ADVM - NASDAQ

Thank you, and welcome, everyone. Today we issued a press release reporting our financial results for the third quarter of 2019. A copy of this release is available on the press releases page of the Investor Relations section of our corporate website at www.adverum.com.Please note that a replay of today's call also will be available on the Event and Presentation section of our website.Joining me for the prepared remarks portion of the call today is Leone Patterson, Chief Executive Officer; and Dr. Aaron Osborne, Chief Medical Officer. Then Leone, Aaron and Chief Financial Officer, Thomas Leung, will be available for the Q&A portion of the call.As a reminder, we will be making forward-looking statements regarding our product development plans, research activities and operations as well as our financial outlook. These statements are subject to risks and uncertainties that may cause actual results to differ materially from those forecasted. A description of these risks can be found in our most recent Form 10-K on file with the SEC.I would now like to turn the call over to CEO, Leone Patterson.

Thank you, Myesha. Good afternoon, everyone, and thank you for joining us today. I'll provide a recap of our recent progress advancing ADVM-022 as well as give a corporate update. Aaron will then further review the progress with ADVM-022 including the OPTIC Phase 1 trial and the data that were presented at AAO. We'll then open up the call for questions.Adverum is focused on delivering what we believe can be transformative therapies for patients living with serious ocular and rare diseases. The therapeutic potential of long lasting gene therapy approaches is rapidly gaining momentum across many areas of medicine.Adverum is part of this exciting field with our clinical candidate ADVM-022, a differentiated gene therapy approach that we are developing in our first indication with IND, which is a leading cause of vision loss in patients over 60 years of age. We have made significant progress over the past year with ADVM-022. This time last year, we had just dosed our first patients in the OPTIC Phase 1 trial. Now with positive data from our first cohort of six patients in OPTIC, we are continuing to evaluate this therapy's potential having completed the enrollment in cohort 2 and announcing our plan to dose additional patients in a third and fourth cohort.In addition, we are planning on developing ADVM-022 for a second indication diabetic retinopathy with a planned IND submission in the first half of 2020. Over the past few months, we have presented at three congresses, data from our first cohort of six patients in the OPTIC Phase 1 trial. First, on September 12, we presented interim 24 week data at Retina Society and then on October 11 at AAO.We presented median 34 weeks follow up data. Last week we presented an encore presentation of these data to a gene therapy focused audience at the European Society of Gene and Cell Therapy.In summary, the data presented on ADVM-022 a single Intravitreal Injection therapy demonstrated the following, durable efficacy with a median follow up of 34 weeks was generally safe and well tolerated with no SAEs and that no patient received a rescue injection.The clinical data has generated positive interest from the medical and the scientific communities and we look forward to further engagement with these very important groups as we continue to develop ADVM-022.We also hosted an investor events at AAO with three leading KOLs who shared presentations on the key learnings from the OPTIC Phase 1 trial real world outcomes with anti-VEGF treatments for wet AMD and also future therapeutic approaches for long lasting VEGF suppression and wet AMD.These KOLs deeply understand the challenges of treating this patient population who requires frequent anti-VEGF injections to maintain their vision and they truly appreciate the potential benefits to patients from a long lasting treatment with an intravitreal gene therapy approach such as ADVM-022.While we continue to gain momentum with ADVM-022 program, we are also making great progress in other areas as well. We are looking forward to being able to occupy a new Redwood City headquarters by the end of this year. The new facility will allow for the expansion of our in-house process development capacity to the 1000 liter scale, which is important as we plan to move into later stage clinical trials and prepare for potential commercialization.We also recently announced a new addition to our executive team with the appointment of Peter Soparkar, as Chief Legal Officer., Peter is an experienced leader who has a wealth of relevant industry experience. We're glad to have Peter onboard as we expand our executive team and bring deep industry expertise to this important function.Adverum's formula for success is our commitment to developing novel technologies and therapies for patients and building a talented team who can execute and deliver on our mission to bring effective gene therapies to as many patients as quickly as possible.I'd now like to turn the call over to Aaron, who will provide further details on our progress with ADVM-022. Aaron?

Thanks, Leone. We have achieved a major milestone this quarter reporting the first clinical data for ADVM-022, our intravitreal gene therapy treatment for wet AMD. These promising data are important as they demonstrate the ADVM-022 may provide a single injection option for patients who would otherwise require frequent our injections to manage that wet AMD.The clinical data generated a lot of excitement, for us here at Adverum, for our clinical investigators and the patients they are enrolling to OPTIC and also for the broader community of ophthalmologists and retina specialists in-house first-hand our truly long lasting anti-VEGF therapy could reduce treatment burden and improve real-world vision outcomes for patients living with wet AMD.ADVM-022 has a unique product profile as potentially the only treatment option that can deliver long-term control of wet AMD disease activity in a single intravitreal injection. This could make it a truly convenient option that provides long term VEGF suppression and dramatically reduces treatment burden for managing wet AMD, a lifelong disease.Other long-term approaches require a surgical procedure, which besides being less convenient can also entail additional risks beyond those associated with an intravitreal injection.At AAO last month, we reported additional data from our first cohort of patients in OPTIC, our Phase 1 study. Importantly, the patients enrolled in OPTIC are not treatment-naive patients, they are patients who previously have required frequent anti-VEGF injections to maintain vision. In the eight months prior to enrolling an OPTIC, these six patients have received a total of 37 anti-VEGF injections.Following ADVM-022 administration in OPTIC with a median of eight months follow up, zero anti-VEGF injections were required. Investigators and patients alike are excited about the transformative potential of our therapy, based on these results.During AAO, we also announced plans for additional cohorts in the OPTIC trial. Cohorts 3 and 4 will enroll more patients for the same doses used in cohorts 1 and 2, 6x10^11 and 2x10^11 vector genomes per eye, respectively. We hope to address two key objectives with cohorts 3 and 4.Firstly, a further 18 patients to be dosed to support dose ranging and to confirm the positive efficacy signal observed in cohort 1. Secondly, that's a prevention of inflammation with six weeks of coverage with prophylactic steroid eye drops instead of 13 days with prophylactic oral steroids as was used in cohorts 1 and 2.We believe the data generated from these cohorts in addition to the data from cohorts 1 and 2 will provide more robust evidence on which doses and steroid regimens best support the further clinical development of ADVM-022. The switch from oral steroids to steroid eye drops will decrease the systemic exposure to steroids and allow for a longer period of steroid coverage, potentially reducing the occurrence of the generally mild inflammatory events that have been reported after cessation of oral steroids.The goal is to provide a more effective prophylaxis for ocular inflammation with steroid eye drops. Dosing is currently under way in the third cohort nine patients and this will be followed by enrollment of another nine patients in the fourth cohort.Looking at future development opportunities for ADVM-022, we are moving forward with our plans to evaluate a second indication. Diabetic retinopathy represents another large and underserved market that may benefit from a long-lasting anti-VEGF gene therapy.Of the estimated 8 million people living with diabetic retinopathy in the U.S., only 2 million are diagnosed and only 1 million are being treated. Diabetic retinopathy is the leading cause of vision impairment and blindness among working age adults. As the prevalence of diabetes continues to grow, the prevalence of diabetic retinopathy is expected to increase. There are significant unmet needs for more effective and more curable anti-VEGF therapies that could reduce the incidence of sight threatening complications and improved outcomes in patients with diabetic retinopathy.We believe maintain consistent levels of VEGF suppression with ADVM-022, could be particularly important for this rapidly progressing disease, potentially improving treatment outcomes over currently available therapies. We look forward to submitting and IND for this indication in the first half of 2020.I'll now turn the call back to our CEO, Leone Patterson. Leone?

Thanks, Aaron. We'll now open the call to questions. Operator?

[Operator Instructions]. Our first question or comment comes from the line of Tyler Van Buren from Piper Jaffray. Your line is open.

Hey guys, good afternoon, and congrats, on all the progress during the quarter. I guess, my first -- the concept of topical steroids and having longer coverage versus the oral steroid, it's interesting. Of the 19 inflammatory events, which I believe was the last number reported. Is it possible to tell us how many of those occurred between the 13 days and say the end of six weeks or just give us an understanding of that?

Yeah, Tyler, thanks for the question. I think I will turn it over to Aaron to answer the specifics on the steroid regimen and also the inflammatory response. But I think I would say is that, obviously, as we said all along that inflammations can be expected in gene therapy, and I think in terms of what the steroid regimen that we believe will be appropriate. It's really been reflective of what we've seen in the first cohort of patients. And I think will be helpful for Aaron to give some context to the actual timing and why we think the prophylactic steroid eye drops will be appropriate.

Thanks, Leone. Generally these inflammatory events were mild, meaning that they were often asymptomatic. So the first time that they were spotted by investigators with typically after the oral steroids had stopped. Do you remember, we were giving a total of 13 days of oral steroids in cohorts 1 and 2, that's six days of 60 and then there was 7-day taper.And what we saw that there were no early inflammatory events that broke through those oral steroids, we saw no clinically significant inflammation during those early periods. But what we saw after the oral steroids has stopped that we saw some of these events be reported. And generally the peak incidents within the period of around four to six weeks after administration of ADVM- 002. And this is really similar to what has been seen also in some other gene therapy trials.So based on this experience from cohort 1, we felt it would be better after extensive discussions with our investigators and other KOLs to move to providing a longer coverage, but also something that provides less systemic steroids as well because we know this is a local response is generally mild and therefore a topical approach with eye drops, it seems to be sufficient. We haven't seen any cases of inflammation breaking through those steroid eye drops, which have been used and inflammation has generally been highly responsive to that. So with the topical steroids, we'll provide longer coverage and we hope to reduce the number of those adverse for those adverse events that we think.

Okay, that's helpful color. And is there any mechanistic rationale why it appears to kind of come back up at around four to six-weeks?

So I would go back to the first one, we did not really see any early inflammation. And sometimes early inflammation can be concerning for physicians because it can resemble an infection, for example, after an injection. I think it's important to remember, we did not see any significant inflammation immediately afterwards. What we're seeing again, it's kind of peaking several weeks afterwards and viral capsid do persist in the eye for quite some time. So we think it's related to that foreign material being within the eye. And really the first time that we're seeing anything that's clinically reportable is generally in that time period, a little bit later. So, again, that's why we feel that the local steroid approach with drops should help to address that.

Okay. That's helpful. And then just taking a step back, we've got soon here four cohorts ongoing that we're all kind of -- you know the last three being launched in a relative short period of time and we're going to be learning a lot as you drop down a dose and then move to topicals. But I guess, can you -- maybe just discuss whether you think more cohorts will be needed or at which point, you will know whether you'll need more cohorts or whether you'll move to Phase II? And exactly what you'll be looking to learn over the course of the next year?

Sure, and its true Tyler. We definitely -- we've got our hands full in terms of trying to dose more patients because, we do think, it's going to be important to have more patients dosed at the current doses we have and to see the impact of the prophylactic steroid eye drops. And I think, with that in totality, looking at those two cohorts then obviously being open label study, we can see how the impact will be happening over time along with a longer follow up period for cohorts 1 and 2. I think, when you look at the totality of that package that will provide us more insight into how we should proceed forward either additional cohorts or faster moving into a pivotal study. We'll need more information I think at further point.

Understood, makes sense. Thanks for taking the questions.

Thank you. Our next question or comment comes from the line of Alethia Young from Cantor Fitzgerald. Your line is open.

Hi, this is Emma on for Alethia. I guess, just following up on that. Can you help us frame, what you expect to see at the lower dose on cohort 2 from an efficacy and safety perspective. Just based on your preclinical work and what do you think there would be any rationale to dose down even further than that? And then second, just also curious to hear your thoughts on the ReGenX clinical of a hold that was announced earlier. So you can just tell how that impacts your competitive position?

Sure. So we will take the first one and talking about the cohort 2 data. Obviously, as we had said, we had seen a robust anatomical response at our first cohort dose 6x10^11 and therefore we thought, it was appropriate to dose dunk along with our KOLs and the second cohort and so which is it to 2x10^11. So, I think for us, it's early in the follow-up period. We are just completed dosing in August and we'll be looking forward to provide an update in the first half of 2020. But in terms of the efficacy and safety profile, given this is a dose-ranging study, we are looking for dose response and once we make sure we have the appropriate doses. So, we will definitely be looking for that. But I think it's early to predict, we'll provide any information, but we do look forward to providing an update in the first half of 2020.And then as it relates to the second question, the ReGenX buys clinical hold, based on the public information available, it appears that it's to do with the device, and clearly this is something that we're all trying to figure out the right way to move this forward for patients in terms of gene therapy approach and our program obviously does not involve a device or surgical procedure. It is an intravitreal approach, which we see as a huge advantage, specifically for patients and even for the retina specialists who delivering it. So, in our minds, we believe that individual approach is still superior. But in terms of any impact on us compared to what they have gone through, clearly, it's a device issue, which we don't have any of that to be concerned about.

Great. Thank you.

Thank you. Our next question or comment comes from the line of Phil Nadeau from Cowen & Company. Your line is open.

Thanks for taking my questions. First, a follow-up to Tyler's question on the steroid regimen. If memory serves me, AAO, there is still, I think, two, three patients who had some signs of inflammation in their eye out through the end of the evaluation period. Can you talk about these patients and how the steroid drops could prophylax against that? Do you think that was due to the capsid still being efficient to eye or was that a process has started much earlier and by given the drops earlier, therefore you wouldn't see an information lasting out through the week 24, 30?

Thanks. So, I'll start and I'm sure Aaron will be able to add some more detail. So, just to be clear that what the follow-up period we were referring to is the 24 weeks where we did give some insight that they were three patients who was still on topical steroids at that point in time, but two of them were also in the tapering period and also still in active steroid regimen. And then as it relates to the timing and the steroid, so I'll turn it over to Aaron.

Yeah. So, Phil, I think it's important to remember that none of these patients are treated with steroid eye drops to start with. So, we had just the 13-day course of the oral steroids and really it was a learning process in cohort 1. So, what we saw was that topical steroids was started at different time points for these patients. So, I think it's important to remember that none of these patients was on a course of steroid eye drops throughout that 24 weeks, rather they took orals initially and then there was some varying use of the steroid eye drops. And I think that's really what we're looking to assess further in cohorts 3 and 4. So by using that consistent steroid eye drop approach for every patient for the first six weeks, you know, we hope to get on top of that inflammation and then we hope to see some benefits down the line, but obviously you know, we can't predict the future and we're looking forward to seeing what data comes through in cohorts 3 and 4.

Great. And on the steroid regimen, how much flexibility do you have in terms of dose and schedule when assigning a regimen? Is it - is it possible to give low dose topical or high dose topical or does topical come really just in kind of single flavor?

Yeah – no we're using - it's a great question we're using a single – a single approach. We're using Dice-2 [ph] pregnate through this cohort 3 so that we have that consistency amongst sites. Again as alluded to you know there was some experimentation early on. The learning has been that the inflammation's been very responsive to those topical steroids, so now we're looking to have that consistent approach across the sites and see what data we get with that.

I think the only thing I would add is, as we said that there was going to be a tapering obviously at six week steroid regimen, but it will start tapering at the three week time point to really taper down on a slow fashion. So that – there is basically, a drop of the time in terms of the amount of steroids that I've given over that six week time period.

Apologies. This maybe a naive question, but if you had to go to a more potent topical steroid regimen is that – is that possible or is this regimen kind of as powerful as it gets?

You can potentially go up – I mean, what we – what we are providing is drops four times a day. And we expect based on the experience that we've had thus far that the inflammation will be very responsive to that. Again, you know, we can't necessarily predict the future and whether ever patient will respond to that, so certainly we are in discussions around what a second line treatment could look like, or if we need to sort of step up treatment in the future. And so potentially that could be more steroid eye drops or potentially that could be – you can administer an injection of steroid around the eye and that's something that's commonly done for – when there's – when there – for example cataractomy surgery performed. And we know patients tolerate that well. You can also – beyond that, there can also even be steroids, the implant that can be placed inside the eye. So there's a variety of different steroid approaches that we could consider, but based on the response we've seen to the steroid eye drops we think that the steroid eye drops are the logical point to start that and we expect based on what we've seen so far that the information will respond to that.

Got it. That's helpful. And then last question from me is - and – what are your recent thoughts or most recent thoughts on assessing aflibercept levels directly in cohort 3 or cohort 4?

I'll start, but I'm sure Aaron will add. So we believe that as we said all along the clinical outcomes are the most meaningful signal of - for looking at treating these patients. However, I think, Aaron, probably would add some more on this – in terms of what we may be looking to do with cohort 3 and 4.

Yeah. So, just a pick up on that point. I mean, there was such an extensive preclinical package that was generated with a lot of dose ranging, a lot of protein levels were taken that is obviously animals that do not have wet AMD, here we're treating humans. They have wet AMD. We have OCT, we have clinical examination and those parameters are much more important than anything else. Having said that, additional information can be helpful, and therefore we have implemented optional aqueous humor sampling to look at protein levels and also other things as well. But that is really exploratory and potentially supportive.

Perfect. Thanks for taking my questions.

Okay. Thanks.

Thank you. Our next question or comment comes from the line of Joon Lee from SunTrust. Your line is open.

Hi, thanks for taking my questions, and congrats on all the progress. Just sticking with the theme of prophylaxis, seroprophylaxis. Just help me understand, you said that you don't really see as much inflammation in the beginning, but those inflammation pop up later during the course, isn't that just because you're on – the patients are on oral prophylaxis earlier on that they don't see inflammation? And if you take that away, I mean, you're not concerned that those inflammation would pop up earlier and why could you just combine oral and topical together or is it just too much steroid? Thank you. And I have a follow-up.

So, it's a really good question. What we have – so the oral steroid could be working in terms of preventing any early inflammation, and what we haven't seen is any inflammation that presents on top of those oral steroids of any clinical significance. So either the oral steroid is working or they're not needed. But we are not going to be taking away steroid coverage altogether, we just reducing that, so rather than providing steroids to the whole system. We're just providing the steroids to the eye now.And I think, you're right, that's the time point at which we need to watch those patients carefully in sort of the first week to 10 days, because there we will have a potentially a weaker steroid regimen is only focused on the eye. And so we need to look and see, if there's any breakthrough inflammation in those first few days and that will be something that we're looking out for in cohorts 3 and 4.

Okay. And I noticed that, looking at your plans for the drug in upcoming cohorts. For the cohort 3 you stay with the lower dose and with the new topical steroid regimen. But for the cohort 4 and you go back up to the original higher dose with the new topical steroid regimen. Are you seeing something from the lower dose in cohort 2 that is driving the decision to retest the higher dose?

No, I think, what I would say is that this is a dose-ranging study and we believe that we need to find not only the dose, but also the right steroid regimen. So for us, it's important to really have – see more patients as you heard from Aaron in the prepared remarks that this will give us additional 18 patients of data at those two doses, which would be potentially what we could be taking forward. And we just need to make sure we have the right prophylactic steroid regimen that would be useful with those patients carrying forward and development.So it's really driven by pursuing, what we believe is the way to manage information, which is with the topical steroids. So that's really what's driving that and wanting to see that at both of those doses, and clearly, we've seen as we've signaled around 6x10^11 at the cohort 4 dose that we've seen a anatomical response. But really, this has been driven by – wanting to make sure we have the right steroid regimen as we move the program forward.

Okay. Thank you. And the last question is certain zero rescue is a great achievement, but what would you say is the threshold that would lead ophthalmologists and patients to choose ADVM-022 over in frequent injections? Is it one or two or -- is there some magical threshold number that would drive commercial adoption?

I think. Yes, clearly you're seeing six patients with zero rescue injections at the three to four week period is a meaningful response. I think from a renal specialists or a KOL [ph] perspective or a physician and patients is they're seeing a significant reduction in number of injections given what they're living with today would be meaningful for these patients. So that means -- so if you were coming in every four to eight weeks to get an injection and you can significantly reduce that then that's going to be meaningful for patients and physicians as they think about patients going – sorry, in terms of enrolling patients on the study and as a product going forward.

All right. Thank you so much.

Thank you. [Operator Instructions]. Our next question or comment comes from the line of Patrick Dolezal from LifeSci Capital. Your line is open.

Hi, thanks for taking the questions. And apologies in advance my first one is actually on inflammation as well. So I thought the duration of topical steroid use is particularly interesting being six weeks. I was just curious if that time course was typically what was required in cohort 1 for patients to respond? Or what gives you confidence in that duration?

Thank you, Patrick. So the -- it is based on what we've seen and it's not just based on what we've seen in OPTIC, it's also based on what we've seen in other ocular gene therapy trials, which have used in a variety of steroid approaches. And that is the first sign of inflammation is often been observed in that type of time period. So that is kind of a peak incidents. And what the hope here is, is that if we dose frequently with the topical steroid, then we can avoid the onset of that inflammation that we're putting that patients on a better trajectory and can not only reduce the number of inflammatory adverse events that happen within that period, but hopefully can make an impact on the subsequent period as well.It's kind of a time period of drops that is very typically used to gain after something like a retinal surgery approach, often patients will get four to six weeks of drops. So we know that that's very manageable from a patient perspective. And as Leone mentioned as well, there will be a gentle taper on those drops, so it's four times a day for three weeks and then it is tapering down to one drop a day by the sixth week. But if we do see any persistent signs of inflammation on any patient, then that period of drops can be extended with a longer and more gentle taper. So we're now doing the experiment obviously in cohorts 3 and 4. I'm really looking forward to getting the data from that and presenting it as quickly as possible.

Great. That's helpful. And on transduction efficiency, should we expect any differences based on the use of the oral versus topical regimen? There is actually a poster at ESGCT last year that indicated that there might be some differences there. I was just curious what your thoughts are and what your experiences with that?

Yeah, we -- certainly, there were some interesting datas and I think a very small number of animals and based on our collective discussions and what we have learned, we don't expect to see any significant differences there. Obviously, we're going into the experiment now. We'll look forward to seeing what data we do get with these cohorts 3 and 4. And again, we are looking at implementing the optional aqueous sampling as well so potentially can get some additional data points that could address that question, but -- right now we do not expect to see any significant differences.

Okay. Great. Thanks. And then the last one is just if you have any additional granularity on the timing of the 52-week data for cohort 1 and the 26-week data for cohort 2?

So as we've said, we will be presenting the 52 week data of cohort 1 in the first half of next year. There's a number of conferences where that could happen. And we're -- we will be able to announce it as we get closer to the time. And I think the second question was to do with the 24 week cohort 2 data and similarly we'll be announcing that in the first half of next year and we'll be again doing it at a -- hopefully in a way that we can get that out there as soon as possible at a scientific conference.

Great, thank you.

Thank you. I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to Adverum CEO, Leone Patterson.

Thanks again, everybody for joining the call today. I just want to reiterate how encouraged we are by the promising clinical results we presented for ADVM-022. We're excited to advance this important therapy for patients with wet AMD and diabetic retinopathy. And looking ahead, we are approaching a multiple milestones for our programs, which we just went through.We plan to announce 52-week data for the first half -- sorry, the fifth cohort and 24-week data from the second cohort of the OPTIC trial in the first half of 2020. We're also looking forward to completing enrollment in cohort 3 and beginning patient enrollment in cohort 4 in the first quarter of 2020. And finally, we plan to submit an IND in diabetic retinopathy in the first half of 2020 to expand the potential in the second indication.We look forward to providing timely updates on our clinical execution and maintaining a productive and transparent dialogue with investors and the medical community as we advance our programs and build value for Adverum. This is certainly been a year of progress and accomplishments for Adverum and I look forward to continued momentum in the months ahead.In closing, I'd like to thank the patients, the caregivers and the retinal specialists who participate in the OPTIC trial. And importantly, I would like to thank our employees for their commitment and hard work to advance our programs to what our broader mission to deliver innovative gene therapies for patients. Thank you for your time, and this concludes our call.