All right, good afternoon, everyone. Thanks for joining us at the Morgan Stanley Global Healthcare Conference. I'm Mike Ulz, one of the biotech analysts here, and it's my pleasure to introduce Gaurav Shah, CEO from Rocket Pharmaceuticals. Just a reminder, the format for today is a fireside chat, so if anyone has a question, please raise your hand, and we'll be sure to address your question. Before we get started, I just need to read a quick disclaimer. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. With that, Gaurav, thanks for joining us. Appreciate you sharing your time with us today.
Maybe we'll just hop in the Q&A and maybe a couple background questions first, just given your focus on gene therapy and your broad pipeline of both AAV and LV approaches. You know, maybe you can just talk about how those are different, you know. What are the advantages and disadvantages of each?
Thanks for having us, Mike. Great to be here. Hello, everybody. We are a gene therapy company. We have two platforms. One is ex- vivo lentiviral based, the other is in vivo AAV based. The lenti programs is really how the company started several years ago. We were focused on rare, devastating bone marrow disorders, specifically Fanconi anemia, pyruvate kinase deficiency, and leukocyte adhesion deficiency one, or LAD1. And later, in the late 2010s, we brought on a clinical program in Danon disease, and therefore, we expanded to a second platform, AAV. Now we have two other AAV programs, namely ARVC with PKP2 mutations, as well as BAG3. A total of six programs, five in the clinic now, a sixth one to be in clinic soon.
In terms of why LV, why AAV, benefits, risks of both, and synergies, I would say that lentis are really well designed for bone marrow-derived diseases, where a bone marrow progenitor cell needs to be corrected because stem cells, that are coming out from the marrow, if you take them out and correct them, ex vivo, they like to go back to the bone marrow, and from the bone marrow, they'll populate whatever compartments need to be populated. So it's really good for bone marrow-derived diseases, which are hematologic mostly in nature, but also some neurologic diseases like ALD and MLD may benefit from ex vivo lenti approaches.
The AAV programs are better suited for solid organs: heart, liver, to some extent CNS, and they are sort of you know, curated, based on the tropism for that organ, and also based on sort of the overall clinical picture of the patient. So it's not that you you know, one is better and you have to select. It's really lenti for bone marrow, AAV for most solid organs. That's how you pick the programs. Now, the synergies, I would say that there's so much synergy. I would say in the release assays for these products, there's shared assays, in the manufacturing, the lentiviral and AAV viral manufacturing are very similar, so you can use one to learn from and apply to the other.
They are different, however, in that the AAV, the drug product, is the virus, whereas in lenti, the drug product is your own cells that have been changed by the virus, so they're very different CMC pathways. Lenti tends to be a lot more complex, and so CMC there can take a little bit longer and be challenging. AAV tends to be a little bit more straightforward. But in the company, the two platforms have been synergistic in the sense that we've learned from one platform applied to the other. With the FDA, there's shared learnings, and with manufacturing CDMOs, there's shared learnings, so there's really a synergy there.
Yep, makes sense. And maybe just in the gene therapy space, you know, very innovative and, you know, sort of a new area over the past several years for the FDA, but maybe just talk about your experience with the FDA. How supportive are they of these types of therapies?
Yeah. So for sure, CBER is undergoing, I would say, an evolution, and I think it's in a good direction for potentially curative gene therapies. I think from the clinical side, there's an increasing understanding that we don't need to stick with traditional drug development and study designs. Small, lean, even single-arm trials with easy-to-measure biomarkers compared with natural history has been the norm for a lot of new programs, certainly all of our programs to date. And I think that'll continue. I think with Peter Marks there, with Nicole Verdun, who's the head of the division, there's real progress in the thinking and mindset of the FDA, and it's much more industry-like than it used to be. And likewise, I think the industry mindset is much more FDA-like. I think there's increased collaboration in general over the last several years.
Having said that, we've been lucky that even with our first programs, for example, with Fanconi anemia and LAD1 several years ago, before the new FDA, we still took advantage of that lean trial design mindset. We talked to the right people. There was a lot of iteration back and forth, but we got to the same place I think we would've gotten with the modern FDA.
Yep.
So we've had a pretty good experience overall.
Great. Maybe we can switch gears and talk about Danon, that's your lead program. Maybe just give us a little bit of brief background there on the program, as well as the disease and where the unmet need is, which is pretty high.
Danon disease is a disease of autophagy, and I was smiling because I was using this funny New York City analogy this morning with one of our investors. Autophagy is like the garbage cleanup service of the cell, right? You require the autophagy to clean out debris from cells like organelles, Golgi, Golgi apparatus, mitochondria, other organelles, and to clear them out of the cell, so the cell can sort of function, and especially in cardiomyocytes and the heart overall, you remove these vacuoles that build up. The vacuoles are like garbage bags, right? The joke was that it's like New York City on a Sunday evening before, you know, you can see everything build up, and the city almost comes to a halt because you can't really drive anywhere.
It's similar in the heart because these vacuoles build up, and the cell just can't function as it should. But once you turn LAMP2 on, which we do through gene therapy, you see the cleanup happen pretty rapidly at the cellular level, and you see it manifest pretty quickly into structural heart imaging, right? So it's, it's a pretty remarkable program. The Danon gene therapy program was inherited or licensed from UCSD several years ago, and we have completed a Phase 1. We're now in a pivotal Phase II study. We worked out with the FDA a trial design that was a single-arm trial design with 12 patients being treated, with no comparator except the patient's pre-existing disease, as well as some fortification with external natural history. So it's, it's really... It, it's been quite a journey.
The Phase 1 data in this program are transformative. I would err on the side of saying mind-blowing, in the sense that you can only affect these changes when you replace a defective gene, defective DNA, with corrected DNA. That's the only way to see this level of transformative benefit across every single parameter. And which parameters are we talking about? We saw, first of all, to be very scientific about this, step-by-step.
Yep.
After the gene therapy, in all six of six patients in the Phase 1 who have been followed for a year or more, we saw, number one, DNA and RNA. We saw protein as measured by IHC and Western Blot. We saw on the macroscopic cellular level, disappearance of vacuoles. On the microscopic cellular level, you could see on TEM a decrease in percent of vacuoles that you can quantify in the cell. So you can really see the garbage being taken out visually, and also you can quantify it. This then translated to massive drops in troponin, which is a marker of cardiac injury, and BNP, which is a marker of cardiac failure.
That translated into structural changes with decrease in LV mass index in all six of these patients, of 10% or more, I think 20% or more, actually, in the patients that we treated. This then translated to improvements in how patients function and feel, NYHA classes improved, and quality of life scores improved. And furthermore, some of these patients are out several years, and they're in their early twenties at a time they should either be passed away or on a transplant list, b ut they're going to college, and they're working, right? So this is sort of unprecedented, not just in cardiology, but if you think about what medicine is supposed to do, it, it's been a pretty remarkable program. So in discussing with the FDA, we were thankful that we got to a place where we can do a pretty lean trial.
Yep, and maybe just talk about... You know, you walked us through a bunch of these endpoints and, you know, dramatic effects across all of them. How did you go about determining which ones to use, you know, in the registrational study?
Yeah, I mean, in our Phase 1, we cast a wide net. We had a lot to choose from. Sometimes when you have too many to choose from, and you give the FDA four options, it takes them a long time to give you one, right? And that's exactly what happened. But once we talked to them, we talked to Peter Marks directly, who's, although not a cardiologist himself, comes from the Brigham and has seen. The mindset is very much cardiology. And once we explained to him that this is a disease of really big hearts and patients pass away because they have big hearts, and if you can combine protein expression with seeing a reduction in heart size, it makes sense that for Danon, that's a viable endpoint.
Doesn't apply to other diseases, but for Danon. In fact, the biggest heart on record is a Danon heart, explanted heart from a patient. So that made a lot of sense, and that led to a series of meetings where we came pretty quickly to the conclusion that that's a good primary or co-primary endpoint, composite endpoint. And as long as the totality of evidence, meaning the rest of the secondary endpoints, also support it, it made sense to do a single-arm trial. The other, And we're thankful to the FDA for this as well.
The other discussion we had in that time, that was about a year ago, by the way, was that, "Hey, let's talk about your full approval path, too, and it was determined that we don't need another trial for that, but we do need to follow these same patients for up to five years for more clinically based endpoints to get to the full approval.
Makes sense. Just on the primary, can you talk about sort of the bars in, in LAMP2 expression or LV mass reduction and kind of, you know, what you saw in your Phase 1?
Yeah. So in terms of protein expression, how much improvement we need to see, all these patients are starting at grade 0. They don't really have protein expression at baseline. So even seeing an improvement from grade 1 to grade 2 which means you have between zero and 25, really few percent to 25%, was seen as meaningful. And even in patients who had the lower end of that, we saw improvements on the other parameters. So the bar was low on the protein expression as long as you show an improvement and change. And this goes with the theory that a little LAMP2 goes a long way, right? Once you turn this on switch on, of a vacuum cleaner or however, whatever analogy you choose, it'll start cleaning up the cell.
It might take time, but you just need a little LAMP to start cleaning, clearing out the debris, and that's what we saw in protein. For the LV mass index, what we saw in our natural history, a limited sample that we had so far at the time of the FDA meeting, was we saw on average an 8% increase in LV mass year after year for these patients. So we said, "Okay, if we see a 10% decrease, that's a meaningful change, versus what's happening in natural history." In fact, in our phase one, the patients have decreased between 20% and 50%, so.
Just in the phase one, maybe on both those endpoints, you know, LAMP2 expression, when does that start to occur after treatment? And then, you know, what's the sort of timeframe of, you know, improvements in LV mass and when you see those?
We don't do biopsies that frequently, certainly not in Phase II, but we did a little more frequently in phase one. We started seeing protein expression as early as eight weeks. It probably shows up at three weeks, I would say, right? So protein expression at one year, though, is we've seen that across the board. Then LV mass, I think really you're not gonna see improvements before nine to twelve months, but we've seen improvements at twelve months in these patients.
Yep. And remind us when you started enrolling patients, and then, the pivotal study and just, you know, maybe how that's been going.
Yeah. So the agreement with FDA was, like I said, last September. And of course, once you have the agreement, you have to amend the protocol, get it to sites, start the sites. That takes a few months. And then we had a two-patient run-in, right? And the patients had to be staggered, too. And then after the second patient, there's another follow-up period, and then you talk to the FDA again. So it just takes time to get there, and then there's, after the two-patient run-in, the trial is designed so that everyone else can be treated without staggering, but the enrollment is going on pretty well at this point.
Have you said when you expect to complete enrollment and at all, or?
We haven't said that specifically, but we are enrolling sites in the U.S. and Europe, and the European sites just take some time to start.
Yep.
I would say that.
Yep. And just given the fact that it's, you know, technically open label, right? It's not randomized. Any thoughts about maybe sharing some data early or not? Or just how do you go about sort of determining whether or not you wanna do that?
Yeah. I think we'll likely, most likely share data at top line. There's no predefined interim analysis, and we really want some meaningful data to come out if the trial is positive at the right time. I'd rather not do interim analyses just because it, it keeps the data cuts clean, and it keeps the dialogue with the FDA very, very pure.
Yep, makes sense. And maybe talk a little bit about sort of natural history and, and what you're doing there, because that's, that's gonna be the comparator for approval, and- I think you're running a couple different studies, if I recall.
There's a couple of different studies. We're looking at, first of all, a retrospective review in the U.S. and Europe of something like two hundred plus patients, and we're doing also a prospective smaller study in the U.S. and Europe across several sites, basically seeing what happens to patients who are not treated. Both of those are going on in parallel and going well.
Yep.
So.
Is there any way to match the baseline characteristics, or is this too tough because it's such a rare disease?
We're gonna try to match patients in the prospective studies if we can, but if not, we'll try to do it through the retrospective, but I think that will be important. I do wanna clarify, though, that the stats are not designed to compare the trial with the natural history.
Okay.
The natural history is here to fortify our stats assumptions. The comparator is the pretreatment.
Okay.
Right, for the patients.
Okay. How long is that period?
It's about three months.
Okay. Gotcha. Maybe just talk about the market opportunity in Danon disease and how patients currently are managed.
Yeah, so when we first talked about the program, we had said that it's 15,000-30,000 prevalence U.S. and Europe, and all the analyses that we've done since then, both top-down and bottom-up, support that notion. This is based on frequency of LAMP2 mutations in the literature, which is pretty consistent. This is based on claims database information that we're now working on. It's based on genomics database analyses, and now it's also based on a bottom-up analysis, meaning we're actually going out and finding patients in anticipation of commercial launch. Now, are there 15,000-30,000 diagnosed patients? No. I would say that there's probably 20% of that, that's actually diagnosed because Danon is often misdiagnosed or undiagnosed in most cases.
I guess why, why are patients misdiagnosed? And I guess, what's the process to diagnose a patient, and then how do you sort of expand that?
Yeah. So Danon presents in a non-cardiac fashion in most cases. Patients might have learning disabilities. They might have muscle pains, fatigue, muscle weakness, slowing down in sports, and very few people sort of in the general medicine landscape would say that this child has a cardiomyopathy. It's just not very common, right? So most patients just aren't worked up for cardiomyopathies and are mistaken for something else. A lot of them get the transplant, and even after the transplant, they're not diagnosed with Danon. Some, many die before transplant, and the females who manifest more slowly might live into their thirties or forties without knowing there's that much wrong. So if it is misdiagnosed, it's sometimes misdiagnosed as Pompe or Fabry disease or another muscle disorder or a neurologic disorder. So how do we actually diagnose it?
Some cardiologists and some primary care physicians will understand the triad of CNS, muscle, and heart, right? And it's only recently been put together that that triad with LAMP2 is Danon disease. And when I say recently, the gene was discovered in 2001, and it wasn't until about 10 years later that there was awareness of that combination, right? So it really is a new disease, which is why it's mostly misdiagnosed or undiagnosed. Ultimately, though, we need to do gene testing at or shortly after birth to be able to capture the full prevalence.
Yeah. And how do you sort of push that forward or anything else you can kinda do prior to your, you know, data slash launch to sort of accelerate that?
Yeah. So we're partnered with some institutes like the Rady Institute for Newborn Screening. We're also working closely with Invitae and other programs where we can go out into the community and find patients with LAMP2. Education of doctors who see these patients, though, is key and critical, just to raise awareness, and that's gonna take some time. But of course, we're not launching anytime soon, plus between now and the peak year we have time to get there.
Yeah. Can you also talk about manufacturing? You've built your own facility, and maybe just give us a sense of the status of that and, you know, the supply of 501.
Yeah, so we tend to do things in a staged manner. We built out part of the facility to support the trial and potentially the early launch, as well as to potentially support PKP2. As we move closer to knowing where the trial stands and the readout of it, we'll build out the rest of the rooms. The full capacity of the manufacturing facility... You came, right to come. The full capacity should supply the full Danon market in the U.S. as well as Europe. This is not a cell product, so you can ship it to Europe directly from here, and potentially, some of it could even supply the beginnings of the PKP market if that's a successful program as well. Ultimately, if we want to build up a cardiac gene therapy franchise, we'll need to expand further and build out more sites.
Okay, great. Maybe we can shift gears to just the PKP2 program. Maybe just, you know, give us a little bit of quick background there and the status.
Yeah. So PKP2 is double Danon in size in terms of market. It's at least 50,000 patients, U.S. and Europe. Some people say 100,000, but 50,000's plenty to start with. And PKP2 is the most frequent cause of arrhythmogenic cardiomyopathy, ARVC, which is now called ACM. Actually, ARVC was arrhythmogenic right ventricular cardiomyopathy. Now it's just called ACM. It's broader because it's not just the right ventricle, sometimes it involves the left. ACM is actually one of the most common causes of sudden cardiac death, so it's sort of coming into what is common disease and not just rare disease. PKP2 is a protein that sits in the intercalated junction, so between the cardiomyocytes and in the desmosome. And it's important in making sure cardiomyocytes work together in unison, also related to the channels and other structural parts of the cell.
With zero PKP2, there's often very early mortality, so those aren't patients that we could treat. With heterozygous PKP2, which is maybe grade 2 out of four on our scale of measuring protein expression, patients have arrhythmias, and these are teenagers who might be playing sports. I mean, I have a 13-year-old, kids like to run around, but when these kids run around, they have palpitations and often faint, and sometimes have sudden cardiac death. That's how you discover that there's an arrhythmogenic problem in these patients. Many patients get an ICD placed. The ICD can be life-saving for fatal arrhythmias, but it doesn't always work. There's also fatal breakthrough arrhythmias, even despite ICDs. Even with ICDs, patients invariably progress to right ventricular increase in size, and failure ultimately.
So the ICD doesn't cure the actual disease. So the AAV rh74 capsid approach that we're using restores PKP2, and we'll see what happens. In preclinical models, it reduces arrhythmias and reduces right ventricular size.
Yeah. And I think you recently started the phase one, is that right?
Yep. Enrollment is ongoing, and going fine.
Maybe just talk a little bit about the trial design and maybe some of the key endpoints and what you hope to learn, you know, in the initial data readout.
It is a dose-escalating trial. The lower dose is 8 E13 which is similar to the starting Danon dose that we used, vg per kilogram, and there is a chance for dose escalation if we need it. Each cohort is three to six patients, and the endpoints that we're looking at, of course, safety for phase one, but protein, arrhythmias, labs, heart imaging, and clinical measures, including quality of life.
Yeah.
Right? So those are the four or five big buckets that we're measuring. But we're like Danon, we're casting the net wide. I can't predict now what the right endpoint is but, I hope to have the dialogue with the FDA.
Yeah. So sort of similar process with Danon, and you kinda look across all the data and sort of pick the best. Okay. When might we see some of that initial data? Is it possible next year, or is that too aggressive?
It's possible next year.
Okay.
I think it's not out of scope, but obviously, we'll see how the trial goes.
Yep. And then maybe to wrap up AAV, just touch on BAG3.
Yeah. Yeah, BAG3 is a program that we inherited through the acquisition of Renovacor. And BAG3 also is a relatively large disease prevalence of at least 30,000 patients, and it's a multifunctional protein, and it has several functions in the heart. Lack of BAG3 is associated with one of the most aggressive cardiomyopathies known, certainly more aggressive than the typical adult cardiomyopathy that we see. We're in the early stages of thinking about the clinical endpoints for that, but we're in the midst of IND-enabling studies, and we anticipate a possible program there in the beginning, early 2025.
Yeah. All right, maybe we can switch to the LV pipeline, and we've got three programs there. You'd mentioned some early on, but maybe we'll focus on Kresladi, LAD1. You recently got the CRL, and maybe just walk us through that a little bit, and next steps there.
CRL seems to be commonplace every week. I do appreciate that the FDA is very stringent when it comes to CMC, and we respect that. I think for this CRL, the idea was not around manufacturing product process and certainly not the clinical data in LAD, which are remarkable, with nine of nine patients living basically normal lives that the patients might have been passed away by now. But it's really around validation of certain assays. It's sort of like crossing the T's and dotting the I's. So, the FDA has said this is not a question of if, it's a question of when.
Yep.
So we're working with them to resolve a couple of outstanding queries.
Yep.
Get it.
Maybe talk about just sort of launch prep, you know, opportunity, how much investments you're making there?
Yeah. So we're not putting a lot of investment in commercial infrastructure for LAD or for Kresladi specifically. We are building commercial infrastructure in general. We're using this as a way to jumpstart that for the future Fanconi and Danon programs. And so we're setting up qualified treatment centers, working with distributors and channels to make sure that the supply chain is adequate. You know, we're building a team of MSLs and GDLs, who are genetic diagnostic liaisons, to find patients and educate sites around the world. So all that is being put in place for the commercial infrastructure in general. I would say LAD or Kresladi is gonna be a soft launch. We're gonna focus on inbound interest at a couple of key centers and not really a lot of outbound marketing for that program.
Gotcha. Maybe just switching now to just Fanconi anemia, PKD. Maybe just give us a little bit of background on the disease there and what's unique about that program.
Yeah, Fanconi anemia is a program that I think has moved the whole field of gene therapy forward, not just the Rocket pipeline. It's the only ex vivo lentiviral bone marrow disorder where we don't use conditioning, because it's a disorder of DNA repair, and the disease itself is also the fix. And what I mean is that when you have one mutation in a cell, in a stem cell in the bone marrow, the bone marrow fizzles out over time, and these patients have bone marrow failure, and they go on to develop leukemia. That's Fanconi anemia. But a second hit in the same stem cell, because it is a DNA repair disorder, so you can't catch mistakes in DNA replication. So if you have one mistake, you get Fanconi anemia. A second mistake could correct that, and the second mistake doesn't get fixed, right?
There's a population called somatic mosaics of patients who one cell got corrected on its own randomly, and that cell, over the course of five to seven years, repopulates the bone marrow. We took that as the way for us to push forward gene therapy with no conditioning. We took a risk on it, and it worked.
Yeah.
Right? It just takes more time. Instead of taking three months to engraft, like most ex vivo lentiviral, it takes about a year to two years, so the endpoints are a little bit longer. But these patients have the benefit of having a potential cure for the hematologic part of Fanconi anemia, but with no conditioning and no transplant.
Yeah.
We've seen that now in most of our patients we've treated.
Can you just talk about why elimination of conditioning is such a big deal?
Yeah, in Fanconi anemia, DNA repair damage can't be fixed, and what does chemotherapy do? It causes DNA damage, right, so these patients are very frail, and they end up getting devastating and fatal head and neck cancers, so once they have a transplant, these patients, they're fine for a decade, but then they're waiting for the solid tumor to come, which is uniformly fatal. Here, we avoid that increased risk of head and neck tumors and other tumors, and if they do get that tumor, because they have not gotten prior chemotherapy, there's potentially a chance for a curative regimen for that solid tumor recurrence down the road, so that's why it was. It was really a breakthrough for the field.
The question that physicians and patients would be asking is, "If I have a therapy with basically no side effects, with the potential for curing hematologic malignancies and, and hematologic failure, and in case it doesn't work, you can get a transplant anyway, why not?
Makes sense. Can you just remind us the status of that program and when we might see the next update?
We generally give updates on filing once we have agreement with FDA and a PDUFA date. It's generally on track, and we'll give an update- when we have some more information.
Gotcha.
The EMA, we filed there already.
Yep, makes sense. And maybe just talk a little bit about the market opportunity for Fanconi anemia, and maybe put that in the context of the other two sort of LV assets?
Yeah. The total prevalence of Fanconi anemia with all complement types is probably 6,000-8,000 U.S. and Europe. I would say that 4,000-8,000 of those are the complement types that we will address, A, C, and G, maybe 6,000 or so. And half of those patients are actually diagnosed and out there. So those patients, I think, are identified. We haven't given exact guidance on how much we expect sales and things like that yet, but those are the big numbers, and you can divide by the median age to know what the prevalence and the incidence should be.
Yeah. Okay. Maybe just talk beyond the assets we talked about, maybe earlier stage pipelines or your thoughts there in terms of developing more AAVs, or what your thought process is.
Yeah, so the three AAV programs in cardiac, we mentioned we're looking at others. We like to be close to IND before disclosing what they are. But they're solid targets, just like the first three are, and there's a lot out there. There's a lot of low-hanging fruit to pluck, surprisingly.
Yeah.
And so there's more to come. We're gonna focus on heme and cardiac. We may expand a third therapeutic area down the road as well, but there's a pipeline that's coming.
Yeah. Makes sense. And then maybe just the last quick question, just, you know, your current cash position and how far that gets you. Is that through the Danon data?
At the end of Q2, we had $279 million, and that gets us to the beginning of 2026.
Yeah.
I can't comment on if that's enough for Danon data until we know.
Yeah, fair enough. Yep. Great. I think we're just about out of time, so why don't we end it there? Gaurav, thanks so much.
Thank you.
Appreciate your time.
My pleasure, Mike. Thank you. Thanks.