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.
Thank you, operator. Good afternoon, everyone. 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 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 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, Cynthia Collins.
Thanks, Mark. Good afternoon, everyone. 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 Charles 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. Thanks to the hard work of our dedicated team of Editans, 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 universal allogeneic cell medicines for cancer through a newly formed collaboration with BlueRock Therapeutics.
We initiated IND-enabling activities for potentially best-in-class medicine for sickle cell disease and beta thalassemia. 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 a strong start to the year and anticipating numerous upcoming milestones. Let me turn the call over to our Chief Scientific Officer, Charles Albright, to discuss our pipeline in greater detail.
Thanks, Cindy. It is a great time for the company, and I'm happy to be here to update you on our pipeline of transformative genomic medicine. Let's start with our development of engineered cell medicines. We're 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 cells. 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. We believe that the highly edited medicines that will be possible with iPS-derived cells will be 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 their respective fields. In this collaboration, we retain rights to edited cells developed for the use in the field of oncology, including T cells, NK cells, macrophages, and other immune effector cells. The technological complementarity, distinct therapeutic areas of focus, desire for collaboration make BlueRock a great partner. We look forward to a productive collaboration. The BlueRock collaboration builds on our existing efforts in oncology. In particular, we have wholly owned efforts in NK cells, a partnership with Celgene for engineered T-cell medicines for solid tumors and hematologic malignancies. Our work with Celgene and BlueRock are but two examples of how we are expanding and accelerating our oncology cell medicine platform as we look to drive the next generation of cancer therapies.
We've also made significant progress towards developing an engineered cell medicine 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. This editing directly increases fetal hemoglobin and is differentiated from others that target the BCL11A enhancer site that indirectly upregulate 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. Our confidence has continued to build based on our work. We have finalized the design of the clinical candidate and started IND-enabling activities with an experimental medicine. We look forward to providing updates at 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 to patients in 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 mid-year 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 to ophthalmology centers of excellence and introduce Editas to the Leber'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 are advancing additional genomic medicines for serious ocular 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 ciliary proteins and photoreceptors. We are developing a treatment for Usher patients that leverages the same AAV vector, promoter, and Cas9 enzyme as for EDIT-101. In particular, our USH2A medicine differs only in the guide RNA specific to the USH2A gene and represents the power of our platform to accelerate 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 & 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 are 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. We look forward to expanding efforts in additional therapeutic areas that leverage this work. Our industry-leading platform, including our exclusive access to Staphylococcus aureus Cas9 and extensive capabilities translating science into treatments for patients, makes us enthusiastic about the potential to target additional genetic diseases. Let me turn the call over to our Interim Chief Financial Officer, Eric Eck, to discuss our progress in building the business and review our financial results.
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 are reporting today. As Charlie mentioned, we have formed a research collaboration and entered into a non-exclusive cross-license agreement with BlueRock Therapeutics. In each of their respective fields, Editas Medicine gains non-exclusive rights to BlueRock's iPSC and cell differentiation technology and intellectual property, while BlueRock gains non-exclusive 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've summarized our financial results for the first quarter in the press release that we issued an hour ago. Full details will be available in our Form 10-Q.
Our cash equivalents, and marketable securities decreased $27 million in the first quarter to $342 million as of March 31st, 2019, from $369 million as of December 31st, 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, $1 million of depreciation, and a $5 million increase in our 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 equivalents, and marketable securities of $342 million as of March 31st, 2019, provides at least 24 months of capital to fund our business. With that, I will hand it back to Cindy.
Thank you, Eric. As part of our EM 22 long-range goals, we talk openly about our Inspiritas culture at Editas Medicine. In Q1, we marked progress on EM 22 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 will 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, Editans, 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 cancers, sickle cell disease, and other serious intractable diseases. We are 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?
Sure.
Ladies and gentlemen, if you would like to ask a question at this time, please press the star then the number one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, you may do so by pressing the pound key. Again, that is star then one to ask a question. Our first question comes from the line of Amanda Murphy with William Blair. Your line is now open.
Hi, good afternoon. I actually had a few on the BlueRock collaboration and iPSCs in general. I guess just 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 specifically in terms of reprogramming and building a clonal cell line if you will.
Sure, Amanda, this is Charlie. We thought BlueRock was going to be a great partner, we just had that kickoff meeting yesterday and are really excited about it. They bring both proprietary and non-proprietary research really with how to take dedifferentiated cells into iPSCs. It's an incredibly complementary partnership because we're interested in oncology, they're interested in cardiovascular neurology and immunosuppressive mechanisms. We think the two technologies of gene editing and iPSC-derived cells are really going to create a powerful partnership.
Just since I know I'm not going to ask you for timing or anything like that, is the right way to think about any candidates that emerge from the partnership as more of a longer-term part of the pipeline? In thinking about, you mentioned solid tumors, but also that I think it also covers heme. Would you consider going after some low-hanging fruit initially with some of the heme cancers, or how should we think about the evolution?
Yeah, we have rights to all oncology indications and all cell types, which is really powerful. We obviously have some ideas about what we're going to do here. We haven't shared them more broadly. Yes, all the things you mentioned are on the table. I'd also say that all cell types focused on oncology are on the table as well. 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 a business.
just last one, I think you mentioned it was not exclusive, so I just was curious if you had thought about exclusivity just on both sides in iPSCs and then with CRISPR from your side.
We decided to do a non-exclusive deal because that both parties the option to go and work with additional parties in our field of interest, which I think is also quite powerful. All part of why we thought it was a great deal.
Got it. Okay. Thanks very much.
Our next question comes from the line of Matthew Harrison with Morgan Stanley. Your line is now open.
Hi, everyone. Thanks for taking my question. This is Connor Meehan on for Matthew Harrison. We were just looking to hear a little bit about your sickle cell approach and sort of what you guys think differentiates your program clinically, then just a quick follow-up afterwards.
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 ASH posters for the work. In that study, we showed that cells edited the beta globin locus, which is where we're editing, reconstitute the erythroid lineage normally. In contrast, cells edited the BCL11A enhancer locus, which is what all of our competitors are doing, had a significant decrease in the cells of the erythroid lineage in mice. Obviously, if this translated into humans, this could be a significant safety and efficacy issue. That's the first basis for differentiation. Those slides and related items to that can be found on our website, and we're happy to go into more detail. It's a somewhat complicated story.
We're also excited about the amount of fetal hemoglobin we can induce, and we'll be having more to say about that in upcoming scientific meetings later this year. That's obviously also key to driving the efficacy of a product.
Got it. Thank you. I'll definitely follow up with some, the PowerPoints on your website. Would it be possible to just comment quickly on the IND enabling steps you guys need to take? I guess maybe a quick comment on expected duration as well.
We haven't provided guidance on the timing. I think it's as usual, the IND enabling activities are not atypical, or to put it in a positive way, they're typical for a cell-based medicine in this field. We'll obviously be discussing those with regulators along the way to make sure that we're all happy about those.
Thank you.
Our next question comes from the line of Steve Seedhouse with Raymond James. Your line is now open.
Great. Thank you. I know there's a lot of features of EDIT-101 that can be leveraged in USH2A and other eye indications. How much of the know-how and tools that you've developed are applicable to non-retinal programs? How much time could you save on subsequent non-retinal indications?
I think much of what we learned with EDIT-101 is going to be useful in other in vivo editing indications. We do think AAV delivery in general is the preferred way to deliver these agents. The work we've done with EDIT-101 enables that. As you probably realize, we have exclusive access to Staphylococcus aureus Cas9, which allows us to make an all-in-one AAV with two guide RNAs. That's unique to Editas, and we're obviously going to take that learnings. Basically, we believe anywhere where you can deliver AAV, we're going to be able to deliver the editing machinery. We are in the process of evaluating other indications where the unmet need and the other aspects of disease selection makes sense, and we'll have more to say about that in the future.
Okay, thanks. Charlie, regarding the sickle cell and beta thal program, 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? Is it any different when you edit at the beta-globin locus?
I think we presented data from both eight weeks and 16 weeks last year, 16 weeks is kind of the standard time where things have reached a steady state. There were marked differences at both time points between editing at the BCL11A enhancer and editing at the beta-globin locus. I can't recall if there was a difference between eight weeks and 16 weeks on either one of them.
Okay. The data presentation at EHA this year for the hemoglobinopathy program, is that more data comparing these methods, or is it some other experiments?
We're actually in the process of figuring that out right now.
Okay, thanks. 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?
Right now, as part of our Celgene relationship, we're not allowed to work on T cells and engineered T cells in oncology. We are allowed to work on non-T cells in oncology. That could be a way to think about things in the short run. We have indicated that we're interested in NK cells. I think in the long run, our interests are obviously broader.
Okay, you're not able to develop CAR T as part of that BlueRock collaboration, is what you're saying?
Not as long as the current relationship with Celgene is intact, that research portion of that expires in May 2020.
Understood. Okay. Thank you. One last question. I just wanted to ask about going back to the mouse studies of EDIT-101 in the LCA10 preclinical model. This is in the Nature Medicine publication, also, for example, you presented at the ASGCT recently. You get to 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 dying or turning over in the eye?
No, we have no evidence of that. We don't think there's a decrease between the time points you mentioned. It's also important that that editing is not corrected for the frequency of the retina that was transduced. If you looked at the dose response curve from that last presentation, it leveled off at 50% productive editing, which is essentially the maximum you can get, and we think it gets there and then stays there.
Okay. Appreciate that. All right. Thank you. Thanks for taking my questions.
Sure.
Our next question comes from the line of Phil Nadeau with Cowen and Company. Your line is now open.
Good afternoon. Thanks for taking my question. I apologize for the background noise. First, on the natural history study in LCA, can you talk about how that study dovetails with your efforts in your clinical trial? Is it possible that you can use that study to identify patients and speed the screening portion of this study along?
Yes is the short answer. That study does several things for us. It gives us familiarity with the scales. It helps us set up the sites. Essentially, the sites are being used in the natural history study are many of the same sites that'll be used in the interventional study, and there'll be patients that are enrolling in the natural history study. Obviously, it's their decision in consultation with their primary care physician as to whether they enroll in the interventional study or not. Clearly, they'll have familiarity with both the site and the study, and then they can make their own informed decision.
That's helpful. Second, a follow-up question on the Celgene collaboration. Do you have any visibility into Bristol Myers' desire to continue that collaboration? Maybe more broadly, is there any update on the progress of the collaboration towards the clinic?
We can only say limited things now that the collaboration is part of Celgene. As you can appreciate, with a larger pharma partner, their interest in disclosure is not the same as it 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 their efforts, particularly in liquid tumors, synergizes very nicely with the BMS focus on solid tumors. From the outside, I think it represents a very interesting merger of two complementary portfolios, both of which have a large focus on oncology. For those reasons, we're optimistic that the merger actually will bring good things with respect to the collaboration.
Any sense of timing when we could see IND-enabling studies?
We can't say anything at this point.
Fair enough. Thanks for taking my questions.
Sure.
Our next question comes from the line of Gena Wang with Barclays. Your line is now open.
Hey, this is Xiaobing doing for Gena. Thank you so much for taking our questions. Maybe just a follow-up on the EDIT-101 question. With the natural history data, would you be able to refine more about the enrollment criteria regarding patient age or visual acuity? The second question would be just what additional steps are you taking to activate the sites? 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?
Let me start with the last question, and then I'm not sure I got the second one, and I'll hit the natural history one. 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 outer segments. We believe that'll be sufficient to allow light to be detected, and then from that, you need to activate the visual pathways to establish vision. There's a good reason to believe that patients could potentially see benefit in a few months, is the answer. When we'll disclose clinical data, which is probably what you actually want to know, is an entirely different question, and that'll 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 was all part of the objectives of running a natural history study. Yes, it has the potential to alter that. I'm not sure I caught the middle question.
Yeah, just more asking about sort of what left to start the clinical, to dose the first patient at that part of the.
Okay
site activation.
Right. All the usual things to activate the site, IRB approval, institutional safety approval, delivering the drug product to the site. We plan to enroll patients in the middle of the year. We're virtually in the middle of the year based on our definition of the second and third quarter. We'll start enrolling patients and then dose someone in the second half of the year.
Got it. Thank you.
Our next question comes from the line of Cory Kasimov with J.P. Morgan. Your line is now open.
Hey, guys. Thanks for taking my questions. This is Matthew on for Cory. The first one, I wanted to follow up on the previous questions for your sickle cell disease and beta thal program. In referring to it as best in class, can you expand on that a little bit, especially as it compares to non-gene editing approaches? Basically, I'm wondering if your confidence here is mostly based on fetal hemoglobin levels.
Yes. It's a little bit hard to do that comparison in a database way that we're willing to disclose at this point, because basically you're doing different things. The gene therapy approaches you have, and what I mean by that is in the gene therapy approaches, you're expressing beta globin, but it has to outcompete the endogenous sickle beta globin. It's actually not clear how that competition's 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 globin. Doing that pharmacologic comparison is actually quite challenging. Suffice it to say that we do believe that the combination of what we're doing has the potential to be best in class.
Part of that as well is based on the human genetics. As you recall, the patients with elevated levels of fetal hemoglobin can reach a level of fetal hemoglobin that actually suppresses the sickle cell symptoms. This is the mechanism that nature has taught us can actually rescue the disease.
Got it. I guess just based on what you just said, what's your broad level strategy to demonstrate this clinically?
We're going to go into patients and measure fetal hemoglobin levels and symptoms that come from that.
Got it. Just one follow-up. Can you provide an update to the CEO search?
Sure. Our searches are well underway, and we're really looking forward to hiring excellent executives to help us lead the company through the next phase of growth as we move into the clinic. Still no comment on timing. We'll update you when the timing is right, those searches are quite active at this point.
Great. Thanks for taking my questions.
Our next question comes from the line of Peter Lawson with SunTrust Robinson Humphrey. Your line is now open.
Hi. Thanks for taking my questions. Just on LCA10, how long should we think about the period it takes to identify, screen, and dose the patients? Have any of the patients that are on the natural history consented to be part of the interventional study?
We can't comment on whether You're basically asking whether anybody's enrolled yet, and 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 I gene therapy-like study, there will be an interval between dosing the first patient and dosing subsequent patients. We haven't provided the details for that. I would just say these are typical intervals of the gene therapy development space right now.
Got you. Thank you. Just on the number of sites, there's this rollover from the natural history study, how many sites do you have, and how many others would you add, and what's the timing around that?
Yeah, we have four sites in the U.S. and three sites in Europe, is my recollection, you guys are testing my memory of all the numbers today. We have an IND approved right now, the sites in the U.S. will be open first, we feel that those will be sufficient to get us well started on the clinical trial, we'll work on opening Europe and the European sites, we do believe we need, in the long run, the patients from Europe, we're good in the short run.
Got you. Thank you. When do you think you could start the sickle cell trial?
We haven't provided that guidance yet, you'll be the first one I'll call, Peter.
Thank you. You take care.
As a reminder, ladies and gentlemen, if you'd like to ask a question at this time, that is star then one. Our next question comes from the line of Denise Meacham with Guggenheim Securities. Your line is now open.
Oh, hey, this is Whitney. Thanks for taking the questions. Well, actually just one. On USH2A, you mentioned that there's some additional optimization ongoing there. Sorry if I missed it, but wondering if you can give us any color on the optimizations that you're working through.
Actually, there's nothing unusual with that. We're finishing up the pharmacology package that supports the nomination of a development candidate, which will put us in a position to be ready for IND-enabling studies at the end of the year. We're on track for that.
Okay, got it. Thanks.
I'm showing no further questions in queue at this time. I'd like to turn the call back to Cynthia Collins for 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 evening.
Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect.