Thank you operator, and good day everyone. We appreciate you joining the call. I'm Sarah Kiely, Vice President of Investor Relations and Corporate Affairs at ProQR. Today, we issued a press release announcing that going forward, we will focus exclusively on our RNA editing platform technology and will seek to partner our ophthalmology programs. This press release can be found on our website at www.proqr.com. With me today from the management team is Daniel de Boer, our founder and CEO. Following Daniel's prepared remarks, we will have a Q&A session, which will include Daniel, along with René Beukema, our Chief Corporate Development Officer. In order to include your question on today's call, we request that you use the phone numbers provided via the webcast link. During the call today, we will make forward-looking statements.
There are risks and uncertainties associated with an investment in ProQR, which are described in detail in our SEC filings. I will now hand the call over to Daniel.
Thank you, Sarah. Earlier this year, we announced that we would be accelerating the advancement of our proprietary Axiomer RNA editing technology. Since this technology was discovered at our labs in 2014, we have been building a dominant and blocking IP estate that forged a strong partnership with Eli Lilly and have generated compelling data in targets across multiple organ systems. We believe there is significant potential for the Axiomer platform to generate medicines in both rare and common diseases. Today, we announced that moving forward, the company will be focused exclusively on Axiomer RNA editing platform technology. We also announced today that we will seek to partner our ophthalmology programs, including Sepofarsen and Ultevursen . As we prioritize the development of the Axiomer RNA editing platform technology, we believe partnering these ophthalmology assets is the best strategy to drive these programs forward, so they may one day benefit patients.
The decision around our ophthalmology programs was made following feedback from the regulatory body in Europe, the European Medicines Agency, or EMA, recommending to conduct another clinical trial for Sepofarsen before a marketing authorization application could be submitted. As a reminder, we conducted post hoc analysis of the ILLUMINATE trial and asked EMA if they would accept our post hoc analysis as a basis for the MAA. Unfortunately, they have indicated that they need an additional pivotal trial with a pre-specified analysis to be conducted before submission of an MAA. As a result, therefore, in order to preserve operating capital, we have made the decision to wind down the Sepofarsen and Ultevursen clinical trials. This was not an easy decision, and I want to acknowledge the disappointment that many in the IRD community may be experiencing.
I also want to thank the patients, investigators and supporters of these programs for their contributions in advancing them to this stage. Importantly, we will offer clinical trial participants the opportunity to continue treatments through access to currently available Sepofarsen and Ultevursen products. We believe that the best chance for Sepofarsen and Ultevursen to benefit patients at some point in the future is to have these programs developed further in the hands of a strategic partner with the right resources to move them forward. Related to the wind down activities of Sepofarsen and Ultevursen 's clinical trials, we will also be implementing an associated workforce reduction of approximately 25%, expected to be completed by the end of this year. This was an extremely difficult decision to make, but a necessary one as we focus on Axiomer and position the business to drive long-term growth and value.
I want to thank those employees who will be departing the business for all of their contributions. Preservation of capital continues to be a priority, and with the update announced today, ProQR will realize cost savings in headcount, program and related support activities, which are expected to extend ProQR's cash runway into 2026. The cash runway into 2026 excludes any revenue generated from the company's existing partnership with Eli Lilly and any potential new partnering deals. Going forward, and in line with our new corporate strategy announced in April, ProQR will focus its strategy and investment exclusively on furthering the development of our Axiomer RNA editing platform technology, which allows selective editing of individual bases in the RNA. The Axiomer technology recruits an endogenous system called ADAR, which we can guide to a place in the RNA where we want it to edit.
We have protected this finding with more than 10 patent families dating back to as early as 2014, when we made the discovery at the ProQR labs. Axiomer is best recognized for reversing disease-causing G to A mutations, but its capabilities go beyond single mutations in genetic diseases. We can, for example, also use the technology to selectively edit wild type RNA, and this can be used to engineer proteins or modify their function, for example, by altering glycosylation or phosphorylation sites. This application has significant potential in non-genetic and even common diseases. Our strategic growth initiatives related to the advancement of Axiomer includes both in-house development of select pipeline programs using this technology, as well as a partnering strategy that allows us to capture the full value of the platform technology.
As an example of that, we entered into a partnership with Eli Lilly last year, under which we licensed five targets to them in liver and nervous system areas. In exchange, Lilly paid us $50 million upfront, with the potential for another $1.25 billion in milestones plus royalties down the line. The partnership is making great progress so far, and we continue to execute on this partnership with priority. As we have just licensed five targets in this partnership, the remainder of the platform remains unencumbered and could be used for additional partnerships in the future. With respect to our in-house development plans for Axiomer, we plan to provide a program update on targets in late 2022 or early 2023, with our initial work focusing on the liver and CNS therapeutic areas, which have strong alignment with the oligonucleotide delivery approaches.
The Axiomer platform has a strong value proposition, a leading IP position, and the validation of an industry partnership with Lilly, and robust data across multiple targets and therapeutic areas with very broad platform applicability. In conclusion, since the inception of the company, ProQR has focused on RNA technologies that allow us to develop potentially life-changing medicines for patients with high unmet medical needs. That remains our focus. We look forward to sharing more about the development plans for Axiomer in the months ahead and to keeping you updated on our progress as we advance the business. Before we open the call for questions, I want to thank again all of the employees that will be departing ProQR for their significant contributions towards our mission, our shareholders for their support through the years, and the clinical trial investigators, the patients, and the caregivers for their support of our programs.
The future is bright for ProQR as we unlock the potential of Axiomer. Operator, we'll now take questions.
Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. Once again, please press star one and one on your telephone to ask a question. We will now take our first question. Please stand by. Your first question today comes from the line of John Vollmer from JMP. Please go ahead. Your line is open.
Hi, good morning. I know a difficult day for you guys, but appreciate the color. A couple questions for me. I believe you were also going to meet with FDA for potential, you know, feedback on the path forward. Wondering if there's anything constructive there, when you're, you know, framing discussions with potential strategic partners on the path forward for your ophthalmology assets.
Hey, John. Good morning. This is Daniel. Thanks for the question. We were indeed disappointed with the feedback from EMA on the path forward for Sepofarsen. We have had informal interactions with FDA that point in the same direction, so we don't expect any other outcome there, hence the announced decision that we made today. I'm gonna hand, for your second question on the partnering activities on Sepofarsen and Ultevursen , the call over to René Beukema. René.
Yeah. Basically, Hi, John, it's René. You know, the data is clear. The regulatory feedback is clear. We have a gazillion amount of data and an excellent proposition for a party that has a different risk profile. We hired Lazard to help us out with the process. We will reach out after Labor Day to the usual suspects. There's a gazillion amount of interactions that happened in the past based on the interim analysis of interim data. We have great expectations, and we will inform the market as appropriate while we plow along and have news to report.
Got it. Just checking on, you know, when we have the update on the ADAR technology late 2022 or early 2023, you know, what kind of context do you think you'll be able to provide then? Is it just identifying the targets or we're gonna see data? You know, wondering how quickly something can get into the clinic. Any details now, I know it's a little ways away, but, you know, what are you thinking preliminarily about what we could hear about when we get that update?
Yeah, absolutely. All of the above, John. Obviously with now the full focus shifting to Axiomer, we will really advance with both the technology, the data generation, as well as the target selection. When we come with an update, you can expect a complete update that includes our plans for pipeline development, targets, data announcements, in vitro and vivo, the whole series of news updates. It will be an extensive update, indeed late this year, early next year.
Got it. Thanks for taking the questions.
Thanks, John.
Thank you. We will now take our next question. Please stand by. Your next question comes from the line of Dae Gon Ha from Stifel. Please go ahead. Your line is open.
Hi, guys. This is Jacques on for Dae Gon . Just turning to Axiomer, you know, how is your Axiomer ADAR tech differentiated and, how are you prioritizing specifically development, the development targets? Then as a follow-up, you know, when can we see that differentiation beyond preclinical data?
Yeah. Thanks for the questions, Jacques. First of all, the Axiomer technology is a technology that we have discovered here at the ProQR labs back in 2014. What this technology allows us to do is to essentially add a new tool to edit messenger RNA. Where before the scientific field could use knockdown approaches or exon-skipping approaches, splice switching approaches, we can now microsurgically edit individual bases in the messenger RNA, and that opens up the applicability to a whole new range of indications and mutations that before were not treatable. This is differentiating in many different ways. We can target loss-of-function mutations. We can target wild type sequences to introduce mutations.
For example, to modify the function of proteins in terms of, you know, protein-protein interactions or glycosylation, phosphorylation sites and so on. The possibilities in terms of how this can be applied to, for example, targets that are so far undruggable with other modalities are really limitless. Now, we are currently obviously going through the exercise where to best apply this, and we can use this methodology to target G- to- A mutations. To essentially treat a mutation that has a G- to- A mutation, where we can convert the A into an I, and the I reads as if it is a G. This is mostly in genetic diseases, which obviously is mostly in rare indications.
Now, in addition to that, we're also looking at more common diseases where we introduce specific, very specific mutations in wild type sequences that allow us to treat non-genetic and even really common indications. We're in the midst of doing that. We have previously said that we are guiding to 18-24 months until first clinical trial, and we are reiterating that. We are making good progress in both in-house work that we are doing, as well as in the partnership program that we are running with Eli Lilly.
Got it. Thank you. If I could squeeze another one in here. I guess, given your past endeavors across QR-010 and Sepofarsen and Ultevursen , how are you thinking about the breadth and depth of your next data announcement to further, you know, to instill or restore investor confidence in your approach?
Yeah, good question. Look, we're obviously very aware that not the entire story for ProQR is built on Axiomer. We will share significant data for people to get excited about that. We have historically been focused on genetic diseases. We are now, as we have indicated in our April update, venturing beyond that, not just in rare genetic diseases, but also in more common diseases. However, we will initially, as we have indicated, focus on liver and CNS applications as the delivery is somewhat de-risked in those areas, and we can build on the vast body of data and experience that's there, in the development of oligonucleotides for those organs, including the delivery. Those are the areas that we'll be focusing on going forward.
Great. That's helpful. Thank you.
Thank you, Jacques.
Thank you. We'll now go to the next question. Please stand by. Your next question comes from Jennifer Kim from Cantor Fitzgerald. Please go ahead. Your line is open.
Hey, everyone. Good morning, and thanks for taking my question. I have two here. The first is on the Lilly partnership. I know you mentioned earlier that you've made good progress, but I'm wondering when can we get more color on the progress there, and what would be the nature and extent of those updates? My second question is, we took a look through your updated corporate deck, and we saw that the R&D Day is targeted for the Q1 of next year. I just wanna make sure, is the announcement of the pipeline targets, the internal pipeline targets in late 2022 or early 2023, is that just going to be an announcement of the targets and Q1 of 2023 is when we should first see data?
I'm just wondering how we should think about the nature of those updates. Thanks.
Thanks, Jennifer, for the question. Yeah, first on Lilly, obviously, we're somewhat dependent on our partner, but we are really pleased with how the partnership is progressing from both an interaction as well as a science and a target progress perspective. We will continue to execute on that partnership with priority. We do anticipate to be able to provide updates. What they will look like and what the content of those updates will be, you have to stay tuned for that. We can't give guidance for that at the moment. We will come back to you on that.
Yes, we, with respect to your second question, we are indeed planning to organize an R&D day in Q1 of next year to outline much more clarity around the platform technology that we're developing. That may or may not line up with the update that you asked for separately. The update in late 2022 or early 2023, where we would lay out more information around data and the targets. We obviously also have presentations on scientific conferences where we present data, and those could be additional validating proof points for the market as well. I hope that answered your question, Jennifer Kim.
Yeah. Thanks. Very helpful.
Thank you. We will take our next question. Please stand by. Your next question comes from the line of Yigal Nachumovitz from Citigroup. Please go ahead. Your line is open.
Hi, Daniel. I just have a basic strategy question with regards to the decision that was taken today. Just wanna understand why you decided to also partner Ultevursen since appears the EMA feedback was not specific to that program? Or basically, did you just decide it wasn't worth keeping USH2A without the positive feedback on LCA10? Thanks.
Thanks, Yigal. Yeah, I think the result of the Sepofarsen trial obviously put the company in a position where access to capital is limited. The execution of the Ultevursen trial is very capital intensive given it's a phase III asset. I hear some feedback, by the way. In light of the financial stability and viability and to enable the Axiomer business plan, we have decided to also find a partner for Ultevursen. Also because we think it makes most sense strategically to keep Sepofarsen and Ultevursen together. We obviously would aspire to participate significantly in the upside of those programs would they get approved in the future.
Now, with these modifications, Yigal , we have been able to extend our cash runway into 2026, which we think is a very important feature of ProQR, being able to maximize the value, capture the value of the Axiomer platform technology and really have the financial means to elucidate that platform. It's, you know, again, as I said on the call earlier, it has not been an easy decision to make, but we think, given how the cards are dealt, this was the right decision to make for the strategy of the company.
Okay, understood. Turning to the positives, I have a fairly specific question on Axiomer. How many edits can this Axiomer platform perform at once? For example, what if there's more than one G- to- A transition in a single RNA transcript? Can it handle those simultaneously, or is it typically the case that you only see one G- to- A transition per transcript for rare diseases?
That's a great question, Yigal . We can actually engineer them both ways. We obviously have optimized the platform for specificity, as in most instances you wanna be very targeted in creating individual single nucleotide changes. However, we can engineer the editing oligonucleotides, the EONs, such that they can also do multiple edits. Depending on the application, we can design the molecules in a way to have them execute what we want them to do.
Got it. Thank you.
Thanks, Yigal .
Thank you. Once again, if you would like to ask a question, please press star one one on your telephone. Star one one to ask a question. I will now take the next question. Please stand by. Your next question comes from the line of Steven Seedhouse from Raymond James. Please go ahead. Your line is open.
Great. Good morning. Thanks for taking the question. Thanks for hosting the call. I just wanted to clarify, apologies if I just missed this, in your answer a moment ago, but the initial targets, will they all be just given the focus on liver and CNS, will they all be subject to the first five targets in the Lilly collaboration, or will they include some wholly owned ones?
Yeah. Hey, Steve. Thanks for the question. No, they will exclude also targets that we plan to develop in our own development pipeline. In addition to the work that we do in the partnership with Eli Lilly, we will announce the targets that we will work on in our own portfolio. Those are the ones that we will announce later, and they will indeed be in the area of liver and CNS.
Okay, great. A few questions on the approach. You've already demonstrated over 60% editing in a couple targets, various models preclinically. I'm curious if you think there's a theoretical limit on how much editing you can get with the, you know, various therapeutic targets, just given that you're leveraging an endogenous editing enzyme. Or do you think that you can really push over time to get as close to 100% editing? Or do you think that's even needed?
Yeah, that's a good question, Steve. To answer your question, if that's needed, that really depends on the application. Often that's not needed. To answer the question on the potential, yes, we think we can push the editing efficiency much higher than the 60% you mentioned. We actually have seen much higher editing percentages in other targets. We don't think that's necessarily limited by the amount of available ADAR, although the ADAR expression differs quite a bit from tissue to tissue. In the tissues we're now targeting initially, we don't see that as a limitation. We think that can be substantial percentages of editing be achieved such that the realm of applicability of the technology is very wide.
Yeah. Great. Okay. Just your view on the state of the field with respect to off-target editing. Do you think that the sort of threshold here is, you know, regulators will just tolerate more off-target editing than, say, for gene editing because it's non-permanent? Just wanted to get your comments on your ability to control or reduce off-target editing. Do you think it's already at the point where you can move into the clinic, or is that one of the steps that needs optimization in the coming year or two?
Yeah. I'll answer your last question first. Yes, we think this is ready, as it currently stands to move forward to developing candidates. We have been working on this technology for the last, seven or eight years, and over that period, we've really been able to piece out all of these elements, including off-target editing. I think we now have design rules that are, transportable from one gene to the next that avoid off-target editing. With respect to your first question, I think, you know, as a general principle, the regulators will be more lenient with transient editing than with permanent editing as it comes to any, unplanned effects like off-target editing. However, we think our technology is specific enough to not have to rely on it.
Okay. Thanks for taking my question. Last question is just on delivery philosophy. Are you gonna use GALNAc in liver and CNS? Curious what you're doing there. Is it AAV or intrahepatic injection or just wanna get your thoughts on how you're gonna approach delivery for those two?
Yeah.
indications.
Absolutely. I'll answer in a bit of general terms, mostly, because we keep our options open for now. The editing oligonucleotides that we develop on our Axiomer platform, the EONs, they essentially behave the same as any other oligonucleotide that has been developed. Which means that we can build on the vast know-how and experience that the scientific field has with the development of oligonucleotide therapies over the last four decades. In terms of delivery, these oligos will have the exact same delivery characteristics as other oligonucleotides. That means we can use proven delivery mechanisms for the organs that we are targeting here. For these organs, there is indeed a number of, you know, successfully proven delivery methods, including some of the ones that you just mentioned.
We will be pursuing those. The good thing is we don't have to reinvent the wheel here. We can take bits and pieces that are proven and essentially add them to the EONs we're developing to not assume any additional risk in developing these products.
Yeah, makes sense. Thanks so much for taking the questions.
Thanks, Steve.
Thank you. I will now hand the call back to Daniel for closing remarks.
Thank you, operator, and thank you all for joining us today. We look forward to keeping you updated on our progress as we unlock the potential of Axiomer. Thank you.