Editas Medicine, Inc. (NASDAQ:EDIT) Q2 2023 Earnings Call Transcript August 2, 2023

Editas Medicine, Inc. misses on earnings expectations. Reported EPS is $-0.78 EPS, expectations were $0.76.

Operator: Good morning and welcome to Editas Medicine’s Second Quarter Conference Call. 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 Cristi Barnett, Corporate Communications and Investor Relations at Editas Medicine.

Cristi Barnett: Thank you, Maria. Good morning, everyone and welcome to our second quarter 2023 conference call. Earlier this morning, we issued a press release providing our financial results and recent corporate updates. A replay of today’s call will be available in the Investors section of our website approximately 2 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 the 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 as updated by our subsequent filings.

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. Except as required by law, 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 CEO, Gilmore O’Neill.

Gilmore O’Neill: Thanks, Christie and good morning, everyone. Thank you for joining us today for Editas’ second quarter earnings call. I am joined today by 3 other members of the Editas executive team, our Chief Medical Officer, Baisong Mei; our new Chief Financial Officer, Erick Lucera; and our new Chief Scientific Officer, Linda Burkly [ph]. I joined Editas 1 year ago tasked with guiding its evolution from platform development company to commercial therapeutics company. In January of this year, we shared Editas’ strategy and a set of objectives for 2023. We — the strategy, just as a reminder, comprises 3 pillars: first, to accelerate the clinical development of EDIT-301, our autologous ex vivo cell therapy for sickle cell disease and beta thalassemia and drive toward approval and launch.

Second, to strengthen our discovery organization by dividing it into an advanced technology group and a translational therapeutics discovery group and so sharpen our discovery focus to in vivo editing therapies; and third, expand our business development activities to partner complementary technological capabilities that can advance our in vivo pipeline development in addition to out-licensing our robust IP and know-how to maximize the use of CRISPR-based medicines. Our 2023 objectives are providing a clinical update from the EDIT-301 RUBY trial by the end of 2023, providing a clinical update for EDIT-301 EDIT trial for transfusion-dependent thalassemia by the end of 2023. And dosing 20 total patients in our EDIT-301 RUBY trial by year-end, hiring a new Chief Scientific Officer with specific expertise aligned to our vision which we have just done, advancing discovery of in vivo editing of hematopoietic stem cells and other tissues and leveraging our robust IP portfolio and business development to drive value and complement or gene editing technology capabilities.

So, how we executed against this strategy and these objectives in the second quarter? On the leadership side, we made 2 important hires to drive our new strategy. Just last week, we announced that Linda Berkeley, a respected scientist and highly experienced and successful therapeutic discovery leader has joined Editas as our new Chief Scientific Officer. Linda has an outstanding track record of inventing or contributing to the foundations of multiple approved medicines and late-stage clinical candidates. We are looking forward to Linda’s leadership as we build on the current in vivo editing work in hematopoietic stem cells and other tissues. Also, 8 weeks ago, we announced that Eric Lucera, a highly experienced former biotech buy-side investor, Chief Financial Officer and Strategic Corporate finance executive had joined Editas as our new Chief Financial Officer.

You will hear from him later on this call. As a reminder, under our new target selection criteria, we will select therapeutic targets that allow our genome editing approach to differentiate maximally from the current standard of care for serious diseases. The target selection criteria will work to identify targets that maximize the probability of technical, regulatory and commercial success. Linda will tell you about these developments at a future date. We remain on track to dose 20 RUBY patients by the end of 2023 and we commenced parallel dosing of patients in our EDITHAL trial in the second quarter of this year. In June of this year, we presented clinical data from our RUBY trial at the European Hematology Association’s Annual Scientific Meeting and data from both our RUBY and EDITHAL trials at a company-sponsored webinar.

We remain on track to provide another clinical trial update by year-end for both trials. We will share a further update on roll on progress in the coming months. Baisong will share further details regarding the developmental of 301 in his remarks as well as recapitulate the RUBY and Editas takeaways and clinical data that we provided in June. And as we have previously stated, we plan to engage with the FDA in the second half of the year. After EHA and our company-sponsored webinar, we raised approximately $117 million in net proceeds from our follow-on issuance of common stock, extending our cash runway into the third quarter of 2025 as we continue our advancement of EDIT-301 towards BLA, prepare for commercial manufacturing D31 and build our pipeline to transform the treatment of serious diseases.

As we progress towards our goal of delivering life-changing medicines to patients, we also continue to expand our footprint to support our manufacturing and quality management for clinical supply and for preparation of commercial launch. We recently increased our clean room capacity and are moving to a new AsierDevons facility. This new facility and increased capacity will support the scaling of EDIT-301 program, manufacturing clinical supply for RUBY EDITHAL [ph] trials and prepares commercial readiness. Turning to our intellectual property position. As a reminder, Editas holds a large portfolio of foundational U.S. and international patents and is the exclusive licensee of Harvard Universities and Broad Institute’s Cas9 patent estate covering Cas9 use in making human medicines.

Only a small fraction of these patents are involved in the ongoing U.S. PTO interference proceedings. We remain confident that our IP portfolio provides meaningful value now and in the future. We are energized by the promising efficacy and safety data that we shared in June, seeing that EDIT-301 may be a clinically differentiated onetime durable medicine that can provide life-changing clinical medicine or benefits to patients with sickle cell disease and beta thalassemia long term, specifically driving early and robust correction of anemia and sustained increases in fetal hemoglobin. With our sharpened strategic focus, our world-class scientists and employees and our keen drive in execution, we continue to build momentum to progress our strategy to deliver differentiated editing medicines to patients with serious genetic diseases.

We look forward to updating you on our progress in executing our new strategy throughout the year. Now, I will turn the call over to Baisong, our Chief Medical Officer.

Baisong Mei: Thank you, Gilmore. Good morning, everyone. Let’s start with the D31 RUBY trial for sickle cell disease. As Gilmore stated in his remarks, we continue to dose and enroll patients in RUBY trial. As we have previously shared, we began parallel dosing of patients in RUBY trial earlier this year and we remain on track to dose total 20 patients in UBI trial by year-end and to provide additional clinical data by. We will share further updates on enrollment progress in the coming months. As Gilmore also mentioned, we plan to engage with the FDA in the second half of the year. In the edit trial of 831 for transfusion-dependent beta thalassemia, or TDT, we continue to dose an invocation. We commenced parallel dosing in this trial in the second quarter.

We remain on track to provide an additional clinical update from the additive trial by year-end. As we have done for the RUBY trial, we are also taking multiple measures to accelerate the development of 31 for TDT and have a strong [indiscernible]. We have enrolled multiple patients who have dosed or have been completed and have 334 cells additive or in the process of prices. Turning to 301 clinical data. In June, we shared promising RUBY clinical data in an oral presentation at the European Hematology Association Congress, or EHA, followed by our company-sponsored webinar where we also presented positive initial data from the first patient treated in elite trials. The RUBY data from the EHA cover safety and efficacy data from the first 4 patients treated, including 10 months data from the first patient and 6-month data from the segment patient, the data including total hemoglobin and feeding.

Excitingly, the data were consistent with the clinical results we shared in last December. I would like to take a few minutes to recap some of the Rubin editor key takeaways from our presentations in June. These include the following: the 831 drives early robust correction of lime to a normal pathological range of hemoglobin in as early as 4 months of the [indiscernible] drives robust sustained increase in hemoglobin in excess of 40%. All 4 dose RUBY patients remain free of vessel-cusive events or VOE, since 301 treatment. All dose patients, 4 RUBY patients and 1 patients showed successful neutrophil engraftment within 1 month of dosing and have stopped retail transfusion. That is on was well tolerated by patients and the safety profile was consistent with myoblastic busulfan [ph] conditioning and autologous hemopoetic stem cell transplant.

And the trajectory of collection of Limiar [ph] and increased expression of fetal hemoglobin was consistent across 31 treated secrete patients and better assuming patients at the same full of time points. Looking at the data in more detail; RUBY study patient 1, total hemoglobin reached normal physiological level by 5 months after 31 infusion and these normal levels persisted during the 10 months follow-up. Patient 1’s fetal hemoglobin fraction increased to 45.5% 5 months after 1 treatment persisted during the 10 months follow-up. The increase of total hemoglobin and fetal hemoglobin of RUBY patient 2, 3 and 4 follow the same trajectory as patient 1. For dive, the first patient experience with A31 resembled that of 4 RUBY patients. This first dislocation achieved [indiscernible] of 34.9% or over 4 gram per deciliter in just 1.5 months after 301 treatments.

We continue to believe that 31 can potentially provide robust clinical benefit to patients, potentially provide clinical differentiation in the long-term. As we have previously stated, the choice of CRISPR enzyme and the gene editing target to switch on fem expression matters. 1 uses our proprietary ASKA enzymes to added HBG1 2 promoter. ASKA [ph] increases editing efficiency and significantly reduced uptake editing when compared to other CRISPR [ph] including CAF. HBG12-editing in human CD34 port calls resulted in greater red blood cell production, normal capacity and improve red blood cell health when compared to editing of BCL11A. Based on clinical data so far, we believe that sustained normal level of total hemoglobin could be a potential point of differentiation for AD.

As a reminder, a sustained normal total hemoglobin level is an important clinical outcome for patients as the correction of [indiscernible] significantly improved quarter of life and ameliorate and organ damage. As I shared last quarter, I have been visiting our RUBY [indiscernible] our clinical trial sites and continuously speaking with investigators. I appreciate the inclusiveness and support when we investigated and study size. I’m pleased with the momentum of 31 in patient recruitment, editing and dosing in both studies. I’m excited to hear from the investigators that the patients dosed with 31 already see positive changes in their lives. We look forward to sharing additional updates as the year progresses, including additional RUBY clinical trial data by year end.

Now, I will turn the call over to Erick, our Chief Financial Officer, to review our financials.

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Erick Lucera: Thank you, Bison and good morning to everyone. Let me first say that I’m excited to be speaking to you today. I came to Editas because I was impressed by the quality of the company’s science, its leadership in the gene editing field, its strong IP portfolio and its highly differentiated work from other players in the field. I was eager to take this opportunity and join Editas at this pivotal time, we just shared exciting human data for our lead asset and we’re preparing our regulatory and commercialization strategy. I look forward to leveraging my experience to help the company execute our vision to bring innovative medicines to patients and drive shareholder returns. With that, I’d like to refer you to our press release issued earlier today for a summary of our financial results for the second quarter of 2023.

In future quarters, I will give more guidance. And for now, I’ll take this opportunity to briefly review a few items. Our cash, cash equivalents and marketable securities as of June 30 were $480 million compared to $402 million as of March 31, 2023. We expect our existing cash, cash equivalents and marketable securities to fund our operating expenses and capital expenditures into the third quarter of 2025. Revenue for the second quarter of 2023 was $2.9 million compared to $6.4 million in the same period last year. The decrease is related to a program license opt-in from our collaborator, Bristol-Myers Squibb, that occurred in the second quarter of 2022 that did not occur in the second quarter of 2023. G&A expenses for the quarter were $17.2 million which remained relatively flat from $16.9 million for the second quarter of 2022.

The slight increase in expense is primarily attributable to increased professional services expenses to support BD activities, partially offset by a decrease in stock compensation expense. R&D expenses this quarter were $29.8 million, representing a decrease from $43.7 million from the second quarter of 2022. The decrease in expenses reflects the focus on execution following the strategic reprioritization of our portfolio, offset by increased activities to accelerate the development of EDIT-301. Overall, Editas remains in a strong financial position and our sharpened discovery focus, coupled with our recent capital raise allow us to concentrate our talent and extend our cash runway further into 2025 which provides ample resources to support our continued progress in the RUBY and EDI clinical trials of EDIT-301, continued commercial manufacturing preparation and advance our discovery efforts.

As a former investor, I know the value of buy-side and sell-side knowledge and I look forward to working with the company and hearing from our shareholders as we work to advance our gene editing medicines. With that, I will hand the call back to Gilmore.

Gilmore O’Neill: Thank you, Erick. It has been an exciting year for Editas thus far and a fulfilling first full year for me at Editas. We look forward to continuing our transformation and sharing our progress with you as we — as a reminder, our strategic objectives for the year include providing a clinical update from the EDIT-301 RUBY study by end of this year, providing a clinical data update from EDA-31edithal trial for transfusion-dependent thalassemia by the end of 2023, dosing 20 total patients in our EDIT-301 RUBY study by year-end, advancing discovery of in vivo editing of the hematopoetic stem cells and other tissues and leveraging our robust IP portfolio of business development to drive value and complement or gene editing technology capabilities.

As always, it must be said that we could not achieve our objectives without the support of our patients, investigators, employees and you. Thanks very much for your interest in Editas. And we’re happy to answer questions now. Thank you.

Q&A Session

Operator: At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Terence Flynn with Morgan Stanley.

Terence Flynn: Great. Two for me. I was just wondering if you could provide any update on the time lines for your first in vivo program? And then secondly, on the ASR facility, what’s going to be required there from an FDA perspective? And do you have to make any changes or do any bridging work to use product from the two facilities in the expanded trials?

Gilmore O’Neill: Thanks very much, Terence, for your questions. APRA in vivo, as I’ve said, our focus is on maximizing the property of technical and commercial success with clear positive differentiation against the standard of care. The work is continuing to progress. And I’m particularly delighted to welcome Linda Berkley here whose leadership is really going to double down and really help us drive this forward. And we’ll update you on time lines at an appropriate time when Linda has had a chance to really settle in and make our mark. With regard to the Asia facility, we anticipate from a regulatory point of view, obviously, we are engaging — are planning to engage with the FDA in this half of the year and are on track to have those conversations.

And we don’t anticipate significant or major work in the transition. It’s essentially the processes. We have are largely locked down. And as I say, we were engaging with the agencies just to ensure that we’re really aligned on our readiness for commercialization there.

Operator: Our next question comes from Samantha Semenkow with Citi.

Samantha Semenkow: Now that you have Linda on the team, could you discuss some of the challenges of in vivo delivery to hematopoietic stem cells and how you’re thinking about mitigating these challenges going forward?

Gilmore O’Neill: Yes. Thanks very much, Samantha, for your question. I’ve got to say, Linda, has to say, has just joined. So I’m going to talk about how — she and I and lend, if you want to add anything, please feel free. One of the things that Linda and I are really highly aligned philosophically on our approach to this. We have made — we actually have some ongoing work and work is progressing on that. The challenges, obviously, are to deliver the executive functional enzyme and guides to the hematopoietic stem cells. The good news is that we feel that we have certainly solved 2 of the 3 challenges. The first being that we have human validation of our Cas12a enzyme thanks to our 301 program. And also, we have validated in man in our clinical trials, the use of our targeting fetal hemoglobin promoter, the specific targeting and delivering of those mechanisms to the hematic stem cell is something that they’re working on currently and we’ll be happy to update you more on specifics and progress there at an appropriate time.

Operator: Our next question comes from Greg Harrison with Bank of America.

Greg Harrison: What feedback have you had from physicians since the recent update at EHA, the 301 program. Regarding a clinically meaningful data set in sickle cell, especially with respect to hemoglobin response? And what are they looking for from the net update?

Gilmore O’Neill: Thanks very much, Greg. I’m going to ask Ben to take that question.