Good afternoon and welcome to the PepGen Conference Call to discuss PepGen’s Fourth Quarter and Full Year 2022 Financial Results and Recent Corporate Developments. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, we will hold a question-and-answer session.

[Operator Instructions] As a reminder, this call is being recorded today, Thursday, March 23, 2023. I would now like to turn the conference call over to Noel Donnelly, Chief Financial Officer of PepGen. Noel, please go ahead..

Thank you, Josh. Good afternoon, everyone and thank you for joining today’s call. Earlier today, we released our financials for the fourth quarter and full year 2022 and provide an update on recent corporate developments.

Press release outlining our financial results is available at our website pepgen.com and our 10-K was filed with the SEC this afternoon.

Joining us on today’s call will be James McArthur, PhD, President and Chief Executive Officer; Jaya Goyal, PhD, Executive Vice President of Research and Preclinical Development; and Michelle Mellion, MD, Senior Vice President and Head of Clinical Development. During this call, management will be making forward-looking statements.

These forward-looking statements are based on the company’s current expectations and inherently involve significant risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties.

Factors that could cause results to be different from these statements include factors the company described in the section titled Risk Factors in our current report on Form 10-K filed with the SEC earlier today.

PepGen does not undertake any obligation to publicly update its forward-looking statements as a result of new information, future events, or changes in its expectations. I will now turn the call over to James McArthur.

James?.

Thank you, Noel and good afternoon, everyone. Thank you for joining our fourth quarter and full year 2022 investor call. Before we begin, I would like to note that PepGen does not currently intend to hold quarterly calls on a regular basis moving forward.

However, with our updated clinical development plan that could lead to a potential accelerated approval for our lead program, PGN-EDO51 or EDO51, we felt the timing to hold this financial results call.

In September of 2022, we presented exon skipping data generated in our Phase 1 randomized, double-blind, placebo-controlled, single-ascending dose trial of EDO51 in healthy volunteers. Following a single IV administration of either placebo 1, 5, 10 or 15 mg/kg of EDO51.

Needle biopsies were taken to the evaluation of muscle concentration of oligonucleotide and exon-51 skipping in biceps.

As we have previously reported, the trial medics primary objective of demonstrate a generally well-tolerated safety profile at the doses study and provided key insights into the potential of PepGen’s enhanced delivery oligonucleotide or EDO cell-penetrating peptide technology platforms.

Our Phase 1 EDO51 trial exhibited the highest levels of oligonucleotide delivery and the highest levels of exon-51 skipping in human muscle biopsies following a single dose based on cross-trial comparisons from publicly available data from other exon-skipping programs.

Perhaps most encouragingly, we observed the accumulation of exon-51 skip transcripts from Day 10 to Day 28 at 5, 10 and 15 mg/kg dose levels, which we believe to be supportive of the potential for both the accumulation of skip transcripts and the accumulation of functional dystrophin protein in our planned repeat dose clinical trials in patients with Duchenne muscular dystrophy for DMD.

As an example, following a single dose at 10 mg/kg, we observed levels of exon skipping up to 1.4% in healthy volunteers, sevenfold higher than previously reported results following a single dose in human mix based on a cross-trial comparison from publicly available data.

As we reported at the Muscular Dystrophy Association, or MDA meeting earlier this week, we observed following a single dose of 20 mg/kg of EDO51 in male wild type non-human primates, 2.5% exon-skipping by ddPCR, the same method used to assess exon skipping in our Phase 1 human clinical trial.

Following 4 monthly doses in non-human primates, the level of skip transcripts increased to 14-fold to 34.9%. We therefore believe that the combination of non-clinical data in non-human primates and the Phase 1 human data signals the potential for PGN-EDO51 to drive clinically impactful levels of exon skipping in Duchenne patients.

We also believe that these results are indicative of EDO51 potential for strong activity and the potential of our EDO platform to drive a transformational treatment paradigm shift for people living with Duchenne muscular dystrophy and myotonic dystrophy Type 1.

Turning now towards our myotonic dystrophy Type 1 or DM1 program, PGN-EDODM1 or EDODM1, we announced IND-enabling non-clinical data for EDODM1 in December of 2022.

Just as a brief reminder, EDODM1 is designed to bind the CUG repeat hairpin loops in the DMPK transcripts of patients living with DM1 to liberate muscleblind like splicing regulator 1 or MBLN1 sequestered by the CUG repeat expansion, the root cause of DM1.

Liberation of MBLN1 has been observed to lead to correction, downstream transcript misplacing events that caused the multi-system muscle and neurologic pathology of DM1. As reported at the MDA meeting earlier this week, we have shown in patient cells with over 2,600 CUG repeats.

The EDODM1 treatment reduced MBLN1 accumulation in the toxic CUG-DMPK foci in the nuclei of cells. Additionally, in non-clinical models, EDODM1 showed no evidence of off-target effects.

Moreover, no short-term or long-term impacts were observed on the levels of other transcripts containing more than 10 CUG repeat in a mouse model of DM1 through 24 weeks.

In acute toxicology studies in non-human primates, EDODM1 was well-tolerated through the 9 mg/kg dose level I thought which is the highest dose level we explored in non-human primates. We believe that these data support EDODM1’s potential to drive clinical activity to provide a favorable tolerability profile.

In addition to the milestones achieved that I just outlined for you. In May of 2022, PepGen went public on the NASDAQ Stock Exchange, raising $122.9 million and broadening our access to capital, while creating meaningful value appreciation opportunities for our shareholders.

In 2022, PepGen appointed Laurie Keating and Habib Dable to our Board of Directors with Laurie serving as Board Chair. We also added key members of the senior management team over the course of 2022 including Dr.

Michelle Mellion, Senior Vice President and Head of Clinical Development, who will soon walk you through our future EDO51 and EDODM1 clinical plans. In summary, we believe PepGen is well positioned to capitalize on key value inflection points as we debut our multi-pronged clinical development plan for 2023.

Based on encouraging non-clinical and Phase 1 healthy volunteer clinical data, PepGen is planning to initiate two clinical trials to assess the safety and efficacy of repeat doses of EDO51 in boys and young men living with DMD.

As we have previously communicated in the first half of 2023, we expect to initiate an open label Phase 2 13-week multiple ascending dose or MAD clinical trial CONNECT1-EDO51 with four monthly doses in boys and young men living with DMD pending approval of the clinical trial application by Health Canada.

We currently expect this trial to evaluate EDO51 doses similar to our Phase 1 study conducted in 2022 in Canada. And importantly, we expect to report dystrophin protein data from this repeat dose Phase 2 trial in 2024.

In parallel to the CONNECT1-EDO51 study in Canada, we plan to initiate in the second half of this year, a Phase 2 global double-blind, placebo-controlled 25-week multiple ascending dose trial of EDO51 in DMD patients. CONNECT2-EDO51 that we believe based on feedback from regulators could support a potential accelerated approval pathway for EDO51.

We believe that conducting this study in parallel with our open label MAD study in Canada is the most efficient pathway towards the potential approval of EDO51 subject to alignment with regulators.

Lastly, in the first half of 2023, we expect to initiate a single ascending dose clinical trial FREEDOM-DM1 in DM1 patients in the U.S and Canada pending the approval by the U.S. FDA and Health Canada. And we anticipate reporting, safety, correction of mis-splicing and other clinical data in 2024. I will now turn the call over to Dr.

Jaya Goyal, PepGen’s Executive Vice President of Research and Preclinical Development to further detail our non-clinical studies supporting our clinical progress and to summarize our early phase non-clinical programs.

Jaya?.

Thank you, James. As James mentioned, PepGen presented non-clinical data in the mdx mouse model and non-human primates demonstrating the potential of EDO51 to treat DMD earlier this week at the MDA’s Clinical & Scientific Conference in Dallas, Texas.

In our mdx mice study received dosing with 30 mg/kg of PGN-EDO23 every 4 weeks and in our non-human primate study, in which NHPs were dosed with 20 mg/kg of EDO51 every 4 weeks, we observed stacking of exon skipping in both the species and accumulation of dystrophin protein in mdx mice after four doses.

In mdx mice bicep, we observed up to 92% of exon skipping and dystrophin production up to 82% after the fourth dose. In non-human primates dosed at 20 mg/kg per monthly for four doses, we showed level of exon skipping in bicep tissues that increased 14-fold from 2.5% after a single dose to 35% after four monthly doses.

Based on this encouraging non-clinical data, we are planning a 25B repeat dose clinical study that Michelle will cover momentarily.

Additionally, we announced earlier this week at the MDA meeting in Texas that EDODM1 was observed to reduce pathogenic nuclear foci and liberated MBLN1 from the toxic RNA full size in a dose-dependent manner in DM1 patient cells with 2,600 repeat. This data provides further non-clinical support for continued development of EDODM1.

As we turn towards our earlier stage preclinical programs, we were pleased to deliver positive non-human primate exon-skipping data from the repeat dose PGN-EDO53 study.

Following a single dose of EDO53, we observed a mean exon-skipping level of 36.4% while exon skip traffic accumulated with a mean exon-53 skipping level of 57.2% upon repeated administration.

This accumulation is consistent with what we have seen in the non-human primate study for EDO51 and in conjunction with the healthy volunteer data from our Phase 1 study with EDO51 supports the potential accumulation of the script transcripts and potentially dystrophin protein in patients upon repeated dosing.

In our previous update on our preclinical pipeline, we also shared in vitro exon-skipping results from wild-type human myoblast treated with PGN-EDO45 and PGN-EDO44. In these wild type human myoblasts, both showed high level of exon skipping. I will now turn the call over to Dr.

Michelle Mellion, PepGen’s Senior Vice President and Head of Clinical Development to further detail our clinical plan moving forward and to summarize our presentation at MDA earlier this week that informs our clinical strategy.

Michelle?.

Thank you, Jaya. As Jaya and James said, in support of our clinical development program for EDO51, PepGen presented our Phase 1 results in healthy volunteers and non-clinical data in the mdx mouse model and NHP demonstrating the potential for EDO51 to treat DMD earlier this week at the MDA conference.

The Phase 1 study shows that a single dose of EDO51 resulted in the highest levels of oligonucleotide delivery and exon-skipping in healthy muscle and was generally well-tolerated at clinically relevant doses. The data at Day 28 support the potential for accumulation of exon skips transfer.

As Jaya described this potential for accumulation of skip transfer is supported by our non-clinical study.

Specifically, we showed in our healthy volunteer study that a single dose of 10 mg/kg resulted in 1.4% exon skipping, while a single dose of 20 mg/kg in NHP showed roughly 2x the amount of exon-skipping, 2.5% by ddPCR as that pain in healthy volunteers suggesting possible scalability.

After 4 monthly doses in NHP, exon-51 skipping increased to approximately 35%, 14x that of a single dose, supporting not only monthly dosing, but also the potential to achieve a meaningful increase in exon-skipping with this dosing regimen.

Following on our successful Phase 1 trial of EDO51 in healthy volunteers, we are planning to initiate two clinical trials to assess the safety and efficacy of repeat monthly doses of EDO51 in boys and young men living with DMD.

CONNECT1-EDO51 is a 13-week open label multiple ascending dose clinical trial expected to be initiated in Canada in the first half of 2023. We anticipate reporting the dystrophin protein data in 2024.

In parallel, CONNECT2-EDO51 is a 25-week global randomized placebo-controlled trial that is expected to be initiated in the second half of 2023 to support a potential accelerated approval. Additionally, our EDO51 healthy volunteer study informed clinical development for EDODM1, which employs the same EDO peptide technology as our EDO51 program.

Based on clinical results from our EDO51 healthy volunteer Phase 1 study, we believe that we will be able to achieve clinically relevant concentrations of EDODM1 in muscle. We are planning to initiate a Phase 1 placebo-controlled single-ascending dose study FREEDOM-DM1 in the U.S.

and Canada enabling PepGen to report safety, correction of transcript, misplacing data and clinical data in patients in 2024. I will now hand the line to Noel Donnelly, PepGen’s Chief Financial Officer to review our fourth quarter and full year 2022 financial results..

Thank you, Michelle. My comments will reflect the high level financial results of our fourth quarter and full year 2022 periods. More details are provided in this afternoon’s financial results, press release and then corresponding SEC filing.

As of December 31, 2022, PepGen held $181.8 million in cash and cash equivalents compared to $132.9 million on December 31, 2021.

PepGen’s strong cash position is expected to fund operations into early 2025, which includes the generation of dystrophin production data or our lead DMD asset EDO51 and the correction of downstream transcript misplacing data or our lead DM1 asset EDODM1.

PepGen’s net loss for the fourth quarter of 2022 was $14.9 million compared to a net loss of $7.1 million for the same period in 2021. Our net loss for the full year 2022 was $69.1 million compared with a net loss of $27.3 million for the full year 2021.

Research and development expenses for the 3 months ended December 31, 2022 were $13.2 million compared to $4.5 million for the fourth quarter of 2021. For the full year 2022, R&D expenses were $54.1 million compared to $19.0 million for the year ended December 31, 2021.

The increase in R&D expenses in the fourth quarter of 2022 compared to the fourth quarter of 2021 was primarily attributable to increased preclinical, manufacturing and clinical trial cost associated with our EDO51 and EDODM1 programs as well as increased personnel related costs.

General and administrative expenses were $4.0 million for the 3 months ended December 31, 2022 compared to $2.7 million for the fourth quarter of 2021. G&A expenses for the full year 2022 were $14.2 million compared to $8.1 million for the full year ended December 31, 2021.

The increase in G&A expenses was primarily due to increased expenses associated with supporting public company operations. Finally, PepGen’s shares of common stock outstanding as of December 31, 2022 were approximately 23.7 million shares with 27.1 million fully diluted shares outstanding. And with that, I will turn the call back to James..

Thank you, Noel. We are proud with the recent progress we have made over the last year advancing our pipeline and platform technology and moving into our new Boston headquarters.

We are eager to continue to capitalize on our clinical momentum in 2023 with the two EDO51 and EDODM1 studies we have referenced on the call that we expect to initiate in 2023 with key patient data readouts expected in 2024.

We will be presenting at the upcoming investor conferences, Stifel CNS Days, March 28; Needham Healthcare Conference, April 29; and Bank of America Healthcare Conference on May 11. With that, I will now open the call for questions.

Operator?.

Thank you. [Operator Instructions] Our first question comes from Paul Matteis with Stifel. You may proceed..

Hi, this is James on for Paul. Thanks for taking our question. Just a quick one regarding the global DMD study set to initiate in second half of this year. Just wondering, have you talked to the FDA yet? And the reason I ask this is because it seems like the FDA has been pretty conservative in the space with a number of clinical holds.

So just wondering if they have specifically asked for anything before – any data before allowing you to initiate in the U.S. and kind of on that point, how will be open label study kind of inform the pivotal given it’s only starting a few months before? Thanks so much..

I appreciate the question. Thank you. Yes, we have had a lot of conversations with regulators and our clinical design has been informed by that.

We are balancing both the desire to deliver on dystrophin data in 2024 for the benefit of both investors as well as people living with DMD as rapidly as possible which is what drives us to do the open label study in Canada. And that data will be integrated into the global study.

The global studies we appreciate after interaction with regulators needs to be a 6-month dosing study. And to go and support that study we will be completing the associated toxicology studies by the end of this year. And that is the reason for the timing of that study in the second part of this year..

Thanks..

Thank you. Our next question comes from Joe Schwartz with SVB Securities. You may proceed..

Hi, this is Beth on for Joe. Thanks for taking our question.

I was just curious if you could provide any color on the dose cohorts you are planning to assess in the CONNECT1 and 2 studies and how you are thinking about the potential to dose up to or above that highest 15 mg/kg dose with the assessment of healthy volunteers?.

Thanks for the question. Let me first start off by highlighting that we think that the dose level of 10 mg/kg, a dose level that was safe and well tolerated with only Grade 1 treatment emergent adverse events in our single dose study, we believe will deliver truly significant levels of exon-skipping in the multi-dose study.

The reason for this is twofold. First is as highlighted, the single dose study at 10 mg/kg delivered levels of exon-skipping that was sevenfold higher than the highest level ever previously reported following a single dose in humans.

Second, the study that Jaya highlighted we are using the same drug in non-human primates, a single dose at 20 mg/kg delivered on 2.5% exon-skipping by ddPCR the same assay.

But following four doses, we saw almost 35% exon-skipping showing a tremendous accumulation of exon skip transcripts with higher exon skip, higher levels of exon skip transcript, of course, we would anticipate seeing higher levels of dystrophin being produced as well. So we are very excited about what we believe is the potential to go to 10 mg/kg.

Now that said, we do believe there is an opportunity to potentially go above that and we will have those conversations with regulators with patient safety all of being front and center in our mind as we move through our clinical development strategy..

Great. Thank you..

Thank you. Our next question comes from Tazeen Ahmad with Bank of America. You may proceed..

Hey, guys. This is [indiscernible] on for Tazeen. We have had a quick clarifying question on CONNECT2.

What is the – what endpoints are you planning to measure? Is it going to be dystrophin levels? And then how are you thinking about how the potential approval of gene therapy for DMD might affect how the agency is thinking about accelerated approval and maybe enrollment for DMD patients in the U.S.?.

So, perhaps I can first take the second part of your question and then I will turn the endpoint part of your question over to our Head of Clinical Development. We think that the potential for approval of a gene therapy is beneficial for patients. It could provide a baseline that could be beneficial, particularly in younger patients.

And that said we and many others believe that the treatment of Duchenne muscular dystrophy is going to require a polypharmacy approach with multiple therapies to truly deliver on meaningful levels of dystrophin and clearly, the level of the type of dystrophin being delivered in it with an exon-skip product which is almost full length in nature is obviously quite a bit different than that of a microdystrophin.

So we think that there is a great opportunity here to deliver on meaningful change for patients. And with that, I will turn it over to Michelle..

Yes. So in terms of the design of that global randomized controlled clinical trial, what we will be looking at in this clinical trial of course is dystrophin production as well as safety.

We will also be including a broad array of clinical assessments to give us an idea of how the increased dystrophin production does affect these assessments and how we can improve performance on these assessments.

And we will leave that in further discussions with regulators and the information that we have from them is that is timing along with evaluation of these endpoints maybe important for an accelerated approval..

Okay. Thank you..

Thank you. [Operator Instructions] Our next question comes from Laura Chico with Wedbush. You may proceed..

Hi, good afternoon. Thanks very much for taking the question. I guess I wanted to ask perhaps a different one around the regulatory landscape. So there will be an advisory committee meeting coming up soon for a DMD candidate.

I am wondering though do you think there is any discussions that could emerge around dystrophin as a surrogate endpoint? Do you see the landscape changing in terms of FDA’s willingness to accept it? And then I just wanted to verify on CONNECT2, could you reiterate again what was the timing for the assessments that you are going to be performing there specifically on the dystrophin productions? Thanks very much..

So, let me first touch on the regulatory component. And again, I will turn it over to Michelle for the readout from dystrophin their timing. So our understanding is that the upcoming advisory committee meeting is focused on microdystrophin.

As I mentioned before, microdystrophin is a very different product than the slightly truncated dystrophin product that is produced by an exon-skipping agent on which there have been four approvals to-date.

The product that is produced by exon-skipping, is perhaps 10% to 20% of the native molecule size comprising most of the normal domains present in the normal dystrophin protein and is a molecule that we know is functional in Becker patients, if expressed at high enough levels.

And that’s why we believe our approach has the potential to be transformative for patients. With that, I will turn it over to Michelle..

Yes, with that dystrophin production, we will be looking at more performing muscle biopsies at baseline and at week 25. So, this will give us an idea of dystrophin production after approximately 24 weeks of treatment..

Okay, thanks very much.

And then maybe one quick follow-up just circling back with respect to the EDO platform and after the recent presentations at MDA, can you just remind us what are some of the differences in the physical properties for the cell penetrating peptide portion of EDO51 versus throughout this 5051? And I guess, stick to any other drivers or features that maybe driving the increased levels of exon-skipping observed versus the R6G analog, whether it’s just access to the nuclear compartment other things like that? That would be helpful.

Thank you..

Yes, appreciate the question, Laura. So, our molecule is a shorter than 20 amino acid linear peptide, completely synthetic in nature comprising three motifs, two motifs do contain arginine, but those arginines are interspersed by non-natural amino acids, which confers much greater stability upon the peptide.

They sandwiched between the two of them a short hydrophobic core that we believe is fundamentally essential in conjunction with these polyarginine sequences driving the peptide at oligo into the cell. So, we think that it’s a very different sequence with very different biology.

And on the basis of both research and preclinical work, we believe not only we are getting better access to cells, but also better access of the oligonucleotide into the nucleus, of course, which is necessary to perform its role and function..

Thanks very much..

Thank you. And this concludes the Q&A session. I’d now like to turn the call back over to James McArthur for any closing remarks..

Thank you, operator and thank you everybody for participating in today’s call. Have a great afternoon and evening depending on where you are. Thank you..

This concludes today’s conference call. Thank you for participating. You may now disconnect..