal and U.
S. Versus Europe either, both key strategic decisions that we as we advance what we feel is a really exciting medicine and look forward to really talking a lot more about it later this year.
And then just on LCA10, just considering the initial patients are probably the most difficult to treat, Do you think you would have a therapeutic dose initially for those patients? Or how long do you think we have to wait until we kind of see that?
Well, we believe that you'll see benefit in a small number of months and we've gone through the scientific rationale for that because it's based on the preclinical pharmacology. And the doses are entirely based on the preclinical pharmacology as well. So, we did studies in mice and non human primates, which give a very similar relationship between dose and Cas9 levels and editing. And so we feel as good as one can feel at this point about dose selection and that's been the basis for how we've chosen the starting dose because we do believe at that dose you have the potential to have therapeutic benefit. But obviously that's why we do the trials to understand what's going on there and we want to be conservative at the same time.
We're trying to understand the efficacy to first understand safety and tolerability.
Great. Okay. Thanks for taking the questions. Congratulations.
Our next question comes from the line of Kenneth Atkins from Cowen and Company.
Hi, thanks for taking my questions. Can you comment on the pacing of patient dosing in the EDIT-one hundred and one trial? How soon after the first patient is dosed, can you dose the second patient and so on?
Yes. This is Charlie again. So we haven't disclosed the details. It's very typical design based on gene therapy. And so, you're correct that there will be an interval between all the patients actually.
And that fits with the priorities of the study to ensure safety and tolerability before we expose additional patients to the drug.
Got it. Okay. And then aside from safety and tolerability, what level of improvement on visual acuity and visual function navigation do you think would be meaningful for patients? And would that differ depending on the patient's age or their disease severity?
I think that the spark provides a reasonable precedent on what's considered a clinically meaningful benefit in patients in general. And clearly, a major objective of the trial is to understand the benefit we can deliver with our medicine.
Got it. Okay. That's helpful. Thanks.
Our next question comes from the line of Whitney Aym from Guggenheim Securities.
Hi. This is Anmutha on for Whitney Ijem. Thanks for taking my questions first. So as you work towards expanding the utility of your in vivo CRISPR technology, can you talk about any of the work ongoing or progress made on the delivery side? And also how do you think about targeting muscle and lung in your DMD and CF programs?
Thanks.
Thanks. It's Charlie. We are very excited to move into other tissues. And one of the big benefits we get out of the EDIT-one hundred and one is experience in delivering a complete package that was suitable to regulators in this space. And so, this does set us up to go into other tissues where AAV has been proven to be a good delivery vehicle.
And of course, you realize we're the only company that actually has the ability to deliver gene editing in a single AAV because of our access to the staph Aureus Cas9. So, we do want to take advantage of that unique capability and move into other in vivo tissues. We do think that the eye was a great place to start. But we look forward to talking more about the other places we're going to go.
Our next question comes from the line of Silvan Turkin from Oppenheimer.
Thank you for taking my question and congratulations on the new role, Cynthia. My question is, could you I looked up the trial on clinicaltrials dot gov, the BRILIENDS trial. And so there's a middle low, middle and high dose in adults and a middle dose and a high dose in pediatrics. Would that middle dose be the same as in adults for children?
Yes. And it turns out that the eye is not all that different in size as you grow. And so, the same dose is totally appropriate.
Okay, great. And could you please remind us of the endpoints that you have in the natural history study for the LCA10? And could that be kind of viewed as a control? I mean, these patients still get spontaneously better, but to kind of quantify the clinical benefit at the end?
Yes. So, we're looking at a variety of potential endpoints in the natural history study, all the usual suspects, so best corrected visual acuity, a variety of imaging endpoints, which could provide substantial evidence that we actually had the functional benefit that we aim to achieve as well as a mobility maze, which is a more stringent test of functional ability of these patients. So part of the whole point of that natural history study was to get familiarity with these endpoints and understand which would be most operationally and functionally relevant for this patient population. And we will be looking at several of those endpoints in the interventional study.
And sorry, my last question, could we get that data before you will disclose any efficacy data from the BRLiENCH trial or do you think that will be after?
We've disclosed some of that data at this past year's ARVO meeting. And so, we disclosed baseline data and that should be available on our website.
Great. Thank you so much.
We have no further question at this time. I will now turn the call over back to Ms. Cindy Collins.
Great. So 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 evening.
Ladies and gentlemen, thank you for joining us. This concludes today's conference call. You may now disconnect.